Sunday, December 20, 2009

Should People on Welfare Be Allowed To Gamble?

Channel News Asia has a very interesting story regarding Singapore's upcoming casinos. There will be very strict regulations in place regarding the admission of prohibited persons. What will happen is that casinos will face penalties for admission of barred persons that could be as much as $1 million Singapore dollars or even the loss of the casino license. Other jurisdictions have policies and regulations regarding problem gamblers, forbidden persons and the like. Singapore is breaking new ground with what is called "third party exclusion orders."

What this means is that an outside party (like a government) is mandating certain persons to be excluded. Obviously known cheats or criminals would be normal persons subjected to a third party exclusion. In Singapore's case, the National Council on Problem Gambling is excluding people that don't fall in these obvious categories. They are excluding those that have undischarged bankruptcies and those on public assistance. This is a great idea. Why should deadbeats and welfare recipients be allowed to patronize casinos? They should be either paying their debts or getting a job, respectively.

This is something that should be implemented in the US but won't. Casinos want business and will scream if the states pushed this regulation on them but exempted state lotteries. Lotteries typically are played by lower income groups, many of which are on public assistance. People on welfare or disability really shouldn't be spending the money they get from taxpayers on gambling. Singapore, even though they are a small country, have a whole lot of common sense.

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Sunday, December 13, 2009

NBA Commissioner Stern Sees Possibility of Expanded Betting on NBA Games

There has been a crack in the stance in the unified public front of the sports leagues in the US regarding betting on professional games. It should be huge news, but so far there is little significant reverberations of this disclosure. I'm guessing the Tiger Woods story has quite a bit to do with that.

Back to the much more positive sports gambling story. Ian Thomsen's Inside the NBA column leads with an interview with NBA Commissioner David Stern. One of the interview topics was the question of expanded legal sports betting given the Tim Donaghy betting scandal. Donaghy was a NBA referee that was investigated for betting on NBA games as well as perhaps directly influencing the games he was officiating. Another post discussing the Donaghy scandal is here.

In response to the question if sports leagues need to reevaluate their positions with regard to sports betting, Stern gave a very interesting answer. "The betting issues are actually going to become more intense as states in the U.S. and governments in the world decide that the answers to all of their monetary shortfalls are the tax that is gambling."

Saturday, December 5, 2009

UIGEA Hearing Held

The House Financial Services Committee held an informational hearing on HR 2267, a bill that would partially repeal the Unlawful Internet Gambling and Enforcement Act (UIGEA), and would license and regulate some forms of internet gambling. The report from Information Week on the hearing discussed testimony that stated both pro an con positions. What is important to note is the difference in the stature and quality of the opposing testimony. I'll give two examples of each.

On the pro side, there was the executive chairman of, a leading online gambling company based here in the US. Yes, you read correctly, there are companies engaged in online gambling right here, right now, in the US. handles online betting on horse racing, which is LEGAL in the US. This executive, Michael Broadsky, explained that technology that can properly regulate online wagering in the US exists today. That is obvious because how could this company process hundreds of millions of dollars per year in online wagers if the technology was insufficient?

The other cited example of pro testimony was the presentation of Professor Malcolm Sparrow of Harvard. He states, "combining a thoughtful regulatory scheme with education, technology tools, and support appears to be the most effective means of handling the realities and risks of online gambling," and "consumers in the United States would be better protected than they are now."

As opposed to the fact-based information provided by the pro-regulated internet gambling witnesses, the information provided by the anti-internet gambling witnesses was non-evidence based opinion and hyperbole.

The first example of this was provided by the head of the Morongo Band of Mission Indians, Robert Martin. Martin testified, "the legislation will do nothing but legalize off-shore gaming.” He further testified that this legalization would be at the expense of the "thousands of people" employed by tribal casinos. That sounds fine, at first, but his statement is false. You see, although offshore gambling firms may want to be licensed, the proposed legislation would mandate US-based facilities. US-based facilities imply US-based jobs, so Martin's opinion is only important if you care only about tribes, and not America as a whole.

There is more to the Morongo's position that you should know about. His tribe recently tried themselves to get ONLINE POKER LEGALIZED IN CALIFORNIA. So, within a few months, this tribe tries to get online poker legalized and then turns around and claims that online gambling should not be legalized and regulated. How does that make sense? It does if you are focused only on protecting your monopoly and not wanting competition.

At the Global Gaming Expo, some panel discussions regarding the online poker legislation in California implied that the proponents may have had a bill not well thought out...or was crafted too much to benefit a particular tribe or tribes. If that is the case, then the testimony is self-serving, not providing good data to provide informed decisions. I don't think tribes have a problem wanting legislative advantages at the expense of non-tribal casinos... Overall, this testimony isn't very helpful or credible. The story describing this in more detail is here.

The other anti-online gambling testimony of note was from the FBI. It is of note because of its stupidity. Quoting from the Bloomberg story:

"'There are several ways to cheat at online poker, none of which are legal,' Shawn Henry, assistant director for the FBI’s cyber division, wrote in a letter to Representative Spencer Bachus of Alabama."

"'Technology exists to manipulate online poker games in that it would only take two or three players working in unison to defeat the other players who are not part of the team,' Henry wrote. 'The online poker vendors could detect this activity and put in place safeguards to discourage cheating, although it is unclear what the incentive would be for the vendor.'"

Think about the genius that said this. There are ways to cheat at online poker and none of these ways are legal. As if there were LEGAL ways to cheat at online poker? You would think the word "cheat" would be a tipoff to the FBI? With mental giants like this fighting crime, I know I can sleep well at night. The FBI stated right after this that there were technology solutions that could detect and defeat cheating, so what's their point? However, they then claimed that they didn't know what the incentive for operators to implement these safeguards. They REALLY can't be this stupid, can they? Obviously, they are.

Let me help state the incentive since the FBI isn't bright enough to figure it out. Gambling operators can't survive if customers don't think the games are fair. Gamblers may win or lose, but they require fairly-run games. An online poker operator that is viewed as having unfair and manipulated games won't have customers and will be out of business. For the FBI to make this kind of statement is so vacant of logic that it is hard to believe that they have fallen this far with regard to talent.

Overall, the trend is that online gambling will be legalized and regulated in the next few years, with the exception of sports betting. My opinion is that all gambling should be legalized, but that will not happen. Poker will likely be legalized first, then other casino games. Sports betting will be legalized last. With the estimates of illegal sports betting being as high as $380 billion per year, it makes no sense to benefit offshore sportsbooks and illegal bookies by keeping this illegal. Now if the Morongo tribe wanted to make a cogent point, they could claim that keeping sports betting illegal benefits offshore operators. That would make sense.

For those interested in the topic, another article on the fallacy of prohibition can be found here.

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