BUSINESS

The Mouthpiece: Traditional notions of gambling meet US gambling expansion

TAGs: Supreme Court, the mouthpiece, United States

“The gambling known as Business looks with austere disfavor on the business called Gambling.”

 — Ambrose Bierce

When the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), it opened the way for the biggest expansion in gambling that this nation will probably ever see.

The Mouthpiece: Traditional notions of gambling meet US gambling expansionYet gambling, especially sports betting, the particular focus of the Supreme Court case of NCAA v Murphy, still occupies a murky and undefined place in society, even in the America of the 21st century.

And the principal reason for that is what we call ambivalence—the psychological state of holding mixed, even contradictory feelings about one single subject. We have always been told gambling is morally wrong to some degree or another—BUT it handles tons of money, and if properly taxed could be a strong source of revenue for governments. So maybe it is okay after all, kinda—BUT we have to remember that gambling may pose a moral and financial hazard to the average citizen, or at least our social folklore has always said so. On the other hand, in the case of sports betting, (both online and off), we are talking about a market of about $350 billion a year. So we kinda like gambling, except when we don’t. Consequently, we banned gambling—except when we didn’t.

Since sports betting is steadily being accepted by more and more U.S. state governments, maybe it’s time to take a dispassionate look at the threats it supposedly raises against godliness and good citizenship. How strong are these threats, really?

The morality of gambling?

The first set of objections is purely moral. Gambling was considered a minor crime and a social nuisance when the original 13 colonies were British possessions, and the old attitudes held in the new nation. This is why, in the U.S., state law is the primary reference point for gambling laws. Under the Tenth Amendment to the Constitution, all powers not specifically given to the national government reside with the states, and the people. So it is the states who hold and exercise what is called the police power: the duty to protect citizens from criminal activity. And the police power also means that the government has a right and, in fact, a duty to prevent wrongdoing. Until quite recently that duty was understood as very much including” wrong “ choices that might be harmful.

Today, that theory of government is in tatters in the U.S., where it survives at all. Formerly unspeakable actions which would have called down every punishment from jail time to a full-blown lynching – -abortion1, same-sex marriage2, even animal sacrifice for religious purposes3, have been redefined by the courts as constitutionally protected rights. Long-standing taboos against drug use, particularly marijuana, have fallen to popular plebiscites and initiatives allowing possession and use for medical and even recreational purposes.4

And in this Brave New World that we live in (like it or not), forbidding somebody from making a few bets, on their own time with their own money, seems silly when we simultaneously allow them to smoke all the weed they can hold and marry their toaster ovens if they feel like it.

Social effects

With the morality argument overtaken by events, the fallback position against gambling is social utility—it is supposed to be harmful to the finances of individuals, society in general, or both. Or at best, a waste of their time.

The idea that the average citizen, left to his own devices, will be duped and bankrupted by unscrupulous gambling operators is a long-standing shibboleth of our common law, and the assumption has widely been adopted in state law.

But how many people are actually falling victim? For that matter, how do you know a victim when you see one?

There are almost as many definitions of the “problem gambler” as there are researchers. Gamblers may be listed as addicted, compulsive, degenerate, habitual or even pathological, depending mainly on the proclivities of the surveyor. The most sensible classification was provided some years ago by the Harvard Medical School’s Division on Addiction, which in 1997 promulgated a two-pronged classification: “Problem gamblers”, who find that gambling is interfering with significant aspects of their lives, such as personal relationships and work; and “Compulsive gamblers” who have developed a genuine addiction, a disease which becomes progressively worse, to the point of self-destructive behavior and even harm to others.

Recent estimates of the number of gamblers in the U.S. (defined as people who place at least one bet per week) run to about 21 million.

How many problem/compulsive gamblers are out there, in America’s gaming public? Once again, this heavily depends on pre-set definitions and proclivities. Estimates range from a high of 5 1/2% (American Psychiatric Association) to a median of 2 to 3% (National Council on Problem Gambling). Meanwhile, actual empirical evidence, records of what was actually wagered on given sites, including the off-track betting system that is licensed by many U.S. states, seem to indicate that genuine problem players are around 1% of the total. This last figure is probably the most reliable, drawn from actual bets instead of surveys, which tend to be self-selecting. The people affected and the depth of their problems are quite real and need to be addressed. All the same, wouldn’t it be wonderful if all our social problems could be kept down to a level of about 1%, or even 5%?

And how much damage, in dollars and cents, is actually done to America’s economy by gambling? Once again, estimates vary with definition and motivation. One of the more recent studies, conducted under the auspices of the University of Georgia, puts the annual cost of problem and pathological gambling to the U.S. at about $5 billion.5

That is no small amount of money, and the problems that it outlines are very real. Nevertheless, it stacks up as rather small potatoes compared to the social cost of alcohol abuse ($249 billion, according to the Centers for Disease Control).6 The social cost of tobacco use runs about $300 billion; $170 billion for direct medical costs, the rest in lost productivity and related problems.7 There surely can be problems raised from the abuse of gambling, including online gambling; nevertheless, a comparison with other social problems shows that it is very far from the looming menace its detractors would have us believe.

There is one remaining stock objection to gaming and gambling—namely that it is a mere diversion and waste of time. This may have been true in previous eras when a nation’s economic strength was measured in output of coal, iron, or cotton. But today games and gaming theory are in fact central to the progress and development of our society. New tools and programs for such diverse areas as economics, sociology, military and aerospace programs, even evolutionary biology, are all dependent on mathematical models and controlled simulations—AKA games. It is no accident that both the development of nuclear weapons and electronic computers were both founded on practical applications of game theory. In fact, today things have come full circle, as state and municipal governments across the country are turning to gaming, in the form of resorts and casinos, to patch local economies that crumbled as the old “productive” industries dried up. Team play of Internet games has even become a lucrative spectator sport. The value of this market alone is expected to reach close to $2 billion by 2020.8

The answer is: we have them already.

Summary

There are hazards and pitfalls associated with gaming and gambling, as they are with every other human activity. A wide array of new opportunities has been opened to U.S. state governments as the old prohibition against legalizing sports betting finally falls.

Will it be possible to avoid most of the problems while reaping most of the benefits? The answer is absolutely yes. Tools and programs already exist to prevent the problems so often associated with gaming and gambling. Careful study has shown these tools and programs to be far less onerous than conventional wisdom would have it. In short, it can be done—mostly.
All it will take is some calm, intelligent planning with an eye toward the future. All it will take is for all of us to be on top of our game.


1     Roe v. Wade, 410 U.S. 113, 114, 93 S. Ct. 705, 708, 35 L. Ed. 2d 147 (1973),
2    Obergefell v. Hodges, 135 S. Ct. 2584, 2588, 192 L.
3     Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 523, 113 S. Ct. 2217, 2222, 124 L. Ed. 2d 472 (1993)
4     At the time of this writing, thirty US states have changed their laws to allow mmedicinal use of cannabis products; recreational use is allowed by Alaska, California, Colorado, the District of Columbia, Maine, Massachusetts, Oregon, and Washington state. Available at https://norml.org/laws (August 22, 2018)
5     “Social Costs of Problem Gambling” available at http://www2.gsu.edu/~psyjge/Fact/Economic%20impacts.pdf
6     Available at https://www.cdc.gov/features/costsofdrinking/index.html. It also kills about 80,000 people per year.
7     CDC – Fact Sheet – Economic Trends in Tobacco – Smoking & Tobacco. Available at https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ… /index.htm (August 22, 2018)

Mr. Owens is a California attorney specializing in the law of Internet and  interactive gaming  since 1998.  Co-author of INTERNET GAMING LAW with Professor Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Comments/inquiries welcome at  mowens@trade-attorney.com.

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