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.
Social Problems Related to Gambling
Economics of Gambling
Logical Fallacies and Systems for Winning
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).
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.
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
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
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
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.
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
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
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
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'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
"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
"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
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
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
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.