Another anti-gambling editorial

Another week, another smug, alarmist anti-online gambling editorial, this time from the Christian Science Monitor:

Fresh from fixing Wall Street’s casinolike ways in high finance, Congress begins work Tuesday on a bill to overturn a 2006 law banning Internet gambling in the US. The measure is being rushed through the House Financial Services Committee on a promise that it would create 30,000 jobs and billions in tax revenue.

via Bill to legalize Internet gambling: No dice –

I dare you to click through and read the whole thing–it’s short and really all over the place. Let me point out a few of what I believe are misconceptions or exaggerations

1. “a promise that it would create 30,000 jobs and billions in tax revenue”
I’ve said before that most of the projections I’ve seen seem to be to be way too optimistic. I’d really like to see the math behind these numbers, because to me it doesn’t make sense.

2. “Any parent who’s puzzled or despaired over their child’s trancelike playing of video games during the past 20 years can readily see why Internet gambling operators are drooling over the chance…”
In other words, adults shouldn’t be allowed to choose whether to gamble online or not, because children are incapable of not playing video games. So does that mean we’re all children when it comes to gambling, or just gambling on computers?

3. “It’s ‘click the mouse, lose your house.’”
Great, Professor Kindt came up with a rhyming catch-phrase to go up there with “If it doesn’t fit, you must acquit.” But does this make sense? Is it inevitable that everyone who gambles online will lose their house? A few thousand online poker players would say no.

Here’s the general problem with the editorial: it assumes that the worst will definitely happen. It doesn’t take much thought to reduce this to the absurdity that it is. Over a hundred people will probably lose their lives in auto accidents across the United States today (source here). Does that mean we should all stop driving? Someone returning to the United States from abroad will smuggle drugs into the country today–should we close our borders and ban all travel to prevent this? Again, most people would say no. In short, you can’t make rules for society that assume that the worst will always happen. Otherwise, you’ll end up with the most repressive regime the world has ever known.

Now, that’s not to say that the editorial doesn’t made some good points. Which leads toP:

4. I have no idea how the government could squeeze $42 billion in tax revenue out of online gaming. Right now, Americans only gamble about $90 billion a year. Let’s say that online gaming increases the total national wager by 10%, or $9 billion. What do you think the tax rate should be? Even if it was 50%, you’d only be getting $4.5 billion a year, which is a lot of money for most of us, but not much where the federal budget is concerned; I’d guess that much of that would be split with the states as well.

5. We also should take a serious look at state versus federal regulation of gambling. I’m not sure a federal solution would ultimately be in the best interests of any of us, from taxpayers to gamblers to the industry. Interstate horse-race simulcasting provides one model of states cooperating to split gambling revenues, and this approach should be given more consideration.

It’s possible, however, to debate the merits and mechanics of expanding legal gambling without resorting to “click your mouse, lose your house” reductionism and blatant scare-mongering.

Anti-casino rhetoric

This Patriot-Ledger editorial–from which I’ve excerpted a tiny slice–says a great deal about how public debates about casino gambling are structured. Why not use innuendo and guilt by association, if you can’t find numbers to back you up?

If BP had come here peddling an offshore oil well, the company would have been hooted out of town. Yet a business not so different from BP – that is, one in which gargantuan profits and toxic side effects are guaranteed and the consumer is nothing but a pawn – has finally suckered Massachusetts lawmakers into taking the plunge.

via JoANN FITZPATRICK: Slick gambling plan promises huge profits and toxic side effects to match – Quincy, MA – The Patriot Ledger.

It’s incredible to me that someone would argue with a straight face that “toxic side effects are guaranteed” with offshore oil drilling, like the Deepwater Horizon explosion and resulting leak were somehow part of the plan. Granted, the capping and clean-up’s been a tragedy of errors, but I’m not entirely sure that this was intended. And tying casino gambling to current whipping-boy BP is just a lazy way of saying, “I don’t like gambling” without explaining exactly why you don’t like it.

My favorite part of that little excerpt, though, is the “gargantuan profits” line–as if running a profitable business were somehow in and of itself some sort of a public obscenity. And plenty of people in Las Vegas would argue with the idea that opening a casino is somehow a patent to unlimited wealth. Within the past few weeks, the crisis at Reno’s Siena has given the lie to that idea.

Basically, Fitzpatrick’s arguing that Massachusetts shouldn’t legalize casinos because they’ll be successful. There’s certainly an argument to be made in the opposite direction, that with declining national revenues new casinos won’t be able to generate sufficient state revenues to make them worth the effort. I’m not saying that’s necessarily true, but it’s a valid line of argument, as opposed to “I don’t like casinos so I’ll compare them to BP.”

Andy Rooney takes on gambling

Part-time economist and full-time curmudgeon Andy Rooney trashed the gambling business in a recent 60 Minutes piece:

The thing that bothers me most about gambling is that people fritter away money so they don’t get to spend it on things that someone else has been paid to produce. Gambling produces nothing.

There’s only so much money in the world and if it’;s lost at a gambling table, it’s money that isn’t spent on things America makes. I mean who’s best for this country – a machinist at an automobile plant in Detroit or a blackjack dealer in Las Vegas?

The gambling casinos keep something like 20 percent of everything bet for themselves, so there’s no chance of anyone but the casinos winning over a period of time. They make billions – and where do the billions come from? They come from all of us because we’re the losers. I mean, suckers is what we are.

via Andy Rooney and the Gambling Business – 60 Minutes – CBS News.

The whole thing is weak; I’d like to see a debate between Rooney and, say Peter Collins on the subject. I thought I’d refute the three paragraphs I quoted just for fun, and to set the record straight.

1. “…people fritter away money so they don’t get to spend it on things that someone else has been paid to produce. Gambling produces nothing.”
Ever heard of a post-industrial economy? Since at least the 1960s, less and less “stuff” is being made in America as the country, for better or worse, shifts towards a service-based economy. More than two-thirds of the United States’ gross domestic product (67.8%) is produced by services; less than 20% comes from “things that someone else has been paid to produce.” Gambling “produces” as much as a movie theater or dog-walking service–Rooney, I assume, has no problem with either of those. The funny thing is that Rooney’s worked in television for decades, providing a service to millions of Sunday viewers. Does he think his life has been wasted because he wasn’t hammering steel ingots?

2. “There’s only so much money in the world and if it’s lost at a gambling table, it’s money that isn’t spent on things America makes. I mean who’s best for this country – a machinist at an automobile plant in Detroit or a blackjack dealer in Las Vegas?”
See point (1), with the added point that most of the “stuff” we buy isn’t made in America. By attracting about 5 million foreign tourists to Las Vegas, who left more than $840 million in gambling losses here (estimate based on 2009 LVCVA stats; probably lower than real number), I’d say that gambling is doing its part to lessen the trade deficit.

Rooney suggesting that a Detroit machinist is intrinsically better for America than a Las Vegas blackjack dealer is curious. Why does he think this? Is there something morally superior in making cars?

3. “The gambling casinos keep something like 20 percent of everything bet for themselves, so there’s no chance of anyone but the casinos winning over a period of time.”

Second half of the statement is true, but the first is wrong: casinos keep, on average, nowhere near 20 percent. If Rooney has a research staff, he should fire them, because they could have gotten the right number from the Center for Gaming Research’s website’s 2009 Nevada Gaming Win Summary.

The real totals for Nevada’s casinos in 2009 were:
Slot Machines: $6.8 billion revenue, with casinos keeping 6.10% of all money bet.
Table Games: $3.4 billion revenue, with casinos keeping 12.04% of all money bet.
Total gambling win was $10.3 billion, with casinos keeping 7.37% of all money bet.

Nevada casinos actually kept less than eight percent of everything bet, less than half of Rooney’s estimate.

I don’t have the data to back this up, but I’d suggest that Americans lost more than eight percent of what they’d “invested” in their financial portfolio’s last year. I can definitively say that if you took the money you paid for an investment property in Las Vegas in 2006 and put into video poker instead, you’d probably have done much better.

So there’s more emotion than reason in this outburst from Rooney. Not that you’d expect more from a guy who makes his living complaining about Lady Gaga and the decline in the quality of the funny papers, but like I said on Friday, if you don’t point out the real facts, bad facts become accepted as the truth.

Russian casinos closing

Casinos in most of Russia are about the close. From BBC News:

Gamblers in Moscow and other major Russian cities are placing their last bets ahead of a government ban on casinos and gaming halls.

A new law comes into effect at midnight, confining gambling to four regions far from the capital.

It bans gambling on the internet and at airports, supermarkets and other sites.

But critics say the move will leave more than 300,000 people without jobs and push the industry underground, amid a continuing economic crisis in Russia.

Unrealistic idea

The law was passed by the Russian parliament in 2006 and was the initiative of the then President Vladimir Putin, who is now serving as prime minister.

From 1 July, Russian gamblers will be restricted to specific zones in the Kaliningrad region by the Baltic Sea, the Primorye region in the Far East, Altai in Siberia and an area in the south spanning the Rostov and Krasnodar regions.

The dedicated gambling zones require massive investment, and critics argue that they are far from ready.

via BBC NEWS | Europe | Russian city gamblers last bets.

This might be the biggest rollback of a legal (though under-regulated) national gambling industry yet.

Not likely

This Christian Science Monitor editorial argues with some logic that gambling isn’t the best thing for the economy. But I think the last line is a bit utopian:

One bright spot in this deep recession is that gamblers might be saying "Enough" to the lure of easy money and calling it quits. States, too, should call it quits on lotteries and not peddle this vice.

Lottery’s lure lost |

I’d like to meet the state legislator who proposes eliminating the lottery and either cutting school budgets even further or raising taxes to offset the difference. It may very well be that, long term, funding would be better secured without a lottery, but I don’t think there’s a politician left who thinks past the next election.

See, for example: David Patterson’s formula for New York’s continued prosperity: more gambling in bars, restaurants, and racetracks!

Illegal Turkish casinos

Even though it seems like casino legalization is a steady wave sweeping across the planet, some nations have chosen to outlaw casinos. Turkey is one of those, though it appears that gambling is still flourishing. From

It is forbidden to open casinos in Turkey; however, casinos are abundant in Turkey. Only in Istanbul are casinos raided at a rate of one per day.

In the raids conducted by Istanbul police, around a thousand casinos have been uncovered, most of which had been spied on by hidden cameras. In these locations, 40 roulette tables, 25 blackjack tables and 3,800 people were caught. However, those taken in were released afterwards.

Around a thousand casinos have been uncovered in Istanbul, most of which serve special customers. Forty roulette tables, 25 blackjack tables and 3,800 people were seized in the raid.

It has been around 10 years since casinos’ doors were locked up. However, those who are fond of gambling and who used to prefer to go to Cyprus, are now starting to stay in the luxurious neighborhoods of Istanbul. Gambling was first continued in basements, but has since moved up to villas, residences and yachts. The casino scenes in “The Valley of Wolves” were shot at the Dalmaz Center, which opened eyes to the truth about casinos. The police have raided the Dalmaz Center six times, however those taken into custody were released every time. Within the last 3 years, in Istanbul police raids, around a thousand casino places have been uncovered, most of which, were spied on by hidden cameras. Forty roulette tables, 25 blackjack tables and 3,800 people were taken into custody, but were then released afterwards.

SABAH Newspaper English Edition – National – Casinos, forbidden but abundant

I’m not totally sure who was spying with the hidden cameras–the police, or the casino staff?

Russian casinos iced

Russia’s casino industry has seen explosive growth in the past few years, but things are changing. From the Miami Herald:

Garish or goofy or grim, Russia’s casinos and slot-machine halls are some of the most vivid testimony to communism’s collapse.

But, under legislation approved Wednesday by Russia’s lower house of parliament, the $6 billion industry is to be driven out of Moscow, St. Petersburg and most of the rest of Russia.

Once the bill is signed into law, gamblers will have only until mid-2009 to lay their bets in Russia’s major cities. After that they’ll have to go to a remote part of Siberia or three other regions distant from Moscow.

”These are repressive measures — essentially they amount to a ban,” said Yevgeny Kovtun, vice president of the Association of Gambling Businesses, which unites about 30 gaming companies.

With the exception of a drab national lottery, Soviet citizens had no outlet for their speculative urges. That changed with the arrival of capitalism: Neon-decked casinos sprouted in big cities — the exterior of one in Moscow looks like a steamship — some offering prizes of luxury cars or $1 million in cash. Slot-machine halls have appeared throughout the country, sometimes even next to schools.

Russia’s oil-driven economic upswing of recent years sent new cash to the gaming tables. But a public backlash has grown.

”This is a business based on vice. It brings no good,” said Vladimir Medinsky, deputy chairman of the parliament committee that drafted the legislation.

”It hasn’t been banned altogether, because it is a natural vice and should therefore be controlled,” he told The Associated Press.

Industry players say that while limitations are needed, a complete ban except for the gaming zones is harsh and could kill the industry. The restrictions, they say, assume Russians will be ready to jump on a plane and fly to the taiga — the sub-Arctic forest region — to make a bet.

”In the U.S. people know about Las Vegas from childhood, but in Russia gambling tourism doesn’t exist,” Kovtun said. “Before, a person would pop into a casino or slot-machine hall between the metro and his house. Now . . . the gaming companies will have to entice him to the Pacific coast.”

The zones, which are currently infrastructure-free wilderness, are located in the Altai region in Siberia, the Pacific coast region of Primorsky, the Kaliningrad area along the Baltic coast and an area in Russia’s south between Rostov and Krasnodar. | 12/21/2006 | Russia freezes gambling, sends it to Siberia

So we’re going to see Las Vegas in the Altai? Stranger things have happened. It will all boil down to infrastructure and marketing.

Russians veto casino bill

The Russian State Duma–their version of parliament–voted down a bill that would have created a new regulatory framework for Russian casinos. Existing regulation, it seems, is something of a slapdash affair. From RIA Novosti:

The bill’s doom does not mean gamblers and casino proprietors have several more years to enjoy the absence of related legislation, some happily drawing super-profits, others squandering their money, as before. The fate of the Russian gambling business is sealed, bill or no bill. Debates on the issue have been raging for years, with numerous arguments for and against. The State Duma discussed bills, one after another. Authorities took the hard line in some parts of the country. For example, all casinos and slot machine halls were closed within two days in Chechnya and North Ossetia. Now, President Vladimir Putin has issued a final verdict. He likened gambling to drug addiction and alcoholism in a public address, and offered the State Duma a bill of his own to fetter the vice.

Recent research by the Moscow Serbsky Psychiatry Institute produced some sensational revelations: gambling has become an obsession with more than two million Russians. Moscow, with its enormous number of slot machines, has 330,000 compulsive gamblers. The owner of just one slot machine makes an average profit of $10,000 per month. Gambling business tax returns have struck a seven billion ruble mark, roughly $260 million.

Many Russians hate gambling. State Duma member Vladimir Medinsky, author of one of the legislative amendment draft versions, went so far as to say concrete walls topped with barbed wire ought to be built round “casinos and other such filth” to keep young people and old-timers away. Another parliamentarian, Anatoly Aksakov, offered a package of Civil Code amendments envisaging incapacitation of gamblers.

The casino lobby fought back. The state regulation bill took so long to appear in parliament for its second reading partly due to a huge number of proposed amendments providing legal loopholes for proprietors to continue reaping their fabulous profits. Now, President Putin’s draft bill leaves no room for compromise. It envisages a complete ban on Internet gambling throughout Russia, and proposes to establish analogues of Las Vegas by 2009 – areas of legalized gambling under strict state control. As the presidential blueprint has it, there will be no more than four such gambler’s paradises in the entire country.

RIA Novosti – Opinion & analysis – Gambling to be exiled in Russia

I did an interview with NTV, a Russian TV channel, a week or so ago, and was struck at how anti-gambling the questions were. At one point, the reporter asked me whether gambling was “less uncivilized” in Las Vegas, now that all gamblers didn’t lose everything they had and blow their brains out (his words) at the tables.

I simply had to say that there was no record of a time when corpses littered the streets (as they would if all gamblers promptly suicided).

People have said that Macau was a den of iniquity before 2002, but from this story it seems that Moscow is the real 21st century Dodge City.

Acting addicted

I’m hardly one to make light of problem gambling, but this story is ridiculous. From Ananova:

Russian actors are being paid to pretend to be destitute beggars in a government scheme to discourage people from gambling.

They will tell passers-by how they were once rich executives who lost everything after becoming addicted to gambling.

Vladimir Platonov from Moscow city council said the plan would see the actors sent to stand outside casinos dressed as beggars.

The move comes as fears grow that the city could be overrun with gambling addicts after a recent ruling by the Moscow Supreme court overturned a law that casinos could only be built outside the city.

Under the scheme, which Moscow city officials claim is a world-first, actors will be selected at a special casting in front of a city council committee.

It is unclear how much the actors will be paid but it is thought they will be given at least the average monthly wage in Russia of £200 to work five evenings a week.

Some will even be given an instrument, such as an accordion, to turn the story into a sorrowful lament.

Ananova – Actors dress as tramps to fight gambling

There’s a range of things governments can do about problem gambling. They can ignore the problem. They can require casinos to post problem gambling helplines in their ads. They can mandate that casinos fund problem gambling programs. They can force casinos to institute “cooling off” periods by setting limits on playing time. Or they can just not legalize and regulate gaming industries.

Some of these things are of dubious constitutionality, and many would intrude on what most Americans would regard as their right to privacy. But they are far more sensible than the Moscow Plan, if it is more than the Russian equivalent of a bogus April Fool’s story (the one official quoted, Vladimir Platonov, apparently really is on the Moscow duma, but I have no other verification).

I just can’t imagine how someone could propose this with a straight face. I’m no problem gambling expert, but I’m reasonably confident that if we held a symposium of experts, public officials, and the general public and kept them pent up for 40 days and 40 nights, they’d never come up with anything this whacked out.

Hiring actors to protray gambling addicts? Lamenting the scourge of gambling while playing the accordian? If this happens, someone’s got to upload video.

Of course, you could just conduct a study of problem gambling prevalence, do outreach with at-risk groups, and attempt to raise awareness of available resources. But that isn’t nearly as effective as having extras play singing hobos, I’m sure.

Free Carruthers FAQ

With the closing of Bet On Sports’ American operations–and effectively its entire business (story here), it is clear that this case will be much different from the 2000 Jay Cohen trial.

Some in the media have expressed wonder at the “secret” website launched to support indicted former BOS CEO David Carruthers. As I said in an earlier post, nothing posted on the Internet is secret, but some things can be mysterious, enigmatic, or inexplicable.

The site’s webmaster has sent me an extensive Q & A that explains who he is (though it doesn’t reveal his “secret identity,” for reasons that seem plausible enough). Here it is:

Q: Who are you?

A: I’m an independent security consultant in the online gaming industry.

Q: Nationality?

A: British.

Q: Do you have any affiliation with BETonSPORTS Plc, David Carruthers, or
his legal team?

A: No. Unlike for example the now archived, is a completely independent effort.

I don’t own any stock in BETonSPORTS Plc either.

Q: Are you an ex-colleague of David’s? Did you work at Ladbrokes or
BETonSPORTS before or after its listing?

A: No. I have never met David but I, like many, wish him and his family well.

Q: Are you being supported by anyone financially or otherwise to do this?

A: No, I’m doing it completely under my own steam, and completely at my
cost both in time and money.

Q: Why are you doing this?

A: The David Carrruthers and Nigel Potter cases are indicative of the
complete failure of the Blair administration to stand up for the rights of
British citizens. The actions of certain ambitious District Attorneys in
the US are no less foul in their callous disregard for those people who’s
lives they destroy as a result of prosecutions like these, but it is the
passivity and inaction of the Blair administration that is the most

You have to draw a line in the sand about remaining silent in the face of
injustice. With the arrest of Carruthers and clear intention of Blair to
sell more British people down the river via the Extradition Act 2003
(evidenced by the NatWest Three’s recent plane ride to Texas) that line
was crossed.

You might say that I believe that one man can (and should) make a
difference. I hope to do so.

Q: Why won’t you tell the world more than your first name? What do you
have to hide?

A: The current US administration does not tolerate dissent, and I do not
wish my name to be on a watchlist when I travel, so that as happened with
David, when the passenger’s details are shipped off under the US-EU
Passenger Name Record agreement within 15 minutes of the plane taking off,
I do not receive what the US Administration deems appropriate ‘treatment’
when I land.

Q: Are you anti-American?

Not at all. I am a big proponent of the special relationship between the
UK and US, and the Anglosphere.

Q: What are your politics?

A: I am skeptical of all politicians, of left or right, in the UK or
elsewhere. People from the US in particular have let their politicians run
amok since 9/11/01 and to grab all kinds of power they should not have, in
the name of the so called ‘War on Terror’.

I wish more people from the US would watch Adam Curtis’ ‘The Power of
Nightmares’ and understand that unless restrained by sensible people,
“those with the darkest fears became the most powerful”, and cast that
shadow into the every day lives of everyone.

Q: Do you dislike journalists?

A: I dislike sloppy, lazy journalism, like Sharon Churcher’s article in
the Mail on Sunday about the BETonSPORTS case. Articles like that are the
reason why blogs are becoming far more trusted and frequently read than
the newspapers. Each time poor articles like that are published, the
reputation and influence of the fourth estate is further diminished. This
is not 1986.

Q: What do you think the main effects of the David Carruthers arrest have

A: Apart from hitting share prices, causing British CEOs to rethink their
travel plans and their ‘directors and officers’ insurance cover, the
arrest has caused two short-term effects;

The first was to ensure that other sports betting operations just got a
boost from all of the publicity regarding the case, and not just from the
‘ex’ customers of BETonSPORTS who currently haven’t a place to bet but
completely new customers too;

The second is that many US-facing sportsbook operations (such as
Sportingbet USA) have abruptly stopped taking telephone wagers, and are
moving their operations completely to Internet-only wagering platforms
such as Finsoft or SportsPulse. While there is no expectation that the US
‘Unlawful Internet Gambling Enforcement Act’ will pass the Senate, there
is a rightful concern that continuing to take telephone wagers now opens
operators to further prosecutions based on the 1961 US ‘Wire Act’.

Q: What about the future effects?

A: This is less clear, and depends on the Blair government getting its
collective thumb out of its posterior and standing up for its citizens for

Three good things the Blair administration has done in the last nine years
in office are making the Bank of England independent, liberalising the
alcohol licensing laws to permit 24hr drinking, and the Gambling Act 2005.

That they are now not standing up for British businesses who are prepared
to bring the government revenues under that Act by operating foreign
facing remote gaming sites is unbelievable.

Q: What is your vision for the FreeDavidCarruthers website?

A: I intend it to become a central rallying point for discussion of the
David Carruthers case and its injustice, the plight of UK businessmen
under the Extradition Act 2003, and the issue of online gambling and its
regulation in general.

Previously, I’d considered the Carruthers case chiefly in light of American online prohibition efforts, but it’s interesting to see how others in the world see it.