Gambling Prohibition

  • History has proven that gambling laws have been no more successful than the prohibition of alcohol or the drug war.
  • Pushing gambling underground has aided con artists, grifters, card sharps, and all other types of racketeers.
  • Violent, organized criminals have controlled these black markets throughout history and corrupt public officials have been their prime beneficiaries.
  • Illegal gambling proceeds have been the central driver behind some of the most remarkably corrupt political machines throughout American history, in particular, the Democrats of Tammany Hall in New York and Nucky Johnson’s Republicans in Atlantic City.

 

(Photo Hennepin County Library Special Collections)

 

Mob Connection

  • Well-chronicled gang wars were fought to control the “numbers” or “policy” rackets, which were essentially illegal lotteries.
  • Sen. Estes Kefauver led the most comprehensive Congressional investigation into organized crime in the 1950s when FBI Director Hoover was unwilling to admit that the mafia even existed.
  • The Kefauver committee admirably identified the corruption that resulted from illegal gambling proceeds, but their recommended course of action for further criminalizing this underground market was misguided.
  • Legalizing, regulating, and taxing various forms of gambling has dramatically reduced the power of the mafia, increased consumer safety, provided thousands of free-market jobs and billions of dollars of tax revenue, and enabled harm reduction/rehab services for compulsive gamblers.

(Photo Library of Congress)

 

The Real Vegas Story

  • Bugsy Siegel and Meyer Lansky are synonymous with Las Vegas gambling…Are you familiar with Tony “the Hat” Cornero and Guy McAfee? They are a couple of Las Vegas’s lesser-known founding fathers.
  • The mafia controlled Vegas for decades and embezzled millions of dollars from the casinos to avoid paying taxes, thereby ripping off the taxpayers of much-needed resources.
  • Government regulators, along with state and federal authorities eventually uprooted the mafia from the legal casino industry.
  • Vegas is no longer a gambling town…it is an entertainment-driven town with the lure of gambling…gambling only accounts for 34% of Vegas casino revenues.

(Photo Ty Eggstaff - Facebook)

Three-Card-Monte Politics

  • There are several examples in which politicians switched their stance on gambling, either for or against, after receiving campaign donations.
  • The gambling industry now finances Republicans more than Democrats. Why? Wouldn’t the industry favor more liberal leaders who generally support legalized gambling?
  • In some instances, casino groups have clandestinely funded anti-gambling campaigns to crush their competition.
  • Donald Trump, Sheldon Adelson, and Jack Abramoff are few relevant names for this topic.

 

(Photo ZioDave/Flickr)

Q - Isn’t Gambling Generally Legal?                                                    A - Sort of…it’s complicated

  • Lotteries are now legal in 43 states and generating over $70 billion in sales.
  • The casino industry is legal in 43 states and generates over $8 billion in taxes and employs over 300,000 people.
  • On the other hand, social gambling among friends in which the host neither profits nor has a “house edge” is banned in 23 states! That doesn’t seem to make sense, but the government hates competition.

 

Offshore Industry

  • The way in which the offshore gambling industry was founded has a fascinating history.
  • As the industry grew in popularity, the DOJ publicly proclaimed that they didn’t have the authority to prosecute these international companies that cater to American clients.
  • Two months later, the FBI busted six of the industry’s leading companies.
  • That case led a tiny Caribbean island successfully challenging the United States through the World Trade Organization (WTO). The WTO sided against the U.S because these types of prosecutions violate fair trade agreements.
  • Nonetheless, our federal government continues to prosecute offshore gambling operators, in some cases by extreme means, and rakes in millions of dollars in forfeitures.

 

(Photo Caymen Islands Wikimedia Commons)

 

 

Online Poker, Sports Betting, Daily Fantasy Sports

  • Banning Internet gambling was a pet project for a small group of Republican leaders. They tried persistently for several years, but there wasn’t enough bipartisan support for their proposal. In the end, they were able to pass their bill through nefarious means. The details of how this unfolded are quite illustrative of how the political process actually works.
  • The sports leagues lobbied aggressively with powerful insiders and powerbrokers to ban Internet gambling; albeit, they wanted one exception. A few years later, daily fantasy sports has emerged as a growing industry due to a technicality within that exception.
  • The sports leagues are now partners with the two leading daily fantasy sports companies.
  • Internet gambling is legal in only three states even though roughly 2 million Americans play this game through legal or illegal markets.
  • Sports gambling is a $200-300 billion black market patronized by roughly 15 million Americans on a regular basis.
  • You will learn about the remarkable backstory of the earliest days of sports gambling, the misguided laws that banned this activity, and the hypocrisy of maintaining these laws.

(Photo John Seb Barber/Flicker)

Quid Pro Quo Racket

  • The prosecutor in the controversial, precedent-setting case involving Internet gambling returned to private practice to work for the law firm whose clients lobbied to ban Internet gambling.
  • Misplaced priorities for prosecutors and federal authorities…The federal government has chased the low hanging fruit of illegal gambling and overlooked the rampant criminality of Wall Street.
  • Some bureaucrats found lucrative careers in the private sector after building their resume with illegal gambling cases and overlooking the crimes of Wall Street. In some instances, private law firms have defended the most notorious financial criminals while lobbying for anti-gambling laws.

 

(Photo www.flazingo.com/creativecommons)

Hypocrisy

  • There are stunning similarities between the mechanics of illegal gambling and financial markets. In fact, the top oddsmaker in Las Vegas is a subsidiary of one of Wall Street’s most renowned bond trading firms.
  • Some of the leading politicians who helped to create the “too big to fail” banks, which are backed by the taxpayers, were also adamantly anti-gambling legislators who were responsible for the creation of Internet gambling laws.
  • These same conservative, anti-gambling Congressmen helped to protect Wall Street’s multi-trillion dollar derivatives betting market from any reasonable regulations. Remarkably, in some cases, offshore gambling companies were held to higher standards of regulation.
  • Financial derivatives are nearly identical to various forms of illegal gambling and Congress actually exempted derivatives from all applicable gambling laws. Bear in mind, the derivatives market led to the financial crash of 2007 and the subsequent mortgage crisis. Finally, the details of this whole sordid tale are particularly indicative of the legalized corruption that takes place every day on Capitol Hill.

 

(Photo Chicago Mercantile Exchange Wikimedia Commons)

 

 

Print Print | Sitemap
© Brian Saady