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No. 349

June 18, 1999

Gambling America

Balancing the Risks of Gambling

and Its Regulation

by Guy Calvert

Executive Summary

or competitive sports.

Americans, it would seem, are all gamblers

A high standard of gaming integrity is in

now. Opportunities abound, from state and

everyone's interest. But that is best accom-

interstate lotteries to the traditional contests of

plished voluntarily, by way of private accredita-

horses and greyhounds and in all manner of casi-

tion through independent third parties. The

nos--Indian or commercial, on land or on water,

federal government should therefore resist

or just online. But while more and more con-

pressure to involve itself further in gambling.

sumers embrace their freedom to wager, a deter-

And the states too must recognize that prohi-

mined few are agitating to turn back the clock.

bition, even in the form of government licens-

Stepping into the fray, Congress has estab-

ing and oversight, substitutes corruption for

lished the National Gambling Impact Study

enterprise. They should fully expose gambling

Commission to tally up the "social costs" of

to the rigors of the market, beginning with the

gambling and examine a range of regulatory

lotteries. It is time for states to relinquish their

options. The commissioners were also to review

monopolies.

the costs of regulation, which presumably calls

Confronting uncertainty, taking or hedging

for thorough consideration of the nongovern-

risks, presents decisions that are the staple of

mental alternatives. But strikingly, in this regard,

life and the key to prosperity. There may be

they failed. Moreover, these proceedings obscure

risks inherent to gambling, but we should

the important point that gambling, for the vast

remember that government intervention

majority of people, is simply a matter of fun, a

entails risk too. A coercive effort to eliminate

voluntary and harmless pursuit that many find

or reduce gambling must compete with that

rewarding. In moderation, it is neither less

most formidable opponent, human nature.

wholesome nor less rational than other sources

Lawmakers too need to balance the risks.

of entertainment, such as television, the opera,

Guy Calvert, a quantitative analyst at a Wall Street firm, holds a D.Phil. in mathematics from Oxford

University.