Online Gambling, Lose Money in The Comfort of Your Own Home!

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So I’ll start with a little bit of my background. I’m not a gambling man per se, but I like to play the odds. A good game of texas hold em can be a nice and exciting way to spend an evening. I’ve been trading equities for about ten years now, and admittedly it can feel like gambling. When there’s a big binary event: a possible merger, a Federal Reserve meeting, a make or break earnings report…it has a way of feeling like gambling. This is especially true in the options market. For any single dollar I make on a stock option, there’s someone else out there who lost that exact amount.

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I’ve always justified that kind of “gambling” as an educated form of gambling. At the very least I’m staying informed, learning something about finance, and maybe (very maybe) I could make some kind of return. If I spend enough time researching and thinking about the situation at hand in any market, I’ve done more than most.

 

With that said, I’ve spend a little bit of time at a casino table or two. A year ago I made a
rare $14o profit in a casino. Since I was ‘up’ in my gambling career, it seeming like a good opportunity to see what all the fuss was about with online gambling. After all, it can be a long drive to get out to a casino. In a scene out of the movie “Runner Runner” a few friends gathered around me as I played with my winnings. For a brief moment, I was even up a few bucks. Then as quickly as I had made the money, it was gone.

I never went back to online gambling, but I did walk away from the experience with a lot of skepticism. I had lost my money with a near perfect hand, the odds heavily in my favor – bet the house kind of in your favor. Now I’m not saying that some algorithm cheated me out of my money. I may very well have gotten unlucky, it happens. But I do get the sense than this form of social media might be a little “too social.”  It wouldn’t be hard to “run” a an online texas hold em table. You just need to get a few friends together with computers in different IP addresses and communicate over the phone. With information on 7 out of the 8 hands in a table, the group has a huge statistical advantage on the unknowing newcomer.

Even if nobody was running the table, I tend to have an inherent distrust of an algorithms ability to be truly random. While poker can be a fun social game and gambling can be an exciting way take on some risk, the internet feels like a dark and murky place to go looking for casino games to play. I think back to the scene in “Runner Runner” (couldn’t find the clip, but I put the trailer below) in which Justin Timberlake’s character loses his money to hackers on an online gambling platform. WIthout seeing the cards fall yourself, it’s hard to know exactly where your odds have come from.

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I think we can agree that online gambling is particularly sketchy – and even if it is safe, it’s addictive, and costly as hell (goodbye $140). So having said that, why do we allow online gambling in some states? I decided to write this post when I was driving my car and heard an advertisement lobbying voters for online gambling. It promised new tax revenue, money for businesses, and new jobs. In large part, these claims are true. Online gambling can mean a $25-$50 million increase in tax revenue for a state. That’s no small sum. All the while that revenue goes to gaming businesses which support jobs. That $25-$50 million can mean new roads and better schools.

With that in mind, it’s important to think about where that tax revenue comes from. This isn’t just any kind of social media website. The revenue isn’t coming from advertisements. There’s no product that is exported to consumers abroad or utilized by the local community. The money comes from individuals in the community who at a click of a button can make poor and costly decision to go gambling online.

 

 

 

7 comments

  1. kdphilippi18 · ·

    Interesting post. I have never tried online gambling, but I have gambled a few times at a casino. I think you bring up a really important point about the ethical implications of online gambling. I never gave it much thought before your post, but the nature of online gambling leaves a lot of room for foul play and cheating people out of their money. While it does have have positive benefits like you outlined for states that allow it, it would be interesting to better understand the regulations behind it to safeguard against people just scamming others unfairly. I wonder if there are limitations about how the algorithms are developed and I am curious to see if the amount people win online compares to the amount won in casinos.

  2. Interesting post! I have always had my skepticism with online Pocker servers. To me, I believe that it isn’t secure. What is preventing someone from hacking into the system and altering the algorithms in their favor? I am assuming that cyber-security on these servers are top notch, but what is preventing some group, let’s say Anonymous group, from corrupting the servers? Maybe I am a little too paranoid, but hey that’s me.

    On your comments about tax revenue. Do you believe that it would actually only come from the consumers? Why wouldn’t companies want to have banners and other online ads on the website?

  3. Interesting post. There definitely is a revenue benefit to state governments that choose to allow and tax online gambling. I’m of the opinion that this is no different than buying scratch tickets or going to a casino – going online doesn’t change the fact that you’re playing a game of chance at your own risk!

  4. adawsisys · ·

    Enjoyed the post! I am also very skeptical of online gambling because of the reasons that you mentioned, although a site like Bovada has been around for a long enough time that by now I feel like any cheating, collusion, or skewed odds would have been discovered. I use Bovada for sports bets now and then. There is slightly larger cut taken by the site than there would be offline and there is a transaction fee for withdrawals. It is much easier to access and feels more reliable than offline. I am not too familiar with online gambling laws, but I don’t understand why a site like Bovada is allowed to operate when Draftkings is running into legal trouble doing the same.

  5. fernaneq4 · ·

    Love that episode of South Park and I really enjoyed your use of that scene in your article. I’m not a gambler myself because I hate losing and further than that I hate losing money but I have a couple of friends who are huge gamblers. No matter if its in a casino or online, they always believe the odds are in their favor. The majority of it is on sports and don’t get me wrong they do their research and they are very knowledgable on the subject matter but it’s called gambling for a reason! Nevertheless, these sites will always exist. These people will always exist. It’s an addiction and a problem that won’t be solved by shutting down DraftKings or the casinos. People will find a way to get their gambling fix and I’m not saying indulge them but at least create a safe(r) environment for them to do so. Great read!

  6. One of my econ professors once said to me “sin tax is still a win tax”. If earnings on online gambling become taxed, people become less incentivized to partake in the activity and it still generates money to the state so personally, I support the legalization of this because so many people do it regardless of whether it’s legal or not so the state might as well get some money out of the deal. That being said, it’s too easy to rig online gambling with the exact method that you described so increased security features should definitely be implemented. Great post overall

  7. Very interesting post. I too always enjoy a few rounds leisurely, especially over the summer when I went to Las Vegas. However, a lot of me is skeptical about how to trust others playing with me and also the system. Online gambling I have never done but it does scare me. I feel I would somehow be scammed or loose a large sum of money. I actually thought about this the other day when I was watching the poker tournament at CitySide. I also agree with when you said, “With that in mind, it’s important to think about where that tax revenue comes from. This isn’t just any kind of social media website. The revenue isn’t coming from advertisements. There’s no product that is exported to consumers abroad or utilized by the local community. The money comes from individuals in the community who at a click of a button can make poor and costly decision to go gambling online.” We are not sure where its coming from…hmm very sketchy to me…will online gambling last?

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