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I Have No Clue What (Illegal) Gambling is Anymore

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There was a time when I thought I knew was legal and illegal gambling was. Now, I have no clue. It's fine if I'm clueless (I'm used to it), but it seems like the rest of American and even the courts are unsure. That's a problem.

We can't obey the rules if we can't even agree what they are.

The reason why this all changed seems to be Daily Fantasy Sports (DFS) websites like DraftKings and FanDuel. John Oliver explains them (and the situation) in hilarious fashion here:

Before Oliver's great video I wrote about DraftKings and FanDuel.

The confusion comes about in that there's a carve-out of some federal gambling law (2006 Unlawful Internet Gaming Enforcement Act) that allows for fantasy sports. The idea was to enable your office to run a March Madness bracket.

Here's a rundown from that previous article of what I think I understand about gambling.

That description makes it sound like a lottery right? You put in some money and some event churns out a winner who receives the bulk of it, with a sizable portion siphoned off for the lottery operator. Except that companies can't operate lotteries. State laws vary, but almost all of them frown on that. The states make an exception for a few operations that give the operating back to the state to fund infrastructure.

What's the difference? Law is just a passing interest of mine, but it seems to whether it is a game of luck or a game of skill. Games of luck are "bad." Games of skill are "maybe okay?"

State lotteries are quite clearly games of luck. Anyone trying to claim they know which way the ping-pong balls are going to bounce is simply nuts...

This has always been interesting to me. I don't understand why regulators would draw a line in the sand between luck and skill. It opens up a ton of issues. There are many, many cases where gambling is a combination of luck and skill.

Let's take some casino games for example. Roulette seems to fall under luck. As a (rare) craps player, I'd say there's some skill in making bets that gives the house the least advantage. Many argue that if you can count cards, you can even beat the house at '21'. I'd say that counting cards is a skill and thus I could be justified in opening a '21' casino. Of course poker is the most obvious example. The cards you are dealt are luck, but the decisions you make after that are firmly in the skill category.

Staff writer Kosmo made a better, more succinct point:

Horse racing is unequivocally gambling, but it's clearly not a game of pure chance. Someone who has expert knowledge is going to do far better (over the long run) betting the horses than I will. Daily Fantasy Sports is basically betting the horses, but swapping out humans for the horses.

There have been questions for some time about the legality of Daily Fantasy Sports, but they sure seem legitimate when you read the companies that have taken investments in the companies. (John Oliver points this out in his video well.)

I'm left to wonder about all other gambling. Using the casino logic above (and the fact that casinos themselves are legal in many, many states), it seems that gambling websites such as Guts would be legal too.

It seems like at some point we need a bright line to know what is illegal gambling and what is legal gambling. I'm not convinced that the difference between skill and luck is where that line should be. Maybe you can say that if anything is 100% luck it is gambling, but even then lotteries are legal, so you can't call them illegal gambling.

This is one of the few areas where my gut isn't telling me what is right and what is wrong. I like for people to have freedom of choice to spend their money on the entertainment they want. At the same time, I like to protect consumers from potentially harmful addictive behaviors whenever possible.

So I leave it to the readers? What do you think?

Posted on February 11, 2016.

This post deals with:

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Gambling

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One Response to “I Have No Clue What (Illegal) Gambling is Anymore”

  1. Geoff says:

    First I would like to thank you for writing this article, as I was completely bewildered when I first heard about these websites and how they were escaping the law.

    I was a big fan of online poker for a long time even though I knew there were some shady dealings with where they were being incorporated, and how they were transferring money around the world so that it would be harder for the government to track exactly what is going on. I am a firm believer in people making decisions for themselves (excluding obvious handicaps), and therefore gambling should be legal everywhere as it is not an activity that forces people to engage. It is just as easy for someone to say no (technically) as it is for them to say yes to gambling. The other reason for why I think gambling should be legal is because you can’t stop people from doing it. There will always be a way for someone to gamble (Lottery, house games, tournaments, etc.). When I am in the bowling alley at night there are always people who are willing to bet, and there are also weekly underground tournaments where thousands of dollars are being put up for grabs. Needless to say where there is a will, there is a way.

    I understand there are some holes in my arguments. How do you define a handicap that should prevent someone from being allowed to gamble? (Probably a 5,000 page document that would have to be submitted through 30 committees). Also, just because there is always a way to gamble doesn’t mean we should allow all of it. I get that…its just my opinion to not waste so much energy fighting something that can’t be stopped, and regularly stimulates our local and federal governments. (It seems ridiculous to spend so much time and energy regulating while we are engaging in that very activity with lotteries).

    This brings me back to my main point, which was doing research and finding that weird law which helped to shut down poker sites. There is absolutely no difference in poker versus fantasy duel. You will have a minimum bet, the house will collect a small portion for hosting the event, and the winner will take the losers money. That’s exactly how both sites are run with some extra complicated structuring for how to bet mixed into the middle (Note I used the term betting pertaining to both games). So then why has fantasy continued to be legal after the big shut down of poker? It seems pretty evident that it is all about the money as John Oliver talks about in his video, and has nothing to do with principles. These major corporations, and powerful figures have a lot at stake with these websites and they are reeling in an outrageous amount of money. It is not hard for them to garner a little government influence to look the other way, and continue to win big. This is a trademark relationship to the largest MLM’s and their “buying power” of the Republican Party and other powerful government related right wing groups.

    My initial prediction was that Fantasy sites would be shut down in a week, but I quickly realized they never would’ve been started without some shady background investments. There lies my final opinion, and that the money will keep rolling in until there isn’t any left.

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