Internet gambling is an issue of strategic financial stability and Wall Street regulation. It is not just an issue of silly games and electronic poker as argued by supporters of the proposed Reid-Kyl bill to legalize gateway gambling in cyberspace (See “Lipparelli: Congress Should Use This Brief Window to Legislate Internet Gaming.”)

In 1995, congressional hearings led to enactment of the U.S. National Gambling Impact Study Commission, which concluded in 1999 that maintaining a total ban on Internet gambling was a U.S. imperative.

Currently this ban is supported by almost all members of the National Association of Attorneys General. Congress even strengthened the ban by enacting the Unlawful Internet Gambling Enforcement Act of 2006, which passedin the House with an overwhelmingly favorable bipartisan vote. Immediately the Internet gambling stocks on the London Stock Exchange lost billions of dollars as speculators finally recognized that these stocks were predicated on illusory gambling activities. Fortunately for Wall Street, the U.S. ban meant that such vacuous gambling stocks were already prohibited on U.S. stock exchanges.

Around the same time, Russian President Vladimir Putin sanguinely noted the economic and crime costs of state-sanctioned gambling and recriminalized 2,230 casinos — virtually wiping the economy clean. Associated leaders such as Chechen President Ramzan Kadyrov confirmed that “the gambling business is … [a threat to] national security.” What do the Russian economists know that is still eluding Washington politicians?

Led primarily by the U.S. ban on Internet gambling, by 2009 about 30 other countries had also banned online gambling.

Recent academic volumes of the multi-volume United States International Gambling Report even have titles reflecting the international economic realities. Specifically, the 2010 volume is alarmingly titled “The Gambling Threat to Economic and Financial Systems: Internet Gambling.” The title of the 2012 volume is even more alarming: “The Gambling Threat to National and Homeland Security: Internet Gambling.”

In its news video “The Bet That Blew-Up Wall Street,” the website for 60 Minutes reports on gambling’s interface with the current crisis in credit default swaps. Cogently, Warren Buffett named the story “Financial WMDs,” while U.S. Senate hearings blasted this Wall Street gambling debacle as “casino capitalism.”

At least the subprime crisis had some real property as collateral. However, with Internet gambling there’s nothing of real value — just people dumping money into gambling accounts which can evaporate more easily than the Bernie Madoff monies.

U.S. gambling is an economic cancer ready to metastasize into Internet gambling. For example, the Congressional Gaming Caucus used the 9/11 tragedy to cripple the 2002 Economic Stimulus Bill with $40 billion in tax write-offs for slot machines and associated electronics (and the caucus had asked for $133 billion in tax write-offs). These recurring write-offs for slots are still draining the U.S. Treasury and could easily be transposed into more write-offs for Internet gambling technologies.

Gambling lobbyists also dominate the economic policies of 28 states, draining state treasuries — as exemplified by Illinois, with the nation’s worst state budget crisis. With a total fair market value of $5 billion ($9.5 billion in 2012 dollars), the original 10 Illinois casino licenses, for example, were granted to political insiders for $25,000 each — including one political insider recently convicted in the scandals surrounding former Gov. Rod Blagojevich.

Within this gambling aura, experts commonly refer to Internet gambling as “crack cocaine” for addicting new gamblers. Internet gambling would place the worst type of computer gambling at every school desk, at every work desk, in every living room and on every cell phone.

In an instant, a person could “click the mouse and lose the house.” Again, 60 Minutes highlights these problems in its video “Slot Machines: The Big Gamble.”

With justification, gambling lobbyists brag that Internet gambling is the “killer application” — killing both individual and institutional finances.

Countries cannot gamble their way to prosperity. Internet gambling shrinks the consumer economy and destroys consumer confidence by promoting a ubiquitous gambling philosophy.

Legalizing U.S. online gambling would allow dubious parties to tout the U.S. imprimatur — empowering them to create a queue of speculative bubbles that could collapse already fragile financial systems and destabilize essential international economic security.

John Warren Kindt is a professor emeritus at the University of Illinois and is a senior editor and contributing author to the United States International Gaming Report.