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Making Poker Legal as a Public Service
What do insurance, commodities trading and state lotteries all have in
common? They were all originally outlawed as forms of gambling.
The major fight today over whether poker should be legalized usually
revolves around the question of whether it is predominantly skill or chance.
But this unnecessarily gives up part of the political as well as legal
battleground. Many activities that are indisputably gambling are now
operated under state licenses, or by the state itself. And other activities,
such as insurance and commodities, are today generally not even thought
of as gambling.
Although they are.
Insurance is, after all, betting a small sum to obtain, that is, win, a much
larger sum if a certain future event occurs. Of course, unlike traditional
gambling, the buyer usually hopes the future event won’t happen. The
industry’s greatest invention was changing the name of death insurance to
life insurance, so that bettors would not be focusing on the fact that to win
this wager they have to die.
Insurance eventually overcame its gambling roots because it was seen as
creating a benefit for the general public, as an efficient way of spreading
and lessening risk.
Still, some anti-gambling prohibitions remain. You cannot take out a life
insurance policy on someone you have no connection with. That would be
too much like making a bet that another person would die. Plus,
government is afraid that you might be tempted to do something to try to
increase your chances of winning.
Trading in stocks and commodities is still gambling. The Securities
Exchange Act of 1934 expressly preempts state anti-gambling statutes: “No
State law which prohibits or regulates the making or promoting of wagering
or gaming contracts” can apply to transactions on American exchanges.
Congress had to add that provision, and others similar to it, to federal laws
regulating stock and futures markets, because too many states still have
laws on their books that had been used against trading. Prior to these
federal laws, speculators had to concoct legal fictions, such as pretending
that they actually planned to accept delivery of tons of pork bellies.
Congress preempted state anti-gambling laws after becoming convinced
that markets were an efficient way to raise money for businesses, and to
allow farmers and food processors to shift the risk of changing prices of
crops to speculators.
Federal preemption does not apply to all trades. A boiler-room operation
selling penny stocks and other risky ventures on unregulated or foreign
exchanges is probably still today violating state anti-gambling laws.
More conventional forms of gambling have been legalized because the
public benefit was seen as outweighing the public harm. State lotteries
raise money for education, casinos provide jobs and tax relief, even
horseracing was seen as bettering the breed.
Poker, where legal, certainly provides as much public benefit. For example,
in California most of the cities with licensed card clubs make significant
percentages of their government revenue from their clubs.
We don’t have enough evidence, yet, but I predict that studies will find that
poker contributes in other ways. Poker players are—probably—smarter,
happier and more sociable. They certainly have to know at least a little
about math, money management and how to play by the rules.
Maybe we should start thinking up ways to prove that poker should be
made legal, not because it is not gambling, but because a society is better
with poker than without.
© Copyright 2010. Professor I. Nelson Rose is recognized as one of
the world’s leading experts on gambling law and is a consultant
and expert witness for players, governments and industry. His
latest books, Internet Gaming Law (2nd Edition recently published)
and Gaming Law: Cases and Materials, are available through his
website, www.gamblingandthelaw.com
What do insurance, commodities trading and state lotteries all have in
common? They were all originally outlawed as forms of gambling.
The major fight today over whether poker should be legalized usually
revolves around the question of whether it is predominantly skill or chance.
But this unnecessarily gives up part of the political as well as legal
battleground. Many activities that are indisputably gambling are now
operated under state licenses, or by the state itself. And other activities,
such as insurance and commodities, are today generally not even thought
of as gambling.
Although they are.
Insurance is, after all, betting a small sum to obtain, that is, win, a much
larger sum if a certain future event occurs. Of course, unlike traditional
gambling, the buyer usually hopes the future event won’t happen. The
industry’s greatest invention was changing the name of death insurance to
life insurance, so that bettors would not be focusing on the fact that to win
this wager they have to die.
Insurance eventually overcame its gambling roots because it was seen as
creating a benefit for the general public, as an efficient way of spreading
and lessening risk.
Still, some anti-gambling prohibitions remain. You cannot take out a life
insurance policy on someone you have no connection with. That would be
too much like making a bet that another person would die. Plus,
government is afraid that you might be tempted to do something to try to
increase your chances of winning.
Trading in stocks and commodities is still gambling. The Securities
Exchange Act of 1934 expressly preempts state anti-gambling statutes: “No
State law which prohibits or regulates the making or promoting of wagering
or gaming contracts” can apply to transactions on American exchanges.
Congress had to add that provision, and others similar to it, to federal laws
regulating stock and futures markets, because too many states still have
laws on their books that had been used against trading. Prior to these
federal laws, speculators had to concoct legal fictions, such as pretending
that they actually planned to accept delivery of tons of pork bellies.
Congress preempted state anti-gambling laws after becoming convinced
that markets were an efficient way to raise money for businesses, and to
allow farmers and food processors to shift the risk of changing prices of
crops to speculators.
Federal preemption does not apply to all trades. A boiler-room operation
selling penny stocks and other risky ventures on unregulated or foreign
exchanges is probably still today violating state anti-gambling laws.
More conventional forms of gambling have been legalized because the
public benefit was seen as outweighing the public harm. State lotteries
raise money for education, casinos provide jobs and tax relief, even
horseracing was seen as bettering the breed.
Poker, where legal, certainly provides as much public benefit. For example,
in California most of the cities with licensed card clubs make significant
percentages of their government revenue from their clubs.
We don’t have enough evidence, yet, but I predict that studies will find that
poker contributes in other ways. Poker players are—probably—smarter,
happier and more sociable. They certainly have to know at least a little
about math, money management and how to play by the rules.
Maybe we should start thinking up ways to prove that poker should be
made legal, not because it is not gambling, but because a society is better
with poker than without.
© Copyright 2010. Professor I. Nelson Rose is recognized as one of
the world’s leading experts on gambling law and is a consultant
and expert witness for players, governments and industry. His
latest books, Internet Gaming Law (2nd Edition recently published)
and Gaming Law: Cases and Materials, are available through his
website, www.gamblingandthelaw.com