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I have participated in a few meetings of some lottery boards, and I have heard that there is a tension here between the illegal market and the pricing of the le

I have participated in a few meetings of some lottery boards, and I have heard that there is a tension here between the illegal market and the pricing of the legal market. Some states charge the (relatively low) commissions that the illegal market charges because they would prefer to stamp out the illegal market, and others take your position but have a thriving black market for gambling. Those are basically the two options.

PaulHoule 2y ago
I think illegal sports gambling was less pernicious. The usual bookie offered bets on the outcome of games which are much harder to manipulate than the stupid prop bets that people get addicted to now. The stigma of being involved in something illegal also slowed things down, you had to actually call up a bookie and not just press a button on an app.
- pclmulqdq 2y ago
  For what it's worth, I agree with you, but that's the counter-argument: if prices are too high, you're going to essentially get people either circumventing restrictions (eg with VPNs) or turning to gangs. Some of the other games that state lotteries are adopting are almost as bad as sports betting in terms of their availability (look up instant-play gaming), but sports betting feels like a game of skill, which certainly makes it worse from a psychological perspective. I still think it should be legal if people are going to do it anyway. Maybe banning the "specials" on combo bets or requiring them to be labeled as "this is still a bad bet" could help. For the record, I have a vested interest in sports gambling being banned because I sell products involved in instant-play and other forms of gaming that are not involved in sports betting.
  - nerdponx 2y ago
    Did people do illegal online sports gambling before it was legal? Did it do as much harm as it does now?
    - pclmulqdq 2y ago
      Yes they did, and I don't know if we have harm data. It certainly provided a lot of funding to criminals. It probably did not cause nearly as much direct harm as we see today.
fidotron 2y ago
> Some states charge the (relatively low) commissions that the illegal market charges because they would prefer to stamp out the illegal market Slight tangent, but I am now of the view the state should not be allowed to tax legal vices. (Drugs, gambling, alcohol primarily). The reason is it keeps pushing amazing conflicts of interest, and the state ends up incentivized to maintain the behavior it supposedly does not want. Either [vice] is wrong and should be illegal, or is tolerated and regulated but in no way profited from by those that do the regulation.
- pclmulqdq 2y ago
  Taxing vices is how you control the amount of them while still allowing people to do them. Taxation is an important form of regulation.
  - fwip 2y ago
    Sort of. It's how you bankrupt poor people addicted to the vice while not meaningfully affecting the well-off.
    - nerdponx 2y ago
      Ideally you would make it extremely expensive to get started, but inexpensive if you're already addicted and beyond the point of thinking rationally about money.
  - s1artibartfast 2y ago
    That's one theory. Another Theory is that the state is simply piling on and further exploiting these people. A third theory is that the state shouldnt be in the position of playing nanny or parent, influencing behavior. If it is illegal, prevent it from happening. If it is legal, it shouldn't it shouldnt interfere.
    - pclmulqdq 2y ago
      > A third theory is that the state shouldnt be in the position of playing nanny or parent, influencing behavior. If it is illegal, prevent it from happening. If it is legal, it shouldn't it shouldnt interfere. This sort of black-and-white position basically means either a complete ban (presumably with a harsh penalty for people who participate in the activity) or no regulation at all. A ban will just get circumvented if you don't penalize people for getting around it, so you're going to have to penalize addicts for illegal gambling, not just the people who enable that gambling. If you want to take the other extreme, are laws that force people to put lung cancer warnings on cigarettes "playing nanny"? In real life, we usually take middle ground positions, and that means doing things that influence behavior, whether they are taxes or restrictions on labeling.
jsnell 2y ago
I mean, yes, that is a theory one could reasonably believe in. In the absence of evidence, it's not obvious at all whether it is true or false. But this submission is about research showing that the legal market isn't just replacing the illegal market. It expands the market and the bad effects. That is, they're able to track the deposits made to betting sites and other spending. Bets to illegal bookies are obviously not in that dataset. But if the legal gambling had replaced illegal gambling, the money going into legal gambling would appear to be coming from nowhere. Most likely a reduction in cash withdrawals? But that's not the effect they're observing. The money going into gambling is displacing other spending, including spending on +EV investments. Given there is now evidence that the theory isn't correct, there's probably not much value in talking about it as if there really was a legitimate tradeoff here.

PaulHoule 2y ago

I think illegal sports gambling was less pernicious. The usual bookie offered bets on the outcome of games which are much harder to manipulate than the stupid prop bets that people get addicted to now. The stigma of being involved in something illegal also slowed things down, you had to actually call up a bookie and not just press a button on an app.

pclmulqdq 2y ago
For what it's worth, I agree with you, but that's the counter-argument: if prices are too high, you're going to essentially get people either circumventing restrictions (eg with VPNs) or turning to gangs. Some of the other games that state lotteries are adopting are almost as bad as sports betting in terms of their availability (look up instant-play gaming), but sports betting feels like a game of skill, which certainly makes it worse from a psychological perspective. I still think it should be legal if people are going to do it anyway. Maybe banning the "specials" on combo bets or requiring them to be labeled as "this is still a bad bet" could help. For the record, I have a vested interest in sports gambling being banned because I sell products involved in instant-play and other forms of gaming that are not involved in sports betting.
- nerdponx 2y ago
  Did people do illegal online sports gambling before it was legal? Did it do as much harm as it does now?
  - pclmulqdq 2y ago
    Yes they did, and I don't know if we have harm data. It certainly provided a lot of funding to criminals. It probably did not cause nearly as much direct harm as we see today.

fidotron 2y ago

> Some states charge the (relatively low) commissions that the illegal market charges because they would prefer to stamp out the illegal market Slight tangent, but I am now of the view the state should not be allowed to tax legal vices. (Drugs, gambling, alcohol primarily). The reason is it keeps pushing amazing conflicts of interest, and the state ends up incentivized to maintain the behavior it supposedly does not want. Either [vice] is wrong and should be illegal, or is tolerated and regulated but in no way profited from by those that do the regulation.

pclmulqdq 2y ago
Taxing vices is how you control the amount of them while still allowing people to do them. Taxation is an important form of regulation.
- fwip 2y ago
  Sort of. It's how you bankrupt poor people addicted to the vice while not meaningfully affecting the well-off.
  - nerdponx 2y ago
    Ideally you would make it extremely expensive to get started, but inexpensive if you're already addicted and beyond the point of thinking rationally about money.
- s1artibartfast 2y ago
  That's one theory. Another Theory is that the state is simply piling on and further exploiting these people. A third theory is that the state shouldnt be in the position of playing nanny or parent, influencing behavior. If it is illegal, prevent it from happening. If it is legal, it shouldn't it shouldnt interfere.
  - pclmulqdq 2y ago
    > A third theory is that the state shouldnt be in the position of playing nanny or parent, influencing behavior. If it is illegal, prevent it from happening. If it is legal, it shouldn't it shouldnt interfere. This sort of black-and-white position basically means either a complete ban (presumably with a harsh penalty for people who participate in the activity) or no regulation at all. A ban will just get circumvented if you don't penalize people for getting around it, so you're going to have to penalize addicts for illegal gambling, not just the people who enable that gambling. If you want to take the other extreme, are laws that force people to put lung cancer warnings on cigarettes "playing nanny"? In real life, we usually take middle ground positions, and that means doing things that influence behavior, whether they are taxes or restrictions on labeling.

jsnell 2y ago

I mean, yes, that is a theory one could reasonably believe in. In the absence of evidence, it's not obvious at all whether it is true or false. But this submission is about research showing that the legal market isn't just replacing the illegal market. It expands the market and the bad effects. That is, they're able to track the deposits made to betting sites and other spending. Bets to illegal bookies are obviously not in that dataset. But if the legal gambling had replaced illegal gambling, the money going into legal gambling would appear to be coming from nowhere. Most likely a reduction in cash withdrawals? But that's not the effect they're observing. The money going into gambling is displacing other spending, including spending on +EV investments. Given there is now evidence that the theory isn't correct, there's probably not much value in talking about it as if there really was a legitimate tradeoff here.