Malcolm Sparrow Testifies to the House Committee on Financial Services

July 21, 2010

Testimony of Malcolm Sparrow, professor of the practice of public management and faculty chair of the Executive Program on Strategic Management of Regulatory and Enforcement Agencies, to the House committee on Financial Services. Hearing: “H.R. 2266, Reasonable Prudence in Regulation Act, and H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act”.

Testified: 3 Dec., 2009.

Good morning Chairman Frank, Ranking Member Bachus, and distinguished members of the House Committee on Financial Services.
My name is Malcolm Sparrow, and I teach regulatory and enforcement policy and operational risk control, predominantly to government regulators, at Harvard’s John F. Kennedy School of Government. I have worked with a wide range of Federal and State regulatory agencies on the challenges of effective risk-control and social harm-reduction, and the use of various regulatory structures and practices in delivering improved public protection. My expertise is in regulatory policy and its relationship to risk analysis, rather than in any extensive prior knowledge of the gaming industry and gambling behavior per se.

Earlier this year, WiredSafety (the Internet safety and educational charity) commissioned a research report to help inform the legalization debate and to help educate the public on the risks associated with online gambling and the best ways to address those risks. The Brattle Group (a research and consulting firm) convened a team of experts to work on the report, and engaged me to participate as an expert in regulatory policy and practice.

The full report1 was released yesterday, and I am happy to make it available to the committee as an addendum to my written testimony. I have summarized the major findings of the report in this written testimony, for your convenience.

Our analysis did not directly address whether online gambling should be legalized. In focusing on managing risks, we did not weigh moral or religious objections to gambling, nor did we examine broadly libertarian arguments in favor of allowing adults to engage in pastimes they may enjoy. We did not conduct any analysis to quantify the benefits of potential tax revenues attributable to regulated online gambling. Further, we did not focus on any issues of federalism or on exactly where regulations and laws should fit into the U.S. multi-jurisdictional governance structure. Instead, we concentrated more narrowly on the obligations of government to protect citizens in general, and vulnerable groups of citizens in particular, from unnecessary exposure to harm.

Read more of the testimony on the House Committee on Financial Services website.

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Malcolm Sparrow

Malcolm Sparrow, professor of the practice of public management and faculty chair of the Executive Program on Strategic Management of Regulatory and Enforcement Agencies.