Powerball, Government & Gambling: The Ultimate Hypocrisy
Jan. 12, 2016 (Mimesis Law) — The Powerball jackpot is now over a billion dollars. Fantasy sports betting sites are spending more than that on advertising. Gambling is everywhere. It’s either a scourge on society or a great way to raise money. It just depends on who is sponsoring it, and more importantly, who is profiting from it.
Gambling is big business in America. In the last 25 years or so, Nevada (where sports gambling is legal) has taken almost 25 billion dollars in sports bets. The American casino industry is worth nearly 240 billion dollars.
The amount illegally bet is even higher. The American Gaming Association, a trade group that lobbies for the casino industry, estimated there would be close to 100 billion dollars bet illegally during the most recent college and professional football seasons. The American Gaming Association is a biased group, charged with protecting an extremely profitable industry. But even allowing for some exaggeration, there is a boatload of money being spent in America on gambling.
And now the government has gotten in on it.
Most states have laws against gambling. The federal government outlaws gambling operations of a certain size. It also outlaws the use of a telephone to aid illegal gambling. Based on the number of people walking around with their eyes stuck to their phones, any law involving the use of a phone basically covers anybody and everybody.
Why does this matter? Why should you care? Because laws against gambling are the most hypocritical thing the government does. South Carolina, for example, has been through a number of high profile showdowns over legalized gambling in the last quarter century. The motivation behind those clashes reveals the utter hypocrisy of gambling laws.
In 1999, video poker was a booming industry in South Carolina. Worth billions, the industry had money to spend, and spent it in a failed bid to stay alive. A legal miscalculation put the industry in front of the South Carolina Supreme Court, where it was doomed. This is the same court that not long ago refused to allow any poker games in the state.
Most gambling opponents oppose it on moral grounds. Arguing it is a destructive social force, they invoke images of poor people, addicted to gambling, spending everything they have on the thrill of the wager. Back in 1999, the New York Times reported:
Business leaders have said poker is destroying South Carolina’s image, and many people have been galvanized by the sight of impoverished poker players feeding money into the machines.
Nothing has changed. Just a few years ago, creative businessmen attempted to revive the video poker industry by presenting it as contests related to the purchase of products, much like the famous McDonalds Monopoly game. Not a bad idea, since you can clearly go to McDonalds when the game is going on, buy a product with a game piece, and win big money. Sounds a lot like gambling. But McDonalds has not been the target of law enforcement. The resurging video poker industry was, though. It was stopped in its tracks after being targeted by the South Carolina Law Enforcement Division and the South Carolina Attorney General’s Office.
Lest you think this is the product of some rural southern Bible-belt state on a moral crusade to save souls, South Carolina is not the only state to target gambling. New York, which is not a rural southern Bible-belt state, has recently fired a shot across the bow of the latest incarnation of sports betting, the fantasy sports league.
If you work in an office, or log on to Facebook from September to February, or have a friend, you have heard of fantasy football leagues. A bunch of people get together, pick professional football players for their “teams,” and score points based on those players’ performances. The leagues are often played for fun, but usually with some type of pot going to the winner at the end of the season.
As technology becomes more and more a part of our daily lives, some clever folks decided to put leagues like these on a website, charge people money to play, and award frequent prizes. Those leagues have exploded recently.
New York’s Attorney General, Eric Schneiderman, has decided this is illegal gambling and has gone after the fantasy sports leagues in an attempt to shut them down. Schneiderman wrote a column in the New York Daily News, explaining his reasoning:
Like online poker, daily fantasy sports rely on a steady stream of “minnows” to feed the “sharks.” That’s why more than 89% of one site’s players are losers, despite seemingly endless TV ads promising easy money. This doesn’t bear on the question of whether daily fantasy sports is legal — but it is a reminder that laws against gambling are more than just the whims of the state.
See? It’s not just the whim of the state that leads to gambling laws. The state is protecting you from predatory businesses. “I’m from the government and I’m here to help.” Schneiderman is out to protect the people of New York:
Daily fantasy sports may be a particularly pernicious form of illegal gambling precisely because it is so easy to access. Players can lose lots of money with a few touches on their smartphone — any time, any place, drunk or sober.
This is the driving force behind most gambling laws; an attempt to protect the people from the evils of gambling addiction and even fraud. Sounds noble, until you try to reconcile the fact you can walk in to just about any store in the country and buy lottery tickets. And those lotteries are almost always sponsored by the state. The very state that wants to protect you from the evils of gambling is more than happy to let you gamble, as long as it runs the betting books.
The Washington Post did an interesting piece on the huge Powerball jackpot. It talks about how people who play the lottery are optimists, seeking the fun of a big win, even if it is impossible. You know what that fun is also called? The thrill of gambling. It’s exactly why those daily fantasy sports sites are so popular.
Recent studies have found many people are not playing the lottery for the thrill of gambling. Poor people are playing it to make money. The lottery is aggressively marketed in their neighborhoods and the states gladly take their money. A very disproportionate number of households with the lowest income are spending the most on lotteries. And no matter how fun it might be to gamble, we know what is happening with those wagers. They are losing.
The government’s relentless targeting of gambling is not too hard to reconcile with its equally relentless promotion of huge lottery contests. Its protectionism, plain and simple. Having gotten a piece of the action, now the states want to make sure no one else gets their hands in the pot.