Gambling

An Annotated Bibliography

 

Edited by Wesley Pack and Tyler Jarvis

 

with contributions by Micah Allred, Leah Brown, Daniel Butler, Amber Clawson, Mark Creer, Scott Hollingshaus, Eric Lewis, Brandon Mackay, Mikey Peers, and Christopher Rees.

 

 

Contents

 

Social Problems Related to Gambling

Gambling & Addiction

Youth Gambling

Internet Gambling

Economics of Gambling

Marketing of Gambling

Visual Aspect of Marketing

Sports Betting Markets

Gambling & Economics

Stock Market Gambling

Gambling & Islam

General

United States

Indonesia

Israel & Palestine

Afghanistan

Other Countries

Mathematics of Gambling

Logical Fallacies and Systems for Winning

 


 

Gambling & Addiction

 

A laboratory-based investigation of relations among video lottery terminal (VLT) play, negative mood, and alcohol consumption in regular VLT players.  Addictive Behaviors 27(2002) 819-835

 

The authors present a very detailed report of a controlled test to ascertain the tendency for people involved in VLT to also drink alcohol, and to see how this affected their mood.  The participants were chosen from a group of people who responded to a newspaper advertisement that solicited gamblers who played VLT at least once a month for the past three months.  These people were divided into a movie-watching control group and a gambling group, then analyzed as they both pursued their respective activities in the same bar-like environment.  The results clearly indicated that those who participated in VLT were more likely to consume alcoholic drinks, and that, contrary to commonly reported data, the subjects who drank and gambled were more dysphoric than the control group (it had commonly been reported by gamblers that gambling and drinking were relaxing).  It was also reported that those who drank and gambled lost more money than those who just gambled.

They seemed to have been very careful in their statistical procedures, and cautious about drawing too strong conclusions.  It was pointed out that this correlation could be useful for counselors of pathological gamblers (it shows a tendency for one addictive behavior to act as a trigger for another), and for those involved with casino regulation (where a looser drinking policy could likely increase gambling revenues). MICAH ALLRED

 

 

 

Quinn, Frank L. (2001).   First Do No Harm: What Could be Done by Casinos to Limit Pathological Gambling.  Managerial and Decision Economics, 22, 133-142.

 

Quinn presents a list of suggestions of steps casinos could take that may prevent current and future gamblers from becoming pathological gamblers in need of professional help.  The list he has does provide some potentially good ideas, but are, for the most part, poorly supported, impossible to implement, and at times contradictory.  He proposes methods for decreasing the length of play, limiting the jackpots, eliminating stimulus, as well as the accessibility to gambling institutions as a few of the possibilities.

The paper was difficult to take seriously as a result of the impossibility of its proposals and the rampant logical fallacies and plays on emotion.  He begins his arguments with a story about a mother who, (at the mercy of the casino), was unable to leave slot machine for 9 hours while her newborn baby, left outside in the car, died of dehydration.  Virtually all of his suggestions are simply stated without any real explanation of the underlying research or theory.  For example, he espouses a regulation that requires casinos to be located away from population centers as resorts, since a majority of problematic gamblers live close to casinos.  They should also reduce their hours of operation, make everyone quit for five minutes an hour, make people stand (rather than sit at slot/virtual poker machines), and prevent casinos from being opulent or offering anything other than gambling. 

If this wasn't bad enough, he later contradicts himself saying that casinos could be as lavish as they wish, and seems to infer that they will both less profitable and better off at the same time.  He deduces from Alabama's failure to establish a lottery, and South Carolina's opposition to video poker, as justification for the statement that the feeling against gambling is changing.  He adds arguments in his conclusion that weren't addressed in the paper and are equally poorly supported. MICAH ALLRED

 

 

 

Sellman, J.D., Adamson, S., Robertson, P., Sullivan, S., & Coverdale, J. (2002).  Gambling in mid–moderate alcohol–dependent outpatients. Substance Use and Misuse, 37(2), 199-213.

 

This article deals with the relation that exists between problem gambling, And mild to moderate alcohol dependence.  In terms of actual data and research, the article is very informative.  The project appears to be very objective, well founded, and free from radical variables. 

The study, involving 124 New Zealand outpatients, monitored their gambling habits for a period of 6 months.  A computer and an analytical team analyzed the survey and determined the frequency of "problem gambling" and pathological gambling among those tested.  The results showed that gambling frequency among those tested was roughly equivalent to the national averages recorded in previous research, however, the frequencies of "problem gambling" and pathological gambling were considerably higher.  The study found the frequency of pathological gambling to be three to four times the nation average while that of "problem gambling" was ten times the average.  However, the article tries to reach beyond its potential in the Discussion section.  Here the authors present several possible treatment possibilities for their alcohol dependent gamblers.  The foundation of these suggestions is not nearly as strong as that of the research data.  The authors should have left this part out, and so should the reader. SCOTT HOLLINGSHAUS

 

 

 

Grant, J.E., & Kim, S.W. (2002). Gender differences in pathological gamblers seeking medication treatment. Comprehensive Psychiatry, 43(1), 56-62.

 

This article focuses on the differences that exist between men and women who are seeking treatment for pathological gambling problems.  Although not a major study it does provide insight into the psychological differences between the two sexes with respect to gambling and their responses to treatment.  However, the study seems to only apply to those people who seek help for their problems, which is the minority of all pathological gamblers.

Through surveys, this study compares the gambling habits and treatment reactions of 127 men and women ranging from the ages of 18 to 65.  Contrary to previous studies, this article finds that there are very few differences between the two sexes.  The study found that the only significant differences are in the average age of those exhibiting gambling problems and in reasons for which they gamble.  The study also looks at the family histories of those involved.  It uses this information to see if family pressure is a notable influence in the gamblers' behavior.  Finally, the study analyzes the treatment histories of the participants.  Because all of the participants were currently seeking treatment at the time, this section provides useful data.  The authors note that most pathological gamblers do not seek treatment, thus lowering the probability that data acquired in terms of family history and demographics are a true representation of all pathological gamblers. SCOTT HOLLINGSHAUS

 

 

 

Petry, N.M., & Oncken, C. (2002). Cigarette smoking is associated with increased severity of gambling problems in treatment-seeking gamblers. Addiction, 97, 745-753.

 

This study is one of the first major studies of the relationship between smoking and gambling addiction, providing some valuable insights.  The researchers present a well thought-out study making considerable effort to eliminate any unknown factors from their data.  It gives strong evidences for a connection between the two addictions, showing that pathological gamblers are more likely to be smokers than the average person is.

The study involved over 300 people from Connecticut who were seeking treatment for gambling problems.  The study adequately screened all involved in order to ensure good data.  The participants completed surveys questioning them about their gambling and smoking habits.  The study found that a considerably larger percentage of the pathological gamblers were smokers than the state average.  However, one relevant weakness is the fact that only three questions determined whether a person was a smoker or not.  The study also compares the gambling habits of those involved and their experiences with illicit drugs, problematic families, and other social problems.  As an aid for the reader, the article provides a good table of the data, thus allowing him or her to concentrate on those areas of most interest. SCOTT HOLLINGSHAUS

 

 

 

Hall, M.N., & Shaffer, H.J. (2002). The natural history of gambling and drinking problems among casino employees. The Journal of Social Psychology, 142(2), 405-434.

 

This study is a longitudinal study in response to a popularly held notion that disordered gambling is always progressive.  Although the researchers try to create a strong data sample, they admit that their results are subject to major error.  It is possible that their results are a true interpretation of the gambling population; however, a reader would be taking a very grave risk in accepting their results as such.

Given an eligible population of 9,943 casino employees, this study uses two surveys, CAGE and SOGS, to map their gambling and drinking habits over a period of two years.  Because of large turnovers in casino employment, the number of participants constantly lessens throughout the study, starting with 6,067 and ending with 1,176.  Using the surveys, the researchers divided the participants into one of three possible levels of gambling and drinking activity.  Each year they repeated the surveys and mapped the movement of the participants from level to level.  The prediction was that over time, more of the participants would move to higher levels; however, the data show the opposite to be true.  Admittedly, the data are questionable in their validity.  One such question discussed in the article is that casino employees, although constantly surrounded by gambling, probably do not represent the normal gambling population.  That aside, however, the data is sufficient to make one question the popularly held notion that gambling is a progressive disorder. SCOTT HOLLINGSHAUS

 

 

 

Pasternak, A.V. (1997). Pathologic gambling: America's newest addiction?. American Family Physician, 56(5), 1293-4.

 

This article reviews the history and growth of legalized gambling in America and the spread of pathological gambling that has followed.  It is not a new study; rather it presents facts gathered in previous research.  It also analyzes the development of indicator tests and the history of pathological gambling treatment methods.  Overall, it is a very good introduction into the symptoms of problem gambling and the methods used to detect it.

After a brief introduction into the universality of the gambling institution, the author addresses the symptoms of pathological gamblers.  He explains and provides examples of the different diagnosis tools (including a copy of the ten diagnostic criteria) that doctors use in order to identify gambling problems in a patient.  He also notes the high probability of false-positive results in the different tests.  The article then goes on to explain the typical path of the problem gambler and the dangers that he presents to his family and himself.  It seems that many factors affect addiction.  The games that "pay off" more often tend to be more addictive.  The author also provides some information as to the demographic breakdown of pathological gamblers.  Age, sex, and social status are all factors that determine susceptibility to addiction.  These differences also aid in the selection of treatment possibilities.  Different treatments, including drugs and counseling, appear to work for different patients.  Finally, the article provides contact information for those who need more information with respect to pathological gambling. SCOTT HOLLINGSHAUS

 

 

 

Petry, N.M. (2000). Psychiatric symptoms in problem gambling and non-problem gambling substance abusers. The American Journal on Addictions, 9, 163-171.

 

This study analyzes the psychiatric differences between substance abusers who are probable pathological gamblers and substance abusers who are not.  Although the study is admittedly subject to considerable error, it does provide some useful information as to this psychiatric relationship.  Contrary to other previous studies, this study concludes that there is no significant difference between the two studied groups.

The study involves a sample of 103 substance abusing individuals who responded to a newspaper ad.  Because HIV and other medical problems are known to contribute to psychiatric disorders, a preliminary screening test eliminated those individuals from the sample, in an attempt to eliminate error.  In an attempt to maintain good interpretable data, the team also randomly eliminated some of the non-problem gambling women because they produced an unequal ratio of men to women.  The South Oaks Gambling Screen (SOGS), the Addiction Severity Index (ASI), and the Symptom Checklist 90-Revised provided the gambling, addiction, and psychiatric data needed for each participant.  The overall findings were that there was no considerable psychiatric difference between the problem and non-problem gamblers.  The article admits that because of the small sample the study may not be a true representation of the whole population.  Another weakness is that the study included all types of substance abusers, including heroin and cocaine users.  Such a broad sample does not provide for a good control.  Finally, the study used tests that evaluate lifetime problems therefore it cannot determine whether problem gambling, psychiatric disorders, and substance abuse were manifest at the same time in the participants. SCOTT HOLLINGSHAUS

 

 

 

Toneatto, Tony and Ferguson, Donna (2003). Effect of a new casino on problem gambling in treatment-seeking substance abusers. Canadian Journal of Psychiatry 48(1), 40-44.

 

This article follows the development of problem gambling in a community after the establishment of a local casino.  The study looks at the relationships between certain substance dependencies and problem gambling.  Much care was taken to provide a proper control and the data seem very strong.

The article examines the gambling habits of 853 residents in the Niagara Falls, Ontario during the tree years following the establishment of the Niagara Falls Casino in 1996.  The entire data sample consists of people seeking treatment for substance abuse with similar demographics to the entire population.  One noticeable difference is that two thirds of those studied were men, which does not follow the normal distribution.  The other big difference is that more than half of those studied were receiving government assistance, which is far from the norm.  Details such as these must be addressed in order to fully apply the data to the whole population.  Aside from those two differences, the sample set is acceptable as normal.  The study found that most people gambled in lotteries, but those who were problem gamblers gambled more in other ways.  As far as the substance abuse connection, it appears that the cannabis abuse is most closely related to problem gambling.  Rates of problem gambling among all the substance abusers were considerably higher than in the normal population.  This result coincides with similar studies. SCOTT HOLLINGSHAUS

 

 

 

Hodgins, David C., Makarchuk, Karyn and Peden, Nicole (2002).  Why problem gamblers quit gambling: A comparison of methods and samples. Addiction Research and Theory, 10(2), 203-208.

 

This article is a comparison study of the different factors that contributed to the eventual quitting of gambling by problem gamblers.  The study compares recent quitters with long-term quitters in terms of reasons for quitting.  The main goal of the study was to look at the factors and determine if the main reason for quitting was internal or if it was imposed by external circumstances.  The article accomplishes this goal and gives some interesting data on the subject.

The study used the SOGS test to determine the gambling status of the study's participants.  The sample set included 43 long-term quitters and 101 recent quitters.  The samples contained similar percentages of male and female.  The two groups were also similar in terms of other demographics, providing for a good overall sample set.  Participants responded to several surveys inquiring as to their reasons for quitting.  The survey asked if reasons for quitting involved crises, immediate decisions, or other contributing factors.  Results found that in most cases the two samples coincided.  Some key differences found that long-term quitters seemed to say that their quitting happened over a short period while those recent quitters claimed that it was a slow process.  The main finding of the study was that most quitters found that it was a conscious decision not forced by outside circumstances.  This is consistent with the original hypothesis. SCOTT HOLLINGSHAUS

 

 

 

Orford,  Jim and Victoria Morison (1996).  Drinking and gambling: a comparison with implications for theories of addiction.  Drug and Alcohol Review, 15, 47-56.

 

This article compares a group of alcoholics and pathological gamblers in several situations.  It is a well thought out project with some very interesting results.  It is one of the first studies to show a considerable difference between the two disorders.  The data are very convincing and they provide an important point of view for anybody looking into the connections between the two addictions.  However, the study is not a very large one, in that it does not have a very large sample set.  Overall, the article is a very good and informative one.

The study takes 16 alcoholics and 16 gamblers and compares the symptoms that the two groups portray.  First, the article looks at how strong the two addictions are.  It found that both alcoholics and pathologic gamblers are very addicted to their problems.  Secondly, the article looks at the withdrawal symptoms of the both.  The study found that alcoholics were the only ones to show significant withdrawal symptoms, similar to other recent studies.  Finally, in the study the researchers interview each of the participants for about one and a half hours in order to more fully understand the impact of these two diseases.  Although not all the results from these interviews are in the article, the key information is presented in an informative manner.  The main weakness of the paper is the fact that the sample group is so small.  However, the two groups were purposely kept small in order to more carefully control the gambling and drinking habits of each participant.  Other than that, the study is very convincing. SCOTT HOLLINGSHAUS

 

 

 

Weiss, Stephen M. (1999) A comparison of maladaptive behaviors of athletes and non athletes.  Journal of Psychology, 133(3), 315-322.

 

 

 

Volberg, Rachel A. (1994) The prevalence and demographics of pathological gamblers: implications for public health.  American Journal of Public Health, 84(2).

 

 

 

Youth Gambling

 

Griffiths, Mark. (1995). Adolescent Gambling.  New York: Routledge.

 

Introducing the concept of adolescent gambling with case studies, the author gives accurate information in an enjoyable manner.  Covering a variety of aspects of adolescent gambling, Griffiths begins with an informative overview of gambling in general, and goes on to focus more specifically on fruit machine gambling. Upon first inquiry the tables and graphs seem to be accurate, with correct analyses. 

Griffiths combines his publications in journals such as British Journal of Psychology, Addictive Behaviors, Journal of Gambling Studies Journal of Community and Applied Social Psychology, and adds his more recent insights and studies. Each chapter can be an article in itself, with studies, tables, explanations and conclusions.  This book is a reliable and informative source. AMBER CLAWSON

 

 

 

Petry, Nancy M. and Tawfik, Zeena (2001).  Comparison of Problem-Gambling and Non–Problem-Gambling Youths Seeking Treatment for Marijuana Abuse. Psychiatry, 40(11), 1324-1331.

 

This article attempts to look at the connections between Marijuana use and pathological gambling.  The study looked at prevalence of pathological gambling among marijuana using adolescents and other demographic information between the two.  The study is a retrospective one and produces some okay results.  The data seems reliable, however, it is pretty simplistic.  The article is good for people who are interested in knowing about the comorbidity of the two, but does not provide any data as to the real connection between them.

The study involved 255 adolescents who were under surveillance for marijuana use.  It found that the prevalence of pathological gambling among them was much higher than the national average. It was about 20% compared to the national average of 2%.  This was determined using the South Oaks Gambling Screen.  The study also found that most of the pathological gamblers were white males.  These data are consistent with other studies comparing pathological gambling and addictions.  In this way, the study does not provide any new unique information.  The only useful information that the study provides is that criminal activity is more common among those individuals that share both addictions.  If one is interested in looking at similarities between pathological gambling and marijuana addiction, this article is not a good resource. SCOTT HOLLINGSHAUS

 

 

 

Darbyshire, P., Oster, C., & Carrig, H. (2001).  The experience of pervasive loss: Children and young people living in a family where parental gambling is a problem.  Journal of Gambling Studies, 17, 23-45.

 

This recent study investigates parental gambling problems from the perspective of the youth.  This study is a solid foundation for future work.  Children of parents who gamble face real-life problems, and have not been the focus of as many studies.  This study enumerates a concept termed "pervasive loss."  This includes a physical and existential loss of a parent, a loss of security and trust, loss of child's relationship with extended family, as well as financial losses.

The approach and methods were well-planned and explained, taking into considerations of who was to be examined, and what permission was needed.  In each family, one parent had acknowledged a serious gambling problem.  15 children from these eight families, 11 males and 4 females, aged 7 to 18, were questioned in an interview setting.  Difficulty arises in future studies for many reasons.  Parents may not acknowledge a serious gambling problem, or be unwilling to provide honest answers.  Although this study was in relation to Australian homes, similar cases can be found in North America.  The findings can be applied to our country and provide insight for further studies here.  There are strong arguments from the findings in this preliminary study, which verify a need to explore the problem children face in the home of gambling parents. AMBER CLAWSON

 

 

 

Marjoribanks, K. (2002).  Family contexts, individual characteristics, proximal settings, and adolescents' aspirations.  Psychological Reports, 91, 769-770.

 

This study examines family social status and parents' perceived aspirations as factors to adolescents' own aspirations about education and occupation.  Although not having a direct connection to adolescent gambling, this source provides insight to possible factors from the home which influence adolescents.   Having a large study group size give credibility to the results.

Examining 1,724 boys and 1,788 girls, the study was extensive in its research.  The explanation of results is quite extensive, and rich with statistical terms.   Thus the explanation is not easily understood.  The author recognizes potential problem of missing data, and the inclusion of dummy variables.  Encouraging future investigations to test his research model, the author recognizes complexity of a once-thought simple solution.  Quoting Roth (1998), "Initially, we conceived learning environments as stable entities that could easily be changed.  However, our development efforts led us to understand the complexity of reform" (p.91).  This study explored relations between distal family contexts and aspirations. AMBER CLAWSON

 

 

Amati, B.H. (1981) Juvenile Delinquency and habit patterns. Indian Journal of Social Work, 44, 405-408. 

 

Keil, N. (1956) The behavior of five adolescents while playing poker.  Journal of Human Relations, 5, 79-89.

 

Knickerbocker, Brad. (1999).  For many teens, gambling starts at home.  Christian Science Monitor, 91(29), 3.

 

Myers, Jim.  (2002) Royally Flushed over Youth Gambling.  Education Digest, 56-61.

 

 

 

Internet Gambling

 

Rose, N. (2000).  The future legal landscape for Internet gambling.  The Fourth Annual International Symposium on Internet Gambling Law and Management.  Retrieved from http://www.gamblingandthelaw.com/antigua.html on February 17, 2003. 

 

The article's author, Nelson Rose, is a legal expert in the Internet gambling arena.  He explains in this article his expectations of future regulations concerning Internet gambling.  Much of the article is commentary on what he thinks ought to be done.

Rose treats current legislative efforts to curb Internet gambling.  He states that the ‘trend' is towards more legislation rather than less.  Various counties are legislating to restrict gambling to people within the country's jurisdiction.  He states that legislations future results are uncertain:  they may lead to higher fees, or increased competition. 

Rose comments on the almost universal legislative condemnation of Internet gambling by jurisdictions in the United States.  He contrasts these opinions with more accepting opinions in the United Kingdom and various smaller countries.  While some state legislators, and some Congressmen, are seeking to create new laws to outlaw Internet gambling, the Department of Justice maintains the position that current laws cover most Internet gambling. 

Rose ultimately takes the position that gambling regulation is a matter reserved for the states, rather than the federal government, through the Tenth Amendment.  State police power have the following attributes that best address gambling issues:  (1) police power is "virtually unlimited", (2) police power is often tied to morality, and (3) police power is a local issue. 

Lastly, the disputes between states with differing laws are discussed.  Extraterritorial enforcement is a difficulty that is troublesome with Internet gambling. MARK CREER

 

 

 

McMillen, Jan.  (2000).  Online gambling:  challenges to national sovereignty and regulation.  Prometheus, 18 (4), 391-401.

 

This article provides a good review of the difficulties governments face concerning regulating Internet gambling.  Sovereignty and potential tax revenue from Internet gambling are discussed.  Various approaches to regulate are also explained.  The article also covers the current policies towards Internet gambling of the following countries:  Australia, the United States, the United Kingdom, South Africa, New Zealand, Canada, and Europe.

A main difficulty that Internet gambling presents is who has jurisdiction over its regulation.  At the time the article was written, in Australia the Commonwealth was beginning to intrude upon its states.  Also concerning jurisdiction is the issue as to whether, and how, countries that do not allow Internet gambling can prohibit their citizens from gambling on websites located in countries that do allow it. 

The approaches of Australia to regulate Internet gambling are discussed.  The main approaches are to control market entry, transactions, and providers.  States in Australia initially sought to cooperate to maintain similar standards for gambling, and to profit-share.  However, cooperation never reached the necessary levels and tax rates vary significantly from state to state. 

The article states various factors as to why the number of Internet gambling websites has grown so quickly:  large profits, few barriers to entry, and low cost of operation. 

The policies of various countries vary dramatically.  South Africa hopes to assume a leading position in providing Internet gambling services.  Australia also facilitates online gambling.  In contrast, the United States takes a stricter position of wanting to possibly prohibit, and definitely regulate it. MARK CREER

 

 

 

Government Accounting Office.  (2002).  Internet gambling:  an overview of the issues (GAO-03-89).  Retrieved January 16, 2003, from http://www.gao.gov/new.items/d0389.pdf

 

This article is a government report that explains three significant issues of Internet gambling:  the laws and acts used to prosecute Internet gambling, the policies and regulations credit card companies are adopting with the rise of Internet gambling, and the threat of Internet gambling facilitating money laundering.  Although the article is repetitive at times, it provides solid information on the issues.

The article details the various laws and acts, and how they are used to prosecute Internet gambling.  The major laws and acts are the Wire Act, Travel Act, and Illegal Gambling Business Act.  The best-covered act is the Wire Act, but the others acts are also well covered.  Tedious explanation of credit card companies follows, providing more information than seems necessary.  The article emphasizes that, in general, credit card companies are staying away from Internet gambling because of the unsure legality of the transactions and the higher risk in the gaming industry.  Lastly, the article covers the contradicting views of law enforcement and banking concerning Internet gambling's vulnerability to money laundering. MARK CREER

 

 

 

National Gambling Impact Study Commission (1999).  National Gambling Impact Study Commission Report:  Chapter 5, Internet Gambling.  Retrieved January 21, 2003, from http://govinfo.library.unt.edu/ngisc/reports/5.pdf

  

This chapter comes from the National Gambling Impact Study Commission Final Report.  The final report is a definitive study on the impact of gambling in the United States.  This particular chapter focuses on Internet gambling.  Some issues and numbers in the rapidly changing Internet gambling industry are already dated.  The article emphasizes the growth of the industry, its types and variations, reasons to prohibit it, states' desire for federal intervention, obstacles to regulation, and recommendations to ban Internet gambling entirely.

The types of Internet gambling are treated lightly.  Well-explained reasons listed for prohibition of Internet gambling are ease of access to youth, pathological gamblers, and criminals.  The applicability of the Wire Act is debated.  The difficulty for states to enforce and regulate Internet gambling introduces the reasons why the federal government should take the lead in enforcement and regulation.  Various methods to avoid regulation are explained to demonstrate the difficulty of enforcement.  Lastly, the report gives recommendations to ban Internet gambling, to prohibit wire transfers to Internet gambling sites, to prohibit gambling's expansion into homes, and for the federal government to encourage other governments to also ban Internet gambling. MARK CREER

 

 

 

Internet Gambling: Prohibition v. Legalization:  Testimony before the National Gambling Impact Study Commission (1998) (testimony of Tom W. Bell).  Retrieved January 21, 2003, from http://www.cato.org/testimony/ct-tb052198.html.

 

This is the testimony of Tom W. Bell before the National Gambling Impact Study Commission.  Bell's recommendation is to promote the legalization and regulation of Internet gambling because he feels it would be impossible to effectively prohibit it.  Although he proposes regulation, he seems to propose so as a second-best solution only because of the difficulty of prohibition.  Few hard numbers are mentioned; just general ideas and consequences. 

He lists three mains reasons for the impossibility of prohibition.  First, Internet technology is so advanced that it easily circumvents its prohibition.  Second, the international nature of the Internet makes it impossible for law enforcement to enforce prohibition in only the United States when foreign websites are both easy to access and difficult to precisely censor.  Lastly, government needs for Internet gambling's potential tax revenue will create a call for the rescission of its prohibition. 

His testimony also highlights benefits stemming from legalization and regulation.  He claims that the various benefits of Internet gambling are increased technological development of networks, more wholesome environments for gamblers (compared to casinos), and increased competition.  He proposes that the key to regulation is creating greater benefits for regulated firms than for unregulated firms. MARK CREER

 

 

 

Hugel, P., Kelly, J.  (2002).  Internet gambling, credit cards and money laundering.  Journal of Money Laundering Control, 6, 57-65.   

 

The authors discuss the relationship between offshore betting companies and credit card companies.  Legal actions of betting individuals against credit card companies trying to recoup losses are explained.  The legislation of internet gambling in various countries is treated.

The authors contrast the offshore gambling's legality in the USA and the UK.  The USA seeks to eliminate offshore gambling, while the UK allows it more.  Another difference is that in the USA both the federal government and state government can take legal action against offshore betting companies.

The type of recovery, or how gamblers receive their winnings, is a big question for offshore betting companies.  Many companies return winnings in the same manner that an account is issued:  winnings are sent by check if the account was opened with a check, or winnings are credited to a credit card if the account was opened with a credit card.  The latter of these two has caused the most trouble.

A large portion of the article focuses on the legal action taken against credit card companies by individuals recovering losses from Internet gambling.  Many individuals sue credit card companies because the credit card company is an easier target than the small, discrete, offshore betting company.  Individuals sue on the basis that their losses are unenforceable since it is illegal.  Various cases show the development of the law in this area.  Credit card companies have won some of these cases, but not all.

Cases based on the Racketeer Influenced and Corrupt Organizations Act are discussed.  Of these cases, almost all are lost by the individuals.  However, the litigation is causing credit card companies to reduce their accessibility to be used by offshore betting companies because of the association with easy money laundering. MARK CREER

 

 

 

Rodefer, J.R.  (2002).  Internet gambling in Nevada: Overview of federal law affecting assembly bill 466.  Retrieved January 21, 2003, from http://ag.state.nv.us/hottopics/int_gamb_nv.pdf.

 

This article is an excellent resource for understanding federal statutes regarding gambling.  Statutes that affect online gaming are thoroughly discussed.  Similar statutes are compared and contrasted with one another to highlight their differences and their aims.  Excerpts from most statutes are listed, and each statute is explained and interpreted in clear terms.  The effects of both past and present legislation on online gaming are the main topics.  Other aspects of gaming that are treated are federal versus state jurisdiction, and jurisdiction according to location of wager.

The article provides a comprehensive list of statutes that directly apply to online gaming as well as those that might indirectly apply.  Those that directly apply are the Wire Act, explained as a narrowly applicable law towards sports betting; Travel Act, explained as a more broadly applicable law; Interstate Transportation of Wagering Paraphernalia Act, applies specifically to gambling supplies; Illegal Gambling Business Act, designed to fight organized crime; Racketeer Influenced and Corrupt Organizations Act, also designed to fight organized crime; Professional and Amateur Sports Protection Act; Interstate Wagering Amendment; and 2000 Amendment to the Interstate Horseracing Act. 

The article mentions the trend towards federal jurisdiction in Internet cases under the Commerce Clause, which gives power to Congress regarding interstate commerce.  Also, some cases are mentioned to demonstrate that case jurisdiction is determined by the location of the user rather than the provider. MARK CREER

 

 

 

Clarke, R. & Dempsey, W.  (2001).  The feasibility of regulating gambling on the Internet.  Managerial and Decision Economics, 22: 125-132.

 

The authors discuss the challenges that Internet gambling presents to governments.  They discuss why governments regulate gambling, aspects of Internet gambling that challenge current regulatory methods, and strategies to regulate Internet gambling.  They conclude that regulation is a better option than prohibition.

Governments allow gambling for the revenues it produces and because of people's demand for it.  Gambling is heavily regulated to reduce harmful social externalities.  The authors explain regulation of traditional methods of gambling (betting, lotteries, and gaming in the United States and Australia.  

The authors demonstrate Internet gambling as a shift from same-time-same-place gambling to different-time-different-place gambling.  Internet gambling provides users the benefit of decreased costs of searching for gambling opportunities.  However, it is fraught with problems.  The fundamental problem is anonymity of both the provider and the user.  Because the provider is anonymous, Internet gambling is more likely to be unfair and unsecured.  The anonymity of users creates problems by providing easier access to youth and problem gamblers.

The main strategies to regulate are banning, licensing Internet websites, and controlling ancillary activities.  Banning, or prohibition, encounters many technical difficulties, such as blocking IP addresses that can be easily masked, that prove it difficult to implement.  The banning of Internet gambling can take two forms: (1) soft, where users are deterred by making it illegal and prosecuting violators, and (2) hard, where technology is used to block websites that offer gambling.  Not only do both require huge resources, but they may be illegal by being classified as censorship. 

Licensing emerges as the option of choice.  Licensing ensures users both quality assurance and strong reputation.  These characteristics will draw more users to regulated sites.  The last option mentioned is to regulate ancillary activities such as advertising, as is done for traditional forms of gambling (casinos can only advertise food and entertainment).  This method would prove equally difficult to carry out due to technical difficulties similar to those from banning. MARK CREER

 

 

 

Marketing of Gambling

 

Miyazaki, Anthony D., Brumbaugh, Anne M., and Sprott, David E. (2001)  Promoting and Countering Consumer Misconceptions of Random Events:  The Case of Perceived Control and State-Sponsored Lotteries.  Journal of Public Policy and Marketing.  Vol. 20, No. 2,  254.

 

This is an excellent article that addresses, in appropriate detail, locus of control,  empirical tests of the effects of information on gambling decisions, and suggestions of possible policy ramifications.  The premise is simple; people, based on their locus of control, can be susceptible to marketing that focuses either on one's ability to control random events or on the influence of luck.  To test the effectiveness of probability information in reducing the feeling of control, or of the presence of luck, the authors conducted two studies that evaluated the extent that notes on lottery tickets, stating the fact that lotteries are random and there is no luck involved.  The authors found that those with internal loci of control, who feel that they have influence over outside events, were significantly influenced by the notes on the lottery tickets.  Those who have an external locus of control were less influenced by the notes, perhaps as a result of the amorphous and less defined nature of luck.  The possible policy connections were very simple, and amounted to looking at placing bounds on marketers, and also requiring information be added to tickets to remind people of the true nature of the game. MICAH ALLRED

 

 

 

The Herald, March 20, 1999, "Commission criticizes lottery advertising,"

 

The article relates the results of a federally commissioned study reporting to the National Gambling Impact Study Commission.  It claims that state lotteries use deceptive marketing and act as a regressive tax.  Regrettably, nowhere in the article is the issue of deceptive marketing practices addressed.  The statement is made that the lotteries promote the idea that lotteries lead to a better life.  The claim that the lottery is a regressive tax also falls short.  It says that blacks spend four times as much as whites and that 5% of players account for 50% of revenues.  Neither of these facts really supports the claim.  Really, the article was pathetic and in was a huge disappointment.  The is no real structure and the statistics lend no weight to the alleged improprieties. MICAH ALLRED

 

 

 

Barker, Thomas and Marjie Britz.  Jokers Wild.  Connecticut: Praegar, 2000. 224p.

 

The chapter focused on Gambling-lotteries is descriptive in its forms of lotteries. These include Pick4, Television game shows, Quick Draw Keno, and Video Lottery Terminals (VLTs).  A discussion concerning advertising cites problems and criticisms.  The author acknowledges the complications regarding advertisement and promotion.  References section at the end of each chapter is convenient, even though there are not footnotes.  Thus one can find materials related directly to the chapter subject.  Also to be convenient to the reader, the author cites his sources directly in body, allowing further investigation on that particular study or referenced item. AMBER CLAWSON

 

 

 

James M. Stearns, Shaheen Borna.  "The Ethics of Lottery Advertising: Issues and Evidence."  Journal of Business Ethics 14:43-51,1995.

 

Absolutely ridiculous.  The paper carries a mildly biased tone and fails to concretely substantiate its claims that lottery advertising is deceptive.  Some examples are given, but they could be much more solid.  The focus of the paper is on a survey which examines the effects of knowing the expected value of the gambling on intended lottery purchases.  First, the experiment should be questioned since it asked people about what they would do, rather than observing behavior.  That might be a problem, if they had the expected values correct for the pay-off from the lottery.  Their calculations (apparently sanctioned by the math department of a major Midwestern university), conclude that if the payout for the pick 6 (1-44) with a jackpot of 11 million, is .82.  So, an investment of 1 dollar leads to an expected final sum of $1.82.  Hmm…, please forgive me if I'm a bit skeptical, but I think they made a mistake in their calculations.  The paper does have some useful definitions of deceptive marketing that may be useful, but otherwise, it has some serious problems (including claiming that the lottery hurts the poor, disenfranchised poor-last I checked, the only people disenfranchised in the US were those under 18). MICAH ALLRED

 

 

 

Landman, Janet and Perry, Ross. (2000)  "It Could Have Been You": How States Exploit Counterfactual Thoughts to Market Lotteries.  Psychology and Marketing.  Vol. 17, Issue 4, 299-321.

 

An interesting, although redundant, article that, as far as I read, can be summarized by the following: states market to people such that they play on their positive counterfactual thoughts (images of getting rich), as well as their negative counterfactual thoughts (the regret of not having played when they could have won).  The presentation and commentary of the article is far too verbose, the results and interpretation of the cases they present are extremely obvious, and would be a much better read if they cut the paper back to 10 pages (from about 25).

One of the examples they presented was of a lottery commercial that showed an average Joe flipping burgers, while these images of wealth and grandeur are flashing to the (modified?) song, "It Could Have Been You." This clearly plays on both of these psychological tendencies, both to imagine what could happen, and to avoid regret.  This, and several other examples, show how advertising focuses on promoting and encouraging these counter-factual thoughts.  These thoughts often lead people to spend more on the lottery, even though the odds are ridiculously stacked against them. MICAH ALLRED

 

 

 

Sprott, David E., Brumbaugh, Anne M.; Miyazaki, Anthony D. (2001) Motivation and Ability as Predictors of Play Behavior in State Sponsored Lotteries: An Empirical Assessment of Psychological Control. Psychology & Marketing, Vol 18(9), 973-983.

 

The authors propose that a certain class of people, namely those who have an internal locus of control (those who feel that they can determine the course of events in their lives), and have a high desire to exercise control of their lives, were more likely to engage in games of chance over which one can exercise no control, like lotteries.  The study was performed in Florida, and consisted of a random sampling of people in a public place to ask about their locus of control/desire to control as well as the amount of money they spent the previous month on the lottery.  This article spent far too much space repeating itself.  The idea, and the empirical results, however, have merit, and deserve to be considered

They positively ascertained that it was the union of these two characteristics (internal locus of control and desire to control) that proved to be a positive and significant explanatory variable in their regression.  This could have ramifications in lottery marketing legislation or in community education programs.  As a note, the statistical process was not very accurately reported, and did not address the existence or absence of heteroskedasticity, serial correlation, or other common problems in regression analysis.  This absence does cast some doubt as to the validity of their results. MICAH ALLRED

 

 

 

Visual Aspect of Marketing

 

Hayano, D. (1982) M. Poker Faces.  Los Angeles: University of California Press.

 

One section of this book pertains to visual and social factors of the gaming environment, and is entitled "Social Organization of the Card Room." Since this book is a dated source, more recent publications to support the argument are needed.

This chapter gives a background for Gardena cardrooms, explaining both legalizing and following the implications.  It describes the physical layout of the floor, and other sensory elements.  This chapter is insightful to those who have not been inside a cardroom. AMBER CLAWSON

 

 

 

Reith, G. (1999) The Age of Chance.  New York: Routledge.

 

This book has one particular section directly relating to the topic of visual influences.   It is entitled "Spatial organisation and social integration."  This source is informative and fairly current.

Focusing on the discussion of diffusion, the author makes valid arguments.  When activity is concentrated into one location as opposed to spread over a large geographical area, the effect on the gamblers is altered.  The author also comments on the influence on the player to be physically involved in the activity. AMBER CLAWSON

 

 

 

O'Brien, T. L. (1998) Bad Bet.  New York: Random House.

 

An extremely informative resource book, Bad Bet gives a variety of insights to a novice explorer of the subject of gambling.  Yet even though there are footnotes, not all of the assertions are documented.  Thus a more in-depth search directly to footnotes from those pages is not possible. 

The author does bring up interesting items in regards to the visual aspect of gambling.  He asserts that some casinos experiment with colored glass on machines to see which entice the players, as well as use ventilation of different scents to influence the gamblers. Yet he does not give documentation, only stating that "some [casinos] are known for" such practices. AMBER CLAWSON

 

 

 

Sports Betting Markets

 

Canes, Michael E. 1976. The market for pro football betting. In Gambling and Society, ed. William R. Eadington, 108-37. Springfield, IL: Charles C. Thomas Books.

 

Michael Canes analyzes the details of the pro football betting market. He also posits conclusions regarding the effectiveness of some sports betting systems and the outcomes of sports betting in general. Finally, he discusses the implications of legalizing sports betting.

Pro football betting in the 1970s comprised nearly 40 percent of the sports betting market, second only to betting on professional baseball. However, the information available on football betting was more extensive than that available on the other betting markets. Studies estimate that nearly 85,000 individuals received income as bookmakers, although many of these "bookies" operate illegally. Bookmakers earned money from bookmaking primarily through their vigorish, meaning the extra money charged for handling a bet. The average vigorish in the 1970s varied from 10 to 20 percent of each betted dollar.

Bookmakers work to ensure that their lines induce equal betting on both underdog and favorite in order to prevent severe fluctuations in income and payout. They also attempt to equalize the accuracy of bets at 50 percent or worse against the odds, thus enabling them to take the entire vigorish as profit. Using extensive betting data, Canes demonstrated that bettors won just less half of all bets, confirming that bookmakers have generally succeeded in their oddsmaking strategies.

Many sports bettors rely on a system to determine their bets. Canes shows that many common systems, such as betting on teams that most consistently cover the spread, only produce 50 percent odds of success. However, following the bets of professional bettors may increase the accuracy of bets to around 55 percent. Even this system only allows bettors to break even on average because of the cost of the vigorish.

Canes also concludes that the impact of legalized sports betting is ambiguous. The reduced cost of policing sports gambling and the possibility of gaining government revenue might offset some of the negative social effects. The increased suspicion and possibility of fixed games might result in revenue loss, but the increased interest among bettors might diminish the negativity. Research is still required to fully analyze the effects of policy alternatives for legalizing sports betting markets. CHRIS REES

 

 

 

Davies, Richard O., and Richard G. Abram. 2001. Sports wagering under siege. In Betting the line: Sports wagering in American life. Columbus, OH: The Ohio State University Press.

 

Recently the future of sports betting faced a legitimate challenge in the form of Senate legislation in 2000. A group of senators supported a bill that would make betting on collegiate athletics illegal. Senators Leahy and Brownback introduced the legislation at the behest of the National Collegiate Athletic Association (NCAA), and the bill gained momentum with the support of Senator McCain. If brought to a vote, the bill seemed likely to pass because betting on college athletics is viewed unfavorably and would not directly affect most of the senators' constituencies. However, Senator Reid of Nevada relied on parliamentary tactics to effectively table the legislation, and the Senate has yet to vote on the legislation.

This chapter by Davies and Abram analyzes the events in recent American history that helped the bill gain support in the Senate. A series of gambling controversies beginning in the late 1970s and continuing through the present seemed to spark the controversy and lead to the proposition to end college sports gambling. The controversies exist among both professional and amateur sports, but the hypocrisy of some professional sports associations has made the prospect of eliminating professional sports betting unlikely. For example, the NFL prohibits gambling among players and discourages it generally, but the organization still posts injury reports for the benefit of gamblers and has allowed many of its owners to gamble (for example, Art Rooney and Jim Mara).

The series of controversies began with the notable tragedy of Art Schlichter, a quarterback at the Ohio State University in the late 1970s. During his collegiate career he began to bet at local race tracks, and his habit eventually became an uncontrollable addiction as his salary increased as a professional athlete. He gambled away all of his rookie salary and signing bonus by mid-season, and the addiction became so bad that he could not focus on play-calling in the huddle because he was distracted by the scores of other games on stadium monitors. He eventually received a suspension from the NFL, but was reinstated. However, his career ended and he continued his downward spiral, eventually going to prison for theft in order to support his gambling habit.

Other controversies emerged at the college ranks around the same time. In 1979 a Boston College player admitted shaving points at the behest of a notorious gambler. In 1985 the Tulane University basketball team was discovered fixing games in exchange for illegal drugs. The UNLV basketball team fell prey to the same notorious gambler of the Boston College controversy in the early 1990s. The 1996-97 Fresno State basketball team also faced allegations of point shaving.

A 1998 University of Michigan study focused on the issue of gambling among college athletes and found that 45 percent of college athletes had placed bets on at least one college game. The sports betting industry has grown to exceed $70 billion in profits, with the focus shifted from horse and dog tracks to professional football and baseball. Much of this money comes from gambling on college athletics and it threatens to destroy the purity of the sport and many of its players, but for now no action will be taken against it. CHRIS REES

 

 

 

Dixon, Mark J. and Stuart G. Coles. 1997. Modelling association football scores and inefficiencies in the football betting market. Applied Statistics 46:265-80.

 

Dixon and Coles posit a model for predicting the outcomes of football (soccer) scores using a Poisson distribution. Their model is based in part on previous work in 1982 by M.J. Maher and affords a relatively high degree of accuracy when matched against historical trends. It therefore appears to provide a useful method for placing effective wagers in the English football betting market. The results lead the authors to conclude that the structure of the English football betting market has inherent inefficiencies which knowledgeable gamblers might exploit.

The paper offers a useful summary of past attempts at predicting outcomes of English football matches. Surprisingly little research has been conducted in regards to the growing sports gambling market for English football, and consequently many of the previous studies were inconclusive or overly simplistic. The depth of this paper and the complexity of the proposed statistical model seem unique for this particular subject.

The model relies on a bivariate Poisson estimate of several factors that the authors assert are essential for consideration. Among these, the authors insist that any successful predictive model will incorporate home-field advantage, recent performance both offensively and defensively, and the strength of recent opponents. The authors suggest that a sufficiently high estimate of a team's chances to win a match will allow bettors to overcome the built-in biases of bookmaker's odds. CHRIS REES

 

 

 

Jackson, David A. 1994. Index betting on sports. The Statistician 43:309-15.

 

Jackson's article represents a significant contribution to sports gambling literature. Sports betting in Britain is a fairly new phenomenon, and index betting is a relatively new area of sports betting. Comparatively little research has explored the field of index betting, especially in Britain. Jackson provides a solid explanation of index betting in sports and how it compares to non-sports indices like commodities markets. He also explains well some of the systems used to calculate probable outcomes of matches.

The first section of the paper outlines the growth of sports index betting in Britain and worldwide, and provides good statistics for the growth of both sports betting and index betting in Britain. The lack of experience among oddsmakers in the fledgling sports gambling industry has impeded the growth of sports betting houses to some degree. With better understanding of the market and modeling techniques, the uncertainties of sports betting outcomes might be reduced.

Thus the second portion of Jackson's paper details some modeling techniques and examines their potential for accuracy. Among the modeling techniques he explores are Poisson and binomial distribution models. He concludes that Poisson models generally produce viable results for sports betting oddsmakers. The large variance in outcome of sports events is the primary difference between sports index betting and commodities indices, and this variance reduces the accuracy of binomial distribution models. CHRIS REES

 

 

 

Woodland, L.M., & Woodland, B.M. (2001). Market efficiency and profitable wagering in the National Hockey League: Can bettors score on longshots? Southern Economic Journal 67(4): 983-995.

 

This paper tests the efficient market hypothesis (EMH) for the National Hockey League (NHL). The study of the NHL is fairly new in sports gambling literature, and this paper is among the first in this research. Perhaps because of the relative inexperience of oddsmakers for NHL games, there is some evidence to indicate market inefficiency, a contrast to most research for other professional sports markets. However, the authors also note that the market does not indicate convergence toward efficiency, so the inefficiency may not result from inexperience among oddsmakers.

The paper provides a useful summary of background literature on efficiency in other sports betting markets. In addition, it offers a detailed description of betting practices for NHL games. Furthermore, the paper often compares its results to other sports gambling research, a trait not very common in other literature, and thus a very useful characteristic of this article.

The authors utilize data from the NHL from 1990-96 to conduct several tests for market efficiency. Ultimately they conclude some degree of inefficiency with little indication of a trend toward convergence at efficient betting practice. Some simple betting strategies enable bettors to earn significant profits, and the authors outline a few such strategies. The authors also conclude that bettors tend to overbet on favorites in the NHL, a trend consistent with other sports betting markets. CHRIS REES

 

 

 

Oorlog, D.R. (1995). Serial correlation in the wagering market for professional basketball. Quarterly Journal of Business and Economics 34(2): 96-109.

 

This paper tests the efficient market hypothesis (EMH) for professional basketball and concludes that the data does not imply any consistent inefficiency in the gambling market. The paper provides a good summary of the EMH and a nice review of background literature relevant to the topic of market efficiency regarding betting markets and markets in general. The brief overview of sports gambling in the article will also prove useful to readers' unacquainted with sports gambling terminology and practices.

The author focuses his study primarily on weak form efficiency under the EMH, with weak form efficiency defined as the inability of a trading strategy based on price trends or previous prices to produce consistent profits. In order to qualify as a profitable gambling strategy that would suggest market inefficiency, a bettor must win his wagers with a frequency of 52.4 percent in order to cover the bookmakers' vigorish of 10 percent. The study differs from that of previous researchers because it seeks to model trends from game to game, not just the cumulative performance against the spread at season's end.

The authors perform a variety of statistical tests of the EMH using data from the 1989-90 and 1990-91 NBA seasons. The author finds that the point spread is an unbiased indicator of actual game outcomes and that no team performs consistently in a manner significantly divergent from the predicted point spread. Furthermore, the results suggest that simple betting strategies cannot be consistently employed to produce profitable exploitation of the gambling market. Consequently, the study concludes that the EMH does hold for sports gambling markets. CHRIS REES

 

 

 

Dana, J.D., Jr., & Knetter, M.M. (1994). Learning and efficiency in a gambling market. Management Science 40(10), 1317-1328.

 

Gray, P.K., & Gray, S.F. (1997). Testing market efficiency: Evidence from the NFL sports betting market. Journal of Finance 52(4), 1725-1737.

 

 

 

Gambling & Economics

 

Brunk, Gregory. (1981) A Test of the Friedman-Savage Gambling Model.  Quarterly Journal of Economics. Vol. 96, No. 2, 341-348.

 

This paper focuses on trying empirically to ascertain the validity of the Friedman-Savage model for gambling behavior.  This model was developed to explain why rational, utility-maximizing people would take bets where the expected payout was negative.  It was hypothesized that non-social gambling (lotteries) was motivated by extreme dissatisfaction with one's current wealth, and the desire to increase one's socioeconomic status.  Thus, small wins that would not raise one's status have a small marginal utility, while large winnings provide a massive increase in marginal utility.  The utility curve thus becomes more like a cubic, rather than a log or square root function, allowing bets with enormous payouts to provide an expected increase in utility.

The empirical test, based on data collected earlier at the University of Michigan, is required to use a highly correlated variable as proxy for dissatisfaction of wealth (scaled 1-7 evaluation of current income).  The results clearly indicate a high correlation between dissatisfaction with income and the amount of money wagered in lotteries.  It also showed that at higher levels of satisfaction, a larger amount was wagered on social games, like poker or bingo.

The confirmation of this model is valuable in that it provides those who control and market lotteries a way to target more accurately their key audience by emphasizing the rags-to-riches potential in the lottery. MICAH ALLRED

 

 

 

Caplin, J., Keating, P.  (1996).  Lotto fever: We all lose!  Money, 25, 142-148.

 

A study of how lotteries are used by states as a substitute for taxes and a way to raise money for causes such as education and healthcare.  Analyzed are the claims of these states that the lotteries are painless and much more profitable.  A table is provided describing the details of each state run lottery and to where its revenue is allocated.  Three main conclusions are maintained and tips to tax payers provided.

Claims the authors contest include, "The benefits of lottery far exceed the social costs," "Giving People the choice to raise money by purchasing lottery tickets will let your state hold the line of taxes," and "We are going to need new money if we want to have good schools.  Either we have a huge tax bill or we approve a lottery."  The authors claim: 1) Lotteries are an inefficient way to raise public money, 2) cash-strapped states typically rely on lottery revenues to plug ever-widening budget holes rather than using ht cast to lower taxes, and 3) despite marketing slogans, lottery states spend less of their budgets on education than do states that go without lotteries, on the average.  Data to support their claims is taken from state lottery agencies, La Fleur's 1995 World lottery Almanac, North American Association of State and Provincial Lotteries, National Conference of State Legislatures, National Association of State Budget Officers. BRANDON MACKAY

 

 

 

Prybylski, M., Felsentein, D., Freeman, D., & Littlepage, L. (1998). Does gambling complement the tourist industry? Some empirical evidence of import substitution and demand displacement. Tourism Economics, 4, 213-231.

 

The authors examine the effect that legal casinos have on local economies.  The article does a wonderful job establishing a framework for understanding the effect of casino gambling on demand for other goods, including tourism.  The article's weakness is its lack of evidence.  Ultimately, the authors make no clear conclusions, stating that legalizing casino gambling will have mixed results on the local economy.

In the first part of the paper the authors discuss the four types of displacement that occur at the local level when a new casino opens up: (1) displacement of other local gambling; (2) displacement of other local demand; (3) displacement of tourists/non-locals demand; and (4) the displacement of demand for export services by locals (‘import-substitution').  While the authors provide an explanation of all four types of displacements, they focus on the fourth point, import-substitution.  According to this line of thought, locals who earlier crossed state borders to gamble will prefer gamble locally. 

The authors used evidence from Indiana and Israel to test the effect of casino gambling on local economies.  The Indiana data come from 1993 - 1996.  Since casinos only started opening up in Indiana in 1996, there is no information on the long-term impacts from the casino openings.  Despite the lack of long-term data, the authors try to show both the positive and negative impacts that local casinos have had on Indiana.  In contrast to Indiana, Israel does not have legal casinos.  The study of Israel is a prediction of what would be expected if casinos were legalized.  The structure of the economy suggests that local economies would not significantly benefit.  DANIEL BUTLER

 

 

 

Eadington, W.R. (1999). The economies of casino gambling. Journal of Economic Perspective, 13, 173-192.

 

This article is a great start for anyone doing research related to casinos.  The author does not present any new data or tests, rather he gives basic, concise, and thorough background information about casinos in America.  In describing the situation of casinos in America, Eadington does a good job presenting an even-handed picture of the status. 

He begins the article by discussing the history of the spread of casinos since 1960.  He discusses specific laws and general trends, highlighting the important points.  The next section provides particularly interesting insights into the pricing used in the casino industry.  He explains the types of casino games (e.g. games with progressive payouts, strategy games, banked games, percentage games, etc.), and the house advantage associated with each.  He offers insights into what determines the house advantage and how the house advantage is used to maximize profits. 

The third section discusses the market structure for the casino industry.  The author discusses the various models that have been used by different states to promote the public interest.  While Nevada has chosen to allow unlimited licenses, most other states have put limits on the numbers and types of gambling institutions that can be created. 

In the next part of the article, the author discusses the constraints on permitted gambling and its effects on profitability.  Following that discussion, the author lists the reasons for and against casino gambling.  The majority of that discussion revolves around the three  major justifications given for gambling.  As he finishs the article, Eadington comments on the future of commercial gambling in America.  He predicts that it will continue to grow and get closer to home. DANIEL BUTLER

 

 

 

Eadington, William R. (1999).  The economics of casino gambling.  Journal of Economic Perspectives, 13 (3), 173-192.

 

This article provides a solid overview of various gambling issues, with an emphasis on the economics issues.  Eadington provides a straightforward and seemingly objective presentation on the history of gambling in the United States, its current status, and factors that will influence its direction in the future.

The article begins with an outline of laws that allowed for growth in the gambling industry.  He attributes three events as critical to gambling's growth:  Congress's passing the Indian Gaming Regulatory Act, South Dakota's legalizing gambling in a dying mining town, and Iowa's legislating authorization of riverboat gambling.

Shifting to the economics of gambling, the article then provides a basic understanding of how casinos earn money through the house advantage.  He explains the difference between games with fixed, progressive, or mixed payouts.  To help understand the material on both this topic and elsewhere in the article are tables that provide the revenue amount by type of gambling, the house advantage for various games, and differences in state gaming regulations.

Regarding different regulations among states, the article demonstrates the influences of different market structures, states' difficulty balancing desires for revenues without squeezing the industry too tightly, and the regulations of neighboring states on the pricing and success of gaming in various areas.

The cost-benefit analysis of gambling in not detailed.  It uses general numbers, but does provide many ideas for further research and digging.  The article concludes by providing factors that will influence gambling in the future.   MARK CREER

 

 

 

Gerstein, D., Hoffman, J., Larison, C., Engelman, L., Murphy, S., Palmer, A., Chuchro, L., Toce, M., Johnson, R., Buie, T., Hill, M.  (1999).  Chapter 5.Impacts of Casino Gambling on Social and Economic Outcomes, 1980-1997: A Multilevel time-series analysis.  Gambling Impact and Behavior Study: Report to the National Gambling Impact Study Commission.  Retrieved February 12, 2003 from the World Wide Web: http://www.norc.uchicago.edu/new/pdf/5.pdf.

 

This chapter is from a report submitted to the National Gambling Impact Study Commission.  The chapter is a study of the impact of casino proximity on 100 non-tribal sample communities.  The study focuses on how casino proximity relates to community characteristics over time by statistically analyzing both communities with and without casinos near, and the years before and after a casino arrives.  It concludes that the casino effect is not statistically significant for bankruptcy, crime, or infant mortality, but is statistically significant for per capita casino spending (logically), four of five employment measures, and seven of sixteen income and earnings measures.  

The years covered in the study are 1980-1997.  Of the 100 communities studied, only five in 1980 had casinos within a 50-mile radius, which is how casino proximity was defined for the study.  In 1997, that number grew to 45.  The study isolates effects of casino proximity in two ways:  (1) it compares both communities with and without casinos, and (2) it compares years before and after the first casino opens in the communities.

The study uses a multilevel model.  This model is good because the data is such that data from years are nested within data from communities.  Since community-level effects are important, the model allows community-specific intercepts that account for unmeasured differences among communities.  The model also accommodates missing values well.

The authors openly communicate possible weaknesses of their methods.  For instance, they mention that their weighting of statistics in proportion to the population bases may understate the good effects of casinos.

The authors focus on differences between when yearly data is included, and when casino data is included.  Their results show that year effects are consistent from comparing the following basic models:  ‘community + year' versus ‘community + year + casino'.  They find that casino effects vary "dramatically" from comparing the following two models:  ‘community + casino' versus ‘community + year + casino'.

Other interesting findings from the study are that crime and economic data are on the positive side, but not significantly.  In addition, they saw a decrease in the receipt of welfare dollars of 13 percent, on a per capita basis. MARK CREER

 

 

 

Farrell, Lisa, Edgar Morgenroth, and Ian Walker. 1999. A time series analysis of U.K. lottery sales: Long and short run price elasticities. Oxford Bullentin of Economics and Statistics 61 (4): 513-526.

 

The article tests for the addictiveness of lotto-playing in the United Kingdom.  While the article is well-written the nature of the data does not support the conclusions drawn.  The problem is that the authors draw conclusions about individual behavior based upon aggregate level data.

The authors test for what they call "rational addiction," which means that "individuals are forward looking and so also take account of expected future preices, and therefore future consumption, when making current consumption decisions."  The authors argue that the occurance of rollovers in the UK national lottery will capture the effect of rational addication.  A rollover occurs when no one wins that week; the funds are then transferred to the jackpot the next week.  During weeks of the rollover, the expected value of buying a ticket increases.  The elasticity of the product, determined by ticket sales as a function of expected value, should reveal addictive behavior.

To test for the presence of rational addicition in lotto players, the authors run regression models on U.K. national lottery ticket sales from novermber 1994 to February 1997.  From their regression tests, the authors find that after rollovers, sales do not immediately return to their original level.  This buying behavior suggests that there is an addictive behavior associated with lotto playing.  As I already stated, the authors use aggregate data.  While it would be more convincing to use individual level data, the results are still interesting and useful. DANIEL BUTLER

 

 

 

Gulley, O. David, and Frank A. Scott, Jr. 1989. Lottery effects on pari-mutuel tax revenues. National Tax Journal 42 (March): 89-93.

 

Gulley and Scott improve upon an earlier study done by Simmons and Sharp to examine the relationship between lotteries and horse-track betting.  This article improves upon Simmons and Sharp's study by determining the actually effect, in dollars, that increased lottery sales has on horse-track race expenditures.  It is an important article for those researching the nature of substitutability among different forms of gambling.

The Simmons and Sharp article was important because it was one of the first to examine the relationship between lottery sales and horse-track bets.  The weakness of their article was its over-generalized nature.  Simmons and Sharp simply divided states into two categories: states with lotteries and those without lotteries.  While they were able to show that lotteries serve as a substitute for horse-track racing, they did not show the magnitude of that relationship. 

The advantage to Gully and Scott's research is that they use lottery spending as the explanatory variable.  They test their model on a data set that includes information from 61 different tracks over a five year period (1976-1980).  Like Simmons and Sharp they find that lotteries do act as a substitute for horse-track racing.  Further they find the trade-off rate.  For every dollar spent on the lottery, 18 cents less are spent at horse-tracks.  The major potential problem with this study is that it does not necessairly take into account the fact there is a lot of spill-over from surrounding states.  Despite this weakness, it provides a better understanding of the substitution effect that occurs with the introduction of a state lottery. DANIEL BUTLER

 

 

 

Purfield, C., & Waldron P. (1999). Gambling on lotto numbers: Testing for substitutability or complementarity using semi-weekly turnover data. Oxford Bullentin of Economics and Statistics, 61, 527-544.

 

Purfield and Waldron find that lucky numbers betting (a game similar in format to lotto except that it is structured to gives fixed odds) is a complement to lotto betting.  In light of their findings, the authors suggest that the English parliament should legalize lucky number betting.  As with most studies on the economics of gambling the data is aggregate level and limited in scope.  Despite that, the article is easy to understand and follow.

The authors use semi-weekly data on lotto and lucky number purchases from the three of the major betting houses in Ireland during 1993 and 1994.  This data represents a little more than a third of all the lotto and lucky number purchases in Ireland during that time period.  To test the relationship between these two products, the authors see what happens to each of the two goods when the price (expected value) of lotto tickets changes (the price in lucky numbers betting never changes).  This change in price occurs when there is a rollover.

When there is a rollover the price of lotto tickets decrease, which causes both lotto sales and lucky number sales to increase.  This evidence suggests that these games serve as complements; as the sales of one increases so does the sales of the other.  The authors suggest that consumers buy both because they want to increase their expected retun on their bet and decrease the variance of that return.  Buying both products is the best way to achieve that balance. DANIEL BUTLER

 

 

 

Simmons, S.A., & Sharp R. (1987). State loterries' effects on thoroughbred horse racing. Journal of Policy Analysis and Management, 6, 446-448.

 

Simmons and Sharp argue that state lotteries serve as a substitute for horse-track wagering.  As a result, the introduction of lotteries decreases the profit gained from horse-track wagering.  Because of its conciseness, the article is worth reading.  It shows how one gambling product is a substitute for another form of gambling.  However, the study has left room for improvement.  The conciseness of the article leaves the reader with many questions. 

Because of the article's length, it does not do a good job establishing any theoretical framework; instead the authors focus on the data and regression results.  The data comes from 89 of the 100 horse-track meets held in the United-States in 1982.  The remaining 11 meets had missing information.  The exclusion of those cases, which represent over 10 percent of the sample, introduces the possibility of bias, an issue which the authors never address. 

These 89 observations are divided into two categories: meets held in states with lotteries (N=45) and meets held in states without lotteries (N=44).  The authors used ran regressions on each sample of data to determine the price elasticity for both categories.  They found that the price elasticity was higher in states with lotteries.  In other words, as the takeout rate (i.e. the amount of money that goes to the operators, taxes, etc.) increases, there is a drop in demand in both states with and without lotteries; however, in states with lotteries, that drop is more significant.

The authors explain that higher price elasticity for states with lotteries indicates that lotteries affect horse-track revenues in two ways.  First, the presence of lotteries sensitizes participants to the price of wagering.  Consequently, when the price of playing at the horse-track goes up, patrons turn to other forms of gambling.  Second, lotteries act as one of those substitutes. DANIEL BUTLER

 

 

 

Stock Market Gambling

 

Looney, Ed (2002). Stock Market and Gambling. Publication of The Council on Compulsive Gambling of New Jersey, Inc. Issue 12, pg.3.

           

The "Security Gambler" was a term coined to describe the emergence of certain types of stock market gamblers following the mini-crash of October 19, 1987. Before "Black Monday" as that date is called, the New Jersey Help Hotline 1-800-GAMBLER received a total of 2% of their calls from stock market investors who had become compulsive gamblers. Following the incident, however, that figure jumped to 44%.

Experts from the Council on Compulsive Gambling, Inc, are aware of the consequences brought to the lives of these "security gamblers." These gamblers usually focus their trades in areas of options, commodities, penny stocks, index investing, new stock, offerings, bonds, and contracts for government securities. They seek the areas with the highest risk usually associated with commodities and option index. The "get rich quick" theme becomes the undefined goal that is impossible to reach. They thrive on the highs and lows of the daily activities of their investments. When family, work, and friends are affected, or financial problems arise, the stock market investors become impulsive gamblers.

Often security gamblers are found to be employees of the brokerage field. If caught, this will lead to a loss of work, and blackballing from the securities field. Their actions may affect the public confidence that is the basis of their vocation.

As the addiction increases, so does the tendency for illegal activity. Many turn to embezzlement to pay off large debts that arose from borrowing form banks, friends, family and fellow employees.

Compulsive gambling is treatable. Make sure they get help. MIKEY PEERS

 

 

 

McMurdy, Deirdre. (1994). A Game Of Chance. Maclean's, vol. 107, Issue 34, pg 26.

 

This article contains mostly the opinion of the author with regards to big companies controlling the stock market. This is not an article with many numbers or even data to back up the arguments of the author. It does, however, raise some questions about the stability of personal investments. The author present questions that a personal investor to the stock market may want to ask himself before investing his money.

We are first presented with a comparison between the Shanghai and Canadian stock markets. The author proposes that the increasing amount of trading going on, and the volatility of the markets are due to the fact that the Chinese like to gamble, and the Canadians are to impatient to make a dollar.

Investors should realize that it is not their investment or the personal investments of others that are forming the prices determined in these markets, but rather large mutual fund and brokerage companies that are moving lots of money at a time. They are the ones who determine stock prices. These opinions of the author convey a warning to the personal investor to learn more about what the larger companies are doing with money and perhaps mimic this.

If an investor places his money in the market with no prior research, they are gambling with their money. MIKEY PEERS

 

 

 

McGinn, Daniel and Raymond, Joan (2003). Do-It-Yourself Isn't Dead Yet. Newsweek,  Feb. 3, 2003, pg. 42.

           

This article informs the reader of how what the current trends in day-trading are. It is full of opinions and does not offer much data aside from opinion. One can see, however, why many believe day-traders to be gamblers, but the day-traders themselves say that investing long term in the stock market is gambling. Day-trading is a hard term to define, but this article helps the reader form an opinion.

Many personal examples of successful day-traders are interviewed in this article. They say that they so not consider themselves day-traders, but rather short term investors. After buying a particular stock, they will sell within cents of the buying price. Paul Mann, a Denver CPA, says that of all the day-traders there are these days, only 10% of them make an annual profit. MIKEY PEERS

 

 

 

Vickers, Marcia (1999). E-Gambling on the Dow? Shocking! Business Week, Issue 3649, 10 April, pg. 6.

 

This is an article that explains a growing trend of online gambling on how the Dow Jones will perform. It is a good article to see the different gambling trends that are based on the stock market.

A $100 bet correctly predicting the closing price  of the Dow returns $200, but a losing bet costs $110. This article brings up an interesting idea about this type of gambling versus a typical mutual fund. The idea of a mutual fund is to disperse your portfolio all around the market so that the investment will fluctuate according to the trends in the stock market. E-Gambling on whether or not the Dow will perform well, however, is considered gambling. There are now at least 10 off-shore companies that run websites based on stock market gambling.

Jeffrey Heisler, a professor of behavioral finance at Boston University says, "People need to remember that this is entertainment, not investing." This is an interesting point he brings up because the line between whether e-gambling and mutual funds are considered investing or not is very small. MIKEY PEERS

 

 

 

James, Jenny (2003). Gambling With the Future. Time Magazine, London, Issue 34, pg.10.

 

This article informs the reader of how the stock market can affect even the largest firms in the department of corporate pensions. An example is shown here how even though an investment appears to be good, and has proven past success, there is always risk involved. In the particular case shown in this article, companies from the U.K. are suffering because the plummet of the stock market is affecting the pension funds they have set up for their current and former employees.

Companies invest large amounts of money for pensions of employees into England's stock market. These companies are now losing lots of money that employees rely upon for their retirement. Although London's FTSE 100 index has fallen over the past four years, Ross Cook, a spokesman for British Telecommunications, has said that even though they are losing money from their pension funds, this poses no immediate threat because the majority of the money will not be paid towards pension funds for many years. This allows time for the investments to increase once again. MIKEY PEERS

 

 

 

Hastings, Dwayne. (1999). Day-Trading Called Gambling by a New Name. SBS Ethics & Religion Library Commision. Volume 8, pg.1.

 

This article takes the perspective that day-trading is the "new-age" gambling. One can read quotes from people related to compulsive gambling programs and learn how these programs look at day-trading. Many programs that help compulsive gamblers in Baltimore, MD and New Jersey are trying to convince people that day'trading is a form of gambling that quickly turns to a problem.

On July 29, 1999, Mark Barton, a day-trader, killed his wife, 2 kids, 9 other people from his day-trading firm, and then commit suicide. It is the view of this article that these actions were taken because Mr. Barton's day-trading profession turned him into a compulsive gambler. This "disease" caused him to lose his sense of reality and sanity forcing him to extreme action.

This article also noted that 14On July 29, 1999, Mark Barton, a day-trader, killed his wife, 2 kids, 9 other people from his day-trading firm, and then commit suicide. It is the view of this article that these actions were taken because Mr. Barton's day-trading profession turned him into a compulsive gambler. This "disease" caused him to lose his sense of reality and sanity forcing him to extreme action.

This article also noted that 14% of all equity trading in the stock market is performed by day-traders. A USA Today study in Boston Massachusetts reported that of 68 day trading accounts followed, only one reported profits. It is the view of the author that day-trading is dangerous and has all of the characteristics of gambling. MIKEY PEERS

 

 

 

McChesney, Andrew. (2002). Like Gambling? Why Not Give the Russian Stock Markey a Try? The St. Petersburg Times, February 8, pg. C-18.

           

This article published in The St. Petersburg Times of Russia is a great article showing the volatility of the Russian stock market. One can learn how the market has fluctuated in the past few years and see the predictions of many analysts from the brokerage firm Troika Dialog. There is information presented to persuade readers whether or not to invest their money in the Russian stock market.

One of the main points of the article is to encourage the reader to question whether the Russian stock market will continue past trends or if past trends have no indication of the future. This is a great point to consider because it is this idea that I believe to be the difference between a good investment and stock market gambling.

Many numbers are presented involving trends the Russian market has seen over the past three years. The article also shows how national events, such as elections, influence the amount of trading that goes on.

One final point made is that even if the stock market plummets, there are ways to make money. It is possible to capitalize on a stock market that goes down. However, again, this is an investment that can be made because of information acquired about companies and attitudes toward trading, or it can be a complete speculation that turns an investment into gambling. MIKEY PEERS

 

 

 

USLaw.com staff. SEC, NASAA Release Day Trading Reports.

 

This article was excellent for conveying the results of day trading. The focus of the article is to investigate illegal activity involved with day trading firms. During the past five years, day trading firms have been the focus of whether or not their actions have been ethical and have followed the SEC rules for trading, buying, and selling stocks.

This article summarizes the data acquired from a study conducted by Deborah R. Bortner. This study was ordered by the SEC. Ms. Bortner followed 124 day trading accounts that had been open for up to 25 months. She found that 77% of these accounts faced losses, while the other 23% reported profits.

This results of this study encouraged the SEC to make regulations on day trading. Also, further investigations were ordered by the SEC to probe the ethical tactics of many day trading firms. MIKEY PEERS

 

 

 

Thaler, Richard H. and Ziemba, William T. (1988)Anomalies Parimutuel Betting Markets: Racetracks and Lotteries. Journal of Economic Perspectives, Volume 2, number 2, Spring, pgs 161-174.

 

This is a good article for anyone interested in the stock market, racetrack, or lotto games. The author reviews the gambling and investment aspects in each of these areas. He also reviews different techniques for strategies that should be most efficient in order to receive a positive return. Many equations are presented to show mathematically what the best odds are for winning.

Investing in the stock market and betting at the track share many similar strategies. The odds of winning are best when money is placed where the majority of bettors or investors say it should be placed. With transactions fees for trading stock and track fees for betting at the track, chances of taking the house are near zero. However, betting at the track is surprisingly efficient. Market odds are remarkably good estimates of winning probability.

The lottery, on the other hand, has atrocious payout rates. History shows that lotteries were actually never popular until New Jersey allowed participants to choose their own numbers. This gave participants a sense of psychological control over the lottery. Although odds remain the same, and payout rates horrible, yet people felt they could choose numbers better than a computer.

This article says that knowledge of a betting system often gives players better odds, just as it should with the stock market, in certain games such as at the racetrack. It also warns that knowledge of a lottery system increases odds only if the person realizes that placing any money would be a bad decision. MIKEY PEERS

 

 

 

Wirth, Gregg (2003). Small Online Investors are Gambling in a Rigged Casino. Dollars & Sense, Issue3749, pg. 28.

 

This article discusses the idea that small online investors are deliberately kept distant from information that is readily accessible to larger brokerage firms. This is done in order to keep the large company investors happy. Most of the information in this article is based upon the views of Aurthur Levitt, the chairman of the federal Securities and Exchange (SEC). It is a good article with the view that often times small investors are considered gamblers because of a lack of knowledge or information that is only available to large firms and investors.

The surge that the stock market was experiencing in 1999 increased the number of small traders. However, the ability for the common person to trade stocks on-line put many small investors in a risky situation. Because the market had been doing so well, everybody was making money, and the risk involved was being overlooked.

In October, 1999, Arthur Levitt addressed the concern that small investors were being treated poorly by the "gamesmanship of Wall Street." Investment banking firms, banks, and other large companies responsible for the majority of Wall Street's trades began to form alliances that benefited themselves. Incidences of insider trading between companies became a common occurrence, and an attitude of ‘if you can't say anything nice about a stock, don't say it at all' lowered the recommendations to sell to the smaller investors. Wall Street was becoming sloppy because of its success.

Levitt felt that the repercussions of this would be felt, in majority, by the small investors. He also felt that it was the investments of the small investors that caused the market increase, and big companies encouraged this so they could take advantage of the situation. IPO's for example would be sold at a low price to large investment firms and banks before the stock went public. Then, when the stock opened on the market, individual investors would buy these stocks at prices higher than their true value and the big companies knew this. When prices were high, companies would sell to the small investors. When the small investors took control of the stock, the big companies would not buy into these stocks again, and thus the price would significantly drop. When the price dropped far enough, they would buy. The small investors would lose money while the companies would earn money and regain the stock. MIKEY PEERS

 

 

 

Cook, Mark D.  "Day-trading: Not what you think."  Futures.

 

The article I chose was from Futures magazine, titled, "Day-trading: Not what you think."   The author Mark D. Cook won the 1992 U.S. Investment Championship with 563% return, and has spent much time recording his experiences.    Cook gives helpful insights to understanding basics of  "day-trading," although the article has a biased point of view.

Cook asserts that a large part of day trading is to choose your system, such as a phone, quote machine, or some other mechanical means, which you trust to make the decisions for you.  If the trader doubts the means he has chosen, he is in essence calling himself a liar.  It is the trader who has chosen his sources.  To not follow the advice of the electronic signals after he has specifically chosen them, is illogical.  The question still arises, as to who is truly making the trader's decisions? 

An interesting aspect of the article comments on the emotional state of the individual.  Despite the mechanical means of evaluation, Cook advises to pay attention to how one feels.  The trader also benefits by feeling his own way.  Day trading can be a reflection of one's personality, as there are so many personal contributions which vary between individuals.

This article is beneficial to one who desires to begin a basic understanding about day-trading.  Yet, a different article would be advised to find analysis of day-trading and stock market gambling, and not just the biased views of a seasoned day-trader. AMBER CLAWSON

 

 

 

"The IT Revolution and the Stock Market."  (1999). National Bureau of Economic Research, working paper 6931.

 

I chose an article, a 17-page paper called "The IT Revolution and the Stock Market."  It is a member of the NBER working series, the National Bureau of Economic Research, working paper 6931.  The article asserts that the outcome of the stock market is directly related to the rising levels of technology.  The authors attribute the rise of the stock market in the 1980s to the IT innovators.

Intuitively, I do not agree with the assertions.  Related to the arguments we discussed in class, it is easy to draw correlations to events after the fact.  The article seems focused on the results that have been found for 1960s and 1980s.  Even though in the abstract, the authors mention forecasting, I see little exploration of that topic in the latter part of the paper.  For a paper written so recently, 1999, I would presume there would be more recent information.

Again, I am very new at this subject, and do not understand all the terminology and the concepts in order to best analyze this paper sufficiently.  I am looking forward to doing more general research with my topic, and be able to find resources to help my efforts. AMBER CLAWSON

 

 

 

Wagenaar, W.A. (2001) Tax Rules for Day Traders Revisited.  Journal of Accountancy, 191(4), 71.

 
The largest degree of usefulness in this article is two-fold: references to other articles to gain a better understanding, and to demonstrate the ability to make misleading statements, even when citing court cases and facts.  There are many references to specific forms of the taxpayer, so the authors expect a degree of competency in the readers.  Yet they understand possible confusion, so they also clarify terms and concepts.

This informative article addresses some concerns regarding taxation with traders, specifically day traders.  An article in October 2000 gave some information, which was revisited and summarized to point out the mistake that was made, concluding that the article was misleading.  Day trading with regards to taxation is a complex matter; even a journal of accountancy can be mistaken.    In the January 2001 issue, they attempted to support their position by citing the court rulings pertinent to their arguments.

Even though they also cited opposing rulings, the authors recognize that they did not attend to all the sections.  By citing such IRC sections as 475(d)(3)(A)(n)(II), one must have a deeper understanding to income taxes and self-employment taxes.  Yet addressing the past confusion, the article clarifies terms such as "market-to-market." AMBER CLAWSON

  
                

 

Gambling & Islam

 

General

 

Shakir, M. H., translator.  (1982).  Koran.  English and Arabic.  New York: Tahrike Tarsile Qur'an.

 

An excellent translation of the Qur'an (or Koran) into English.  Two Qur'anic references discuss gambling—2:219 and 5:91.  Other translations include:

Ali, Abdullah Yusuf (Yusufali).  The Meaning of the Holy Qur'an.  Brentwood, Md.  Amana Publications, 1994.

Pickthall, Mohommed M.  Koran. English and Arabic.  New York:  Mostazafan Foundation of New York, 1984.

ERIC LEWIS

 

 

 

El Sayed, Sheikh Shaker, and Royer, Ismail.  (no date).  The Islamic Position on Gambling.  Muslim American Society official website.  At http://www.masnet.org/position/gambling/htm.  Accessed March 29, 2003.

 

Discusses why Islam forbids gambling. ERIC LEWIS

 

 

 

Siddiqi, Muhammed Iqbal.  (1981).  Why Islam Forbids Intoxicants and Gambling.  Lahore.  Kazi Publications.

 

Siddiqi explores Islamic sources, such as the Qur'an, Hadith, and religious scholars to explain why Islam forbids gambling.  This book utilizes the writings from Muslim scholars who discussed why Islam forbids gambling and alcohol. ERIC LEWIS

 

 

 

Mustansir, Mir.  Dictionary of Qur'anic terms and concepts.  "Intoxication and Gambling" p. 136.  New York.  Garland.  1987.

 

An encyclopedia to terms in the Qur'an.  The entry on Gambling explains why in the Qur'an it says that the good benefits of gambling outweigh the bad—the men would wager for pieces of meat, and then it was their privilege to distribute the pieces to the poor.  This activity seems to have been connected with alcohol consumption. ERIC LEWIS

 

 

 

Kepel, Gilles.  (2002).  Jihad:  The Trail of Political Islam.  Cambridge, Massachusetts; The Belknap Press of Harvard University Press.

 

An analysis of political Islamic movements throughout the world, focusing on violent and terrorist groups.  Includes insightful commentary on the role of Islam in Muslim society. ERIC LEWIS

 

 

 

"The Islam Page."  Online Database.  Query "Gambling" under prompt "Hadith and Sunna."  Accessed on January 21, 2003. 

 

An online database gives quick access to hadith, prophetic sayings of Mohammed.  The two specific hadiths on gambling are:

Sunan Abu Dawud:  Book 14, Number 2573 and Book 26, Number 3662: 
Malik's Muwatta:  Book 31, Number 31.13.25 and Book 31, Number 31.27.65.

ERIC LEWIS

 

 

Rosenthal, Franz.  (1975).  Gambling in Islam.  Brill.  Leiden, 1975. 

 

Gambling was an important part of pre-Islamic Arabia.  Gambling practices continued into the Islamic period.  This book discusses the usage of Arabic words referring to gambling, gambling practices, and references to gambling in Arab literature.  This book does not refer to modern history. ERIC LEWIS

 

 

 

Glass, Cyril. (1989). The Concise Encyclopedia of Islam.  London, Stacey International.  "Gambling." p. 136.

 

Short explanation of Islam's forbiddance of gambling. ERIC LEWIS

 

 

 

United States

 

 

Rose, I. Nelson. (2002). "Politics And The Law Of Gambling."  Casino City Times. Accessed February 13, 2003. http://rose.casinocitytimes.com/articles/5697.html

 

Mr. Rose discusses a recent bill in Congress to eliminate on-line gambling as part of the fight against terrorism because terrorists may be using on-line gambling to gain financing.  Written from a pro-gambling perspective, he dismisses the claims as ludicrous because there is no evidence that Islamic terrorists have ever utilized online gambling to provide funding. ERIC LEWIS

 

 

 

"NOcasiNo Maryland."  Anti-gambling website in Maryland.  Accessed April 4, 2003.  Available at http://www.nocasinomaryland.org/

 

Website from the coalition of anti-gambling groups in Maryland.  Discussed in the article "Maryland Muslims take up Gambling Fight, Group Says Governor's Plan Would Foster Crime, Corruption." ERIC LEWIS

 

 

 

"Maryland Muslims Take up Gambling Fight; Group Says Governor's Plan Would Foster Crime, Corruption."  (2003, Feb. 6).  U.S. Newswire, Inc.  No page number.

 

An American Muslim society called upon Maryland Muslims to band together to fight a gubernatorial plan to place slot machines throughout Maryland.  The organizers of this campaign cite both sociological and religious reasons against gambling.  This group, the Muslim American Society, has also organized a coalition of various groups opposed to gambling in Maryland. ERIC LEWIS

 

 

 

"Interfaith Effort Takes on Lottery."  (2002, May 31).  Chicago Tribune.  p. 6.

 

American Muslims and Buddhists have ecumenically combined forces with Christian groups in working to ban the Tennessee state lottery. ERIC LEWIS

 

 

 

"Austin, Texas, Muslims Struggle to Invest, Adhere to Religion." (200, August 15).  Austin American Statesman.  No page number.

 

Muslims in America, and especially Muslim students, hold to their faith by not investing in un-Islamic companies, such as those that promote gambling.  They also try to avoid variable-rate interest, which is also forbidden in Islam, but struggle to follow this commandment because of the difficulty of finding fixed-interest student loans. ERIC LEWIS

 

 

 

Fay, Tim.  (1995, February 5).  "Islamic Teachings Can Put Shopkeepers in Quandry over Beer, Lottery."  The Atlanta Constitution.    p. A3.

 

Muslim shop owners in the U.S. are in a moral quandary because convenience stores typically sell lottery tickets.  Some Muslim shop owners rationalize that if they don't sell lottery tickets, they will just be sold somewhere else.  They say that although gambling is specifically forbidden in Islam, selling lottery tickets isn't. ERIC LEWIS

 

 

 

Indonesia

 

"Indonesia's Pig of a Lottery."  (1993, November 27).  The Economist.  329 (7839).  p. 39.

 

Islamic and Indonesian law forbids gambling.  However Indonesian government has sponsored a lottery.  Students have protested in response.  Indonesian government has excused the lottery by calling it "philanthropic donations with prizes" and comparing it to a pig—unclean to Muslims yet still worthy of life.  The lottery has been attacked because of high prices, resulting corruption, and Chinese ownership.  Indonesian government has not yet repressed these student protests. ERIC LEWIS

 

 

 

"Gambling Talks End in Tension."  (2002, August 22).   The Jakarta Post.  p. 8.

 

Indonesia is predominately Muslim but has not legalized gambling.  Some people suggest that legalizing gambling will decrease the amount of illegal gambling and add substantial revenue to the city of Jakarta.  Yet others fear that vigilant Islamic groups would raid official gambling facilities. ERIC LEWIS

 

 

 

"Bogor Students Raid Gambling Den."  (1999, November 5.)  The Jakarta Post.  p. 1.

 

Muslim students, irritated that Indonesian police have not sufficiently enforced the prohibition of gambling, raided an underground lottery establishment. ERIC LEWIS

 

 

 

"Caught in a World of Change, Balinese Go Their Own Way."  (1982, May 4).  New York Times.  p. A14

 

Although Hindus are the predominant religion in Bali, Indonesia's government is dominated by Islamic ideals, and outlaws gambling.  The Balinese try to continue their gambling practices, including betting on cock fights, in spite of Islamic rules against it.  The Balinese face many similar challenges as non-Muslims in this Islamic governmental system. ERIC LEWIS

 

 

 

Cohen, Margot.  (1992, Jan 7).  "Indonesian Sin:  Muslims Addicted to the Lottery."  Wall Street Journal.  p. A8.

 

Discusses societal consequences of the lottery in Indonesia.  Muslim mystics give advice on which numbers to pick.  Indonesians regard winning the lottery as a gift of God.  Families have fallen into poverty because of addiction.  And crimes such as stealing fund lottery addiction. ERIC LEWIS

 

 

 

Israel & Palestine

 

"Jericho Casino is Center of Moral Controversy."  (1998, October 10).  Middle East Reporter Weekly. 5:14-16.

 

Examines opposition by some Muslims to the Oasis casino in Jericho, approved by the secular leader Yasir Arafat and owned by European and Palestinian investors. ERIC LEWIS

 

 

 

"Fun and Games Below Sea Level."  (1998, December 9).  The Economist.  348 (8085).  p. 48.

 

A casino and resort is planned (and has now been completed) in the West Bank Palestinian town of Jericho, funded by Palestinian and Austrian companies.  The resort will cater to Israelis and internationals.  The casino will not be open to locals, though it will provide many local jobs.  Muslim leaders have not yet protested the development. ERIC LEWIS

 

 

 

Battersby, John.  (1996, January 11).  "Vegas on the Negev?  Israel Rolls Toward Resort Casinos Peace with Arab Neighbors Opens Up Competition to Attract Gamblers."  Christian Science Moniter.  p. 1.

 

Israelis have began to travel to Europe and Egypt to gamble.  Israel, which has forbidden gambling, is now moving toward the legalization of casinos.  Palestinians, who are primarily Muslim, will probably follow suit if Israelis build casinos.  Arab countries have benefited from Israeli tourists who gambling in their countries. ERIC LEWIS

 

 

 

Afghanistan

 

"Quail Fighting Among Afghan Vices: ; Drugs, Drinking, Quail Fighting Return After Taliban Defeat."  (2002, January 21). Charleston Daily Mail.  Charleston, West Virginia).  p. 2D.

 

Quail fighting (and betting) has returned to the streets in post-Taliban Afghanistan.  The city of Kandahar in Southern Afghanistan has a tradition of fighting quails.  This article discusses the role of quail-fight betting in Afghani society. ERIC LEWIS

 

 

 

Dixon, R. (2002, May 12).  "The World; The Bird Men of Afghanistan; Culture: In a Nation Rife with Rivalry, Fighting Partridges-or Kites or Eggs-is a Passion."  The Los Angeles Times.  p. A5

 

Discusses gambling in all forms in Afghanistan.  Afghani gambling, whether betting on partridge fights, kite fights, or egg fights, seems to be deeply imbued in Afghani tradition.  These traditional gambling practices have endured throughout the Taliban's rule. ERIC LEWIS

 

 

 

Other Countries

 

El Deeb, Sarah.  (2001, Jul. 2).  "Egypt's Top Cleric Says Quizz [sic] Shows are Gambling and Should be Banned."  Associated Press.  (International News.)  No page number.

 

A new game show has appeared in Egypt—a spin-off of America's "Who Wants to Be a Millionaire."  The show consists of trivia questions and callers who correctly answer the questions win up to one million in Saudi riyals ($267,000 US).  Unfortunately, participants pay a hefty phone bill.   In response, the most highly respected Muslim cleric, Nasr Farid Wassel, called for the end of this and similar game shows, because they resemble gambling. ERIC LEWIS

 

 

 

"All Eyes Set on Lotteries."  (2000, July 26).  Middle East News Online.  No page. 

 

Lotteries in Kuwait have become popular in this predominately Muslim country.  Sponsored by banks and other private organizations, these lotteries attract the interest of Kuwaitis and foreign laborers.  ERIC LEWIS

 

 

 

Dudley, Nigel.  (July 1997).  "Beirut on a Roll."  Euromoney.  p. 155-158.

 

The repairing and re-opening of the Casino du Liban in Beirut, Lebanon, is a sign that Beirut is finally emerging from civil war tensions and welcoming tourists back to the Paris of the Middle East.  During the civil war, both Muslims and Christians crossed battle fronts to gamble at this casino, though it soon fell into disrepair. ERIC LEWIS

 

 

 

Schneider, Howard.  (2000, May 15).  "Iran Blends Pragmatism with Islam to Solve Modern Problems."  The Washington Post.  p. A20.

 

Iran's strictly Islamic government has permitted the establishment of a national lottery.  This lottery is justified as a philanthropic fund-raiser—Iranian officials emphasize that participants buy tickets out of charitable desires.  However, those who win receive a substantial amount of money. ERIC LEWIS

 

 

 

Holland, Lorien. (2000, October 5).  Betting on the House.  Far Eastern Economic Review. (Hong Kong)  163 (40).  p. 78. 

 

Malaysia, a South-East Asian and predominately Muslim nation, has permitted gambling.  The casino stocks are an important part of the Malaysian stock market.  Speculators have confidently invested in gambling company's stock but a recent downturn has made business analysts wonder if increasing Islamic political activity has decreased gambling activity. ERIC LEWIS

 

 

 

Lee, Jennifer 8.  (2002, August 29).  "Saudi Censorship of Web Ranges Far Beyond Tenets of Islam, Study Finds." The New York Times.  p. G5.

 

The Saudi Arabian government has attempted to block pornographic and gambling internet sites in accordance with Islam.  A Harvard study found that Saudi Arabia has also banned other sites that do not contradict Islam but are objectionable to the Saudi government. ERIC LEWIS

 

 

 

Brenner, Gabrielle A., Lipeb, Martial, and Servet, Jean-Michel.  (1996).  Gambling in Cameroon and Senegal:  A Responce to Crises?  Article in Gambling Cultures:  Studies in History and Interpretation.  ed. Jan McMillan.  Routledge.  London and New York.  pp. 167-178.

 

Academic discussion of the role of gambling in Cameroon and Senegal.  Senegal is a predominately Muslim nation, yet gambling is very common among all of the population.  Some Muslims do not believe that Islam forbids gambling. ERIC LEWIS

 

 

 

Naidoo, Shanthini.  (2002, Dec. 15).  Gambling Debt Deepens Heightens [sic] Murder Mystery.  Sunday Times (South Africa).  3.

 

A Muslim living in South Africa was found murdered, possibly because he did not pay a gambling debt.  Because of his apparent devotion to Islam and quiet mannerism, members of the Muslim community have been deeply shocked at his death. ERIC LEWIS

 

 

 

"In Sudan, All the Horses Run Under a Handicap."  (1994, December 12).  The New York Times.  p. A4

 

Although Sudan's government is strictly Islamic, it has permitted horse racing, a traditional sport.  Betting quietly continues at the race tracks.  Policeman will quickly arrest those who appear to be wagering and booking bets, with threats of arrest and prison time.  Yet the betting continues among those who are unwilling to let the government eliminate the traditions of gambling. ERIC LEWIS

 

 

 

Mathematics of Gambling

 

Noone Jr., Emeric T.  (2000). The Probability of Winning a Lotto Jackpot Twice.  Mathematics Teacher, 93, 518-519.

 

This article offers insights on how one may teach students about probability using an example from the state lotto.  By showing how fun and interesting the lotto is, he claims that students will be more interested in learning probability.  At the same time, one will better understand the remote chance of winning a lotto game. The author also maintains that state lotto games offer a wealth of problems and exercises for classroom activities as well as an introduction to a few distributions. 

The example used to show these points is, "What is the probability of winning a lotto jackpot twice?"  The author walks us through the steps, showing us the pitfalls and common mistakes along the way.  A table is provided, showing the probability of winning twice using Binomial and Poisson distributions as the number of trials and time increase.  Suggestions are also given for substitutes for monetary jackpot prizes and official lotto drawing methods.  The audience is generally middle school and high school teachers. BRANDON MACKAY

 

 

 

Everitt, Brian S. 1999. Chance Rules: An Informal Guide to Probability, Risk, and Statistics. Springer-Verlag New York Inc. New York.

 

This book is a great introductory book on probability and statistics.  It begins with a brief history of chance, the development of it in games, noting particularly the beginning of the study of probability.  It then provides some simple examples of counter-intuitive statistical and mathematical problems.  After this introduction the author begins to examine probabilities involving dice before moving into more "serious" forms of gambling.  He then analyzes lotteries and football pools, roulette, cards, and horse racing.  The author includes a chapter on coincidences, which is appropriate with his subject choice, an issue that needed to be addressed.  He then continues with Bayes' theorem and conditional probability, after which he provides his reader with a few fun problems to solve.

This book is very non-technical, and could be read by anyone; the author's audience is the general public.  It is a good place to solidify one's understanding of probability and how it works.  It discusses simply the different probability ideas in a fun and easy manner.  However, if one was looking for a more through or mathematical based analysis, this book would not be that helpful. LEAH BROWN

 

 

 

Dubins, Lester E., and Savage, Leonard J. 1965. How to Gamble if You Must: Inequalities for Stochastic Process, McGraw-Hill Book Company, New York.

 

How to Gamble if You Must is a mathematically written book filled with the analysis of different areas of gambling.  As the authors say, "We have tried to write the book for mathematicians generally.  Technical knowledge of probability is not a logical prerequisite…but it will ordinarily be a psychological one."  They were true to their word.  Each section of the book is a look at the mathematics and probability behind gambling.  Sections such as the formulation of the abstract gambler's problem and casinos with fixed goals involve inequalities so as to determine the strategies and probabilities of each aspect of gambling.

Specifically, the book looks at the gambling in red-and-black, income-tax casino, lottery, and fair casino.  After all of this the last chapter discusses the scope of the gambler's problems, such as fortunes and nonleavable houses.  This is a very good book for one who wants to study the mathematics behind gambling to work out a sound gambling strategy.  In fact, it seems a must on the list of books to be studied. LEAH BROWN

 

 

 

Bain, L. and Engelhardt, M. (1992.) Introduction to Probability and Mathematical Statistics (2nd ed.). Duxbury Press: Belmont.

 

This is an introductory textbook to probability and mathematical statistics.  It provides the means to having a solid foundation for the reading of the more technical articles on the probabilities related to gabling.  The first chapter is especially applicable, as it explains counting techniques and basic probability laws.  The second and third chapters deal with one random variable, and the techniques used to determine the expected values, variance, standard deviation, and all other values of this random variable.  Then the book continues with more than one random variable in chapter four, which is a necessity for anyone wanting to delve into the mathematics and statistics behind gambling probabilities, especially those who want to work out a fit strategy for some gambling game.  The book then discusses more properties of random variables, distributions, and point estimation.  In the end it discusses ways to build hypotheses and test them, along with explaining nonparametric and linear models.

The book is complete with examples of how to use the information provided, with examples especially to games of gambling and chance.  Studying this book will provide the tools necessary for further developments of creating a gambling strategy or understanding some else's.  It is, after all, a textbook, and has been written as such. LEAH BROWN

 

 

 

Iltis, R.  (2000).  Runs With No Winner In A Lottery. The College Mathematics Journal.  31 (5), 356-61.

 

The author analyzes the Oregon state lottery game "Megabucks," and determines how the probability of having a run of no winners decreases with time.  In Megabucks, a player wins if the six numbers they select from 1 to 44 are drawn by the Lottery.  This only gives you a 1 in 7,059,052 chance of winning.  The record of drawings in a row with no winner for the Oregon State Lottery is 31.  By Oregon state law, Megabucks is required to pay out at least 50% of the ticket sales. The author explains that this is alright, because state lotteries gain much more each time there is no winner even though the amount they have to pay out is larger. The increase in public interest and ticket sales largely outweigh their costs. 

The author explains that this game has evolved since its creation in 1985 when it started as a game of possible numbers from 1 to 38.  Since then it has been increased to 42 numbers and then to 44 in 1997.  Using a Markov chain, the author concludes that the Oregon lottery made a wise decision by including the additional 6 possible numbers, thus bumping their average revenue from $144 million to $227 million.  He also predicts that this revenue may be bumped up to $293 by driving up the choice of numbers to 50, but then includes that with fewer jackpots being paid out, ticket sales might decrease.  BRANDON MACKAY

 

 

 

Systems for Winning

 

Wagenaar, W.A. (1998).  Paradoxes of Gambling Behavior. Hillsdale: L. Earlbaum.

 

This book relates to various aspects of gambling theory.  Wagenaar states axioms and explains their pertinence to gambling theory.  Exploring the fallacies in logic, he gives the reader an understanding of common problems with games of chance.  He specifically explains blackjack, roulette, and lotteries. 

Wagenaar discusses implications of normative theory.  He describes the logic of the game of blackjack, as well as strategies to win.  These include "Never Bust, Mimic the Dealer, and Counting."  The explanations provide an informative introduction, as well as an in-depth analysis.  Extensive understanding of the topics discussed is backed by studies in each of the games of chance.  Having a relatively large study group, Wagenaar has combined his findings into charts, tables and graphs.  AMBER CLAWSON

 

 

 

From http://www.greatgamblingsystems.com/content/roulette

The Martingale

This is a great little system—IF you have an infinite amount of money.  It says you should choose something and bet on it all night, doubling your bet with each loss, because "it would be an impossibility for a casino roulette table to fall on say ‘red' all night."  Of course, it is not an impossibility for this to happen—indeed it is quite possible that it will happen for long enough that you'll go broke.   Using this system you could lose all of your money very fast.  And the average losses due to this system will be the same as with any other system.  What this system does accomplish is that it transforms a game with almost even chances of small wins and small losses into a game with a large chance of a very small win and a small chance of a very large loss.

A variant of the system is to "wait until the casino roulette table has a run of say three or more on Red or Evens before doubling up on the other side."  Supposedly this is so that you have more chances of winning on the odds or black.  But that argument is the standard Gambler's Fallacy—the chance of the ball's landing on Red or Evens again is still 18/38, regardless of what has come up before.

The Anti-Martingale

This system is based on the fallacious belief that wins and losses come in runs of three or four.  So, you play until you win three or four times, and then you leave.  LEAH BROWN

 

 

 

Roger R. Baldwin; Wilbert E. Cantey; Herbert Maisel; James P. McDermott. The Optimum Strategy of Blackjack.  Journal of the American Statistical Association, Volume 51, Issue 275 (Sept 1956), 429-439.  Found on jstor.org

 

This article gives an in-depth analysis of the strategy of blackjack.  It analyzes the decisions of the player, the probabilities of the actions of the dealer, and then looks into the different playing strategies such as holding or doubling down.  If one is looking for a mathematical analysis of the game of blackjack along with an analysis of the different options, this would be a good article to study.  However, a solid understanding of mathematical terms and symbols is required.

It begins by explaining the game of blackjack as played in a casino, where the dealer's strategy is fixed (as apposed to a private game where the dealer's strategy may change).  This article then presents the decision equation used to determine the best (mathematically sound) decision if a) the player has a set hand or b) the player's hand contains an ace, which can be used as both a 1 or an 11.  With this equation and a little more analysis the different strategies in blackjack are analyzed (such as doubling down or splitting) so that a player may decide which strategy to use at any given point in the game. LEAH BROWN

 

 

 

Algoet, Paul. Universal Schemes for Prediction, Gambling, and Portfolio Selection.  Annals of Probability, Volume 20, Issue 2 (Apr., 1992), 901-941

 

This article analyzes the schemes of gambling using statistics and mathematics.  A familiarity with statistics, probability, and mathematics is needed to understand it.  It contains problems such as the existence of a universal gambling scheme and a universal prediction scheme, which it goes over technically and in depth to give the reader the background needed for analyzing the stock market, horse racing, and other gambling issues. It is a good source for mathematical theory behind the relevant probability. 

Specifically it analyzes the Kelly system so as to obtain a universal scheme for gambling on a stationary ergodic process with values in a finite set.  It also discusses a universal prediction scheme which, though it is not necessary in portfolio selection, is helpful in obtaining universal gambling and portfolio schemes.  The object is that in the end the reader will be able to apply one of the schemes discussed when choosing a gambling portfolio. LEAH BROWN

 

 

 

Howard, Gail. (1997). Lottery Master Guide. Smart Luck Publishers; Revised edition.

 

In this book the self-proclaimed lotto maven, Gail Howard, discusses many different systems for winning the lottery with ways to choose numbers and what lotteries to play in.  It is not entirely clear whether she actually believes what she has written or if she is intentionally attempting to mislead her readers. In either case, this book is not only completely fallacious, but the "strategies" proclaimed here will actually hurt a player's chances of winning the maximum amount possible in pari-mutuel lotteries (most lottos).  The reason for this is the fact that they do not increase your chances of winning at all, but they do increase your chances of having to share your winnings with other players if you do win (see e.g., N. Henze and H Riedwyl, How to Win More: Strategies for Increasing a Lottery Win).

However, if one is looking to analyze fallacious lottery systems, this book is great, since it provides a large collection of the many of the most popular systems.  Most of the strategies in Howard's book are founded upon the Gambler's Fallacy, although some other standard fallacies also show up.

People who are determined to use wheels should note that the wheels in Howard's book are not as efficient as those in the book of Ilya Blushkov, Combinatorial Lottery Systems (Wheels) with Guaranteed Wins.  However, as N. Henze and H Riedwyl, correctly point out in How to Win More: Strategies for Increasing a Lottery Win the main thing you'd want to do with a wheel is use it to see which numbers NOT to pick. LEAH BROWN

 

Jones, "Prof". (1997) Basics Of Winning Lotto/Lottery. Cardoza publishers.  Revised edition.

 

Unlike Gail Howard, who might actually believe in her fallacious strategies, Mr. Jones is clearly trying to deceive his readers by writing under the pseudonym of "Prof" or "Professor."  Since he neither says what hs is a professor of, not where he is a professor, not what his credentials are for being a professor, and most importantly, since his strategies are manifestly foolish, it is very difficult to believe that he really is a Professor.  The same objections that were listed the review of Gail Howard's book are applicable to this one, except that here the author's intent to deceive is manifest.  Tyler Jarvis

 

 

Cardoza, A.  (1994). How to win at gambling; slot machines.  Cardoza Publishing, 152-6.

 

The author gives a brief history of the evolution of slot machines.  He explains the basic functions of two main types: standard and cumulative.  He explains the strategies and tactics used by businesses to lure people into playing.  Written in layperson's terminology, it offers detailed and interesting facts about a mode of one of the largest incomes for casinos.  It is valuable to those who have little to no knowledge about slot machines.

The author analyzes the odds of hitting the jackpot on a standard slot machine and helps the reader to understand the risk.  He explains what is meant by loose/tight slots and why it is important to research locations before you play.  Casinos strategically place tight and loose slot machines to entice and fool people passing by into thinking that their chances of playing there are better than elsewhere.  He makes mention to a few of the minimum returning pay-offs that are sometimes set by state governments, but shows that not all states have these.  BRANDON MACKAY

"Wanna Bet?  On Gambling Strategies that May or May Not Work in a Casino," Cynthia A. Coyle, Chamont Wang, The American Statistician, Volume 47, Issue 2 (May, 1993), 108-111.  Found on jstor.org

 

This very useful article treats common gambling myths and discusses how to prove or disprove them.  The authors provide the reader with a few simple problems that intuitively seem easy.  They then prove mathematically that the counter-intuitive solution was actually the correct one.  Through this process they illustrate the odds of winning at a "fair" game versus an "almost-fair" game (one where the gambler has a 50-50 chance of winning, called fair, and one where he has an almost 50-50 chance of winning, say 47.8, called almost fair).  It then offers further readings and resources for the reader.

One typical example cited in this article is of a man who gambled $200,000 every hand, taking note of the cards played after each hand.  However, he lost $9.4 million to a mathematician who had worked out a mathematically sound strategy to beat him.  The authors, after presenting this story, then try to analyze the mathematician's strategy to show how he won.  The mathematician had figured out that after 70 hands of play the gambler had a 44% chance of being ahead, but after 5,250 hands, the gambler had only a 16.8% chance of being ahead.  Thus the longer the gambler played, the less chance he had of winning.  LEAH BROWN

 

 

Kiernan, V.  (1996).  There's One Born Every Minute….  New Science, 149, 14.

 

This article analyzes the results of a survey of 681 people living in Tallahassee, Florida, who said they had participated in the state lottery.  The focused on how these participants selected their lottery numbers.  Five main categories of methods were identified as: Special days, random number generators, mythical or religious cues, environmental cues, or no fixed method. 

The survey and research was performed under the direction of Susan Losh, a sociologist at Florida State University.  She was trying to draw connections between the methods that were used and the psychological background and approach of those playing.  She found that well-educated people were more likely to use a random number generator, than other means, thus eliminating human biases to specific numbers.  (No mention is made as to the type of random number generators used or how they function.)  Those who spend a lot of time watching television were more likely to rely on special days.  41% of those surveyed rely on special days, 22% on random number generators, 16% on mythical or religious cues, 3% on environmental cues, while 18% used no fixed method. BRANDON MACKAY

 

 

 

Saunders, S. C., Moody, M. E.  (1987).  Great Expectations: or Playing the Odds in the State Lotteries.  Northwest Science.  61 (4), 239-248.

 

In the recent past, there has been an increase in the creation and legalization of state lotteries.  This article specifically describes the Washington State Lottery, called "Lotto," but points out that this system is similar to many others.  The authors explain how the payoffs are made.  They develop a mathematical model explaining the odds of winning in the currently accepted state sponsored betting systems.  Their reasoning and explanations involve a great deal of mathematics.  A few graphs and tables are provided to help understanding.

The authors explain the basic rules to the Washington State Lottery.  Each participant selects a 6 number combination containing any numbers from 1 to 44.  This gives a 1 in 7,059,052 chance of choosing all six winning numbers and winning the jackpot.  This jackpot is divided among all winning participants.  Smaller prizes are also given to those who guess four and five of the six winning numbers.  The authors' model takes into account that with no winner the jackpot increases and consequently so does participation in the next drawing.  However, with an increase in participation, the probability that more than one person will win the jackpot also increases.  Thus, your expected payoff will not necessarily increase. BRANDON MACKAY

 

 

 

Johnson, R., Klotz, J.  (1993).  Estimating Hot Numbers and Testing Uniformity for the Lottery.  Journal of the American Statistical Association. 88 (422), 662-668. Available at jstor.org

 

The authors consider estimating the probability of selected lottery numbers and attempt to determine uniformity.  This problem is considered when the winning numbers are selected sequentially and without replacement from the Lotto American Lottery where numbered ping-pong balls are selected from a container.  A model is developed to compute maximum likelihood estimates of each of the probabilities.  Provided, is an introduction to the needed statistics.  A previous knowledge of math and statistics is very beneficial.

The article provides a higher explanation of maximum likelihood estimates but assumes that you already understand the basic principles involved.  The authors concluded that the LAL, the possible numbers do not all have the same maximum likelihood estimates but range from .03106 to .01124, a difference of .01982.  Then they selected the six numbers with the highest MLE and found the winning probability of that set of numbers.  To verify their conclusions, the authors preformed a series of lottery drawings of their own.  Their case was a sample of six numbers from 54, repeated 200 times.  This entire experiment was preformed 100 times each to get as non-biased example as possible.  Then they tested for uniformity and the estimates of each set of 200 drawings.  They found that the difference in the probability of selecting all six winning numbers based on their individual MLE gave a minimal advantage. BRANDON MACKAY

 

 

 

West, J. H.  (1955).  An Analysis of 162,332 Lottery Numbers.  Journal of the Royal Statistical Society.  118 (4), 417-426.  Available at jstor.org

 

This article analyzes the randomization apparatus and procedure of a southern Rhodesian lottery.  Specifications are given on the randomization apparatus and the lottery balls.  As well as a brief history of the evolution on this game, to help the reader better understand the process.  Data is gathered from city records for 67 consecutive lotteries and put into tables for this analysis.  The expected value for each number is found and compared to the actual drawings to decide if the process is unbiased.

The focus of the study is on the numbered balls, which comprise the last four squares on the ticket.  Letters occupy the first two, but analysis of them is not made here.  The author computes the expected value of digits 0-9 in each position.  Analysis of the tables show that some numbers appear more often then their expected value and others less, thus creating doubt as to the fairness of the selection process.  A few hypotheses are given for this, such as the numbers making the balls more slippery and so they slide into the selection slot easier.  Thus numbers that cover more area, such as an 8, will have an advantage of being drawn over, say, the number 1. BRANDON MACKAY

 

 

 

Henze, N., & Reidwyl, H.  (1998).  How to win more: strategies for increasing a lottery win.  Massachusetts.  A. K. Peters, Ltd.

 

There are probably only two really useful and accurate books on how to play the lottery.  The first is Ziemba, W. T. (1986) ,Dr.  Z's 6/49 Lotto Guidebook, and the second is this nice little volume. 

The authors' focus is on winning the greatest possible amount if your numbers are selected.  The book is based on the important idea that, while there is no way to increase your chances of winning,  if you still insist on playing there are plays which will increase or decrease the expected payoff in the unlikely event that you do win.  Anything you do to pick your numbers that other players also do will increase the probability that you will have to share your winnings—something that could be very disappointing indeed.

The authors identify ten "foolish" strategies to play lotto and explain why their use would be injurious to players' pocketbooks.  These are: choosing arithmetic progressions, choosing winning combinations of previous draws, choosing "hot" and "cold" numbers, choosing outstanding numbers, choosing winning numbers from other countries or states, choosing geometric patterns, modifying previous winning combinations, playing with numbers, the "too-large-number" dilemma, and foolish play and arithmetic complexity.  Data and explanations are provided for each of these strategies.  In each case, the authors show that these strategies are very common and therefore the payoff, should you win, would be significantly less than you would otherwise expect.

They also identify eight "intelligent" strategies and give a brief analysis of the most common lotto strategies and how one may avoid falling into their trap.  Factors to beware of, such as the "birthday zone" (1-31), special number layouts on lotto cards, and clustering, are considered.  Tables and diagrams are provided to help understand tendencies of lotto players and choose a number combination that would bring the largest payoff, should you win. Some information is given on strategy for matching five of six numbers.  BRANDON MACKAY

 

 

Ziemba, W. T. (1986) ,Dr.  Z's 6/49 Lotto Guidebook , Vancouver and Los Angeles: Dr. Z. Investments, Inc.

 

This nice little book is unfortunately rather hard to get hold of.  It is one of only two really good books on the lottery (the other is Henze, N., & Reidwyl, H. (1998)  How to win more).  It covers many of the basic questions and gives an accurate treatment of the lottery for those who are determined to play. Tyler Jarvis

 

 

Snyder, R.J. (1986) Gambling Swindles and Victims.  Journal of Gambling Behavior, 2, 50-57.