Gambling

Gambling

I

INTRODUCTION

Gambling, wagering of money or other items of value on an uncertain event, dependent either wholly or in part on chance. Gambling appeals to the human desire for gain and the thrill of uncertainty or risk. Gambling has been practiced throughout human history and continues to thrive around the world, both legally and illegally, as a lucrative industry and popular entertainment activity.

Modern gambling, sometimes called gaming, has increased rapidly in scope in recent decades. In the United States, where legal gambling generates more than $60 billion annually, many cities and states have authorized casinos and other forms of gambling. In particular, many Native American tribes have taken advantage of newly acquired legal rights to open casinos on reservations and have continued to expand their operations.

The gambling industry provides jobs for hundreds of thousands of workers and is an important source of tax revenue where it flourishes. Some community and religious groups oppose gambling because of concerns that it leads to crime, corruption, and other social ills. Legal gambling is subject to strict government regulation in much of the world, including minimum age requirements and—in some cases—the odds of winning in specific games or machines.

II

FORMS OF GAMBLING

There are many different types of legal and illegal gambling. Legal forms are run directly by government agencies, for-profit companies, and charitable organizations. Illegal types include bets placed with individuals (known as bookmakers) or underground gambling services (including Internet gambling sites), as well as informal gambling among friends, such as poker games or sports pools. Complex laws dictate which types of gambling are legal in a particular city, state, or country, and these laws are subject to change. Because of varied regulations from city to city and state to state, gambling is often used by communities and vacation destinations to attract tourism.

A

Casinos

One of the fastest growing forms of gambling today is the casino. A casino is a gambling establishment where players bet against the casino (sometimes called the house) in games of chance. These games can include poker, blackjack, keno, dice games such as craps, and mechanical devices such as roulette wheels and slot machines. All casino games have a house edge, which means the casino has better odds than the players. In the few games where players compete against each other, such as poker, the house edge usually consists of a small percentage taken from each pot (the total amount wagered on each hand). Since the early 2000s poker has soared in popularity, mostly because of widespread television coverage of major tournaments.

Although many states and foreign countries have legalized casinos, Nevada dominates the casino market in the United States and the world. In an area known as the Strip in Las Vegas, Nevada, billion-dollar theme hotels attract millions of tourists annually with flashy entertainment, amusement parks, and huge casinos. Other cities with a high concentration of casinos include Reno, Nevada, and Atlantic City, New Jersey. Some states, including Iowa and Louisiana, have legalized floating gambling parlors known as riverboat casinos. All together, legal casinos in the United States collected about $40 billion annually in the early 2000s, with the total revenues making up nearly two-thirds of all legal gambling in America.

Native American casinos have begun to make inroads into the U.S. gambling industry. In 1988 the United States Congress passed the Indian Gaming Regulatory Act, which allowed for the possibility that Native American tribes could open up gambling on their lands, partly to help stimulate the depressed economies of many reservations. By the early 2000s more than half of the states had licensed some form of Native American gaming. A number of these casino resorts, such as the giant Foxwoods complex in Connecticut, have been phenomenally successful. This trend has increased the pressure in many states to expand legalized gambling so that other outlets can compete with Native American casinos.

B

Sports Betting

Betting on sporting events is a common form of gambling around the world, involving billions of dollars annually. Large events such as the Super Bowl or the World Series alone can generate wagers totaling billions of dollars. In addition to legal sports betting, such as wagers made in casinos, illegal sports gambling flourishes globally. Rigid enforcement of sports gambling laws remains difficult because much of the betting is placed with private individuals or with companies located in countries where such wagering is legal. Internet gambling sites, which can be based anywhere in the world, are a growing source of sports gambling.

Legal in many other parts of the world, betting on individual sporting events in the United States is allowed only in Nevada (with some exceptions, such as the sport of jai alai, which is open to gambling in a few places, mostly in Florida). In part this is because of the potential for events to be fixed, or illegally influenced (usually with bribes or other compensation). There have been a number of high-profile sports gambling scandals in history, including the fixing of the 1919 World Series by Chicago White Sox players, who were paid by gamblers to lose the series. Another scandal involved professional baseball player and manager Pete Rose, who was banned from the sport and barred from entering the Baseball Hall of Fame because of his gambling. Most sports leagues and associations have strict rules against players betting on sports or associating with gamblers.

Sports betting typically involves odds or point spreads that affect the bet or the payout. A bet with odds of five-to-one means that a winning bettor will collect five dollars for every dollar bet. With a point spread, one team is favored by a certain amount of points (the amount is set separately by each gambling outlet). For example, if a bettor decides to wager on a team favored by 12 points, then he or she wins only if that team wins the game by more than 12 points. If there are no odds or point spread given, then the wager is known as an even-money bet (betting five dollars to win five dollars). There are many other types of sports wagers, including combination bets, depending on the sport and the specific regulations that apply to it.

Horse racing has long been one of the most common types of legal sports gambling. Many large cities have tracks dedicated to horse racing. More than 150 racetracks were operating in the early 2000s in the United States. Gambling at these tracks is governed by the pari-mutuel betting system (French for mutual stake). Under this system all money bet on a race is placed in a pool and split between winning bettors, minus a percentage that goes to the track. The odds are determined by how much money is bet on each horse, with the more money bet, the lower the odds (and the lower the payout). By the beginning of the 21st century pari-mutuel betting on horse racing in the United States—including wagers allowed away from the track, know as off-track betting—totaled more than $16 billion annually. See also Harness Racing.

Dog racing, which also uses the pari-mutuel system, is legal in some states but is not as widespread as horse racing. Betting on animal fights, such as cockfighting or bullfighting, has become even more limited because of animal cruelty laws that outlaw these sports. Animal fighting is an example of a type of gambling that has been banned in the United States but is still legal in some other countries, which have different cultural traditions and often less stringent gambling laws. It is also operated illegally in many places.

C

Lotteries

Lotteries are another form of gambling. In a lottery, tickets are sold for a set amount and a share of the proceeds is returned to the winners, usually through a random draw. Most games allow players to pick their own numbers or let a computer randomly pick for them. Lotteries offer a wide variety of games, including weekly drawings, instant “scratch” tickets, daily games, and superlottos with prizes increasing until there is a winner. Large lottery prizes sometimes exceed $100 million, especially in games held simultaneously in more than one state. By the early 21st century all ten of the Canadian provinces and about 80 percent of U.S. states had laws allowing government-run lotteries. Overall, lotteries make up about 25 percent of all legal gambling revenue in the United States.

D

Other Types of Gambling

Various other forms of gambling exist but are generally more limited in scope or visibility. Many of these, such as bingo games and raffles (similar to a lottery), are often used for charitable fundraising. The prizes offered for these games can be money or goods, sometimes donated by local businesses or individuals. Mail-in sweepstakes are another gambling alternative that people play in hopes of winning a large prize.

III

PROS AND CONS OF GAMBLING

Despite its widespread practice and long history, gambling is often considered a controversial issue with strong advocates on both sides. Proponents of legalized gambling argue that for most people it is a harmless diversion, and that individuals should be free to spend their money as they wish. Perhaps the most common arguments for legalized gambling focus on its accompanying economic benefits, especially in poorer communities that use gambling to attract investment and jobs. Cities and states can use legalized gambling to generate tax revenue that supports specific public services, such as education. Supporters also argue that gambling attracts tourism, and that restrictions simply divert the potential tax revenues to illegal gambling operations or to other regions where the practice is legal.

Opponents of gambling counter that it attracts a variety of social ills that damage society. Gambling can become a compulsive habit, ruining the lives of people who run up huge debts or gamble away their personal or family income and savings (see Gambling, Pathological). Studies suggest anywhere from 1 to 5 percent of the adult population can be considered “problem gamblers,” and society must pay at least a part of the resulting costs related to lost productivity, psychological counseling, and other services.

Research has also shown that gambling disproportionately affects the lower economic rungs of society and that problem gambling is higher in these communities. In particular, Native American gambling addiction has soared as gaming expands on reservations. Gamblers Anonymous, an organization that provides support for compulsive gamblers, has chapters across the United States and in more than 30 other countries.

Another problem is crime, which can increase in communities where gambling is legal. Problem gamblers sometimes turn to criminal activity to support their habit, and violent crime rates can also rise in some cases when gambling is legalized. Corruption of government and law enforcement officials is another issue associated with gambling. The gambling industry often contributes heavily to political campaigns in the hopes of influencing legislation and expanding operations in those areas.

In response to gambling’s economic benefits, opponents say that gambling tends to attract more money from the local community than from tourists, so the industry is simply absorbing revenue that would otherwise be spent on other forms of entertainment or on basic goods and services. They also point out that funding for local or state government services from gambling often simply replaces other sources of tax revenue. Rather than using the gambling money as an extra source of funding, state legislators cut back or eliminate other sources of tax revenue, knowing that lotteries will make up the difference. This method can backfire when gambling revenues fluctuate from year to year or experience declines.

IV

HISTORY OF GAMBLING

A

Gambling Origins and Spread

Anthropologists have found evidence that games of chance date back thousands of years. Dice more than 4,000 years old have been discovered inside the Egyptian pyramids. Horse racing is more than 2,000 years old, and betting on the outcome of those races is presumably just as ancient. The Christian Bible contains a number of references to gambling, including Roman soldiers “casting lots” (probably stones or shells) to divide up Jesus’ clothes after his crucifixion. The first casinos also appeared in ancient times, serving Romans who traveled to resorts near natural spas. During the Middle Ages, gambling flourished at inns along the roads traveled by soldiers and merchants.

The first lottery games with purchased tickets and prize money were held in Europe in the early 1500s. Such lotteries were an important source of royal revenue. In colonial America lotteries were widely used to fund the construction of canals, bridges, buildings, and roads. The Continental Congress even authorized lotteries to raise money for George Washington's troops. After the American Civil War (1861-1865), several Southern states used lotteries to help rebuild their ravaged infrastructure.

In the 19th century casinos spread across Europe. The most prominent of these early casinos was in Monte Carlo, Monaco, still a popular gambling center today. Illegal casinos and other types of gambling thrived in East Coast cities in the United States during the same time.

B

Twentieth-Century Gambling

Nevada became the first state to legalize casinos in 1931. The city of Las Vegas steadily grew into the gambling capital of the world during the mid-20th century. Nevada had a monopoly over legal casino gambling in the United States until 1978, the year casinos were legalized in Atlantic City, New Jersey. State lotteries were introduced in 1963 when New Hampshire created a government-run game, and many states followed suit.

During the early and middle of the 20th century, organized crime syndicates were a major factor in financing and controlling gambling in the United States. These groups were involved in many forms of illegal gambling as well as legal forms such as Nevada casinos. Gambling establishments made large profits for organized crime and also served as a way to “launder” (make to appear legal) the profits from other illicit activities, such as narcotics. Although organized crime’s involvement in the growth of Las Vegas and other gambling centers is well documented, this influence has gradually declined as gambling has grown into a giant corporate industry. The syndicates still exert some measure of control over illegal gambling activity, although the exact amount is unknown and varies by region. See also Mafia.

Gambling exploded in popularity during the last two decades of the 20th century. Spurred by the legalization of gaming on Native American reservations in the late 1980s, gambling revenues went from $8 billion to $15 billion from 1988 to 1994. Seeing the potential for huge profits, more states and municipalities began to legalize gambling. Lottery games proliferated and offered more and larger prizes, although often by making the chances of winning much lower. In the 1990s Las Vegas began building opulent theme resorts with thousands of rooms, targeting families along with hardcore gamblers. For the gaming industry, there seemed to be no limit to growth during this period.

C

Recent Trends

In the early 21st century gambling was sometimes called the new American pastime. By 2004, 36 states had legalized casino gambling as a way to stimulate their economies and create jobs, either commercially or specifically on Native American lands. Television shows featuring poker tournaments attracted high ratings, giving casinos and card rooms valuable free publicity. One annual tournament, the World Series of Poker, garnered widespread media coverage with its huge cash payouts—including a $5 million grand prize in 2004. As more casinos continued to open around the world and Internet gambling grew rapidly, the industry attracted millions of new gamblers.

At the same time, the gambling industry faced challenges. The rise of Internet gambling, for example, appeared for a while to pose a serious threat to traditional gambling outlets, as anyone with an online connection could wager real money on sports or casino games. Because gambling Web sites are often based in foreign countries, they pay no taxes to the local governments where the gamblers live. Online gambling also posed problems for regulators attempting to enforce gambling laws. In 2006 the U.S. Congress passed a law making it illegal for banks and credit card companies to send payments to Internet gambling sites. The firms that run the sites announced they would not take bets from U.S. customers, and the market value of the firms plunged.

Other forms of gambling failed to thrive. Attendance at racetracks has been in steady decline, forcing governments and track owners to change laws and marketing tactics in an attempt to shore up the business. Some gambling enterprises have been hurt by too much competition, from multistate lotteries contributing to declines in smaller state games to Native American casinos cutting into the revenues of other types of gambling. In some places, citizen backlash has been able to block legalized gambling from being approved in their communities. The gambling industry, like the act of gambling itself, continued to hold out the promise of riches while remaining a risky proposition.

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