Don't bet on online gambling

Headlines aren't supposed to be in the imperative mood, telling readers what to do. But in this case, I think it's appropriate. Online gambling in many US states has become a multibillion-dollar industry. While many people can control their gambling, others can't. And the ones who can't are suffering, along with their families and friends.

Full disclosure: I don't personally gamble, I have little interest in sports, and my state of residence (Texas) does not allow sports gambling, either in person or online. So mine is definitely an outsider's viewpoint, but perhaps that can make me more objective.

In 1992, the US Congress passed the Professional and Amateur Sports Protection Act (PASPA), which prohibited sports gambling in all US states and territories, with some minor exceptions. Over the next decade, individual states where gambling was popular, notably New Jersey, mounted legal challenges to the act, and in 2018, the Supreme Court ruled that it was an unconstitutional violation of states' rights, citing the Tenth Amendment to the Constitution.

This opened the door for individual states to allow sports gambling, and so far, about half of them have in one form or another.

In the time PASPA was in force, the United Kingdom legalised sports betting and became one of the early hotspots for online gambling with the advent of smartphones. According to an article in the Financial Times, in recent years, a spate of bad publicity and suicides related to gambling addiction has led to a crackdown on online gambling. Since 2017, UK online gambling organisations have paid about $240 million in fines to that country's gambling regulatory agency.


Like any addiction, online gambling is easy to fall into and hard to escape the clutches of. The Financial Times article tells the story of 22-year-old Dylan, a New Jersey lawyer in training who recently confessed to his family that he had spent over $50,000 in mostly online bets. He is currently attending Gamblers Anonymous and hopes to free himself from his addiction, but unless he divests himself of his cell phone and stays away from computers, the means to resume it will always be literally at hand.

Ethically speaking, gambling is an activity in which one person — the gambler — risks something of value, and another person or entity, which we will call "the house", profits from the gambler's risks, on average over time. Gambling is distinguished from stealing because, presumably, the gambler receives something of value from the activity.

And unlike armed robbery, whose victims generally have no choice in the matter, nobody is obliged to gamble. In this regard, a libertarian would, in principle, oppose any attempts to regulate gambling, saying that unless some third party is harmed by the transaction, the gambler and the house should be left alone.

There is also the argument that casinos and other forms of gambling benefit certain communities. This was the idea behind allowing certain Indian tribes to run casinos in the US. While nobody can deny that such things make money, I can't shake an uneasy feeling that basing a particular cultural group's economic viability on such a foundation is not in the best interests of the group, or their customers either, for that matter.


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And gambling doesn't take money from all socioeconomic groups equally, either. Many studies have shown that gambling revenues are regressive, in the sense that most of the money comes from the poorer segments of the population — those who can least afford it, in other words. The libertarian would come along and say, "Well, if those folks choose to spend their money that way, it's their choice, and who are you to interfere?"

One way to look at an economic activity is to ask what would happen if a whole lot of people tried to make money that way. I'm not a trained economist, but it's worth a try, anyway. Clearly, gambling is a parasite on any economy worthy of the name. If everybody tried to make money by gambling, no one would have any time left to do anything productive. The economy would devolve into the equivalent of prisoners playing pinochle for toothpicks. It might pass the time, but it's not going to put food in anyone's mouth or make anything useful.

Wager not

Granted, we are not in imminent danger of turning into a nation of 24-hour gamblers. But online gambling is particularly pernicious because it produces a complete geographic separation between the gambler and where his or her money ultimately ends up. In a friendly office football pool, you at least know the people who end up with your money if you lose. Betting on your football team online may enrich some executives in the Cayman Islands, but it's a net loss to your neighbourhood.

Of course, many states (including Texas) run lotteries, which is a sort of gambling monopoly exercised by the state involved. And because I teach at a state university, some portion of my paycheck could probably be traced to revenues from the state lottery. I wish it were otherwise, because I disapprove of gambling in general, but not so much that I'm going to quit my job over it. This is really just an example of how an industry can co-opt government into benefiting from its operations, even if, on balance, those operations are harmful to the public.

It's interesting that Richard Daynard, who is a professor of law at Northeastern University, is now looking into filing a class-action lawsuit against online gambling outfits, claiming that their advertisements are misleading and that they encourage problem gamblers to go deeper into their addiction.

The online betting industry had better pay attention to what Prof. Daynard is doing, because he was one of the prime movers behind the giant settlement with the tobacco industry that took $200 billion out of their collective hides for deceptive advertising. After that lawsuit, you didn't see any more ads with doctors in white coats saying how healthy X cigarette was for you. So, if you're invested in online gambling, you might try to find some other way to make money — or lose it.

Karl D. Stephan is a professor of electrical engineering at Texas State University in San Marcos, Texas. This article has been republished, with permission, from his blog Engineering Ethics, which is a MercatorNet partner site. His ebook Ethical and Otherwise: Engineering In the Headlines is available in Kindle format and also in the iTunes store.

Image: Pexels


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