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.

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."

To the direct question if it is in the best interest of the NBA to legalize sports betting, Stern made the following quotes:

"It has been a matter of league policy to answer that question, 'No,' " he said. "But I think that that league policy was formulated at a time when gambling was far less widespread -- even legally."

"Considering the fact that so many state governments -- probably between 40 and 50 -- don't consider it immoral, I don't think that anyone [else] should...It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it's now a matter of national policy: Gambling is good."

"So we have morphed considerably in our corporate view where we say, Look, Las Vegas is not evil. Las Vegas is a vacation and destination resort, and they have sports gambling and, in fact, there's a federal statute that gives them a monopoly of types [on sports betting]. And we actually supported that statute back in '92."

"But it's fair enough that we have moved to a point where that leap is a possibility, although that's not our current position."

This is news. The NBA Commissioner recognizes times have changed, the public is gambling on sports regardless of legality and that governments have embraced gambling as no longer evil and as a source of revenue. He didn't go so far as to officially change the position of the NBA, but in my opinion, the leagues need to move in small steps. The NBA is more forward thinking than the other sports leagues, by allowing an owner of an NBA team to own a Las Vegas casino and offer sports bets as well as have the NBA All-Star game in Las Vegas. It would not be a surprise for me that the other sports leagues would prefer to have the NBA take the lead on this, with them following, without having to break the ice themselves.

In the interview, Stern stated that he didn't want the NBA to turn into a point-spread league (like the NFL). So, probably those kind of bet types is something that is giving the NBA pause with moving their positioning further. There are bet types available that could provide wagering on games, but avoid the issues with potential point shaving.

The first kind is betting on player performances similar to fantasy sports. The NBA sponsors fantasy games already, so this wouldn't be a stretch. The NBA could leverage YouGaming's patented concept of pari-mutuel fantasy wagering. This would allow win place and show betting, exactas, trifectas, etc., with regard to the statistics of NBA players. This kind of wagering doesn't involve the outcomes of any games. It would be very difficult to manipulate this kind of wagering as there would be so many variables to manipulate to get a certain outcome that it would be next to impossible. Also, since it is pari-mutuel, the more wagered on a particular option actually reduces the payout, which is a barrier to those who may want to wager large amounts on a particular option and reap huge odds. Another advantage to a wagering operator with pari-mutuel is that the operator gets their profit off the top, with the winners splitting the rest. A pari-mutuel system avoids the potential for loss which can happen with traditional bookmaking. The final advantage to this option is that it is patented, which can offer the NBA the ability to more actively control this kind of wagering in the US as patent law can be leveraged to shut down unauthorized wagering venues from being accessed from inside the US.

With regard to wagering on games, bets on a money line could be offered, avoiding point spreads. The operator will still have to ensure that the proper lines are set to obtain equal wagering on both sides, but there isn't a worry about by how many points a team wins.

A second option does involve total points, but in a different way than just a straight point total, which can be more easily manipulated. What might be offered is a point total option that pays out if the total is above a certain total or below a certain total, but loses in the middle. For example, let's say for a game the estimate is that a total of 180 points would be scored by both teams. Today, the total of 180 is offered as an over/under, which means you could wager on either choice, that more than 180 points are scored or less than 180 points are scored. This kind of wager was the wager exploited in the recent scandal.

What could be offered is a wager that would pay if the total exceeded, 187 or was less than 173. If the total points scored was between 173 and 187, the bet would lose. Maybe you set the lose spread a bit tighter to get more action, but you see the concept. If you set the spread tighter, maybe you can offer an option that paid if the total fell within a certain range, in the current example, the bet wins if the total points scored are within the range of 177 to 183 points. I think the best approach would be to explore the first range bet option first and then see how accurate the line setters are before offering the second option.

In both of the previous cases, there could be bet limits to satisfy the desire for wagering but not allow whales to wager huge amounts. Depending on the amount of risk desired, perhaps an upper limit of $1,000 per game. For the pari-mutuel fantasy option, since the operator cut is off the top, wagering limits aren't as necessary and probably aren't desired.

Again, the original SI story is at this link. Read more: http://sportsillustrated.cnn.com/2009/writers/ian_thomsen/12/11/weekly.countdown/index.html#ixzz0ZbchHIGb

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 Youbet.com, 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. Youbet.com 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.