Comments on: Google, Yahoo and Microsoft ante up $31.5 million in fines for promoting online gambling

By: Kevin

Kevin — Fri, 21 Dec 2007 08:09:47 +0000

From what I heard a couple years ago, there was legislation on the books to legalize internet gambling site to locate their host servers in Las Vegas, but I guess it never came to fruition. I’m sure online gambling is a billion dollar business by now, and all that money is going overseas.

By: Mani

Mani — Thu, 20 Dec 2007 18:53:50 +0000

TDavid - I sometimes, well most times, think that our government couldn’t hit their butts with both hands nor see the forest for the trees. Why not legalize gambling in whatever form and take a piece of the pie. I also think that they should legalize other things - but that’s another story. Good thinking about the travel/time impact. If one could gamble at home, wouldn’t that reduce the ‘global warming,’ the wear and tear on your vehicle, etc.?

By: TDavid

TDavid — Thu, 20 Dec 2007 17:48:44 +0000

You just made me think of other issues with terrestrial gambling, Davis, unless one lives in walking/biking distance to a casino: environmental and financial impact of travel to and from the terrestrial casinos. The closest indian casino here is about 25 mile round trip. The closest casino we like the best is over 100 miles round trip.

If people could gamble from home legally, that would cut down some amount of travel-related expense and waste.

By: Davis Freeberg

Davis Freeberg — Thu, 20 Dec 2007 17:13:43 +0000

Not only is the government missing out on tax revenue, but consumers are also missing out on more efficient ways to wager. Historically, gambling has been heavily regulated which has allowed casinos to maintain high spreads on what they charge people for gambling. Instead of trading bets with other players, you have to use the house as an intermediary, where they are allowed to fix prices. This allows the casinos to keep a percentage of what you are gambling, instead of charging you a flat commission because you usually don’t know what their cost basis is on the bet. While most customers don’t notice the spread, it shows up everywhere from the green spaces on the Roulette wheel to the 5 - 10% Vig that they take at the sportsbook.

If you were to compare gaming to investing, then the casinos today works like much of the bond market. Instead of knowing how much you are paying for each wager, you only get to know how good/bad the odds are. Some casinos will be more aggressive and will advertise better rates, but most consumers have trouble understanding how much gambling costs, when they aren’t paying a flat fee for each “trade”

In England (where internet gambling is allowed) it works less like the bond market and more like the stock indexes. Instead of having to pay an unknown spread to the house, you pay a flat commission and are then allowed to buy and sell bets directly to the public. This reduces the risks that the house needs to take and improves the efficiency for gamblers. It also gives gamblers an opportunity to cut losses or take early gains, if the situation around their wager starts to change (i.e. star QB breaks his leg) Unfortunately, by trying to outlaw internet gaming, the Government has created high barriers to entry and are preventing more efficient markets from developing.