MY STANCE ON GAMBLING

MY STANCE ON GAMBLING

For years I have been ambivalent about gambling. My libertarian inclination is that individuals should be free to spend their money as they wish, even if I think it is foolishly. My humanitarian inclination is that society has some responsibility to inhibit dangerous or foolish acts.

Locally the provincial government is allowing, even encouraging, an expansion in casino gambling and is directly operating its own lottery system. Is there morality involved? If so, then where do I stand?

I do not believe it to be a moral issue. Gambling does not directly harm anyone.

Should gambling of all forms be free of all government restraint and regulation?
I think not.

Some politicians and social activists describe gambling, and in particular casino gambling as a "tax on the poor". I do not think that conveys an accurate view although a "tax on the foolish" is closer. If the poor gamble more than the rich it is because, in general, they are less educated. As for foolishness; is it more foolish to risk your money gambling or risk you life in dangerous adventures or sports?

I believe government should not be directly involved in gambling. It is an activity that warrants a degree of regulation. The conflict of interest is unacceptable if the government both operates and regulates.

So let gamblers gamble and the dens of such activity operate.

As for the regulatory role of government I do not advocate a laissez faire stance. There is a role for government and that is enforcing transparency and honesty in advertising. I give some specific examples.

Just as the government enforces uniform measures of weight, distance, and temperature; a proper role is to specify a uniform measures of gambling risk. I advocate the measure "expected value". Expected value is the average payoff from an identified game of chance.

Gambles on a fair coin have an expected value of 1. Betting $10 consistently over time would leave the gambler walking away with $10.

A gamble with odds of winning of 5 in 100 would have an expected value of .05. A bet of $100 at those odds done consistently over time would leave the gambler walking away with $5.

A fair government regulation would require that each game have a clear posting of expected value. A $5 slot machine would post, for example, "this $5 slot machine pays out expected value $3".

A casino may be required to have a large marquee posting the weighted average expected value of the various games weighted by the present level of play. "This casino has an expected value of $60 for each $100 spent".

It is also appropriate for the government to be involved in educational activities that benefit its citizens. Just as the government promotes knowledge of nutrition and health it can promote financial literacy.

If individuals knowingly walk into a casino to spend $100 and knowingly walk out with $60 on average they may still prefer the $40 net cost to attending 3 movies or any other $40 entertainment or excitement.

The next big question is whether the government should levy special taxes on gambling establishments. My view is that there should be a business tax designed to cover all costs of enforcing regulations and promoting financial and expected value literacy. The government should not profit directly from the profit of the gambling establishment beyond the normal income tax. To receive a direct cut of the action creates a conflict of interest.