249 Comments
Mar 19, 2022Liked by Milan Singh

The setting for the finding that legalized gambling doesn’t reduce illegal gambling is the lottery. The current setting is legalized SPORTS betting. It seems much more plausible to me that legalized sports betting will reduce illegal sports betting in a much more significant way. “More plausible to me” is not the same thing as “true,” of course, but much of your argument seems to rest on the lack of illegal-to-legal substitution. I think there are good reasons to question whether the lottery finding is generalizeable to other types of gambling.

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Hmm. The state-run lotteries were designed in part to displace to *very* big and very illegal "numbers game", popular in urban settings across the nation. Daily betting, pick a number from 000 to 999. (Was this covered in "The Godfather"?)

https://www.nytimes.com/2019/02/27/nyregion/numbers-harlem-new-york-lottery.html

This is from the NY Times of April 1979:

https://www.nytimes.com/1980/04/07/archives/fooling-with-numbers.html?searchResultPosition=1

"New York State has a new entry in the field of legalized gambling. Arguing that a state-sanctioned lottery would cut into the lucrative illegal numbers racket, legislators have approved a game where gamblers will try to pick a number from 000 to 999."

The illegal-to-legal transition would have been taking place in the 80s in NYC. Weekly drawings and HUGE payoffs didn't have notable illegal counterparts, I'd bet.

Bonus Factoid: Gen. Colin Powell's dad bought the family home in the mid-1950s after hitting the numbers. Might be apocryphal.

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Hard agree with this. I don't have the numbers, but I can't imagine that the lottery made up a large part of illegal gambling, if there were even illegal lotteries at all.

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There were the numbers rackets, those were akin to lotteries as I understand it and were very big money.

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Milan, I genuinely applaud your willingness to put your ideas out here to the SB crowd, even if they give you crap about them.

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That's very kind. This is the internet. Are you allowed to do that?

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Breakin the law

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Adding to what you said about people giving crap: I’m sorry to be rude but I have to say many of the pro-gambling comments on this post are appallingly bad. Is that because libertarians tend to be so predictable, or is it that the A team doesn’t comment as much on weekends?

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One unexpected downside of gambling being illegal is that it makes prediction markets illegal. AFAIK they are the most promising way we have of predicting the future, so that’s a shame.

More broadly, arguably betting is good for epistemic health; it’s more expensive to believe crazy things if you put money on your beliefs. These are somewhat niche considerations, but IMO that just goes to show that banning things has unpredictable costs.

More broadly: I’m too libertarian to accept this case for banning gambling. Let consumers decide if gambling is good for them or not. I’d support a tax to fund anti-addiction treatment *for people who seek it out*, but an outright ban seems too paternalistic.

It’s pretty messed up IMO that the main form of gambling that is legal (state lotteries)

*is run by the government* and has terrible payouts. Makes gambling bans look less like well-intentioned consumer protection and more like enforcing a monopoly.

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I fully agree here. Anything that people enjoy doing is going to be addictive. So, why not ban all activities that people really enjoy? Does the author see any problem with the logic?

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There are no negative social consequences to an addiction to gardening, quilting, tennis etc. Alcoholics and drug addicts create big public health problems, are a partial cause of homelessness, and may commit more crimes on average. Gambling addictions are probably less harmful on net but can cause serious financial problems for families, mental health issues, and probably an increase in certain financial crimes.

I don't have a considered opinion on whether gambling should be banned/restricted/unrestricted, but there is a pretty clear rationale for why we might regulate "vices" and not all things people enjoy.

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The 'but what about the families/children' is the ultimate handwave that always gets dragged out in these arguments. We could plausibly outlaw fatty foods, processed foods and sugars if we're going that route, given that they lead to obesity and many parents dying early- 'fatty foods are DESTROYING families all over America', etc. etc. I'd argue fatty foods are affecting many, many more families in the US than gambling. They certainly have a much larger societal cost in driving up our collective healthcare & insurance prices. Would you like to outlaw them too?

It's not the role of the state to prevent every individual from possibly doing anything that could harm their own family somehow

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Maybe the state could use evidence to determine which activities are most likely to be addictive and harmful and balance that against the benefits and make a determination on that basis.

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Well, a purely evidence-based approach to which behaviors are most harmful would certainly outlaw Big Gulps before sports gambling. Twinkies before scratch tickets, donuts before Super Bowl bets. Hell, cigarettes before March Madness pools- cigarettes are still perfectly legal??

Maybe the state could instead use a rich tradition of personal liberties and democracy going back to the Enlightenment, Locke, Rousseau and the Founding Fathers to instead stay the hell out of private citizens' entertainment choices?

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I said “most likely to be addictive”--I’d bet anything (ironic, I know) that the percentage of problem users, people acting compulsively, is higher for gambling than for junk food. As for cigarettes, if cigarettes were invented in the same year that betting apps were, there’s no way we would let them be sold, which speaks to the problem with legalizing harmful products--it’s hard to put the toothpaste back in the tube.

Regarding the Founding Fathers, I sincerely don’t know: was gambling legal in all 13 states when America was founded? I would be surprised.

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Paternalistic much?

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deletedMar 20, 2022·edited Mar 20, 2022
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That’s one way to look at it. Another is that it’s arrogance.

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There is no principled distinction between gambling, trading futures and trading options. Why is it ok to bet on the future price of soybeans but wrong to bet on who wins a ballgame?

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Betting on the future price of soybeans is actually useful for e.g. farmers who want to lock in a price for their harvest so they know how much money they'll make this year. But no one really has a motive like that about who wins ballgames. (Maybe the players, or the teams, who will make less money if they lose? But they're supposed to be as motivated as possible to win; betting against themselves would be a bad look)

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Mar 19, 2022·edited Mar 19, 2022

I could be wrong, but gambling in a casino involves the house always winning. I suspect in sports betting this is less oh a thing, but I would think that for the book or the house (is that the right term?) to make money, the odds of making back what you spend must be below 50%.

Financial markets have grown quite significantly over time so one's odds of making money that way are >50%. Futures and options are ways to reduce a trader's risk, so while they might be a zero-sum, win lose proposition, they can be used to reduce risk rather than increase it (like with normal gambling).

I agree though that as playing financial markets moves away from institutions and towards individual traders using Robinhood or whatever, what I observe is a lot more like gambling.

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Gambling does not have to have bad odds, it could move to super low fees in a highly competitive market (outside of a casino). Bad odds and high fees are a function of government regulation to limit competition with the state lottery monopoly.

And while it’s true that options can be used to hedge risk, retail traders betting against quant PhDs on the other side of the trade are generally the greater fool and generally taking increased risk rather than hedging. That does not mean we should ban retail options trading, but let’s not pretend that retail options traders are generally engaging in risk aversion.

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In Britain they have a new generation of companies that simply act as market makers, connecting both sides of the wager (i.e. you bet on the Patriots and some other random guy elsewhere is betting on the Jets), and taking a small cut. Probably a more defensible model than a casino

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There’s no distinction between gambling and investing? Really?

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I don't really agree with that, because there's actual economic substance to futures trading, though you're right there is not clear line between gambling as a vice and gambling as an economically useful risk transferring activity, and maybe it depends who's trading futures and why. A farmer can limit their risk to broader market fluctuations and leave themselves exposed only to risks directly affecting their own operation (such as local weather or their own health) by selling their crop at a known price at the same time as they decide how much to invest in planting the crop. A large buyer of a commodity, say an ethanol producer, that has long-term supply contracts with its customers, might also want to limit its risk of price increases on its inputs. But yes, for random people who buy futures contracts on the secondary market, it is closer to gambling. If that's "gambling", though, then anyone who underwrites insurance contracts is a gambler.

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As illustrated in this excellent movie scene:

https://www.youtube.com/watch?v=ySxHud7abko

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This is trivial or false. If you define "principled distinction" as "some technocrat has written a longwinded is-a-hot-dog-a-sandwich thinkpiece and come out on the 'no' side," then it's true, but trivially so. If you define "principled distinction" as "any reasonable person can see that these things are different," then it's false.

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As Mr. Paulson succinctly points out below, the argument is framed as one of costs and benefits, but the actual CBA is missing. The author ignores (and assigns no value to) the hedonic benefit derived by the gambler. By this logic, eating at fine-dining restaurants and drinking fine wine are harmful to the consumers because the consumers get fat, destroy their livers and kill brain cells (I do that a lot); no value is ascribed to the enjoyment of consumption. In the absence of market failure, we generally assume that the price paid is equal to the value received. The proportion of lottery revenue spent on schools is not a measure of consumer harm.

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Very good points. That only 60% or 80% (or 50%) of gambling revenue is spent on schools is presented as a negative point instead of a positive one. If it's a negative point, then the author should show that more spending on school is bad, or that cutting teacher salaries, or having fewer computers or books in schools, or larger class sizes would be good.

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Mar 19, 2022Liked by Milan Singh

I don't think he was really using it to say 80% is bad, I think he was providing the information and comparing how different policies around gambling can produce more or less funding for education.

Every dollar that comes from gambling revenue could be collected as taxes instead, which could be less regressive and not contribute to addiction. I think that was his point.

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Huh?

That "only" 60% of the revenue is spent on schools is a negative point if the gambling is generally advertised as being "for schools" and you'd expect 100%.

If you want school spending, 60% is worse than 100%.

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But, is 60% worse than 0%? Or is 0% worse than 30% when they don't promise to spend it on schools?

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You _could_ argue that 60% is worse than 0%. Your comment implies the author is arguing that and failing to back it up

"If it is a negative point, then the author should show..."

But in that case I wouldn't say "only". The author (to me) clearly means to say that 60% is better than 0% but worse than 100%, and therefore has no need to show that less school money is good, because they're not arguing that.

That's what I mean.

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Mar 19, 2022·edited Mar 19, 2022

Also, what if you were to know they spent the rest on health care, roads, and tax cuts? Would you still believe 100% of the money spent was worse than getting none of the new revenue and not spending only 60% of it on schools and the rest on other government boondogles?

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founding

The point about addiction is supposed to show that it’s largely irrational spending rather than the rational sort you mention. I don’t think it’s enough to show that, but it is slightly suggestive at least.

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As long as you also factor in hedonic benefits of heroin addicts in drug enforcement, that makes sense. Like Milan, I don't gamble, so it's hard to know how to factor that in. It's still different to talk about fine wine and food though. Getting fat doesn't destroy people's lives like addiction does.

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Nels, people are addicted to food, too. Perhaps you have missed this?

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Although I’m not a libertarian, I think any time you want to ban something people like doing then you have to conclusively prove that it does significant harm to both individuals and society at large. The fact that some people become addicted (which is a really overused term) isn’t enough.

People become addicted to all sorts of things -- gambling, television, sex, alcohol, fishing etc. Addiction can be treated as a public health or medical issue without the use of state violence to prevent everyone from doing something they enjoy.

Besides has anyone concerned about the cost of an activity like gambling also calculated the cost of enforcing a ban?

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I think a very strong argument against this is that we can just look at the European market, where sports betting has long been legal, and which (afaik) is not really a success story, with a good amount of social corrosion, ubiquitous advertising, and of course a lot of ruined lives. And gambling is literally, not figuratively, addictive.

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Exactly. You lose tax revenue. Presumably, you arrest people caught doing what they like to do. That's a cost. Law enforcement needs to spend time policing what are almost victimless crimes. You fine or arrest the gambling addict? Seems that might make his life worse rather than better.

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Mar 19, 2022Liked by Milan Singh

A benefit to gambling being illegal is that no one can start a big casino and then saturate the advertising market.

And while I don’t support cops busting in to arrest a friendly game of poker for real money, the illegality of gambling means that losers have a chance to not pay if they got over their head—it’s not a legal debt—which hopefully reduces the stakes and the harm to addicts, though may increase other crime.

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If you lose betting in illegal gambling markets you do not have the ability to not pay. People will come after you

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One of the problems with bans of activities that people like to do (as opposed to regulation) is the unintended consequences. I gather that during Prohibition pretty anyone of any age could get alcohol if they really wanted to do so. Today, regulation makes underage drinking rarer. (Although certainly not impossible.)

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This idea that gambling in illegal games, in which victors do not have legally-enforceable ways to claim their winnings 'lowers the stakes' seems exactly wrong. I think we can see that in practice if a large part of the people playing are criminals, they are unlikely to be troubled by the lack of a legal avenue for redress, and the debtor is going to face a risk worse than bankruptcy.

I'm as gambling-skeptical as anyone in this thread, maybe more so, but this isn't a good argument for gambling being illegal.

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You never saw Rocky I?

In all seriousness though, I guess you can frame the people not paying as poor struggling victims, but they could just as easily be the neighborhood bully or a conman drifter who decides they don't want to pay their debts to the local bingo hall.

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Another way of thinking about this is that there is a distribution of gambling frequency. The vast majority of users (and apparently dollars) gamble reasonably and safely, to their own enjoyment and without material harm. A small minority -- the right tail -- may not be able to exercise sufficient self-control over their gambling frequency. An outright ban sends the majority of gamblers back to illegal markets, while arguably doing the same for the right tail and not solving their problem, because they are addicted and will stop at nothing to continue gambling. That's why regulatory interventions in these kinds of markets need to be narrowly tailored to address the specific mischief sought to be corrected. I don't have a good counterproposal to the author's, and I think there will likely be a net loss of consumer welfare with an outright ban.

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But Milan makes the argument that most people don't actually move to the illegal market, they just stop. If I can go on my phone and place a bet I might do it, but I'm certainly never going to go to an illegal casino run by some gang. And since I don't go there I might never realize my gambling addiction. It's not conclusive, but he has shown that there is evidence that indicates this is the case.

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But the problem is that that right tail isn’t fixed in number. When more people gamble, even if the problem gamblers are the same share of the total, there are more of them, hence more harm is done.

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founding

Shorter version: Someone is doing something that is bad for them. Government must make that thing illegal. And then enforce the ban with the threat of violence or incarceration.

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Mar 19, 2022·edited Mar 19, 2022Author

I don't think the ban needs to be strictly enforced. I agree with Douthat's argument that the pre-Murphy status quo "struck a useful balance, making gambling available without making it universal."

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founding

A ban that isn't strictly enforced? So the law is there, but only applied at the discretion of local police and prosecutors? Situations like that don't usually end well for the poor and working class folks.

Every law, ultimately, is enforced through the threat of violence or incarceration. That isn't to argue against all laws. But it is a useful heuristic when contemplating new laws, especially ones that restrict what people would otherwise choose to do.

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One of the problems with “laws that are not strictly enforced” is they tend to be used selectively against unpopular or disadvantaged minorities. The authorities can pull out a seldom enforced law when they want to punish a particular person or group, but can’t find anything else.

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If you don't trust the authorities in your jurisdiction, you'll probably believe their selective enforcement is unfair. The minorities situation, where many people distrust how the authorities treat disadvantaged groups, is just a subset of that much more general case that will apply everywhere and always. On the other hand, if you do largely trust the authorities around you to selectively apply the law, suddenly that selectivity looks much better.

Getting rid of all selectivity of enforcement (which is impossible anyway) is a poor way of solving the distrust problem. If someone is speeding on their way to the hospital because their spouse is having a stroke or heart attack most people would agree a little selective enforcement of speeding laws might be a good thing.

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Mar 19, 2022Liked by Milan Singh

A gap between legal principles announced to the public and laws enforced in practice by the legal system a feature of American law in a huge number of areas--theorists call it "acoustic separation."

In practice, a law like this would be strictly enforced against corporations but not against individuals, which is a fairly rational policy. You could even make this explicit if you wanted to--e.g. there's something called the "Mrs. Murphy" exception to housing law that exempts very small operations. But an explicit policy gets rid of the "free deterrence" benefit of acoustic separation.

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The point of anti-gambling laws is to restrict bookmaking and casino operations, not put jackboots on the throats of everyone who threw in $10 for the office March Madness pool. The pre-Murphy status quo was actually working very well - with the notable exception of state-sanctioned lotteries, which are grossly exploitative and unethical.

There's a strong state interest in creating pragmatic barriers-to-entry for accessing activities and products with significant negative social externalities - particularly if we know those products often subvert individual decision-making through chemically or psychologically addictive properties . Those barriers do not need to be insurmountable, and they shouldn't overshoot to create the impression of a repressive police state (e.g. Prohibition). But there's a big difference between a country where people could gamble when they did a road trip to Vegas with some buddies, and a country where people can gamble from their couch on a smartphone app.

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What you're missing is that gambling has relatively less externalities than other addictions- similar to riding a motorcycle without a helmet, the user is really just affecting themselves.

Fatty, processed foods and sugars are producing vastly larger externalities to society than anything gambling could ever do, in terms of healthcare costs around obesity. Do you think that outlawing fatty foods is reasonable or practical? Obviously not. There is a case for a pigovian tax for some things, outright banning is generally a poor idea

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I agree that you should pick the right tool for the problem. Bans for foods don't make a ton of sense. That said, it's clearly in the social interest to maintain barriers to access processed sugars and fats - or at least, ensure that it isn't easier to access those foods than healthier options. That's why there are laws requiring the posting of calorie counts and listing ingredients, why there's a lot of effort to address 'food deserts' where unhealthy options dominate, and why there have been efforts to impose taxes on those foods and beverages (however unpopular they've been).

A couple of points to consider about gambling:

1. The financial decimation of individuals (and their families and children) is a fairly significant negative social externality. Gambling addiction looks more 'reputable', but a family going bankrupt due to the ponies instead of oxycodone isn't any better off.

2. There are negative externalities associated with casinos themselves, as Milan highlights in his piece.

3. There's a big difference between trying to establish a new ban, and rolling back a pre-existing ban that was working (see, "Chesterton's Fence").

4. Unlike cigarettes and alcohol, gambling has never had a major social role in American life, and it seems pretty foolish to facilitate mass-market access (and advertising) to an addictive service with no social benefit.

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I don't agree that much of anything has been done about food deserts, and I don't think any taxes have been successfully imposed anywhere. I agree that there was a lot of talk about doing both of these things, but not any actual action. The 'what about the families' just makes my eyes roll. Again, fatty foods are killing more parents and disrupting more families than gambling ever could- why don't we outlaw, say, Big Gulps?

Ultimately, I just don't think that this is a legitimate use of state power. Some individuals may choose to choose to make poor decisions, and it's not the nanny state's job to stop them. To the extent that there are actual externalities, this is what pigovian taxes are for. Also, gambling's always had a major social role in America- in Las Vegas. As the Supreme Court correctly ruled a couple of years ago, allowing just one city in the whole country to have all of the gambling is outrageous.

I will say that I am a bit troubled by how unfair the casino business model is (they can & do ban you for winning, so you can only ever lose). However as I mentioned above, a new generation of British tech companies simply matches both sides of a wager like a market maker, which brings gambling closer to financial markets (which is gambling for the upper middle class) and is more fair

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I get what your saying, but in the real world police departments have to set priorities to not exceed their budgets, and that means some crimes are more strictly enforced than others. Prior to the legalization of sports gambling the prisons weren't overflowing with black people caught gambling. But there were still fewer people doing it, and fewer addicts.

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Good points. The reality is that police have always selectively enforced laws. The priorities are usually set by the wealth and influence of the person affected by the crime. If a rich or prominent person is murdered, authorities channel massive personnel and resources into solving the crime. If the dead body is that of a trans prostitute it may be written off as “no human involved.”

I don’t think it’s a good idea to have laws on the books that are seldom or selectively enforced. Especially when it comes to activities that most people are able to enjoy without harm to themselves. It’s a waste of public resources when the police -- because of publicity or somebody important is offended -- have to suddenly and selectively enforce the law.

Of course that doesn’t mean the government can’t regulate the activity. I think people should be allowed to own firearms, but requiring purchasers to get background checks or take safety courses doesn’t infringe on their ability to possess and own a gun.

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Civil laws are enforced through incarceration or threat of violence?

Also, unconstitutional laws on the books? (i.e., NC prohibits atheists running for office, but not enforced due to unconstitutionality)

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Coca leaves are really cheap to grow. Remove regulatory barriers, and cocaine would cost ~$1 a gram. That would be a social disaster. Something like cocaine should be a misdemeanor. No ones life should be destroyed because they get caught, but the price should be well north of $1 a gram.

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Isn't the other alternative a pigovian tax?

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“Government must make that thing illegal”

Or, government must corner the market.

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Mar 19, 2022·edited Mar 19, 2022

Strong disagree. If the state is going to monopolize the lottery , which returns 50% or less of wagers to players, it simply doesn’t have the moral authority to ban gambling that returns 90% (or more) of wagers to players.

This sort of terribly inconsistent and sloppy thinking is rampant on the right wing, let’s not import it.

And states that want to ban lotteries and sport wagering are at least consistent, if fascist in their regulation of one of humanity’s oldest recreational activities.

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author

In case it wasn’t clear I also think that states shouldn’t be running lotteries.

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If a state allows something bad, it has to allow other bad things too?

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The state is presently running the monopoly on Bad Thing, with worse odds than any casino, while outlawing private competition. That doesn't look insanely hypocritical to you? If gambling is bad for society at large, can you justify why the state is allowed to not only run it, but have 100% of the market share backed by the power to arrest their competitors? As Mark writes, states that ban gambling and don't have state-run lotteries are at least consistent

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Ideally, the state shouldn't run a lottery either, but two wrongs don't make a right.

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founding

Some states do this for alcohol sales. I don’t know if any do it for cannabis, but I believe some Canadian provinces do.

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Pennsylvania still has state stores for wine and hard alcohol and they used to be the only place in the state (outside of a restaurant) where you could buy it. The state still makes a lot of money off of the state liquor stores.

One positive outcome was that the state stores are very strict about checking ID and not selling to people under 21. The state does sting operations where they send in agents to try to buy alcohol without ID and if the liquor store employees don't insist on ID, they're fired on the spot (they're unionized) and if they get caught selling to someone underage, the employee will be prosecuted. I have no idea how much of an effect it has on underage alcohol consumption.

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Mar 19, 2022·edited Mar 19, 2022

Quebec only allows government-run Cannabis stores.

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Not only is this hypocritical, but I find it deeply disturbing when I see state lotteries engage in the scammy marketing and house odds that can be common with gambling in general. As such, my opinion is that I'm fine with private sector gambling, but very opposed to the public sector doing it. At least with the former, I have the ability to choose to not be a participant or associated with it--as a citizen of a government, I don't have the ability. And so it's disappointing that the status quo has been the exact opposite of that in recent times.

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I mean you are still associated with private sector gambling in your state, since they pay taxes that fund services you enjoy.

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If this were a good faith argument i'd respond in good faith, but it isn't.

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Excellent contribution.

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I think this is a good example of whataboutism. Plenty of opponents of legal gambling also oppose state lotteries as regressive taxes--what do you say to us?

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So let's stop states from doing it too.

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I agree with this take and think the comments thus far are a bit disingenuous. There's plenty of research on the negative effects of gambling addiction. I don't buy that a "Netflix addiction" even exists; video game addiction is also not well supported by the research despite scaremonger headlines about people never leaving the basement. There's controversy about whether or not marijuana is actually addictive, certainly it doesn't seem to be physically addictive the way alcohol, cigarettes, and heroin are, and you don't hear about people losing their houses to support their marijuana addiction (which does happen with gambling). If you're libertarian and don't believe in any restrictions on anything, it's at least ideologically consistent, but don't pretend there's no difference in regulating gambling and regulating watching Netflix.

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founding

At least with a Netflix addiction you can’t lose more than $17.99 a month (or whatever it is).

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I think it's more about the time lost. Same goes for video games, which I would say can be semi-addictive, in the same way that I personally experience gambling

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founding
Mar 20, 2022·edited Mar 20, 2022

I think for both streaming and at least turn-based video games, in addition to the “next episode” or “end turn” button, there should be a button that says “one more”, where it will let you watch one more episode, or play one more turn, but then at the end of that, all buttons will be disabled other than “quit”. Sure, you could restart right afterward, but it could give you just the amount of self control you need.

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There is also the opportunity cost of missing out on some network TV. Or online discussion fora.

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Just went up to $19.99 :(

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“There's plenty of research on the negative effects of gambling addiction”

Is there research on the positive effects of gambling? I mean, some folks really, really seem to enjoy it and keep their lives in control.

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Netflix was just one ridiculous example. The average netflix user in the US watches 3.2 hours per day! If that is the average, on the high end there must be people who binge watch serials upwards of 5 or 6 hours a day or more. Staying up late to see how the end-of-episdoe cliffhanger resolves? I can't say I've never done that.

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Do people lose their jobs and their houses because of Netflix addiction? Show us the research if you know of any.

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Mar 19, 2022·edited Mar 19, 2022

Did the author of the article present any hard evidence about how many people are harmed and how badly? BTw, I agree that Netflix is probably not as addictive as gambling and it would be totally ridiculous to ban it.

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Mar 19, 2022·edited Mar 19, 2022

The thing I've always heard is it's very hard to control for all other mental health disorders with these things. I had a pretty severe World of Warcraft addiction in the 00s but most psychologists would say I was salving pretty horrible depression and anxiety.

Gaming can get those long term effects but usually there's something else under there.

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As a compulsive gambler and alcoholic in recovery (10+ years of abstinence for both) I feel compelled to weigh in.

This piece starts out with a chart showing a dramatic recent increase in sports wagering, but then references studies that are relatively older, and focus solely on data related state sponsored lotteries. From a compulsive gambling perspective, a distinction needs to be drawn between these two types of gambling (not all wagering is created equal). Think state lottery vs. online sports betting as cocaine vs. crack, but worse. When similar studies are done detailing the impact of widely legalized sports betting, the results will be staggering.

Anecdotally, I have seen a significant increase in new "members" in a certain 12-step recovery program I attend, where people are coming in after having their lives destested by mobile phone sports betting. The ubiquity of sports betting is certainly producing a lot more compulsive gamblers in aggregate.

From a societal perspective, I don't think prohibition is the answer. Compulsive gambling does not pose the same societal risk as other addictions. Compulsive gambling is personally devestaing (imagine losing five figures while sitting on your couch or sitting in front of your computer), but has a small direct impact on others in comparison to something like alcohol. Crimes stemming strictly from compulsive gambling are more of the white collar variety (embezzlement, check fraud, etc.).

As an addict, I appreciate pieces like this because it brings compulsive gambling to the forefront. In comparison to alcohol and drug addiction, it has always been a little misunderstood by people who have no propensity to addiction. If any "good" came come from this explosion in sports betting, it's a broader understanding of addiction in general, and hopefully a proportionate explosion in treatment programs for people suffering from addiction.

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"Compulsive gambling does not pose the same societal risk as other addictions."

Your life and well being has value to society too, and we should aim to maximize it. We should not callously just allow people to spiral into a pit of despair, even if it was ostensibly of their own volition.

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I appreciate that sentiment. For societal risk, I was thinking more in terms of things like the number of innocent people killed or injured by drunk drivers, or the number of vehicle thefts perpetuated by people suffering from meth addiction. Aside from the amount of money I "borrowed" or stole from my friends and family, the societal harm my compulsive gambling societal caused was more along the lines of writing hot checks at grocery stores and defaulting on payday loans and credit card debt.

I started my recovery by attending private pay intensive outpatient rehab (several hours a night, five days a week for twelve weeks). This was extraordinarly costly (especially when I was beyond broke from gambling), and I could not have done it without the financial help from the Employee Assistance Program provided by my employer. These types of quality programs need to be less costly and more widely available.

From a public spending perspective, $1 spent towards addiction education and treatment would go a lot further than $1 spent towards prohibition enforcement. The War on Drugs in a perfect case in point.

Empathy is the most powerful weapon against addiction. The better addiction is understood by the general public, the less addicts feel will like pariahs. I had a tinge of anxiety using my real name and "outing" myself as an addict even in this paywalled little corner of the internet. People suffering from other diseases aren't fighting shame when also fighting their illness. If someone beats cancer, they're celebrated as a hero. If someone beats addiction, they still have to keep it a secret in most aspects of society (even as it's the greatest achievement of their life).

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How common do you think the level of gambling addiction you had is? I'm sincerely curious if it's 1 in 10 or 1 in 10,000 because I couldn't even begin to guess.

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It would be nearly impossible to quantify. In terms of the different ways addictions manifest themselves, alcoholism dwarfs all other types of addiction by orders of magnitude. I suspect this is just because of the prevalence of alcohol in our society, which is why this explosion in legalized sports betting is so distrurbing to me personally.

Quantifying the severity of compulsive gambling itself is hard because there a few physical side effects (in comparison to alcohol or drug abuse), and it's fueled by money. I was "lucky" enough to become a compulsive gambler very early in my life. My gambling prevented me from having a meaningful romantic relationship or starting a family in my 20s. It also prevented me from advancing in my career and building wealth. The flip side of this is that I had a lot less to tangibly lose (because I never had it to begin with).

If someone starts later in life after building wealth and has a family, they could gamble for a shorter period of time and spend less hours doing it, but could lose their marriage, destroy their relationship with their children, and lose their retirement. The tangible loss would be much more severe, but severity of the addiction itself could be less.

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When will you be outlawing fatty, processed foods or sugar, which cause vastly more harm to Americans every year than gambling ever possibly could?

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I wouldn't be opposed to Pigouvian taxes on such things, especially if we're eventually paying for it anyway in terms of the health care costs.

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I'm curious about your thoughts on this idea - why can't gambling, particularly the new, online, version, be regulated in an "opt-in / opt-out" way, sort of, kind of similarly to medicinal marijuana or gun sales (in very, very broad strokes). If someone is identified (perhaps self-identified) as having a problem, the book wouldn't be allowed to take their money. Or maybe people would have to provide income or net asset information at sign-up and be prohibited from losing more than a certain percentage.

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Both of these systems are in operation in the UK. Problem gamblers can self-exclude, and gambling companies are supposed to perform background checks on salary etc and not to let people gamble above certain limits.

The reality is that gambling companies *constantly* bend and break these rules.

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Ok - but does that mean having these rules is worse than not having them or do they literally do nothing?

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No, of course some regulation is better than none at all, but my point is that, since people are right when they point out that gambling companies make a large part of their revenue from the most problematic gamblers, most 'innovation' in the industry is dedicated to the question of extracting as much revenue as possible from those gamblers. In addition, adding regulators who simply tweaks that dyanamic so it becomes that innovation is now dedicated to either fooling regulators or working out when to openly flout them based on the expected benefit versus anticipated fine.

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What would you think about a requirement being put in place for websites to detect compulsive behavior and cut it off? Similar to how a bartender will cut you off when you've had too many. That way, responsible people can gamble if they want to, but those prone to addiction are somewhat protected from themselves.

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OK, so let's ban stuff you don't like, and legalize addictive, harmful things like smoking pot that you do like. I have a proposal: let's just let you tell the rest of us how to live our lives? Let's also ban video games, which are addictive, social media, which is addictive, online porn, which is also addictive. Also, a lot of people are addicted to the gym. Let's ban it. Alcohol, let's ban that too. Sorry, but a lot of people are addicted to marijuana, for sure should be banned as it's also harmful.

Implicit in your post is the idea that additional spending on education is actually harmful! And the right wing position that additional tax revenue is wasteful. Enough with this neoliberal BS.

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I never implied that additional spending on education is harmful. I said that there are better ways to get the money, such as raising taxes on the rich which I support and have written in favor of previously.

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How about raising taxes on the poor so they’ll have less to spend on lottery tickets?

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Mar 19, 2022·edited Mar 19, 2022

To my reading, it sounded like you were presenting the finding that additional gambling revenue results in more education spending as a negative reason why we should ban it. In my view, that should be a huge positive. You started that paragraph with "But, is it money well spent?" and also the phrase 'increase school spending *by only* 30%". Doesn't this also imply that you see other forms of government spending as wasteful? What if they spent 30% on schools, 40% on healthcare, 10% on roads, 10% on clean water, and cut taxes on work with the rest? You should at least edit the piece to make your view clear that this additional revenue spent on schools is an unambiguous good, but just that you think taxes on wages or capital gains would be better than taxing an activity that many people enjoy but can be harmful to some.

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^I wasn't alone. A commenter above cited the finding that only 60-80% of gambling revenue is spent on education as a reason to ban it.

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It seems like distributional changes in the tax code is really a separate policy. I'd probably agree with you, especially regarding tax loopholes and enforcement. Did you realize though, that the top tax bracket in California, including state and federal, is now 50.3%? I'd probably agree it should be 52% or 53%, but I think if you raise it above 60%, you are going to have some people doing everything to avoid, such as by leaving the state, cheating, legal tax avoidance, moving to Puerto Rico, etc. We probably have a lot of this already.

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There's no point to even talking about this is you aren't willing to discuss the scale of harms that come from addictive activities, and if you call everything an addiction.

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I agree with you. It's not easy to separate something that someone really enjoys doing from an "addiction". We assume "addictions" are bad, but I'm kind of addicted to debating random issues on internet forums when I should be doing something more productive. But, let me choose how to waste my time on frivolous activities.

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Do you think it’s basically illegitimate to consider relative harms of different activities and to ban or restrict one activity and not another on that basis?

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No. But, there was no cost-benefit analysis here at all. I'm biased as I like gambling, I make money doing it, and I believe prediction markets can provide publicly-useful and policy-relevant information.

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Sure, those are good reasons to support legal gambling. Your scare quotes around "addiction," questioning whether gambling addictions are bad, and comparing gambling addiction to commenting on the internet all made me feel that you weren't really taking the harm of gambling addiction seriously. I agree the post didn't have a cost-benefit analysis, but part of doing that is reaching rough agreement on the costs.

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Why not ban Netflix too? There is plenty of evidence it's addictive. People could be working instead, or volunteering in homeless shelters. TV soap operas? People should be caring for their loved ones instead. What society needs is very strict guidelines from the government on how to live every aspect of their lives. That's what this column says.

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Can you cite evidence showing that Netflix is addictive? Anecdotally, I have known many people who are addicted to the things we traditionally think of as addictive, and zero who had that same type of relationship to Netflix. When you’ve seen the real thing up close, the difference is obvious.

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I used Netflix as a ridiculous example. Also, I don't think it's so easy to separate something that is "addictive" from something that people enjoy to do. But, google tells me the average netflix user spends 3.2 hours a day. Some probably average 2-3 times that. One can see other articles alleging harmful effects. https://www.marketwatch.com/story/we-now-spend-more-time-on-netflix-than-we-do-bonding-with-our-kids-2018-09-13-12882032

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Bro, chill.

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The most important reason for a ban is that gambling ads are tacky.

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Mar 19, 2022·edited Mar 19, 2022

Funny. But, yes, to me the worst parts of the cannabis and gambling legalization is we didn’t do enough to restrict marketing.

Just because I believe neither should be prohibited by the government, does not mean flush corporations should be able to endlessly promote it.

I cannot drive a few miles on a highway before seeing a giant cannabis billboard. On a recent road-trip you Detroit, cannabis ads seemed to make up every single billboard.

And as someone who enjoys sports but doesn’t gamble, it’s made tv/radio watching of games worse. But more importantly, I don’t want my kids exposed to either via advertisements.

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Mar 19, 2022·edited Mar 21, 2022Author

Yeah, the marketing is a big part of why the distinction between a weakly-enforced ban on something and legalization matters. Even before Murphy, it's not like the US enforced the gambling ban as seriously as we enforced the heroin ban. You could host some poker games in your basement without worrying about the cops kicking down your door, but you couldn't set up big casino ads without getting into trouble.

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Honest question from someone w/ out kids - what's the difference between this and the tsunami of beer commercials during a game? I know growing up, these ads made it seem like beer, especially the various lite beers(Tastes Great! Less Filling!) were the epitome of cool and hot looking people.

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I would ban alcohol ads too, personally, just as was done for cigarettes years ago.

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Fair point, but I think a case could be made the ridiculous beer marketing played into the excessive and dumb drinking culture I grew up in the nineties (technically forbidden but So Much Fun!)

I’d prefer we restrict marketing for any of these as we do tobacco nowadays.

But since cannabis/gambling didn’t have the pull of alcohol out of the gate, it’s all the more obnoxious this is already the state of things.

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One difference is that the gambling marketing actually impinges on the broadcast--they’ll post various odds and opportunities to bet on the game situation, broadcasters and analysts talk about it. You’re made aware of it as an integral part of the game, not an adjunct like alcohol.

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It is possible to outlaw ads for a thing without outlawing the thing. Ads for cigarettes have been banned from TV for decades.

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For those of us who grew up on the East Coast in the '80's and '90's this ad was everywhere. I still occasionally get the song stuck in my head.

https://www.youtube.com/watch?v=6ft2neL4WNg

As a result of that ad I was convinced from a young that casinos were tacky and was shocked that casinos in places like Monte Carlo were considered classy.

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The book “Addiction By Design” by Natasha Dow Schull is amazingly good (and depressing). It’s about the slot machine industry.

It makes a convincing case that slot machines are a different (and probably more pernicious) kind of gambling than table games or sports betting. Unlike sports betting, people aren’t playing slots for a thrill or because they convince themselves they can win back their losses.

Generally speaking, serious slot machine addicts understand that they will lose money, but they play anyway to get into a state they call “the zone” (almost like a flow state).

Casinos developed all kinds of advanced analytics techniques to maximize “time on device” which the book goes into. Disturbingly, a lot of this stuff has been adopted by the app and f2p game industry — same tricks people use to drive engagement, same mental state.

So what really worries me is sports gambling becoming an app where people can use engagement tricks to get people to compulsively use the app. Then you’ve got both kinds of gambling addiction combined into one, probably uniquely bad.

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I don't think I would ban sports betting necessarily, but Matt Bruenig made a good point on Twitter a while ago, which is that "innovation" in gambling can never be particularly good.

Similarly, I don't think the trend that huge amounts of sports media is now oriented around wagering is great and a lot of this arises because DraftKings, etc. are allowed to sponsor events and media properties. So I think if you are going to have legal gambling you just have it run by the state to prevent "innovation" or keep regulations in place that crack down on permissible sponsorships and widespread marketing.

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Yeah, if we're going to have sports gambling, it should be a state monopoly, like the lottery. Market incentives for private gambling firms are obviously terrible.

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So, I'm biased, but imagine you lived in Kabul just before it was taken by the Taliban. Maybe you'd have liked a prediction market that showed the Taliban was going to take the city soon and it was time to leave. I'm sure the guy died who tried to cling to an airplane to leave would have appreciated a prediction market less biased than the information he was getting.

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Well, the state could run the prediction market if it's valuable, no?

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I'm having a hard time with the idea that what Afghans in Kabul needed was a privately-run prediction market.

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Why? That's precisely the type of thing prediction markets do a good job with.

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Because it was obvious that the Taliban were going to take the country sooner or later. And frankly, nobody is abandoning their home because an algorithm told them there was a 65% chance they would need to or whatever, this is just not how actual humans actually behave.

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Here's another example. Many Russians and Ukrainians did not believe a war was about to start. Prediction markets had the chances very high. You simply don't buy the research showing that prediction markets do pretty well at predicting things?

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LOUIS XIV’S FINANCE minister, Jean-Baptiste Colbert, famously declared that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” Legalized gambling is irresistible to states because the goose won't hiss at all. There is a literature that suggests that poor individual's rationality is more bounded than wealthier individuals which might explain the prevalence of in that demographic.

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What does "rationality is more bounded" mean?

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Economic theory is based on the assumption that decision making is rational. I.e. decision-makers have all the information to choose the best among a set of alternative courses of action. Bounded rationality exists where insufficient information is available to make the best choice with certainty.

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gotcha

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founding

I agree that gambling is a bigger problem than people realize. But I think a harm reduction approach is appropriate. Mark Kleiman had a proposal for marijuana regulation that seemed good - the first time someone goes to buy marijuana, they set a limit on their own monthly purchases that gets entered into the system. At any point they can change the limit for future months, but not for the present month. A similar self-made limit on gambling expenditures seems helpful.

Singapore has a rule that anyone entering a casino must either show a foreign passport, or pay a $100 fee. That makes it clearly a recreational activity you do on travel or for a special occasion rather than an activity you get hooked on.

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Mar 21, 2022Liked by Milan Singh

Milan, I have a couple small criticisms and I'm going to let em loose

> If one assumes that the lucky store effect wears off after a while (and mostly applies to the winning store itself) then it seems likely that some of this long-term increase in consumption reflects people starting to play the lottery during the initial shock and then getting hooked.

This is a very poor way to support any kind of claim about addictiveness. Compare the idea of people "getting hooked" with people just finding out that gambling is a hobby they enjoy. We have no way of telling how much of this effect is which, so whatever amount you think is the former depends entirely on how much you *already* thought gambling would make people addicted.

Also, I think your comparison to free trade could have been a bit clearer on a key point. The reason that free trade is good and gambling is bad is that free trade is *positive sum*, and so we can turn it into a pareto improvement with good redistribution. Meanwhile, gambling is *zero sum* (or you could even say negative sum considering the overhead costs of a casino), so legalizing it then redistributing is just extra stuff-shuffling for no benefit. You allude to this, and I imagine most readers understood you, but I still don't feel like the piece ever puts this key distinction clearly in its sights.

Thanks for the piece though, I haven't seen this issue covered much and I think gambling is a clear example of something socially harmful, and we should be thinking carefully about that when deciding to legalize it. I'll also just point out the whole controversy of loot boxes in video games, it's a close parallel discussion that you might find interesting if you don't already have an ear on it

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