Alex Blaze

Thoughts on gambling

Filed By Alex Blaze | October 17, 2007 12:01 PM | comments

Filed in: Politics
Tags: Monaco, taxation, taxes

There's a great post up over at Daily Kos by Devilstower about gambling. While it's not really on the national radar, there's lots of debating going on about the issue at the state and local level all over the country. Generally a lot of them see gambling as a way to raise revenue "without increasing taxes". It seems that the only people willing to oppose these schemes are social conservatives, the likes of the AFA, FotF, and other groups. Usually while perusing their websites, I find that there isn't much I agree with them on, except for this issue. I think that the progressive position should end up against gambling schemes, and here's why.

My disdain for gambling, especially gambling that's supposed to provide for public works, comes from three main sources. First, gambling-to-substitute-for-taxes is an inherently wasteful and regressive tax. In Indiana, we get TV and radio ads all the time for the state lotto. Those ads are paid for by the lottery itself. There are people who have to run it for the state. Then there's the paper itself, and those colorful cards with their scratch-off surfaces and anti-forgery mechanisms aren't cheap. And, of course, the lottery has to pay the winners. It makes you wonder how much is left at the end of a ticket for actual public works.

If it weren't bad enough that it's a wasteful tax, it's also inherently regressive, and not just because poor people play more than the rich, nor because even if everyone played the same amount it wouldn't be proportionate unless everyone played with the same percentage of their salary that everyone else did. It's the entire idea of the lottery, taking a little bit of money from a lot of people and giving it to a few people, that makes it the most regressive. Add to that the fact that it usually replaces a comparatively fairer system of taxation, like income taxes or property taxes, it's enough to make a boy angry at the whole system.

The argument behind such schemes is that they're taxes without being taxes, but, if no one played, they wouldn't work. They know that some people are psychologically attached to gambling, don't have a realistic idea of their odds, or just like the fun colors and games, so they'll have a steady supply of rubes to give money to the government more happily. As one libertarian commenter on Kos said:

However, don't use lotteries to fund public sector activities. Use taxes. That sounds counterintuitive for a libertarian position, but it's not: if we want competent and effective government, we have to be willing to pay for it in a manner that is equitably distributed and establishes a direct relationship between what we're paying and what we're receiving. "Indirect" methods for anything are tyrannical and cowardly policy, and that includes "taxes" that "are not taxes" such as lotteries.

(I don't know if that's the Libertarian Party's position, but I'm willing to hope that there's something I agree with them on too that involves taxes.)

Second, gambling does nothing appreciably good for people. A farm that uses harmful pesticides to grow wheat, at the end of the day, still makes wheat. A restaurant that doesn't pay its workers a fair wage still makes food for people. A state lottery gives people maybe three seconds of "fun", and what overpriced fun that is.

Several years ago, while backpacking around these parts where I'm living now, I stopped by Monaco for a day. I gave myself 10 euro to play with, since, you know, when in Rome.... I lost nine euro in under three minutes and left angry with my last. It didn't take long for me to be nine euro poorer and for someone I've never met, who never did anything for me, to be that much richer.

While I don't like to use my experiences prescriptively, I think that gets to part of the reason I don't like gambling schemes - they just don't do anything positive and yet a whole lot of people make money off them. Call me old-school, but I like the idea of people doing something, anything, beneficial in any concrete way at all and earning money from that. That's probably just kid-of-an-immigrant attitude speaking and that in and of itself wouldn't be enough to ban private gambling. But state gambling....

Third, and Devilstower touches on this, gambling creates a whole bunch of false narratives about how easy it is to become rich. He says:

Gambling places all importance on chance, and in doing so it devalues work. In fact, it makes it much easier to keep paying people miserable wages when they get to rub off a few magic tickets each week. And stories of the janitor who won ten jillion dollars are just what you need to keep people happy with their lot. Mix in a few stories of the guy who would have won a billion, only he didn't buy a ticket with his newly rich buddies that week, and you have a perfect mix to keep people worshiping at the quick-pick altar.

While I don't agree that everything in America is about work instead of luck, it's not about the sort of luck involved in lotteries. It's the kind of luck that's involved in getting a rich daddy or mommy, being born with the right skin color, being the recipient of a Y-chromosome, or not being a big queer-mo. It obscures those power mechanisms with it's "Everyone can be a big, big winner!" advertising, with the teeny-tiny print warning people to "Please play responsibly". It's effective advertising, and if it didn't work, they wouldn't be paying to put those ads up on the TV and the radio. And in that way it gets people to internalize the economic values that ultimately hurt them.

So, there. I agree with the Religious Right on something. Although you don't really hear much about them opposing gambling (since it doesn't involve sex, sexuality, or gender, and since tax cuts for the rich are the real conservative priority). But hey, agreeing on paper is something, isn't it?


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Gambling is not a tax. Gambling is a "service"-- a form of entertainment, enjoyed by many and not by others, vilified by some and not by others.

The lottery, in particular, is a form of gambling offered by governments. As is common, the government likes to establish monopolies (e.g., schools, post office). The govt lottery has some monopoly power-- as the only lottery available. But its monopoly power is limited in that other forms of gambling are easily available.

To reiterate what Alex said: The impact of gambling is regressive. From the research I've seen, the amount spent on gambling is surprisingly stable. But as Alex points out, as a percentage of income, gambling expenditures diminish as income rises (the definition of regressive).

Certain (but not all) contexts for and some (but not all) aspects of gambling are morally questionable or even bankrupt. As I have written about in my book, defining gambling turns out to be quite difficult-- and applying the definition consistently turns out to be frequently draconian and undesirable.

"A state lottery gives people maybe three seconds of 'fun', and what overpriced fun that is." The people who engage in gambling believe that it will do something "appreciably good for" them-- whether the prospects of monetary reward or the excitement in finding out. If not, they wouldn't do it! The other possibilities are they're "irrational" (unable to weigh benefits and costs) or the subjects of fraud (e.g., the govt lies about the odds).

Anyone, and especially anyone who has reason to fear persecution by the govt, is short-sighted to advocate restrictions on such activities. If we allow the majority to define the sorts of voluntary behaviors in which we can participate, we risk the same use of force against us some day. (It doesn't do any significant harm to others, but I can't imagine how that could be fun or good, so let's outlaw it.) Moreover, why not allow people the dignity of their own decisions, even if we don't understand or agree with them?

Alex concluded: "So, there. I agree with the Religious Right on something." There might be a few things on which you should agree with them, but that's not one of them! ;-)

(I'll cross-post this at SchansBlog.com.)

beergoggles | October 17, 2007 4:54 PM

Everyone bandies the term 'gambling' about so losely, one hardly knows where to begin in discussing this weird relationship we have with the activity.

Some people make their livelihood out of gambling. It's called playing the stock market.

Others enjoy it as a sport in terms of racing, betting on sports teams, playing poker, etc.

Yet others prefer the much more straightforward way of playing the lottery.

The religious right embraces their correct form of gambling by playing bingo in their churches.

From what I can gather about this sudden objection to using gambling funds for public projects, the objection seems to be the government involvement? It's not quite clear since casting 'gambling' as a danger while at the same time we engage in it every day if you invest in the stock market or play bingo or buy a scratch ticket or play poker sends very mixed messages as to what exactly you object to.

If your premise is that the government should get out of the gambling business while allowing citizens to gamble to their hearts content, I'm all for it. However the current crackdown on non-government sanctioned online gambling, poker tourneys, etc. just has to stop. We're just creating another doomed to failure War on Gambling that will go the same way as the War on Drugs and the previous War on Alcohol. It'll keep adding to the police/incarceration establishment while continually eroding our civil liberties.

In a sense, everyone gambles every day from the moment they wake up, but I think Beergoggles is onto something.

There's currently a double standard whereby some gambling is "ok" (such as church bingo games, raffles and betting huge amounts in the stock market) and other opportunities are inherently bad.

I'm be tempted to argue that it's human nature to gamble, and that outlawing it will meet with the same success rates as enjoyed by the laws outlawing drugs, prostitution, cigarette smoking and hell... even speeding.

Yes, gambling is regressive, but everyone wants to be able to have that big score. Well, that and the fact that the average Joe on the street probably thinks that he has nothing to lose since he probably can't afford to retire anyway.

Great post, Alex!

I'm pretty sure you can't compare church bingo-primarily a social event, with VERY LOW stakes, to the multimillion dollar gambling industry.

Eric's argument rests on the morally corrupt language of market populism: "The people who engage in gambling believe that it will do something "appreciably good for" them-- whether the prospects of monetary reward or the excitement in finding out. If not, they wouldn't do it!" Duh, dude, false consciousness.

Making the free market the arbiter of the will of the people is totally absurd.

Kevin, I'm not talking about arbiters, I'm talking about individual freedom and dignity for people's choices (as long as they don't harm others significantly).

Making the government and majority opinion the arbiter of what's right for people is totally absurd.

OK, cool, thanks for the lengthy comments.

Mainly I was talking about state and local gambling schemes to expand gambling to reduce other, less regressive forms of taxation. When it comes to private gambling, I'm a whole lot more hesitant about being prescriptive there.... I should have made that delineation clearer now that I think about it.

Making the government and majority opinion the arbiter of what's right for people is totally absurd.

I don't know, I think that when it comes down to what's right for the government to do, that majority opinion is generally the best way to go. There are a few exceptions, but if the state's going to set up a lotto, I think that it should go thru the democratic process.

And saying "individual freedom" to defend a state action (especially one that exists primarily to cut taxes for wealthier people) seems self-contradictory to me. It is a tax, ultimately, and just because the state finds ways to gussy it up and make it colorful and fun, that doesn't mean that it's not funding public projects, that its main intent is to fund those projects, and that its doing so regressively and inefficiently.

Use taxes to fund public works, and if people still really want to gamble, set up a lotto where the earnings go simply to pay for the program and to pay winners and don't advertise it. That way it actually would be a public service instead of a tax.

And yeah, good point, Kevin. There are always arbiters for everything, absolutely everything, whether or not the language of "free markets" or "freedom of choice" is used to obscure those arbiters.

Church bingo low stakes? You must not be from Indiana! I've seen several thousand dollar kitties at some of the local games...

As for how much money Powerball and scratch off tickets make for the state - it's profitable. Very profitable. Remember - only 60% of winnings are ever redeemed...

It just bugs me as a way to get more money from poor people. They're desperate to improve their lives and will (pardon the pun) gamble everything on it.

Firstly, I'm a gambler and want to be allowed to carry on putting my sporting opinions to the test.

I would, however, be in favour of a ban on all gambling advertising. If people have an urge to seek a place to gamble then that's fine. If cigarette advertising can be outlawed then so can gambling adverts.

People need to have a choice and a free choice otherwise we are on a slippery slope in this world.

One more thing: if you're concerned about regressive and burdensome taxes, then you have to be much more upset about the 12.4% payroll taxes on EVERY dollar of income (up to about $100K) that fund Social Security.