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Casinos taught me that gambling can be dangerous. A shift manager at the Hard Rock in Las Vegas threatened me one night that the next time I walked into his casino, I wouldn't be walking out. The problem was that I was a card counter: a professional blackjack player. When I was at the table, the casino was expected to lose. So they panicked, threatened and at times practically assaulted me—all for playing lawfully.

Casinos hate playing without an edge. When you don't have an edge you risk losing control. I learned this when I tried to retire from blackjack. After supporting myself in casinos for five years, I discovered online poker in my home in Brooklyn. I was bad at this new game, but confident: a poor combination.

When I finally quit, I was broke. Fifty thousand dollars of mine had been beamed electronically to Gibraltar and the Isle of Man, where the websites I'd been compulsively using were based. It struck me that something was wrong.

It would have been weirder if I'd delivered that money not to private corporations, but to the state of New York. Such weirdness is now possible with a late-December announcement from the Department of Justice that threatens to transform not just what a lottery is, but what a state is and what it does. The decision could still be overruled, but as it stands, states can operate gambling sites thanks to petitioning by Illinois and New York.

The announcement reverses years of precedent that said all forms of Internet gambling violate the 1961 Federal Wire Act. The act was invoked in 2005 to prevent Illinois from obtaining an Internet lottery. In 2007, U.S. Attorney Catherine Hanaway told the House Committee on the Judiciary that the government viewed "all forms of Internet gambling" as "illegal under federal law."

But the state of the state has changed since then. Tax revenues languish below pre-recession levels, unemployment is high, and tax hikes are political poison. New income streams are a good idea. So Illinois asked the Justice Department to reconsider, this time with the help of New York, and together they hit the jackpot. The Wire Act now only restricts sports betting, not online lotteries, poker or gambling in any other online forms. California, Michigan, Delaware, Virginia and Maryland are among the states exploring this potential revenue source.

A likely model is Washington, D.C.'s "iGaming" program, the nation's first and most evolved state-sponsored Internet gambling initiative, which has been rolling along somewhat brazenly, gambling that the proper permission would come. Now that it has, the D.C. Lottery would include full-blown casino-style gambling, accessible round-the-clock at home. These games are considerably faster and more dangerous for players than the harmless-seeming, dollar-a-week scratch card habit. I know from my poker experience that speed plus accessibility can turn a hobby into an addiction. Not to mention players lottery accounts are wired directly to their bank accounts.

"Addiction is very much about the speed," said M.I.T. Associate Professor Natasha Dow Schüll, author of the forthcoming book, Addiction By Design: Machine Gambling in Las Vegas, in an interview. "Faster play accelerates the addictive process."

Illinois Lottery Superintendent Michael Jones said Internet gambling actually may be safer, less likely to result in pathological or addictive play, because the state-run websites can limit the losses of players betting too much money. "Right now I can't control someone walking in and spending a thousand dollars on tickets in retail stores, but online I can prevent that," he said.

Just because he can doesn't mean he will. State lotteries have not impeded problem gambling, according to Keith Whyte, executive director of the National Council on Problem Gambling. "To claim otherwise ignores history," he said. "There's nothing to indicate lotteries have been more or less responsible than private companies."

Illinois has no current plan to limit individuals' spending while gambling online. The D.C. Lottery will cap losses at $250 a week, or $13,000 a year, which is not a number particularly inconsistent with degenerate, compulsive play. But that's really no surprise. If the states want to emulate casinos, degenerate, compulsive play is where the money is.

Just look at Oregon: the bulk of that state's lottery revenue comes from slot-like "Video Lottery Terminals" available in places like bars, according to interim public affairs manager Chuck Baumann. The Oregonian newspaper reported in 2009 that the majority of video gambling revenue in that state was attributable to a minority of players: a small 10 percent whose monthly losses averaged $500 each, month in and month out. These are the people powering the lottery.

It's the degenerates, not the dollar-a-week hobbyists, who will really fill the states' online coffers. One Josh Axelrad prepared to drop 50 G's in a year is worth a thousand of the dollar-a-week types. Gambling stimulates many but thrives on the few. It thrives on people like Long Khong, who was sentenced last week for embezzling more than $800,000 from a Denver employer to fuel his gambling addiction. Ralph Edward Staelgraeve turned himself in the same week on charges of embezzling $700,000 in Michigan, some of which he spent in a casino. Kevin McAuliffe, a 58-year-old Nevada clergyman, faces sentencing next week for stealing $650,000 from his diocese. These are just the latest examples of hardcore gambling gone wrong.

The ultimate responsibility with this tricky game lies not with the state or the casino, but with the individual. Finally embracing this concept helped me get up from that chair—as did Gamblers Anonymous and the fact that I was broke. I can't in good conscience complain about the vile designers of gambling websites who maximize game speed and encourage addictive play. That's their job and it behooves them to be good at it. Ugly work—but someone always does it.

That someone should not be the government, though, fiscal problems notwithstanding. A broke state is preferable to a state dependent on breaking its own citizens to put cash in the bank.