U.S. Now Says All Online Gambling Illegal, Not Just Sports Bets
bloomberg.com
bloomberg.com
"Adelson's newspaper, the Las Vegas Review-Journal, was the only major newspaper nationwide to endorse Trump.[42][43]
Adelson was also the largest donor to Trump's inaugural celebrations, with a $5 million donation to the celebrations.[44]" -- Wikipedia
The "word on the street" among lawyers I knew when the UIGEA[1] was passed in 2006 (which paved the way for black Friday[2]) was that Sheldon Adelson & the Vegas Lobby had pushed hard for this.
The long-term aim, in their opinions, was to capture the online gambling market on a state-by-state basis via regulatory capture, because they had already missed the boat and were being out-competed by Pokerstars et al.
It's no surprise that the regulations in e.g. New Jersey require a "partnership" with a land-based casino.
edit: also, I should note that Vegas probably shot themselves in the foot doing this (at least short-term). Online gambling brought a surge of business to Vegas, and though the recession had a lot to do with it, the banning of online poker definitely hurt them a lot.
[1] https://en.wikipedia.org/wiki/Unlawful_Internet_Gambling_Enf...
[2] https://en.wikipedia.org/wiki/United_States_v._Scheinberg
"For Washington State residents, all gambling on the Internet is illegal, including all types of sports betting. "
https://www.wsgc.wa.gov/about-us/frequently-asked-questions/...
edit: quote+link
https://statelaws.findlaw.com/washington-law/washington-gamb...
So this all is separate from the Federal Wire Act, and the even more recent discussion on how to interpret it wrt online gambling.
I know it is separate from the Federal Wire Act, but I present it as a counter to the commenters here that seem to believe restricting online gambling is some kind of a Trump/GOP thing.
Progressive democratic party politicians are more than happy to criminalize online gambling when powerful interest groups that give them money ask for it.
https://www.cnn.com/2018/05/14/politics/sports-betting-ncaa-...
Note IANAL, but there doesn't seem to be a necessary conflict.
Many states now allow sports gambling, with many more on the way.
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
18 U.S.C. § 1084(a) (codifying Pub. L. No. 87-216, § 2, 75 Stat. 491 (1961)).
From the 2011 DOJ opinion that stated that only sports bets were illegal[1]
1. https://www.justice.gov/sites/default/files/olc/opinions/201...
Can anyone legally versed tell me why I shouldn't be this incensed?
> (b) Nothing in this section shall be construed to prevent the transmission in interstate or foreign commerce of information for use in news reporting of sporting events or contests, or for the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal.
So if it is legal in your state to you to have casual betting (which is often the case, for example New York State excludes "casual" bookmaking [1]) and it is legal in the other state to have casual betting, then there's likely no conflict with the Federal law.
[1] https://www.nysenate.gov/legislation/laws/PEN/225.00, General Definitions, 9. "Bookmaking" means advancing gambling activity by unlawfully accepting bets from members of the public as a business, rather than in a casual or personal fashion, upon the outcomes of future contingent events.
"Bracket pools, office sports pools, and fantasy sports have never been authorized as gambling activities in Washington State and are illegal."
https://www.wsgc.wa.gov/about-us/frequently-asked-questions/...
https://gist.github.com/jeremyaboyd/6012e7c0d80138f366064d69...
The question is about "on any sporting event or contest"
Is that "on any sporting event or sporting contest" or "on any sporting event or other contest"
I might not be correct, but lists of two don't seem to have commas in at least this US Law.
In so far as the federal government can unilaterally expand its reach, it will tend to do so, if just because being part of the federal government makes you more likely to think things should be regulated at the federal level. The authors of the Constitution knew this, and drafted it to safeguard the rights of state governments. But "states's rights" has been a dirty word for quite some time.
You mean like your 9th and 10th Amendment rights from the Bill of Rights?
A loot box is literally "Pay $1 and see what you get!", and there are percentages behind what you can get (unknown to us). It's literally no different than buying a lottery ticket, except you always get something (maybe equivalent to the value of the lottery ticket) with a chance of getting something more valuable.
Now maybe they are adjusting lootbox percentages on the back-end so too many people don't get something unique if that's how you are trying to claim it's a raffle.. but I still don't think that makes it anywhere near the definition of a raffle.
From the consumer side, insurance is the purchase of a service to cover any a future debt falling under the category of the service, ie. an unforeseeable, unintentional act of damage by or to the consumer. I have no intention of burning down my house. I pay so that if it were to happen, I am not stuck paying off a house I'll never own.
From the servicer side, it is the sale of a product whereby consumers get covered for unexpected events, yet the company gets a profit for provider the service. Assuming a correct amortization, the company gets a profit.
Insurance is gambling. The servicer is the house and always wins (unless they screw up).
That is not to say that gambling can't serve purposes other than entertainment, because it can. That doesn't make it not gambling.
Correct me if I’m wrong, but I think the difference is, no one is betting that you actually do have an unforeseen incident, so there is no bet to hedge against.
You are. When you buy insurance, you are betting that you will have an unforeseen incident and will utilize your insurance.
The fact that you are doing so to offset some financial risk doesn't change the fact that you are gambling.
I don't see why source of a risk matters here. I believe the position I am arguing against is that that motivation of hedging against risk makes gambling-like behavior not gambling.
As far as I can tell your position is:
Gambling-like behavior is not gambling if it is done to offset non-gambling related risk.
Almost, but I don't feel like this is 100% accurate, because neither involved party wants an unforeseen incident to occur - the 'win' situation, if you could call it that, is the same for both parties. I can sort of see the argument that you are betting you "won't win", but I can't see it as gambling behavior:
> I don't see why source of a risk matters here.
Gambling implies taking a risk for possible gain, no? To me, part of the difference is that the risk/chance involved (life) is not intrinsic to the transaction - it is more or less known what your returns will be, and under what conditions. Contrast this to, say, a slot machine, where the 'win' conditions are owned by the house and unbeknownst to you. There is no situation where you can know you will be paid out for any given parameters.
What about flight insurance? Is that a gamble because no one knows if you'll make your flight? Are you betting that you won't make your flight because you purchased it, or are you paying for a conditional service?
(mostly not serious) aside: if what you posit is true, is the peace of mind one gains from having insurance akin to gambling addiction?
It is? I'm pretty sure health care pricing is far more opaque than slot machine payout amounts (the opaqueness of payout rates varies by state).
You have increased the downside of not having large hospital bills. You are taking on risk, but the idea is that the small risk reduces the variance in your outcomes. See the other reply thread where I am trying to understand why reducing variance in one situation is gambling but doing it in another is not.
> if what you posit is true, is the peace of mind one gains from having insurance akin to gambling addiction?
I would say akin, but obviously not the same. In both cases you have made wager that you can be usually pretty certain has a negative expected value and the motivation for this wager is to acquire a positive/pleasant state of mind.
Paying $X is saying "I bet something will happen to me, so I need this service so I don't get screwed over." Otherwise, why buy pay anything at all?
(If you "hedge" so far you're unbalanced in the other direction, you're not actually hedging your bets any more. "Hedge funds" aren't really for hedging if you use them as a primary investment.)
In what way is it opposite? How is more betting somehow the opposite of betting?
Let's say I bet $10 that team A will beat team B with 1:10 odds (I would win 100) and then team A does really well so at half-time I bet $10 that B will beat team A with 1:2 odds (I would win 20)
I have now hedged my bets and I will at least break even. Under your understanding, that second bet is not gambling solely because of my motivation for placing it?
Let's say that instead I make a $20 bet at halftime that B will beat team A with 1:2 odds (I would win 40). Now I come out ahead no matter the outcome. Because I "over hedged" this is gambling again?
This doesn't make sense to me.
If you were doing both bets before the game started, at about the same time, then the second bet would effectively not be gambling. Not because of your motivation, exactly, but because it reduces the variance in how much money you'll have at the end of the game.
If you buy a matched pair of tickets so that you guarantee a $60 output, that's not gambling. Even if you come out ahead no matter what. (who was dumb enough to sell that to you?)
Let's say you had a bet on team A forced upon you, because of where you live or something. At that point buying a matching bet on team B is an anti-gambling behavior that removes variance from the system. It's the equivalent of insurance.
If you then keep buying team B, then you're gambling in the other direction. If you buy so much insurance that you make a profit on losing items, you're gambling. But that's not how insurance normally works. It normally pays out less then what you lose, because of deductibles and the time wasted.
> If you were doing both bets before the game started, at about the same time, then the second bet would effectively not be gambling. Not because of your motivation, exactly, but because it reduces the variance in how much money you'll have at the end of the game.
I would agree that if you could make both bets simultaneously that would not be gambling, but I don't see how that is relevant
In my example, both of the second bets reduce the variance in how much money you could gain or lose. 90,-10 after the second bet becomes 80,0 or 70,10
> Let's say you had a bet on team A forced upon you, because of where you live or something. At that point buying a matching bet on team B is an anti-gambling behavior that removes variance from the system. It's the equivalent of insurance.
Why does the source of the risk matter? You have said that gambling is based not on intention, but on effect on outcome variance. Why would the second bet in your example be any different from the second bet in mine?
Let's go with a more real world example. Let's say you have a shop near a stadium in the UK and you place bets so that you win money on outcomes that are likely to lead to vandalism or looting. My understanding of your position is that this is not gambling unless the shopkeeper miss-estimates his risk and bets so much that he gets vandalized and still comes out ahead.
In my view, the distinction between gambling and insurance is purely marketing and public relations.
I might buy a case that insurance companies don't gamble the same way that some bookies don't gamble, because they have the information they need to safely hedge their bets with certainty as they are made.
In my view, consumers generally have much less information about the risks they are hedging, that means they can't have the certainty required for buying insurance to not be gambling
If you're conditionally making the second bet based on outside factors, then you might not actually be implementing a strategy of reduced variance. (And if you were making that bet unconditionally then why did you wait until midgame?) It's tricky. I'd rather deal with simpler upfront scenarios.
> Let's go with a more real world example. Let's say you have a shop near a stadium in the UK and you place bets so that you win money on outcomes that are likely to lead to vandalism or looting. My understanding of your position is that this is not gambling unless the shopkeeper miss-estimates his risk and bets so much that he gets vandalized and still comes out ahead.
That could possibly work. If the looting is basically guaranteed, the bet acts to reduce variance. But looting tends to be pretty random, so under real life circumstances it probably wouldn't work out that way.
The laws aren't set up for such tiny corner cases, of course.
> I might buy a case that insurance companies don't gamble the same way that some bookies don't gamble, because they have the information they need to safely hedge their bets with certainty as they are made.
> In my view, consumers generally have much less information about the risks they are hedging, that means they can't have the certainty required for buying insurance to not be gambling
The information is needed to figure out a fair price for the insurance. If you don't have enough info you might overpay, but overpaying isn't gambling. If you turn a 10% risk of a $10k loss into a guaranteed $2.5k payment then you got ripped off but you didn't gamble. Your variance is still dropped to zero.
This doesn't make sense to me. What are "outside" factors and why do they matter? When you place the second bet, you have risk that you are reducing. Whether that risk has changed since you placed your first bet has no effect on whether your second bet reduces your risk or not.
> I'd rather deal with simpler upfront scenarios.
I'm sure you would, but you have failed to explain the relevance of upfront scenarios to our discussion.
> If you don't have enough info you might overpay, but overpaying isn't gambling.
You have still failed to explain WHY you think reducing risk by placing a bet that you will be injured is not gambling but placing other bets that reduce risk are.
As long as the only things involved are the "team A wins" reward and the "team B wins" reward, any bet you make that brings them closer together is not gambling.
> You have still failed to explain WHY you think reducing risk by placing a bet that you will be injured is not gambling but placing other bets that reduce risk are.
They're both not gambling. (Logistically. Legality is another issue.)
Especially when it's taken out by people who don't even own the asset being insured. For people that do, it's ideally like taking an opposing bet to the bet that you've implicitly taken by owning something that has the possibility of failure.
I guess the line is that if you're on both sides of the bet, it's not gambling.
Selling insurance is definitely gambling, but it's subject to the law of large numbers like everything else - at some point, all of the risk is ironed out by the number of things you insure. At that point, it's a government concession.
When you buy insurance you're not betting that something bad will happen to you, you're hedging your otherwise implicit bet that something bad _won't_ happen to you.
I'm betting State Farm $12 a month my apartment will burn down before I die or move out.
I remain unconvinced that insurance is anything but a legal gamble.
You and a million other people give State Farm $12 so that in the event of fire or flood affecting a subset of the pool, there's enough money collected to pay out to make claimants whole.
There are no "winners" in the insurance game, only losses. If they have to pay you, you've already lost both the premiums you've already paid as well as what people or property were damaged (gambler's fallacy at work-- your entire neighborhood is smoldering and your family is dying painfully in the burn ward, but here's your insurance check, you winner!).
In your case, even if your apartment does burn down, it's not like you walk away with a windfall (unlike gambling). The adjuster is going to see to it you end up no better off than almost-exactly how you were before the fire. You don't "win" anything, and the meager payout you get can't always replace who or what you lost in the process.
Everybody involved also loses if more peoples' apartments go up in flames than there is money in reserve-- unlike with lotteries, where the payout is distributed equally amongst the claimants.
How do you think casinos and bookies work? They spread their risk by setting lines and odds and taking a vig.
It seems so many laws are about protecting people from themselves, but then we need exceptions from them for society to work at all. Like you can't legally invest in a non-listed company if you are not an accredited investor. Maybe we should make this distinction more formal and universal. Society could have an official and transparent way a person could enter the class of people who are expected to be responsible for their actions.
my take away is this, as long as we allow states to market lotteries then the idea that private companies should be held to differing rules is wrong. either all play on a level playing field or none play. considering the misery many state lotteries are said to bring I don't see how they can stand there smug except the fact they have the courts and police power to get away with it.
Maybe a better answer is why we ban gambling at all. There are people who have a problem with it, but maybe a better solution is to get them help to break the cycle instead of banning it in some cases but not others.
I think the problem is we don't know the exact point when a pleasure becomes a problem. Or, how to effectively help people even if we did know when they crossed a line.
Society will pay a price somewhere. It's just right now, we seem more willing to curtail our freedom in that area than we are to help those who make mistakes.
There are huge social consequences to gambling. If you look at an entire society you have some people that will have problems with it and some people that won't. You may fall into the "won't" pile but surely society benefits if we prevent a large number of our members from falling prey to addiction.
There are huge social consequences to drinking. If you look at an entire society you have some people that will have problems with it and some people that won't. You may fall into the "won't" pile but surely society benefits if we prevent a large number of our members from falling prey to addiction.
AFAIK, no such laws exist with respect to gambling.
Allowing problem gamblers to blow all their money hurts the whole industry because then they go broke and don't have any more money to gamble with. The industry has started to recognize that in the last 5-10 years and many measures have started to be implemented to catch problem gamblers and restrict them before they lose all their money.
Most of the laws don't really deal with people that drink too much. Bars might need to stop serving if someone is inebriated enough. There might be public intox laws, which occasionally get folks arrested for walking home instead of driving. Drunk driving laws, because it is bad And sometimes there are limits to hours and things.
None of these things deter anyone determined and I'm guessing more than one of them catch more folks that don't have a big problem than the ones that do.
how does society benefit from prohibiting people from doing things that only hurt themselves?
If we are going to be liberal, we also need to ensure society as a whole isn’t damaged in the process. War on drugs, as an example, have more or less destroyed other countries. Legalised drugs are probably better, but could be taxed and those with problems should be treated as they have a sickness. Gambling could be state run and be handled the same way.
I don't have any dependents myself. why do you care if I spend all my money?
Making it illegal to neglect your dependents is already codified into law in a couple of places, like alimony, but a general purpose law runs into the problem of defining neglect and enforcing it. It's the sort of thing that is a total mess in the courts with an endless parade of he-said she-said cases.
Slot machines are a hack that exploits human psychology, to the loss of everyone, and the benefit of... Casino owners.
I understand that people want to gamble. I also think that it should be aggressively discouraged.
how about instead of trying to protect him from his own mistakes like a child, you just let go of the need to take care of people who willfully mess their lives up?
> I understand that people want to gamble. I also think that it should be aggressively discouraged.
nothing wrong with having an opinion. I'm just asking you to use your words instead of appealing to state power.
"But many would rather die than go there!"
"If they would rather die, then let them get on with it! And decrease the surplus population!"
> how about instead of trying to protect him from his own mistakes like a child, you just let go of the need to take care of people who willfully mess their lives up?
Because a civilized, compassionate society takes care of all its members, no matter how broken they are.
And because, furthermore, various studies have shown it to be cheaper to address problems like this before they get that bad than it is to let someone fall through the cracks. At that point, they're likely to be a cost to society in different ways, whether it's due to crime or just the trouble of cleaning up after them.
"State power" isn't a swear word. It's a highly effective solution to a great many societal problems, when exercised sensibly.
There are all sorts of laws which protect people from themselves, this is nothing new. See; seatbelt laws for an obvious and simple example.
and they are all a grotesque overextension of state power. although seatbelt laws are actually not a good example; they protect people outside your vehicle as well.
I guess we just have different values. I don't want to be a revenue center for the state to optimize.
Well, that's certainly a valid viewpoint, but secondary (and primary) seat belt laws have saved a staggering number of lives. You're correct that it's perhaps not the best example as the driver and occupants can turn into projectiles and harm others, but the vast majority of deaths and injuries come to those not wearing a seat belt[1].
>I don't want to be a revenue center for the state to optimize
It's not about being a 'profit center' for a host of corrupt politicians. We can debate what tax money should be spent on, or the rate at which they are levied, but I imagine we would both agree that taxes themselves are necessary for the maintenance of a healthy society. Your life is better when those around you are healthy and productive. None of us exist in a vacuum.
As far as the general notion that government has an overriding interest in people's welfare - that same logic would trivially justify abortion bans, forced marriage and labor, and all kinds of other nasty stuff.
Only if you left no room for nuance and see every issue as completely black and white. Life doesn't work that way. It's ridiculous to compare seat belt laws (which we already have!) to forced marriage and labor (which we do not.)
Take drug use, for example. Some people want legalisation under the pretence that it only hurts yourself. Someone sitting at home smoking ice has a risk that they are going to leave their home and participate in behaviour that puts other innocent people in danger, such as driving a vehicle while high.
If a large number of people in an area become problem gamblers then it will lead to issues that affect everyone in the area, not just the gamblers. Who shoulders the cost of this?
https://www.predictit.org/support/faq
Why is there an $850 limit to how much I can buy on any one contract?
PredictIt operates under no-action relief from the Division of Market Oversight of the Commodity Futures Trading Commission. An $850 limit on investment by an individual participant in any contract is a condition of this relief.
[1] https://www.justice.gov/olc/file/1121531/download
[2] https://www.justice.gov/sites/default/files/olc/opinions/201...
This position will be reversed in a couple of years, and one can be perfectly poised to take advantage of it.
Now would be a good time to start development on a sports betting app.
How would the law distinguish something like that from "a game of chance?"
On the other side, gambling acts as a one-way function on money, allowing laundering. So reducing the ability for laundering is a good thing.
Finally, gambling can easily destroy family finances so it's good policy to curb it on those grounds as well - requiring the gambler to visit an establishment means potentially less nets-eggs being broken to feed a habit.
Crony capitalism 101
I don't care what side of the aisle you're on, if you don't see this as textbook corruption, you're on the take, period.
This isn't even a conspiracy theory, this is just obvious fact. Adelson paid for this with his billions, in an effort to stamp out a business concern.
No one has yet described the actual consequences of this, and as far as I can tell, there haven't been any.
And plenty of these sites aren't offshore at all, like bovada.
You act like gambling itself isn't a "scam" -- no need to be illegitimate when what you're doing is as insanely profitable as gambling...
I think the correct contrast would be legalized state lotteries.
There is a sister post that in trying to argue against this only seems to support the point. "a house that always wins"; as has been echoed on HN ad infinitum, _don't stock pick_, (Edit; child is correct, this is more about day trading, but the broader advice probably still holds to some extent) because if you do, you're the dumb money handing it over to the HFT firms. So even if the intent is not for wallstreet to be a gambling house, if it looks like a duck and quacks like a duck and benefits from regulatory capture like a duck...
"Google announced that it was buying a private company called Nest, for instance, and the entirely unrelated stock of Nestor Inc. (ticker: NEST) was up 1,900 percent"
This explanation should be very familiar to those who have frequented groups like bogleheads that drink the indexing koolaid. (I admittedly do, as one could probably tell from the above)
I think you mean _don't day trade_. HFT is a tax on changing your bets. If you pick a stock and stick with it for years, it's negligible.
It still might be good advice not to stock pick, but I don't think HFT is the reason.
Even that is debatable. In just about every state, when they added a lottery "that funds eduction", they reduced the state contribution to the education budget by exactly the amount that was being added by the lottery. So while technically yes it goes to education, in reality it does not.
Lotteries are my prime example when I want to highlight that humans don't act rationally
What if $5 per week for the rest of their life doesn't impact an individual's standard of living, but $10 million would drastically improve it?
Does it then make (more) sense to participate?
But if you get some other value out of it you place at least $5/wk utility on, sure. Maybe you get more utility out if it than a movie a month, or whatever.
Already maxing my ROTH and 401K so I figure it's like $80 a year well spent to entertain the phantasy.
I don't think most people even consider the odds when playing the lottery.
OTOH, people pay for the dream of winning the lottery, which has some value, adicts withstanding.
Insurance on the face of it is irrational -- insurance companies make money, therefore buying insurance is paying a premium above what the expected reimbursement is over the lifetime of the insurance. It's a reverse lottery; the expected outlays exceed the expected returns.
What you pay the premium for in insurance is to reduce downside variance.
What you pay the premium for in a lottery is to increase the upside variance.
When I buy options contracts as a trader, I'm speculating the price will go up or down. I'm not adding anything productive to the economy. For me to win, another trader must lose.
But I'm still gambling on an outcome in a zero sum game. What is the purpose of anti-gambling laws? To protect the common man? But the state is okay with you losing everything on stocks? The point is its an unjust hypocrisy.
Gambling is a useful analogy but what is missing is that a person creating a business or buying a house, fixing it up, and flipping it are taking a risk on /profit/ but fully intend on creating real value whether they end up losing money or not.
That's quite a bit different than laying a bunch of money on red at a roulette table. The only value created -- the fun of the gamble itself -- is completely intangible and immediately destroyed.
Of course, there's a spectrum there, too. How much value is created by the efficient allocation of capital in our markets? Lots, it can be easily argued. Well, what about the marginal micro-transactional allocation in HFT? Well, maybe not so much.
Adelson was a major financial supporter of Trump and the GOP in 2016 vis-à-vis the Future 45 Super PAC. His wife was recently awarded the Presidential Medal of Freedom. This decision was bought and paid for.
The "too big to fail" era left the US with fewer choices in the marketplace, thanks to the political elite and their revolving door connection with big industry.
Crony capitalism is just as bad as authoritarian socialism, but at least the latter feigns helping the regular person, instead of lining the pockets of the elite while claiming "free markets".
The papers should be lashing out against this type of stuff. But I guess none of the left-leaning major papers want to seem soft on 'regulation'.
My understanding is that they don't need to register as an exchange because of this. That doesn't necessarily absolve them of being a form of gambling, does it?
> A coalition backed by billionaire casino executive Sheldon Adelson lobbied the Justice Department in 2017 to reconsider its 2011 decision that cleared the way for states to allow online gambling.
California made $7 billion from their lottery last year alone. But you can't run one!