The moral evil of gambling has gotten some extra press this week thanks to the outing of Bill Bennett as a major whale. (A whale being an industry term for a schmuck who loses a lot of money gambling.) And, of course, we’ve seen a number of conservatives coming forward to defend their favorite ideologue.

As the argument goes, what Mr. Bennett does with his own money is a private matter, and if he happens to enjoy gambling, then that’s his own business.

Sounds reasonable to most people. But Rep. Jim Leach is not most people. Oh, he’s got no problem with Mr. Bennett, because Bennett drove (or got a limo) to Atlantic City to do his gambling. But Mr. Leach has an issue with people who do their gambling outside of the sanctioned halls of New Jersey, Nevada, or the Indian reservations.

Leach has reintroduced for the umpteenth time a bill that would outlaw Internet gambling. Sort of. Actually, it would pretty much do nothing. But more on that in a minute.

According to Mr. Leach’s press release, Internet gambling serves no legitimate purpose, is a danger to the family, and (naturally) has potential links to terrorism. This last bit apparently due to the idea that you can launder money through Internet gambling.

Starting with the most ludicrous proposition first: it’s true that you can walk into a casino with a suitcase of cash, walk out with a suitcase of different cash, and therefore effectively disguise the source of the original cash. But it’s hard to walk into an online casino, so in order to get money into play, you’ve got to do that with a wire transfer. Wire transfers leave inconvenient records of the original source point for the money.

[Update, 5/11, 8:21 PM: A source at one of the online financial clearing-houses tells me that a) most of their transactions are rather small, and b) there are limits on the size of every transaction. When this company approached their government to ask how they could be of use for government tracing of financial transactions, they were told they were already in compliance; since the company stores its money in banks, all transactions are already traceable.]

But moving on to the general proposition, that gambling is bad for society. Presumably, this is due to the fact that it’s possible to wager away Junior’s college fund — unless you’re subscribing to Puritan theory that wagering on the will of God is in itself bad. Assuming the former, gambling that makes it more likely you’re going to lose the college fund is worse than gambling that makes it less so.

Whoops. We have a problem, then. The way to determine the odds of losing is to check out the casino’s edge on any given bet. At one popular Internet casino, the overall edge for the house was 2.21% in March; this means that for every dollar you bet, you could expect to get back just over 97 cents. This makes this particular site a better bet than most Atlantic City casinos, where the equivalent return on slots averages about 95 cents (and much lower on less expensive machines).

But the worst bet you can make isn’t at an Internet or at a land-based casino. The worst bet is on the government. State lotteries routinely pay off 50 to 60 cents on the dollar.

As an example, let’s review the return from the Iowa lottery, where Mr. Leach hails from. In their standard “Pick 3” game, hit the 1,000-to-1 number, and get paid $600. That’s 60 cents for every buck you wager. Spend $10 on their “All The Marbles” instant ticket, and on average you’ll put $6.60 back in your pocket.

Interestingly, the Iowa lottery says on their web site that “tickets cannot be purchased on the Internet at this time.”

There’s no question that there are people playing online who have no business being there; the same goes for any casino, and it’s fairly easy to spot who’s who. But if you’re going to play, you’re best off where you’ve got the best odds, and the free market seems to make online casinos pay off a hell of a lot better than their land-based equivalents.

Leach’s bill makes it illegal to transfer funds directly from a US institution to an Internet casino. But it’s only illegal for the casino; players and the wire-transfer institutions are exempted. Amusingly, it’ll still be legal to buy any registered security, so if you want to buy stock in one of the UK-based casinos, that’s just fine. And since all Internet casinos are already illegal in the US, what this will essentially do is force players to move money first into an international clearing house, and then move it into the casino.

Note to Mr. Leach: you already need a service like this if you want to pick up your winnings from the casino, in most cases. Most online players already have these accounts.

Essentially, this bill should be called, “The Cessation of Protections for Internet Gamblers Act”, because that’s what the bill will perpetuate. Since all of the casinos and most of the clearing-houses are international, if your money gets “lost” somewhere, you’re pretty much screwed. There are web sites which tell players which places to avoid, but that information isn’t widely distributed. A bill that licenses or regulates Internet casinos, rather than attempts an ineffectual ban, would be far more likely to protect the rent money from being lost on Internet red 22. [Update: John Conyers has proposed a commission to do exactly this.]