Gambling


Gambling

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Betting or staking of something of value on the outcome of a game or event.

Commonly associated with gambling are horse racing, boxing, numerous playing-card and dice games, cockfighting, jai alai, recreational billiards and darts, bingo, and lottery. In most gambling games it is customary to express the idea of probability in terms of "odds against winning." In the U.S. casino gambling, once highly restricted, is now legal in many states, and lotteries are employed by many states to raise revenues. The Internet has also become a venue for placing bets. See also bookmaking; casino.

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▪ 1998
by William R. Eadington
      Gambling in the United States has been experiencing a period of unprecedented growth since the end of the 1980s. Though gambling policy is often controversial, and the activity is still considered a vice in the minds of many, its legal status in many jurisdictions has clearly moved from prohibition to restricted tolerance. Furthermore, increased public acceptance of gambling is reflected both in opinion polls and in the willingness of Americans to allocate considerable time and money to gambling pursuits.

      Between 1982 and 1996 revenues from legal gaming industries in the U.S. grew from $10.4 billion to $47.6 billion. By 1997 casinos were operating legally in such diverse places as riverboats, historic mining towns, and Indian reservations. As recently as 1988, true legal casinos could be found only in the deserts of Nevada and at the shore in Atlantic City, N.J. By 1997, however, more than 25 states had operating casinos, and gaming wins of about $25 billion were being generated. This included Indian casinos, operating legally in more than 14 states, which in 1996 brought in more than $5 billion in gaming revenues. Lotteries, which were nonexistent in 1963, were operating in 37 states and the District of Columbia and generated revenues after payment of prizes of $15.4 billion in 1996.

      New technologies and product innovations also affected the presence and extent of commercial gaming. Various new games, gambling schemes, or lottery products quickly became major dimensions of the commercial gaming industries in the 1990s. Video lottery terminals (VLTs) first appeared in South Dakota in 1989 and in 1996 were present in five states, where they accounted for nearly $900 million in revenues. Slot machines, VLTs, and/or electronic gaming devices were placed at racetracks in Iowa, Delaware, Rhode Island, West Virginia, and Louisiana, and video poker machines were also in various locations in Montana and Louisiana. These gaming devices accounted for about $750 million in gaming revenues in 1997. Internet gambling, though still in the embryonic stage, quickly became mired in legal controversy, with legislation introduced in Congress in 1997 that would prohibit such activities.

      Where casino-style gaming was authorized, especially when there was little or no regional availability beforehand, surprisingly large gaming industries quickly emerged. Billion-dollar casino industries developed from scratch in the 1990s in the states of Mississippi, Illinois, Louisiana, and Connecticut. The casino industries of Missouri, Minnesota, and Indiana all exceeded the $500 million level in 1997, with Colorado and Iowa not far behind. California, which passed statewide regulatory legislation in 1997, had card clubs and technically illegal Indian gaming operations that exceeded $1 billion in gaming revenues.

      Between 1994 and 1997 active opposition to the continuing spread of casino-style gambling appeared in the form of the National Coalition Against Legalized Gambling, an activist group that became the most visible opposition to commercial gaming in the country. Partly at their urging and partly as a result of broader concerns regarding the wisdom of such a rapid increase in the presence of gambling, Congress authorized the National Gambling Impact Study Commission in 1996. The commission, which began meeting in 1997, was charged with examining a wide variety of issues linked to gambling, including community impacts and social and economic benefits and costs. It was scheduled to complete its investigations by 1999.

      Among those states that introduced casinos for the purpose of economic development in the 1990s, Mississippi was probably the most successful. The city of Biloxi and Tunica county were each becoming major regional casino-based destination resorts, with significant hotel and nongaming development taking place in addition to the casinos. Because of the diminishing political popularity of introducing new casino jurisdictions in the region, it appeared that Mississippi would hold its place as the southern regional casino centre.

      Other new jurisdictions have experienced rockier performances. Riverboat casinos expanded operations in various locations in Iowa, Indiana, and Missouri in 1996 and 1997, but competition and market saturation have become issues in many markets, including the metropolitan areas of Kansas City and St. Louis. Riverboats in western Louisiana performed well by catering to the large eastern Texas visitors' market, but casinos in New Orleans continued to disappoint their owners and supporters. The bankrupt land-based casino Harrah's Jazz in New Orleans made no progress toward completion through October 1997, and the last downtown riverboat casino in New Orleans closed in October.

      Indian gaming continued its rapid expansion but with some major controversies remaining unresolved. Legal battles involving tribal gaming continued in some states. In New Mexico the legislature finally approved a formula for compacting Indian casinos after previous agreements between tribes and the state's governor were disallowed by the state Supreme Court. In California tribes operated substantial casinos without compacts as legal and political battles raged between various parties, including U.S. attorneys, card clubs, the racing industry, and the governor.

      Not every gaming industry has benefited from legal gambling's recent expansion. The pari-mutuel racing industry continued its long-term decline in the face of competition from casinos and lotteries. Gaming revenues generated by wagering on horses and dogs declined by 0.8% in 1996 to about $3.7 billion. More significantly, on-track revenues from live racing fell by 14% in 1996, which reflected a shift in betting activity to offtrack and intertrack wagering. In some states the racing industry has been successful in persuading legislators to allow them to offer slot machines or other electronic gaming. The result has been to make those racetracks de facto casinos.

      It seems likely that during the next few years there will be a slowdown in political efforts to expand commercial gaming in America, partly because the general strength of the U.S. economy has reduced the urgency of undertaking significant job-creation and economic-development initiatives. Furthermore, many policy makers will wait until the National Gambling Impact Study Commission has issued its findings before making any future plans.

      It is unlikely, however, that the spread of gambling will become totally dormant. Indian gaming will almost certainly continue to become better established and to expand in various locales. The racing industry will continue to lobby to offer casino-style gaming as a means to save racing. Finally, the increasing public acceptance of gambling as a legitimate form of entertainment and the economic benefits to communities in the form of increases in jobs and tax revenues suggest that there will continue to be political efforts to grab the golden ring offered by legal gambling.

William R. Eadington is Professor of Economics and Director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada at Reno.

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Introduction

      the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, a contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor's miscalculation.

      The outcomes of gambling games may be determined by chance alone, as in the purely random activity of a tossed pair of dice or of the ball on a roulette wheel, or by physical skill, training, or prowess in athletic contests, or by a combination of strategy and chance. The rules by which gambling games are played sometimes serve to confuse the relationship between the components of the game, which depend on skill and chance, so that some players may be able to manipulate the game to serve their own interests. Thus, knowledge of the game is useful for playing poker or betting on horse racing but is of very little use for purchasing lottery tickets or playing slot machines (slot machine).

      A gambler may participate in the game itself while betting on its outcome (card games (card game), craps), or he may be prevented from any active participation in an event in which he has a stake (professional athletics, lotteries). Some games are dull or nearly meaningless without the accompanying betting activity and are rarely played unless wagering occurs (coin tossing, poker, dice games, lotteries). In other games betting is not intrinsically part of the game, and the association is merely conventional and not necessary to the performance of the game itself (horse racing, football pools). Commercial establishments such as casinos (casino) and racetracks may organize gambling when a portion of the money wagered by patrons can be easily acquired by participation as a favoured party in the game, by rental of space, or by withdrawing a portion of the betting pool. Some activities of very large scale (horse racing, lotteries) usually require commercial and professional organizations to present and maintain them efficiently.

Prevalence of principal forms
      A rough estimate of the amount of money legally wagered annually in the world is about $10 trillion (illegal gambling may exceed even this figure). In terms of total turnover, lotteries are the leading form of gambling worldwide. State-licensed or state-operated lotteries expanded rapidly in Europe and the United States during the late 20th century and are widely distributed throughout most of the world. Organized football (soccer) pools can be found in nearly all European countries, several South American countries, Australia, and a few African and Asian countries. Most of these countries also offer either state-organized or state-licensed wagering on other sporting events.

      Betting on horse racing is a leading form of gambling in English-speaking countries and in France. It also exists in many other countries. Wherever horse racing is popular, it has usually become a major business, with its own newspapers and other periodicals, extensive statistical services, self-styled experts who sell advice on how to bet, and sophisticated communication networks that furnish information to betting centres, bookmakers and their employees, and workers involved with the care and breeding of horses. The same is true, to a smaller extent, of dog racing. The emergence of satellite (satellite communication) broadcasting technology has led to the creation of so-called off-track betting facilities, in which bettors watch live telecasts at locations away from the racetrack.

      Casinos (casino) or gambling houses have existed at least since the 17th century. In the 20th century they became commonplace and assumed almost a uniform character throughout the world. In Europe and South America they are permitted at many or most holiday resorts but not always in cities. In the United States casinos were for many years legal only in Nevada and New Jersey and, by special license, in Puerto Rico, but most other states now allow casino gambling, and betting facilities operate clandestinely throughout the country, often through corruption of political authorities. roulette is one of the principal gambling games in casinos throughout France and Monaco and is popular throughout the world. craps is the principal dice game at most American casinos. Slot (slot machine) and video poker machines are a mainstay of casinos in the United States and Europe and also are found in thousands of private clubs, restaurants, and other establishments; they are also common in Australia. Among the card games played at casinos, baccarat, in its popular form chemin de fer, has remained a principal gambling game in Great Britain (United Kingdom) and in the continental casinos most often patronized by the English at Deauville, Biarritz, and the Riviera resorts. faro, at one time the principal gambling game in the United States, has become obsolete. blackjack is the principal card game in American casinos. The French card game Trente et Quarante (or rouge et noir) is played at Monte-Carlo and a few other continental casinos. Many other games may also be found in some casinos—for example, sic bo, fan-tan, and pai-gow poker in Asia and local games such as boule, banca francesa, and kalooki in Europe.

      At the start of the 21st century, poker exploded in popularity, principally through the high visibility of poker tournaments broadcast on television and the proliferation of Internet playing venues. Another growing form of Internet gambling is the so-called betting exchanges—Internet Web sites on which players make wagers with one another, with the Web site taking a small cut of each wager in exchange for organizing and handling the transaction.

      In a wide sense of the word, stock markets may also be considered a form of gambling, albeit one in which skill and knowledge on the part of the bettors play a considerable part. This also goes for insurance; paying the premium on one's life insurance is, in effect, a bet that one will die within a specified time. If one wins (dies), the win is paid out to one's relatives, and if one loses (survives the specified time), the wager (premium) is kept by the insurance company, which acts as a bookmaker and sets the odds (payout ratios) according to actuarial data. These two forms of gambling are considered beneficial to society, the former acquiring venture capital and the latter spreading statistical risks.

Chances, probabilities, and odds
      Events or outcomes that are equally probable have an equal chance of occurring in each instance. In games of pure chance, each instance is a completely independent one; that is, each play has the same probability (probability theory) as each of the others of producing a given outcome. Probability statements apply in practice to a long series of events but not to individual ones. The law of large numbers is an expression of the fact that the ratios predicted by probability statements are increasingly accurate as the number of events increases, but the absolute number of outcomes of a particular type departs from expectation with increasing frequency as the number of repetitions increases. It is the ratios that are accurately predictable, not the individual events or precise totals.

      The probability of a favourable outcome among all possibilities can be expressed: probability (p) equals the total number of favourable outcomes (f) divided by the total number of possibilities (t), or p = f/t. But this holds only in situations governed by chance alone. In a game of tossing two dice, for example, the total number of possible outcomes is 36 (each of six sides of one die combined with each of six sides of the other), and the number of ways to make, say, a seven is six (made by throwing 1 and 6, 2 and 5, 3 and 4, 4 and 3, 5 and 2, or 6 and 1); therefore, the probability of throwing a seven is 6/36, or 1/6.

      In most gambling games it is customary to express the idea of probability in terms of odds against winning. This is simply the ratio of the unfavourable possibilities to the favourable ones. Because the probability of throwing a seven is 1/6, on average one throw in six would be favourable and five would not; the odds against throwing a seven are therefore 5 to 1. The probability of getting heads in a toss of a coin is 1/2; the odds are 1 to 1, called even. Care must be used in interpreting the phrase on average, which applies most accurately to a large number of cases and is not useful in individual instances. A common gamblers' fallacy, called the doctrine of the maturity of the chances (or the Monte-Carlo fallacy), falsely assumes that each play in a game of chance is dependent on the others and that a series of outcomes of one sort should be balanced in the short run by the other possibilities. A number of systems have been invented by gamblers largely on the basis of this fallacy; casino operators are happy to encourage the use of such systems and to exploit any gambler's neglect of the strict rules of probability and independent plays. An interesting example of a game where each play is dependent on previous plays, however, is blackjack, where cards already dealt from the dealing shoe affect the composition of the remaining cards; for example, if all of the aces (worth 1 or 11 points) have been dealt, it is no longer possible to achieve a “natural” (a 21 with two cards). This fact forms the basis for some systems where it is possible to overcome the house advantage.

      In some games an advantage may go to the dealer, the banker (the individual who collects and redistributes the stakes), or some other participant. Therefore, not all players have equal chances to win or equal payoffs. This inequality may be corrected by rotating the players among the positions in the game. Commercial gambling operators, however, usually make their profits by regularly occupying an advantaged position as the dealer, or they may charge money for the opportunity to play or subtract a proportion of money from the wagers on each play. In the dice game of craps—which is among the major casino games offering the gambler the most favourable odds—the casino returns to winners from 3/5 of 1 percent to 27 percent less than the fair odds, depending on the type of bet made. Depending on the bet, the house advantage (“vigorish”) for roulette in American casinos varies from about 5.26 to 7.89 percent, and in European casinos it varies from 1.35 to 2.7 percent. The house must always win in the long run. Some casinos also add rules that enhance their profits, especially rules that limit the amounts that may be staked under certain circumstances.

      Many gambling games include elements of physical skill or strategy as well as of chance. The game of poker, like most other card games, is a mixture of chance and strategy that also involves a considerable amount of psychology. Betting on horse racing or athletic contests involves the assessment of a contestant's physical capacity and the use of other evaluative skills. In order to ensure that chance is allowed to play a major role in determining the outcomes of such games, weights, handicaps, or other correctives may be introduced in certain cases to give the contestants approximately equal opportunities to win, and adjustments may be made in the payoffs so that the probabilities of success and the magnitudes of the payoffs are put in inverse proportion to each other. pari-mutuel pools in horse-race betting, for example, reflect the chances of various horses to win as anticipated by the players. The individual payoffs are large for those bettors whose winning horses are backed by relatively few bettors and small if the winners are backed by a relatively large proportion of the bettors; the more popular the choice, the lower the individual payoff. The same holds true for betting with bookmakers on athletic contests (illegal in most of the United States but legal in England). Bookmakers ordinarily accept bets on the outcome of what is regarded as an uneven match by requiring the side more likely to win to score more than a simple majority of points; this procedure is known as setting a “point spread.” In a game of American or Canadian football, for example, the more highly regarded team would have to win by, say, more than 10 points to yield an even payoff to its backers.

      Unhappily, these procedures for maintaining the influence of chance can be interfered with; cheating is possible and reasonably easy in most gambling games. Much of the stigma attached to gambling has resulted from the dishonesty of some of its promoters and players, and a large proportion of modern gambling legislation is written to control cheating. More laws have been oriented to efforts by governments to derive tax (taxation) revenues from gambling than to control cheating, however.

History
      Gambling is one of mankind's oldest activities, as evidenced by writings and equipment found in tombs and other places. It was regulated, which as a rule meant severely curtailed, in the laws of ancient China and Rome as well as in the Jewish Talmud and by Islam and Buddhism, and in ancient Egypt inveterate gamblers could be sentenced to forced labour in the quarries. The origin of gambling is considered to be divinatory: by casting marked sticks and other objects and interpreting the outcome, man sought knowledge of the future and the intentions of the gods. From this it was a very short step to betting on the outcome of the throws. The Bible contains many references to the casting of lots to divide property. One well-known instance is the casting of lots by Roman guards (which in all likelihood meant that they threw knucklebones) for the garment of Jesus (Jesus Christ) during the Crucifixion. This is mentioned in all four of the Gospels and has been used for centuries as a warning example by antigambling crusaders. However, in ancient times casting lots was not considered to be gambling in the modern sense but instead was connected with inevitable destiny, or fate. Anthropologists have also pointed to the fact that gambling is more prevalent in societies where there is a widespread belief in gods and spirits whose benevolence may be sought. The casting of lots, not infrequently dice, has been used in many cultures to dispense justice and point out criminals at trials—in Sweden as late as 1803. The Greek word for justice, dike, comes from a word that means “to throw,” in the sense of throwing dice.

      European history is riddled with edicts, decrees, and encyclicals banning and condemning gambling, which indirectly testify to its popularity in all strata of society. Organized gambling on a larger scale and sanctioned by governments and other authorities in order to raise money began in the 15th century with lotteries—and centuries earlier in China with keno. With the advent of legal gambling houses in the 17th century, mathematicians began to take a serious interest in games with randomizing equipment (such as dice and cards), out of which grew the field of probability theory (probability and statistics).

      Apart from forerunners in ancient Rome and Greece, organized sanctioned sports betting dates back to the late 18th century. About that time there began a gradual, albeit irregular, shift in the official attitude toward gambling, from considering it a sin to considering it a vice and a human weakness and, finally, to seeing it as a mostly harmless and even entertaining activity. Additionally, the Internet has made many forms of gambling accessible on an unheard-of scale. By the beginning of the 21st century, approximately four out of five people in Western nations gambled at least occasionally. The swelling number of gamblers in the 20th century highlighted the personal and social problem of pathological gambling, in which individuals are unable to control or limit their gambling. During the 1980s and '90s, pathological gambling was recognized by medical authorities in several countries as a cognitive disorder that afflicts slightly more than 1 percent of the population, and various treatment and therapy programs were developed to deal with the problem.

Dan Glimne

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Universalium. 2010.

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