April 26, 2016

Chopping the Primaries

As another set of presidential primary results come in tonight, it is interesting to note how the different delegate selection systems used by the Democrats and Republicans have had significantly different effects on how each party's eventual candidate will be selected. Let's look at these effects by using poker tournaments as an analogy.

Each state is essentially a separate poker tournament, offering a prize pool of delegates. The size of the prize pool (number of total delegates available) will vary based on the nature of the tournament. For example, some tournaments have smaller buy-ins or fewer participants, and have a smaller prize pool, while other tournaments have larger buy-ins or more participants, and have a larger prize pool. Under this analogy, California is the Main Event of the presidential primary season. You have to win a lot of smaller tournaments (or a lot of Nebraskas and Delawares) to net as many delegates as a win in the Main Event.

Even more important than the prize pool, however, is the payout structure. On the Democratic side, all states award delegates on a proportional basis—win 55% of the vote, get roughly 55% of the delegates (in states with small numbers of delegates, the delegate counts may deviate slightly due to rounding, such that a 52%-48% "win" results in an equal split of delegates). On the Republican side, however, early primaries were proportional (with a qualifying threshold), while most later-stage primaries are winner-take-all or winner-take-most affairs. In those states, a simple plurality of the vote—maybe as little as 40%—can win 90-100% of the delegates.

Viewed as poker tournaments, the Democratic primaries essentially are structured such that the candidates are required to "chop" every primary. As my poker-savvy readers know, chopping is an agreement to split the prize pool rather than playing out the tournament to its end. Chopping is common in poker tournaments, and is a method for reducing variance (being the chip leader is great until a couple of short stacks get lucky and knock you out with a small payout). Chopping is usually tied to chip stack size, recognizing that players with more chips have a better chance of winning. One basic method of chopping is a "chip-chop" where every player is paid last place money, and the remaining prize pool is divided proportionally to chip stack size. So, players with larger chip stacks get larger percentages of the prize pool, but everyone gets more money than last place money.

The Republican primaries—at least those remaining—are more akin to poker tournaments with top-heavy payout structures. Poker tournaments with guaranteed payouts (such as the WSOP "Millionaire Maker") often feature large payouts to the winner or top few players, with little or no prize money for lower finishers.

These structural differences are critical to the underdogs in both races. On the Democratic side, the primary was essentially decided by Super Tuesday, when Hillary Clinton opened up a sizable pledged delegate lead. Although Bernie Sanders has won numerous primaries and caucuses since then, most of those were in smaller states with fewer delegates. Even worse for Sanders, the proportional award of delegates made it difficult for Sanders to make an appreciable dent into Clinton's delegate lead because Clinton will pick up sizable numbers of delegates even in states she loses. Effectively, Sanders can never come close to sweeping a state's delegates. Based on projections by FiveThirtyEight.com, Sanders will likely need to win 65% of the delegates in the late-stage Democratic primaries, which translates into this essentially impossible scenario:
"Based on these estimates, Sanders would need to beat Clinton by 26 percentage points in California, 28 points in Indiana and 16 points in New Jersey, all states where he trails Clinton in polling averages. He’d also need to win Western states like Oregon and Montana by 50 or more percentage points."

~ FiveThirtyEight.com
By contrast, the top-heavy structure of the late Republican primaries offers Ted Cruz an opportunity to quickly close the delegate gap on Donald Trump if he is able to score even narrow wins in most of the larger remaining Republican primaries. Even though that scenario is unlikely to lead Cruz to a majority of delegates, Cruz still has a decent shot of winning enough delegates to deny Trump a majority of delegates, enabling Cruz to make it past a first ballot and into a scenario where delegates would no longer be pledged to Trump and could throw their support to Cruz (or John Kasich or Marco Rubio).

In short, Sanders could close out the remaining primaries on a string of 60%-40% victories and handily lose the Democratic nomination, while Cruz could close out the remaining primaries on a string of 40%-35%-25% victories and win the Republican nomination. Of course, the most likely scenarios are for Clinton and Trump to score solid victories in most of the remaining primaries (starting tonight) and wrap up majorities of pledged delegates prior to the party conventions. But the difference in delegate selection structure means Clinton is essentially on cruise-control while Trump will be in a dogfight to control Cruz.

February 03, 2016

RINO for a Day—Inside the Iowa Republican Caucuses

I am a Republican.

There. It feels better to have that secret out there. It has been a terrible burden to bear.

I haven't always been a Republican, though I did grow up in one of the most reliably Republican congressional districts in America—Nebraska District 3—which covers pretty much everywhere in Nebraska that isn't Omaha or Lincoln. Republicans in partisan elections can rely on running up 70-80% of the vote in this largely rural district where you find fifth and sixth generation family farmers and ranchers, and county seats with populations in the low-to-mid thousands. Social life revolves around school, church, and Huskers football. Guns and God (and running the dang ball) are a way of life, not a punchline. My hometown actually sits on the banks of the Republican River.

Still, in my very first Presidential election, I voted Democrat, supporting Jimmy Carter in his 1976 victory over Gerald Ford. I suppose technically my vote only counted in the highly influential Weekly Reader presidential poll, considering I was a first grader and couldn't get around that pesky 26th Amendment. Still, my guy had won, so being a Democrat meant being a winner. So I was a Democrat. Of course, I'm still bitter about the other big election that fall, when my elementary school voted on the color of the new tornado slide. Informal recess polls had red and gold neck-and-neck during election week, but somehow blue pulled off the upset victory. I still suspect those shady 5th and 6th graders committed election fraud.

The Iowa caucus system strongly resembles a school election. Voters are crammed into churches, schools, and community centers. The pledge of allegiance is recited. Some self-important busybody serves as chair because nobody else wants to run the show, and everyone mostly wants to get home to watch Netflix. Speeches are given and ignored. In lieu of a raffle or bake sale, envelopes are passed around for cash donations, with a reminder to keep it below the mandatory reporting threshold; nobody wants to do homework.

My first two forays into the caucuses were as a Democrat in 2004 (Edwards) and 2008 (Obama). Those were the first caucuses of the social media era, and turnout was substantially greater than anticipated. Democrats those years were motivated, organized, energized. We left the caucuses feeling that our votes mattered.

This year, I had planned to skip the caucuses. I had switched my voter registration to Independent in 2010, and the Democratic race seems to hold little actual suspense—it's your standard race between a candidate who would fail an open-book exam in Economics 101 and a candidate who would need a cheat-sheet to pass Intro to Ethics.

But then, around Thanksgiving, a sign appeared.

No, really. An actual freaking sign. In fact, it was this particular billboard mounted on a fence in my neighborhood:

Donald Trump billboard (12/8/2015), West Des Moines.
2016 Iowa Republican Caucuses.
This sign is four blocks from my house. It is mounted overlooking the corner where my street intersects with one of the busiest parkways in the Des Moines metro area. In an unintentional homage to the modern Republican Party's core constituencies, the sign sits smack between the biggest evangelical mega-church in the metro and the largest shopping mall in the state. Given that I run, walk, and drive past that corner several times each day, I've gotten to see a lot of that sign. And as the caucus season progressed, it drew plenty of attention from visitors and the media.

As Donald Trump might say, the sign is yuuuuge.

Now my significant other and I enjoy watching Trump's reality TV show, Celebrity Apprentice. On the show, Trump can be a bullying buffoon, but he's an entertaining buffoon. Trump as President? Not nearly so entertaining. For that matter, I wasn't particularly enamored of several other Republican candidates. But what could I do?

Then, Monday morning as I passed the Trump sign on my way to work, it occurred to me—why not caucus as a Republican? If I'm not thrilled with the Democratic candidates, why not help support a better (i.e., more tolerable) Republican candidate? At the very least, why not see who these people are who think Trump should be President? Maybe the Trump sign guy would even speak!

Iowa allows same-day voter registration, including changing parties to cross-over and vote in a primary or caucus. A quick form to complete online and print out, and presto! I was a newly minted Republican.

Caucus night was exciting. It was a five minute drive to the large Catholic church where our precinct (West Des Moines 221) and four other precincts (the efficiently numbered West Des Moines 222-225) would gather. We arrived at 6:40, and the line stretched around the building. More doors were opened, and the lines collapsed into a black hole inside the church with folks jostling to get in the right registration line. Based on official tallies, 1,203 people voted at our location, with the largest group (406) being from our precinct.

Organizers had not anticipated the large number of caucus participants. There were too few people working registration. Ballots ran out and had to be printed. Lines ground to a halt. In the midst of the chaos, candidate Carly Fiorina was giving a TV interview, presumably setting expectations for a "win" as outpolling Mike Huckabee and Deez Nuts.

Suddenly, a murmur broke out. There, walking through the crowd as if he were parting the Red Sea or walking the Oscars red carpet, was Donald Trump. The crowd acted like he was a Hollywood star, maybe George Clooney on a bad hair day. Trump smiled and basked in the crowd's adoration, gave brief remarks to a TV crew, then headed to the front of the church. Love him or hate him, the Donald exudes charisma.

Donald Trump arrives at the Iowa Republican Caucuses.
St. Francis Church, West Des Moines, 2/1/2016 .
Despite the registration backlog, the caucus was brought to order at 7:15 PM. At least 800 people were crammed into the fellowship hall, with the remaining 400 or so of us out in the adjoining entry room, many still waiting to register. A Boy Scout troop posted the American and Iowa flags, and we all recited the Pledge of Allegiance, because we're Americans, not Socialists, dammit. The temporary chair appointed by the state party was then elected to be permanent chair because nobody else wanted the hassle. And then, as I remained 25 people back in the glacial registration line, the main event was underway.

Each campaign was given three minutes to bore or annoy the crowd with a last minute sales pitch to those oddballs who, despite months of campaign mailers, TV ads, debates, and candidate appearances at local fairs and pancake dinners, still found themselves undecided mere minutes before voting. Carly Fiorina and Donald Trump each spoke for themselves at the beginning, followed by precinct representatives for the other campaigns in alphabetical order. Here are my summaries of their speeches. Keep in mind I was trapped in the undertow of the registration line the entire time, so my notes were minimal. Paraphrasing is likely to be inaccurate, while direct quotes are probably unusually inaccurate paraphrases.

Fiorina:  Drawing on her experience as a failed CEO, Carly gave a wonderfully upbeat speech filled with corporate jingoism meant to distract from her campaign's lousy performance in the 4th quarter of 2015. She closed with an appeal for "enough votes to attract a leveraged buyout or vice presidential nomination."

Trump:  The Donald is loud! He's successful! He's rich! He's an outsider! He will be a winner! Every other candidate is a loser! Free walls for everyone! Mexico will host an open bar with free margaritas and walls! Note: The WALL (TM) thing has me curious. Is Mexico using MasterCard, and if so, what kind of airline miles or cash back multiplier are they getting for construction-related purchases? Will Mexico pay for my new backyard retaining wall? Because that would be amazing.

Santorum:  Rick's wife, Karen, reminded the crowd that the Muslim terror group, ISIS, wants Rick dead, which is sad and puzzling because they share those strong Christian values of demonizing gays and returning civilization to the good ol' days of the Dark Ages. Also, the electoral system is rigged against those who dare to speak against the Republican establishment, particularly if your name happens to rhyme with "Dick Mantorum." Karen closed with an anecdote about how Rick likes to make blackberry jam. But either she forgot to bring jam, or there wasn't enough for those of us in back. Trump would've had jam for everyone, and it would've been award-winning, amazing jam, and Venezuela would've paid for it with a post-dated check. Anyway, no jam, no vote.

Bush:  Jeb! can win Florida. Jeb! can win Ohio. In a close election, Jeb! can win in the Supreme Court. Basically, Jeb! has a very particular set of skills, and at this point, he expects you to vote for him, because if you don't, he's going to torture you with more cheesy super-PAC ads.

Carson:  Doctor Ben is a regular guy. He'd totally drop by your house on Thanksgiving. "By the way, we're all neighbors. You're supposed to love your neighbor. How many of you even know your neighbor?" [crowd shuffles uncomfortably] [Note: This was a totally real quote.]

Cruz:  Ted is a good person. Ted believes in God. He reads the Bible. Ted believes in the Constitution. It's not clear if he has read the Constitution. Ted will ban gay marriage, abortion, and the designated hitter. Ted makes the apple-iest apple pie. Ted is not only not Canadian, he is the only candidate willing to carpet bomb ISIS in Canada.

Huckabee:  No one spoke for Huckabee. For the first time ever, I agreed with every word said by Huckabee's campaign.

Kasich:  Only John can save the United States. Only you can prevent forest fires.

Paul:  Rand's niece, Lisa, spoke. "Dammit Jim! Rand is a doctor, not a career politician!" Note: This message would probably work better if Rand wasn't badly trailing a world-renowned neurosurgeon who actually has never held political office.

Rubio:  "Marco is very religious, but doesn't want to flaunt it. He keeps it private. Like this past Sunday when he came to Mass at this very church. And again both the Saturday and the Sunday before that. Marco loves Mass at this church." Also, Marco is the best candidate for beating Hillary in the general election. There are three important points to remember about Marco:

1. Experience
2. Judgment
3. ???

Profit!

Official ballot, West Des Moines Precinct 221.
Iowa Republican Caucuses, 2/1/2016.

High tech ballot box, West Des Moines Precinct 221.
Iowa Republican Caucuses, 2/1/2016.
"White" label distinguishes white ballots from Precinct 221
from different colored ballots from other precincts at the caucus site.
Following the campaign speeches it was time to vote. In the Democratic caucuses, participants physically gather themselves into groups by candidate, then spend an hour playing a ritualized version of Red Rover as each campaign poaches people from and lends people to other campaigns to maximize their delegates while minimizing the delegates of selected rivals. The Republican Party, however, is much more modern and simply casts a statewide straw poll using cutting edge technology designed to expedite voting and thwart election fraud—paper ballots and golf pencils. Basically it was just like that Weekly Reader election back in 1976, except instead of the sainted Mrs. Pearson counting the ballots, it was a committee of party hacks in a back room, supervised by the caucus chair who also totally coincidentally was also Marco Rubio's precinct captain.

After dropping our ballots in the color-coded and completely secure homemade ballot boxes—our precinct was awkwardly designated the "White" precinct—we had the option of leaving or sticking around for a business meeting about organizing the precinct and electing county party leaders and committees. We skipped out before we could be drafted to make glitter signs and hang crepe paper in the gym or whatever.

Unfortunately, it turns out I was on the wrong end of this grown up Weekly Reader poll. In selecting a candidate to back, my first criterion was "Don't Be Batshit Insane". Right away that knocked out Trump, Cruz, Carson, Paul, Santorum, and Huckabee. Christie is a jerk. Fiorina lacks experience. I could find myself supporting Jeb!, Rubio, or Kasich even if I don't agree with some/many of their policy positions; unlike the rest of the field, they seem qualified to govern.

In the end, I went with Jeb! while my precinct went with Rubio. In fact, Rubio (160 votes) essentially tied the combined votes of Trump (86 votes) and Cruz (75 votes) who finished second and third in the precinct. The aggregate votes for the five precincts at our location had a similar pattern, with Rubio (455 votes) far outpacing Trump (240 votes) and Cruz (228 votes). Although Rubio finished third overall in the state, he clearly attracts the support of middle-class suburban voters who will be critical to the success of any candidate in the general election (statewide precinct level results have been compiled by the New York Times and the Iowa Secretary of State).

So much for the good signs. The bad omen is that Trump and Cruz are both still ahead of Rubio and the rest of the pack. Trump looks to win New Hampshire. Trump and Cruz are both strong in South Carolina. Rubio or any other "establishment" or "mainstream" Republican candidate will need to find a way to tap into the anti-establishment energy driving this campaign or be left in the dust.

Although the presidential primary marathon has only begun, Iowa's turn in the spotlight is blessedly over. Now it's up to the next wave of primary states to further clarify who will represent the Republican Party. As for me, my 48 hours as an Iowa Republican have been exhilarating and embarrassing. At least if Trump is nominated, I can say I played my part in the resistance. But sometime in the next few weeks, this Republican will turn back into an Independent.

In the meantime, I have a hankering for some homemade blackberry jam.


Standing room only at St. Francis Church, West Des Moines.
Iowa Republican Caucus, 2/1/2016

Standing room only at St. Francis Church, West Des Moines.
Iowa Republican Caucus, 2/1/2016

Donald Trump enters the Iowa Republican caucuses.
St. Francis Church, West Des Moines, 2/1/2016.


Crowds waiting to register for Iowa Republican Caucuses.
St. Francis Church, West Des Moines, 2/1/2016.


Crowds waiting to register for Iowa Republican Caucuses.
St. Francis Church, West Des Moines, 2/1/2016.

January 08, 2016

Always Protect Your Beverage


An axiom of live poker is: "Always protect your hand." If a hand is fouled or mucked by mistake, a player often has no recourse. To protect their cards from misadventure, many players will use a card protector or "capper"—a chip, coin, medallion, or small trinket placed on top of their cards to weigh them down and signal to the dealer the hand is live. 2004 WSOP Main Event champion Greg "FossilMan" Raymer famously uses small fossils as card protectors, and often gives them away to players who beat him.

I got to thinking today about the "protect your hand" rule and card protectors because of a blog post by Rob, over at the cryptically named Rob's Vegas & Poker Blog (here's my memory of one of my first times meeting Rob). Rob may be the last poker blogger left in the wild. He writes regularly, often posting entertaining trip reports (remember those?) about his poker outings in Vegas. With posts filled with wacky hand histories, outlandish characters, and hilarious hijinks, Rob keeps it old school. Nobody consistently puts the "long" in "longform" quite like Rob.

Today, Rob posted a vignette (an "anecdote" by Rob's standards) about having his drink "stolen" from him while he stepped away from the poker table during a tournament at Aria. Now "stolen" is probably a bit of an overstatement. In reality, what likely happened is that a cocktail server saw a glass which appeared abandoned and picked it up in the normal course of her rounds. Look, beverages are free in Vegas poker rooms (though Rob, like most poker players, typically tips the server a buck per drink). So if your glass is picked up with a couple of sips left, no big deal, right? Well, not for Rob, who has—to date—been inspired to pen more than 2,500 words over two posts on the grave injustice of removing his beverage glass before he has consumed every drop of liquid and every cube of ice. 

Given the quirky nature of many poker players, it should not surprise anyone that some poker players can be a little over-protective of their free beverages. Back during our annual Ironman of Poker (IMOP) trip in March 2012, my buddy Santa and I were playing 4/8 Limit Omaha8 at Venetian. As you might expect for such a game, Santa and I were the only players born after World War II. One of the players—let's call her Ruth—reminded me of a raptor; beady-eyed, with talon-like hands that pounced on any pot she drug. 

Ruth, like most of the other players, was a regular in the game. Also like most of the regulars, Ruth complained loudly about everything—the room temperature, the drafty ventilation, her chair, the dealers, the other players, her cards, the board cards, the food and beverage service, the comp system, and whatever topic was brought up at the table. I think it's safe to say that low stakes Omaha8 players are the pettiest, most miserable class of people in any poker room, and possibly in the entire casino.

I had the dubious privilege of sitting next to Ruth. Needless to say, a couple of drunk young guys yucking it up and splashing around did little to lighten the mood at the table. Losing money to a couple of luckboxes who played too many hands and chased (and caught) too many draws was just the latest indignity the regulars had to endure; many of the regulars, including Ruth, were rather vocal in sharing their displeasure at our style of play.

At some point, Ruth ordered dinner. When her food was delivered, it was placed on a side table between us. Of course, we heard a litany of complaints—service was slow, they hadn't gotten her special instructions right, the food was too cold, blah, blah, blah. Nonetheless, Ruth ate her dinner, then got up and went for a walk.

About 15 minutes later, a food server came by and asked if he could remove the dishes from the side table. I told him he could. The server left the side table because I and another player had our drinks sitting on it (the Venetian's tables did not have cup holders).

Another 15 minutes went by, and Ruth returned. Immediately upon sitting down, she snapped: "Where is my soda? Who took my soda?" At that outburst, I remembered Ruth had been drinking a soda with dinner out of a standard glass. When she left, the glass was less than half full, and she had tossed her napkin over it. It certainly had appeared ready to be cleared. But ...

"Why would they take my soda? 

"I told them I thought you were done with dinner."

"I was done eating." Beady eyes glared at me. "Why did you tell them they could take my soda? I put my napkin over it so they wouldn't take it."

Now, I'm not certain if a napkin over a glass is a high society etiquette maneuver which indicates, "please don't take my beverage", or if the Venetian's napkins serve as magical cloaks of beverage invisibility. But Ruth was clearly peeved about her missing soda. So naturally, every server the rest of the evening was given imperious instructions not to touch her beverage glass. And, every time she left the table, the dealer was given strict orders to protect her beverage as though it were an irreplaceable family heirloom. I got the impression—via several glares and snide comments—that Ruth did not find the situation nearly as amusing as I did. Of course, I may have needled her just a little whenever she brought up the topic.

In any event, about a month later I was back in Vegas for a work conference. One night I went over to Venetian to play 1/2 NLHE. As I wandered through the room, I noticed Ruth was back at the 4/8 Omaha8 game. And again, Ruth had a side table next to her to hold her dinner plate and a glass of soda. But this time, Ruth was prepared. Covering her glass was a laminated coaster with a straw hole. Above a large black skull and crossbones on bright yellow background was neatly typed:

"PLEASE—DO NOT TAKE THIS DRINK"

Based on Rob's posts, I bet there's an untapped market for poker drink protectors.


"Please Do Not Take This Drink"
--Venetian Poker Room (April 2012)

December 16, 2015

O'Bannon v. NCAA—College Athletes Get a Lump of Coal

In August 2014, a federal judge ruled in O'Bannon v. NCAA that the NCAA's amateurism rules were an unlawful restraint of trade in violation of the Sherman Antitrust Act because colleges improperly prevented their athletes from being compensated for the use of their names, images, and likenesses (NILs). The judge entered an order requiring the NCAA to place some portion of the money colleges earned from athletics—up to $5,000 per athlete per year—into a trust fund which athletes could access once their collegiate careers had concluded. Not surprisingly, the NCAA appealed.

In September, a three-judge panel of the Ninth Circuit Court of Appeals issued an opinion largely affirming the district court's determination that the NCAA violated antitrust law by restricting compensation paid to college athletes to the cost of attending school (tuition, room and board, books, and fees). The panel, however, limited the athletes' relief to expanding athletic scholarships to the full cost of attendance, but struck the district court's order to establish an athlete trust fund. Today, the full Ninth Circuit denied the athletes' petition for rehearing en banc, leaving the panel's appeal decision as the final ruling in the case, barring an improbable appeal to the United States Supreme Court.

Although the O'Bannon decision has been rightly hailed as significant blow to the NCAA's claim of general exemption from federal antitrust law, the Ninth Circuit's opinion is actually a major loss for college athletes. Surprised? Let's take a closer look.

In applying what is known as the "Rule of Reason" analysis to the NCAA's amateurism rules, the district court and appellate court each agreed that the NIL rules actually provided a pro-competitive effect which was beneficial to the schools and athletes by creating special market conditions for college athletics. Both courts agreed that the benefits of the NIL rules included “preserving the popularity of the NCAA’s product by promoting its current understanding of amateurism” and “integrating academics and athletics.”

Of these supposed benefits of the NCAA's NIL rules, the more important was the public appeal of amateurism. Citing a U.S. Supreme Court decision, the Ninth Circuit noted that paying college athletes would potentially damage the NCAA product by transforming amateur college athletes into poorly paid minor league athletes. In other words, college athletics exists as a lucrative product in large part because athletes are not paid, so requiring athletes to be paid might destroy the very market upon which college athletics depends (italics in original):
"We cannot agree that a rule permitting schools to pay students pure cash compensation and a rule forbidding them from paying NIL compensation are both equally effective in promoting amateurism and preserving consumer demand. Both we and the district court agree that the NCAA’s amateurism rule has procompetitive benefits. But in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.

Having found that amateurism is integral to the NCAA’s market, the district court cannot plausibly conclude that being a poorly-paid professional collegiate athlete is “virtually as effective” for that market as being as amateur. Or, to borrow the Supreme Court’s analogy, the market for college football is distinct from other sports markets and must be 'differentiate[d]' from professional sports lest it become 'minor league [football].'"
Denying college athletes any share in the mountains of cash they earn for the NCAA and its member schools, in the court's view, is a feature, not a bug in the collegiate sports business model. Now the Ninth Circuit grudgingly acknowledged that the meager NIL payments ordered by the district court would likely not cause significant harm to the concept of amateurism for the sports-consuming public. Yet, the Ninth Circuit noted that payments of any kind would inevitably lead to slippery slope demands for greater payments to college athletes:
"The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap. Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point; we have little doubt that plaintiffs will continue to challenge the arbitrary limit imposed by the district court until they have captured the full value of their NIL. At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its 'particular brand of football' to minor league status."
The upshot of the Ninth Circuit decision is a bright line determination that any payment in excess of the costs of attending college is substantively compensation for play, and athletes are instantly transformed from amateur to professional. Because the court determined that preservation of the amateur athletic paradigm is a pro-competitive purpose for the NCAA's business model, the Ninth Circuit has given the NCAA a green light to enforce a hard line rule against any NIL payments in excess of the cost of attending school. Essentially, while paying lip service to antitrust law, the O'Bannon decision actually provides the NCAA and its members schools a virtually unassailable get-out-of-jail-free card—"protection of amateurism"—which effectively trumps antitrust law and prevents athletes from obtaining any meaningful monetary compensation.

With O'Bannon in its hip pocket, the NCAA and its member schools are essentially free to continue to rake in billions of dollars of revenue (and in many cases, still run large deficits) without paying its labor force anything remotely close to their fair market value for their work. The relief the O'Bannon decision affirmed—increasing scholarships to the full cost of attendance—is a hollow victory, as major conferences had already adopted these minor scholarship enhancements. The O'Bannon decision also likely guts other pending athlete compensation class action cases; if modest compensation of $5,000 per year is out of bounds for athletes as a threat to amateurism, how can a court award the even greater unlimited "market value" compensation sought in these pending cases? Throw in the recent National Labor Relations Board decision to deny college athletes the ability to form labor unions, and it's pretty much business as usual for the NCAA.

So, as you sit back to enjoy the upcoming college football bowl games this holiday season, rest easy that America's colleges will take on the terrible burden of divvying up a half a billion dollars in revenue so that their athletes remain true amateurs. It's all about the integrity of the game.

December 01, 2015

DFS and the Puritan Problem

Daily fantasy sports (DFS) contests are under legal and regulatory attack in multiple states, and face litigation in New York and possibly other states over the question of whether DFS is illegal gambling. This battle is one recently waged—and resoundingly lost—by online poker sites. DFS supporters seem to be repeating the mistakes made by online poker supporters, failing to take these legal challenges seriously because they believe their game is self-evidently different from gambling.

What DFS and online poker supporters fail to appreciate is that while online gaming is essentially a brand new game, the laws being applied to online gaming are often centuries old. Many state gaming laws have their roots in religiously driven anti-gambling movements from the middle and late 1800s; those movements have their own roots in religious doctrines dating back to America's Colonial period and before. DFS and online poker advocates ignore these morality arguments at their peril.

In other words, John Calvin is why we can't have nice things.  

* * * * *
"Those who work their land will have abundant food,
but those who chase fantasies will have their fill of poverty.

A faithful person will be richly blessed,
but one eager to get rich will not go unpunished."


~ Proverbs 28:19-20 (NIV)
Last Wednesday, a New York state court judge held a hearing to determine whether daily fantasy sports (DFS) contests are illegal "gambling" under state law. The DFS court hearing came on the eve of Thanksgiving, our annual gluttonous commemoration of the Pilgrims who in 1620 established the Plymouth Colony in what is now Massachusetts. Ironically, the court's decision on the legality of a modern, digital game like DFS may well turn on anti-gambling legal principles first introduced into American law by the Pilgrims nearly four centuries ago.


I.  Pilgrims and Puritans—America's Founding Fun-Haters

The Pilgrims and their close religious cousins, the Puritans (who would establish the nearby Massachusetts Bay Colony), were sects within the broader Reformed Christianity movement. As such, they were close followers of the teachings of the influential Protestant ReformerJohn Calvin. According to Calvinist doctrine, people are born into a state of "total depravity" or absolute sin. God has preordained which people will be redeemed to eternal salvation, and which people are damned to eternal suffering. This concept of predestination implies that nothing people can do will affect their eternal fate. However, Calvinists believe that one's fate can be learned through seeing which people God blesses in this life. Consequently, pious living, frugality, hard work, and financial success were taken as signs of God's blessing and the election of particular individuals for salvation. Although predestination was rejected by most non-Calvinist Protestant traditions, this attitude toward the spiritual benefits of hard work and frugal living were widely shared by most Protestant reformers, and gave rise to what is commonly referred to as the "Protestant work ethic".

Calvinism, as you might imagine, was not exactly a barrel of laughs. During his heyday, John Calvin essentially ran the city of Geneva, Switzerland as a theocracy. City laws were based on Calvin's biblical teachings, including strict bans on all manner of entertainment—gambling, drinking to excess, ostentatious attire and hairstyles, singing of non-religious songs, musical instruments, theatre, and dancing. Punishments were often severe with public shamings, whippings, or even exile being preferable to a death sentence by drowning, beheading, hanging, or burning at the stake. Calvin had a child executed for striking a parent, but in fairness, also had his own step-daughter and son-in-law executed for adultery.

Given their fervent religious beliefs, it is hardly surprising the Pilgrims and Puritans imported much of Calvinism's ascetic morality into the New World.  Almost as soon as the first Puritans set foot in America, they banned gambling in 1631, declaring:
"It is … ordered that all persons whatsoever that have cards, dice or tables in their houses, shall make away with them before the next court under pain of punishment."
The Puritans also banned other common vices including drinking to excess, fornication and adultery, working or traveling on the Sabbath, and participating in or attending theatre productions. The Pilgrims were not much better, making gambling, drunkenness, and tobacco abuse illegal, among a lengthy list of crimes (though the punishment for minor vices like gambling tended to be a fine rather than whippings, time in the stocks, or public shaming, which were reserved for adultery, fornication, blasphemy, or lying).

America's founders were also our first fun-haters.


II.  The Puritan Case Against Gambling

A prominent and influential Puritan minister in the Massachusetts Bay Colony, Increase Mather, preached against the evils of gambling, authoring a pamphlet in 1687 decrying, among other evils, "Games of Hazard and Chance, such as Dicing and Cards, and Sundry Games at Tables". Mather's critique of gambling began with the declaration that gambling was immoral because it was addictive and led to disastrous financial and social consequences:
"It has been observed by many that there is a secret Curse attending these Games. Hence it is that when persons have once a little used themselves hereunto, they can know no bounds therein. They are so bewitched with a Gaming Humor, as that they will lose their Friends, Esteem, Estate and every thing else that’s desirable, rather then play no more at Cards. Infinite Evils and Miseries have sprung up from this bitter Root."
Increase Mather also asserted the Calvinist position that it was sinful to win money by gambling rather than by industrious labor, comparing gambling winnings to the proceeds of theft:
"It is common for such Gamesters to play away their Estates, or to get other men’s Estates in this way, both which are exceeding sinful. When God has possessed a man of an Estate which he has a just Title unto, now for him to make it a Question whether this Estate shall be his or another mans, and then to decide the controversy by the shuffling of Cards or the cast of a Die, is unworthily to abuse the good Providence of God, and so to transgress the third Commandment. This is also to break the 8th Commandment in a very High Degree. To get another mans goods, at an under price is injustice and theft, and clearly against the Rule of Righteousness, how much more to take from another his Money and give him nothing at all in lieu thereof? It is a crying sin! ...

Money gotten by Gaming is like the goods of them that dye of the plague, which commonly bring a Pest with them. He that shall add but a little to his Estate by getting money from another in any such unrighteous way, will perhaps find that little to be like a Moth that shall consume, and bring a secret Blast of God upon all that he enjoys. And He that gets Riches and not by Right (the man that gets a sum of Money by playing at Cards, has gotten Riches and not by Right) He shall leave them in the midst of his Days, and at his end be a Fool. Jer. 17:11. I would seriously advise all such persons, so far as they are capable, to return back their ill gotten goods again, as ever they desire pardoning Mercy at the Hands of God against whom they have grievously sinned."
Finally, Mather also declared that gambling was slothful laziness, a sinful waste of precious time better spent preparing for Heaven:
"For a Christian ... to waste so much Time in any Recreation, though never so innocent and laudable, as Gamesters usually do at Cards and Dice, and Tables, is hainously sinful. Every mans Eternity in another world, will be according to his improvement of time here. What a sad account will they be able to give to the Son of God at the last Day, who have spent a very great part of that Time wherein they should have been preparing for eternity, in nothing but idleness & plays?"
Of course, in the same tract, Mather preached against other "Superstitious and Prophane" evils to be avoided, such as toasting another person with alcohol, attending the theatre, and observing the Christmas holiday (one of the earliest examples of a "war on Christmas"). And Increase Mather and his son, prominent minister Cotton Mather, were both important figures in the infamous Salem Witch Trials—both defended the trials, though Increase Mather opposed the use of "spectral evidence", declaring that "It were better that Ten Suspected Witches should escape, than that one Innocent Person should be Condemned".


III.  Protestants and American Gambling

Under the influence of the Puritans and other Protestant sects, anti-gambling laws were enacted throughout the American Colonies. Of course, early immigrants did not all follow the Puritan faith, and in fact many colonists were followers of religious faiths more accepting of gambling or simply were not particularly devout. Many colonists also adopted the widespread British embrace of gambling upon the restoration of the monarchy in 1660 by King Charles II, a notorious gambler.

By the time of the American Revolution, gambling laws remained on the books in the Colonies, but were little-enforced; General George Washington actually was forced to issue an order to his soldiers to cease gambling so as to maintain order and morale. Following the Revolution, every one of the new States sponsored lotteries, while gambling was widespread, particularly in frontier areas which were attracting settlers.

American attitudes toward gambling changed, however, with the onset of the spiritual movement known as the Second Great Awakening. During this period which ran from the early 1800s until the early 1850s, many Protestant denominations evangelized aggressively through the use of mass meetings and traveling ministers, resulting in millions of religious converts. The movement also focused on social reform issues such as abolition of slavery, temperance, womens' rights, and prison reform. This wave of renewed Protestant spirituality led to the abolition of state-sponsored lotteries in nearly every state by 1840.

Gambling in the West was little-affected by the anti-gambling religious forces of the mid-1800s. The California gold rush of the late 1840s and 1850s in particular attracted and cultivated gambling. But, concerns about the violence and corruption connected with gambling led to laws cracking down on professional gamblers, and a ban in 1860 on all house-banked games.

Following the Civil War, many states, particularly in the South, turned to state-sponsored lotteries to raise revenue. Horse racing was also common. This return to gambling was short-lived, however. A renewed Protestant spiritual movement, referred to as the Third Great Awakening, ran through America from the 1850s until the early 1900s. This religious movement built on the social reform movement associated with the Second Great Awakening, and led to the rise of the Social Gospel movement.

Protestants associated with the Third Great Awakening and the Social Gospel movement were postmillennialists. Postmillennial doctrine holds that Christ cannot return for the "Second Coming"" until after an age (a "millenium") of governance under Christian morality which will create peace and prosperity. Postmillennial Protestants, therefore, were greatly concerned with issues of public morality and social justice, and were a driving force for abolition of slavery, prohibition of alcohol, protection of children and other vulnerable people, and women's suffrage. The Social Gospel movement eventually gave rise to many Progressive reforms in the early 20th century.

Puritans and Progressives rarely have much in common, so when they join forces, it's usually a good bet something is getting banned for the "public good". Although not as prominent an issue as prohibition, gambling joined alcohol as a casualty of the forces of the Third Great Awakening. Anti-gambling forces certainly raised traditional morality arguments consistent with the Puritan arguments made by Increase Mather. But there were new moral arguments to make, based on protection of the poor and vulnerable (e.g., children, the elderly, the mentally ill) from the evils of gambling; lotteries and similar "get rich quick" schemes were seen as particularly immoral. Also, anti-gambling advocates capitalized on cheating scandals in horse-racing and corruption scandals in the state lotteries (the Louisiana Lottery was the last and perhaps most corrupt of the era) to generate public outrage and support.

In response to the anti-gambling movement, many states added prohibitions on lotteries to their state constitutions, or adopted broad anti-gambling laws; Arizona and New Mexico were required to add constitutional bans on gambling as a condition of admittance to the Union. As a result of this religious anti-gambling crusade, gambling was essentially banned throughout the United States (other than in Nevada) from roughly 1910 until the 1960s, when states again turned to lotteries to raise revenue, eventually kicking off the modern wave of legalized and regulated gambling.


IV.  Protestant Origins of American Gambling Laws

Interestingly, the Bible is silent on the issue of gambling, at least insofar as it never discusses gambling directly nor condemns it as a sin. The Catholic Church teaches that gambling is not inherently immoral, though it may pose moral concerns if abused:
"Games of chance (card games, etc.) or wagers are not in themselves contrary to justice. They become morally unacceptable when they deprive someone of what is necessary to provide for his needs and those of others. The passion for gambling risks becoming an enslavement. Unfair wagers and cheating at games constitute grave matter, unless the damage inflicted is so slight that the one who suffers it cannot reasonably consider it significant."

~ Catechism of the Catholic Church, Sec. 2413
American gambling laws did not follow this Catholic viewpoint for several reasons. Most significantly, early American colonists were overwhelmingly Protestants, and Protestant denominations dominated American life and politics into the late 1800s. Further, there was significant anti-Catholic bias in America until the mid-20th century, in part because of centuries-old doctrinal disputes carried over from Europe, and in part because of resentment of the waves of Catholic immigrants who arrived in the late 1800s and early 1900s. So, America's significant anti-gambling movements were largely driven by Protestants, resulting in gambling laws largely written by Protestant legislatures and largely interpreted by Protestant judges.

The Protestant Christian movement has a messy and complex history, leading to multiple branches, denominations, and sects with significant and often irreconcilable doctrinal differences. Yet each of the major Protestant denominations in the United States shares the Puritan view on the immorality of gambling. This staunch moral opposition to gambling spans the fundamentalist, evangelical, and mainline Protestant traditions, and encompasses every major doctrinal branch—Calvinist/Reformed, Methodist, Lutheran, Baptist, Anabaptist, and Pentecostal (representative church statements on the morality of gambling are gathered in Appendix A at the end of this post).

The Protestant position on the immorality of gambling traditionally focuses on several interrelated factors:
  • Gambling can become addictive or compulsive, overriding one's self-control.
  • Gambling can lead to financial ruin with devastating consequences for self, family, and community.
  • Gambling can lead to other sins—greed, coveting, theft, lying, cheating, and violence.
  • Gambling is poor stewardship of money—one should not risk God's bounty and blessings on a game of chance, while gambling winnings always come at a cost to another person.
  • Gambling is antithetical to the duty to work hard by creating a hope of winning something of great value for little or no investment.
  • Gambling encourages laziness and idleness.
  • Gambling takes advantage of the poor and vulnerable (youth and elderly).
  • Gambling can lead to corruption of the game (scams) and corruption of the government (bribes and kickbacks for gambling licenses and franchises).
Recognizing the Protestant influence on American gaming laws is important for two reasons. First, a surprising number of current anti-gambling provisions in various state constitutions and state gaming laws were enacted in the 1800s or early 1900s in response to advocacy by religious groups. These antiquated anti-gambling provisions remain on the books and are in full force today, though in many cases amended to permit certain kinds of state-sanctioned gambling. Thus, modern gaming innovations like poker/online poker, online casino gaming, social gaming, video poker, and even DFS are being judged against laws written to address the social and religious concerns of a much different era.

Second, a great deal of common law developed around anti-gambling statutes from the 1850s through the 1940s as courts struggled to define the boundaries of gambling. Many of these cases reflect a broad suspicion of even a hint of gambling, and justify sweeping relatively minor or even harmless games, marketing campaigns, or entertainment devices into the category of "lotteries" and "gambling" by appealing to moral arguments against gambling that could have been lifted from the local minister's Sunday sermon. A great deal of gambling case law developed during this religious era, and much of that case law reflects the religious and moral arguments of its day. And, it must be emphasized, much of that case law remains good law today. In fact, the New York Attorney General's Memorandum of Law in support of his application for a preliminary injunction against DraftKings and FanDuel cites to five cases decided in the 1800s, and fifteen cases decided from 1900-1949.

A few court opinions from the era of gambling prohibition provide good examples of the adoption of Protestant morality and even religious language in support of a broad interpretation of anti-gambling statutes. For example, in 1879, the United States Supreme Court weighed in on efforts to ban lotteries:
"They [lotteries] are a species of gambling, and wrong in their influences. They disturb the checks and balances of a well-ordered community. Society built on such a foundation would almost of necessity bring forth a population of speculators and gamblers, living on the expectation of what, ‘by the casting of lots, or by lot, chance, or otherwise,’ might be ‘awarded’ to them from the accumulations of others. Certainly the right to suppress them is governmental, to be exercised at all times by those in power, at their discretion."

~ Stone v. State of Mississippi, 101 U.S. 814, 11 Otto 814, 25 L.Ed. 1079, 1 Ky.L.Rptr. 146 (1879).
Or how about this New York court opinion evaluating whether a newspaper advertising scheme distributing coupons with numbers used in prize drawings was gambling; the judge's language might have been written by any Protestant minister of the era, or even Inrease Mather himself:
"Furthermore, it is argued that the precise mischief that the Legislature sought to correct is present in the transaction shown in this information; that not for any purpose of benevolence, but for gain derived from classes of persons easily subject to temptation and who can ill afford such use of scanty means of subsistence, the defendants developed and nurtured in those who yielded the perverted moral nature of the gamester, fascinated by hope and expectation of fortune’s favor, which may give him without service or effort on his part the benefit of others’ toil, thus engendering or increasing deteriorating and destructive emotional qualities, selfish greed, false standards of conduct, diseased sensationalism, and resultant slothfulness and dishonesty, and impeding the cultivation of wholesome character, the spirit of service and honor which makes the good citizen; that it would be unworthy of enlightened jurisprudence to allow the evident legislative intent of guarding the public welfare from the influence of this nefarious evil to be defeated by an ingenious device to evade the law by a mere variance of form of procedure, which leaves unchanged all the injurious effects."

~ People v. Mail and Express Co., 179 N.Y.S. 640 (NYC Ct. Spec. Sess. 1919).
Even cases from the latter part of the gambling prohibition era relied upon the standard Protestant arguments against gambling, as in this 1937 opinion from the New Mexico supreme court:
"The evil flowing from them [lotteries] has been the cultivation of the gambling spirit—the hazarding of money with the hope by chance of obtaining a larger sum—often stimulating an inordinate love of gain, arousing the most violent passions of one’s baser nature, sometimes tempting the gambler to risk all he possesses on the turn of a single card or cast of a single die, and ‘tending, as centuries of human experience now fully attest, to mendicancy and idleness on the one hand, and moral profligacy and debauchery on the other.’

....

'Almost all modern states have, at some period of their history, employed lotteries as a means of revenue. But though they supply a ready mode of replenishing the public treasury, they have always been found to exert a mischievous influence upon the people. The poor are invited by them rather than the rich. They are diverted from persistent labor and patient thrift by the hope of sudden and splendid gains; and as it is the professed principle of these schemes to withhold a large part of their receipts, a necessary loss falls upon that class which can least afford to bear it.'"

~ City of Roswell v. Jones, 67 P.2d 286 (N.M. 1937) (citations omitted).
In many modern cases, court interpreting gambling statutes have cited to more recent social concerns, most notably the potential for gambling to be linked with the evils of organized crime and money laundering. These issues began appearing in court decisions in the years following Senator Estes Kefauver's famous 1950s investigation of the Mafia's involvement in Las Vegas casino gaming.

Nonetheless, even in contemporary gambling cases, many courts continue to rely on the traditional Protestant morality arguments in justifying broad applications of state gambling statutes. For example, in 2012, the South Carolina supreme court considered a challenge to that state's expansive and archaic anti-gambling statute as applied to a low-stakes home poker game. At issue was a state anti-gambling statute more than two centuries old which contained a broad ban on "any game with dice or cards"; by its language, the statute could comfortably construe a family game of Yahtzee or Old Maid as gambling. Despite admitting the statutory language was vague and overbroad to the point of being unconstitutional, Chief Justice Toal provided the decisive vote for finding poker to be illegal gambling, primarily because of her concerns about the effect on public morals if the court voided the state's gambling statute:
"In my opinion, striking this language would also open the door wide to all heretofore illegal gaming practices in this state, including video poker. Because of this very real consequence, I am concerned that striking this critical language from the statute would beget, as elucidated by the General Assembly in 1816 when amending section 16-191-40, the "impoverishment of many people, corruption of the morals and manners of youth, ... the tendency which is vice, misery and crime, as examples in this state have abundantly proven." These dire concerns resonate as much today as they did nearly 200 years ago. I do not need to remind any person of the havoc wreaked upon this State as a result of the "pernicious" practice of video poker. Although there are other sound provisions outlawing video poker, I am loathe to strike the critical language from the general ban on gaming in the event that it guts these provisions, and consequently, South Carolina's longstanding prohibition against gambling."

~ Town of Mount Pleasant v. Chimento, 737 S.E.2d 830 (S.C. 2012) (Toal, C.J., concurring) (citations omitted) (italics in original, emphasis added).
These cases are barely the tip of the judicial iceberg (additional excerpts from other representative opinions are gathered in Appendix B at the end of this post). There are literally hundreds of court decisions on the books which wrestle with the issue of whether particular games, contests, and marketing schemes qualify as illegal lotteries or gambling. Most of those decisions make at least passing reference to some of the traditional Protestant anti-gambling arguments. And the courts invariably interpret and apply gambling statutes in an exceedingly broad manner, particularly where the contest or scheme at issue resembles traditional gambling or poses some threat to the general public, with little or no regard for the relative roles of chance and skill involved.


V.  The Protestant Case Against DFS

So what does this fusion of Protestant morality and gambling law mean for DFS? The primary danger for DFS advocates is to focus exclusively on the "skill versus chance" argument while ignoring or dismissing appeals to traditional morality arguments. Yet that is essentially the approach taken by FanDuel and DraftKings in the pending New York litigation. And DFS advocates in media appearances, op-eds, and other public statements likewise focus on the skill game argument nearly to the exclusion of other issues.

The DFS industry focus on the skill game argument may yet win the day. But it seems a high-risk approach when there are traditional moral issues in play both in public and in the courts.

For example, just days prior to the DFS insider-trading scandal, the Southern Baptist Convention (SBC) openly criticized DFS as immoral gambling. Writing for the SBC's influential Ethics and Religious Liberty Commission, Pastor David E. Prince explicitly called out NFL Commissioner Roger Goodell for his hypocrisy in claiming DFS is a wholesome form of family entertainment:
"Goodell, the guardian of the integrity of the game, says he does not consider these [DFS] leagues gambling. Goodell said, 'We don’t put fantasy football in that [gambling] category at all... Fantasy has a way of people engaging more with football, and they do it in a fun, friendly, in this case, a family manner.' The commissioner would have us believe that his implicit support of these fantasy football operations has nothing to do with the ratings and money fantasy football generates for the NFL; it is merely about building stronger families.

In reality, these fantasy football gambling leagues are affecting families by relentlessly catechizing an entire generation watching these NFL games on the acceptability and excitement of sports gambling. How does the NFL get around the reality that these leagues constitute gambling?

....

Gambling entrepreneurs have turned a geekish and fun hobby into a relentless, daily, predatory lure of fast cash and easy money. The NFL relationship with these fantasy gambling leagues is so cozy USA Today recently reported, 'FanDuel, the nation's biggest daily fantasy sports company, has signed multi-year sponsorship agreements with 15 NFL teams.' This should deeply trouble those of us who love Jesus and delight in sports as a good gift from God.

Simply put, gambling is a societal evil that preys on those most in need. While some may say, 'You don't have to participate in gambling, so it’s nothing to be concerned about,' that way of thinking does not hold for one who desires to follow Christ. Our Lord does not call us to love ourselves; rather, we are to love him and to love our neighbor (Matt. 22:37-40).

The biblical witness is clear that one of the vital ways we love God is by loving our neighbor. Gambling appeals to greed, and there is simply no way for a follower of Jesus to gamble to the glory of God and the good of his neighbor. Proverbs 28:25 says, 'A greedy man stirs up strife, but the one who trusts in the Lord will be enriched.' Anyone who has ever witnessed the devastation wrought by people who gamble their future away, attempting to get something-for-nothing, knows well the expansive tornadic path of destruction gambling greed produces."

~ "The NFL Commissioner Has a Gambling Problem," David E. Prince, The Ethics & Religious Liberty Commission of the Southern Baptist Convention (Oct. 1, 2015) (emphasis added).
The SBC's criticism of DFS hits on several traditional Protestant moral arguments against gambling:
  • Playing DFS is "predatory" to the detriment of the weak and comes at the expense of one's neighbors.
  • Playing DFS is addictive (a "relentless, daily ... lure").
  • Playing DFS promises "fast cash and easy money", enticing players with the promise of "something-for-nothing".
  • Playing DFS can result in personal ruin.
  • Playing DFS can result in adverse consequences for others.
In the pending New York litigation, the Attorney General repeatedly sounds similar morality-based themes:
  • "The [DFS] contests are streamlined for instant-gratification, letting bettors risk up to $10,600 per wager and enter contests for a chance to win jackpots upwards of $1 million."
  • "The DFS operators themselves profit from every bet, taking a 'rake' or a 'vig' from all wagering on their sites."
  • Like a lottery, DFS sites promise something for nothing: "With commercials depicting cash falling from the ceiling and oversized novelty checks, the message is clear: anyone can play DFS and anyone can win. 'Try it,' one FanDuel ad urges. 'It takes a few minutes. ... I’ve deposited a total of $35 on FanDuel and won over two million!' 'Taking home your share is simple,' a DraftKings ad promises, 'It’s the simplest way of winning life-changing piles of cash.'”
  • "For those struggling with gambling addiction or those who are vulnerable to it, certain structural characteristics make DFS particularly dangerous." Further, "Problem gamblers are increasingly being seen at Gamblers Anonymous meetings and at counselors’ offices addicted to DFS. For DraftKings, at least, this should not come as a shock: records show that their customer service representatives have responded to pleas from self-described gambling addicts to close accounts and permanently ban them from the site."
  • DFS results in significant sums changing hands based on the functional equivalent of a roll of the dice or turn of the card: "For a real-life illustration, consider the Monday night NFL game on November 9, 2015. As the game entered its final moments, the Chicago Bears were leading by a tight margin. In a common strategic move, Quarterback Jay Cutler took a knee to run out the clock and assure victory. This play cost the Bears one yard, and reduced Cutler’s total fantasy production by one-tenth of one point—and reportedly cost one unlucky FanDuel player $20,000; he had apparently picked Cutler and the one-tenth of a point reduction spelled the difference between winning $50,000 in first place and $30,000 in second place. (By contrast, that same one-tenth of a point reduction was a lucky break for the DFS player who took first prize.)"
  • Even the DFS sites' strongest evidence of the element of skill backfires as a moral issue, painting the sites and top players as being predatory: "With poker and DFS, professional players, known as 'sharks,' profit at the expense of casual players, known as 'minnows.' The numbers show that the vast majority of players are net losers, losing far more money playing on the sites than they win. DraftKings data show that 89.3% of DFS players had an overall negative return on investment across 2013 and 2014."
  • DFS sites are unregulated and at risk for cheating and corruption. In reference to a recent "insider-trading" scandal, the Attorney General noted "Until recently, for example, both DraftKings and FanDuel explicitly encouraged their employees to play DFS games on competitors’ platforms—competing against regular customers who had no knowledge of the extent of the DFS employees they were competing against. FanDuel recognized that this policy would be ill-received, instructing employees to minimize their public presence 'so users are less likely to be suspicious or angry' and avoid becoming 'among the top five players by volume' because 'top players frequently become targets for accusations.'”
The briefs filed by FanDuel and DraftKings are essentially silent as to these moral issues, instead focusing entirely on the narrow legal issue of whether DFS is a game of skill. Technically speaking, the moral issues are irrelevant to the resolution of whether DFS is illegal gambling. But decades of case law suggest that moral issues often color and even control the courts' analysis of gambling issues.

DFS advocates need look no further than recent poker litigation to see this effect. Poker advocates raised a similar skill game argument in the Chimento case discussed earlier; the South Carolina supreme court ultimately found poker to be illegal gambling precisely because of moral concerns.

Likewise, when considering a challenge to a state ban on all online gambling brought by the PPA, the Washington supreme court noted that the state had a compelling reason to regulate gambling in general and online gambling in particular because of the moral risks posed by gambling. Interestingly, the court identified moral concerns related both to consumer perils and to criminal activity:
"The State wields police power to protect its citizens' health, welfare, safety, and morals. On account of ties to organized crime, money laundering, gambling addiction, underage gambling, and other societal ills, '[t]he regulation of gambling enterprises lies at the heart of the state's police power.'

Internet gambling introduces new ways to exacerbate these same threats to health, welfare, safety, and morals. Gambling addicts and underage gamblers have greater accessibility to on-line gambling-able to gamble from their homes immediately and on demand, at any time, on any day, unhindered by in-person regulatory measures. Concerns over ties to organized crime and money laundering are exacerbated where on-line gambling operations are not physically present in-state to be inspected for regulatory compliance. Washington has a legitimate and substantial state interest in addressing the effects of Internet gambling."

Rousso v. State, 239 P.3d 1084 (Wash. 2010) (citations omitted) (emphasis added).
DFS advocates have a strong case to make that DFS is a true game of skill exempt from gambling laws. That argument may yet carry the day in court challenges. But in both the court of law and the court of public opinion, traditional moral issues still carry significant weight. DFS advocates are truly rolling the dice if they ignore those moral concerns.

* * * * *

Appendix A—American Church Positions on Gambling

Not all Christians follow all of the moral teachings of their particular denomination; plenty of Christians (even Protestants) gamble. And, not all Christian denominations oppose gambling. The Catholic Church—the largest Christian denomination in the United States—takes the official view that gambling is not inherently immoral, but can become so if abused:
"The Catechism of the Catholic Church (no. 2413) briefly mentions that games of chance and wagers are not bad. It is the emotions that come from gambling that the church feels negatively about. Greed, coveting, selfishness, indulgence, power, worship of money, all of these things can control the mind and soul. Once these emotions are thrown into the mix, God’s law is violated. These emotions must have been St. Augustine’s justification for saying, 'The Devil invented gambling.'

As long as the games are played in moderation, so as not to become enslaved by the addiction and evil emotions, and are conducted fairly so no one is cheated, robbed, or unjustly taken advantage of in any other way, we Catholics are free to enjoy the excitement that comes from taking risks."
Still, there unquestionably exists a strong vein of Christian opposition to gambling in contemporary America, particularly among Protestant Christian denominations, the modern-day descendants of the Puritans. Polls consistently confirm that Protestants are significantly less supportive of legalized gambling than other Americans.

The United Methodist Church—the largest mainline Protestant denomination and third-largest Christian denomination overall in the United States—maintains a strong anti-gambling position, which it has explicitly extended to online gambling:
"Gambling, as a means of acquiring material gain by chance and at the neighbor's expense, is a menace to personal character and social morality. Gambling fosters greed and stimulates the fatalistic faith in chance. Organized and commercial gambling is a threat to business, breeds crime and poverty, and is destructive to the interests of good government. It encourages the belief that work is unimportant, that money can solve all our problems, and that greed is the norm for achievement. It serves as a "regressive tax" on those with lower income. In summary, gambling is bad economics; gambling is bad public policy; and gambling does not improve the quality of life.

....

Because computer usage is available in the privacy of one's home and even in churches, the potential for access to gambling websites and addiction to Internet gambling is great. Internet gambling is an international problem and it is virtually unregulated which has led to corruption, money laundering, and funding of terrorist organizations. Individuals and local churches should seek to educate themselves on the easy access to Internet gambling Web sites. The social cost of addiction to Internet gambling is great and leads to bankruptcy, suicide, and family discord. Young adults and senior citizens are among the most vulnerable populations at risk to gambling addiction. Parents and caregivers should take steps to ensure that children and the elderly with access to computers not be exposed to Internet gambling Web sites. Local churches and annual conferences should provide educational resources for parents and caregivers on the dangers of Internet gambling and enact strict oversight of church-owned computers."
Similarly, the Southern Baptist Convention (SBC)—the largest overall Protestant denomination and second-largest Christian denomination in the United States—also has long maintained an anti-gambling stance. As early as 1890, the SBC took a position against state run lotteries. In 1934, the SBC adopted another resolution in response to the rise of efforts to legalize gambling:
"The Southern Baptist Convention hereby deplores the widespread revival of the gambling spirit in our American life and expresses its hearty and unqualified disapproval and censure of all forms of gambling and all games of chance. Hardly anything could be more demoralizing or destructive of all the regular commercial and industrial activities and prosperity of our people, or could more thoroughly debase their morality than a widespread prevalence of gambling."
The SBC continued to oppose the "immoral" spread of state-sanctioned gambling throughout the 1980s and 1990s, repeatedly decrying the "increasingly large number of compulsive gamblers in the United States" as well as characterizing gambling as an"immoral effort to get something for nothing [which] contributes to the moral decline and family instability of our nation." In another resolution, the SBC asserted that the "tidal wave of gambling in our country has left in its wake pain and destruction in the lives of countless people, especially the children, poor, and elderly." In 2014, the SBC explicitly adopted a resolution calling for the end of all government-sanctioned gambling and opposing the adoption of regulated internet gambling (emphasis added):
"WHEREAS, Government has become an advocate for the transformation of gambling from a private and local activity into a revenue source as significant and accepted as taxation; and

WHEREAS, Government sponsorship of casinos and lotteries is predatory in that it exploits primarily poor, vulnerable, and disadvantaged citizens by promoting participation in highly addictive behaviors which often result in financial disadvantage or ruin; and

WHEREAS, Government, by sponsoring and promoting gambling, is actively encouraging and profiting from the statistical certainty of citizens losing their money over time; and permitting such a process to occur under the full protection of the law conflicts with the public interest and historically has been viewed as dishonest; and

WHEREAS, Government-sponsored casinos and lotteries promote and perpetuate the mentality of getting something for nothing, which is contrary to Scripture and replaces biblical teachings of working for a living (Proverbs 13:11; 2 Thessalonians 3:10; 1 Timothy 6:9–10); and

WHEREAS, Both federal and state governments are now considering authorizing, regulating, or sponsoring internet gambling, which would open a casino or a lottery outlet virtually everywhere in America; and

WHEREAS, Government sponsorship of casinos and lotteries is inconsistent with its role to protect the people (Romans 13:1–7; 1 Peter 2:13–17); now, therefore, be it

RESOLVED, That the messengers to the Southern Baptist Convention meeting in Baltimore, Maryland, June 10–11, 2014, reaffirm our long-standing opposition to government sponsorship of gambling ....
The United Pentecostal Church International (UPCI) proclaims that gambling is a "moral fungus that eats at the very core and fabric of our society." UPCI further states:
"I Corinthians 10:21 declares you cannot drink of the cup of the Lord and eat at the devil's table. Is a gambling table anything less than that of Satan?

Gambling violates the biblical principles of stewardship with regard to property, money, and its appropriate use. The Bible blesses the use of money or property which are in accord with the intention of God. Thus, money may be used to provide for our basic needs (II Thessalonians 3:10), support of one's family (I Timothy 5:8), to contribute to the Lord's work (I Corinthians 16:1-3), to meet human need (Ephesians 4:28, II Corinthians 9:6-15), to give to the poor (John 13:29), and to pay taxes (Matthew 22:21, Romans 13:7). Such conscientious handling of one's resources precludes gambling. Giving to a game of chance with the blessings of God is not mentioned anywhere in the Holy Writ.

Gambling is greed and exploitation of others. It ignores the command to love our neighbor. We are enjoined to abstain from all appearance of evil (I Thessalonians 5:22), to hate what is evil (Romans 12:9). The actions of the individual Christian are to be disciplined toward the moral and spiritual welfare of others (Romans 14:13-21). Our influence as Christians is to be exerted in a positive, aggressive, and godly fashion for the building of a Christian influence in the community.

Gambling contributes nothing to the common good. It undermines values, mocks work, finances crime, robs children, enslaves its addicts, subverts government, and poisons whatever it touches. Biblical insights lead us to reject the false promise of gambling and to cleanse ourselves from all filthiness of the flesh and spirit.

....

The General Board of the United Pentecostal Church International, on behalf of our constituency, does firmly affirm its conviction that gambling is both un-biblical and morally wrong. Politicians may tell us that it is the way to raise revenue for the needs of education, roads, etc. If something is morally wrong it cannot possibly be politically right.

Gambling is wrong because it is addictive. Gambling is wrong because it is not consistent with the scriptural work ethic. Gambling is wrong because it ignores valid stewardship. Gambling is wrong because it involves monetary gain to the hurt and suffering of the less fortunate.

In the light of biblical revelation, we cannot sit idly by while this plague rips our nation apart. Neutrality is impossible. There are certain responsibilities to speak out. We cannot ignore them. We urge those who want to live in harmony with the Almighty and whose lives are dedicated to His pleasure to refrain from any form of gambling. We call upon our people everywhere to do all within their power to discourage the legalization of gambling."
The Evangelical Lutheran Church in America (ELCA) has long opposed gambling as a "moral and spiritual evil". More recently, the ELCA has acknowledged that the Bible is silent on the issue of gambling, but has identified numerous issues of concern:
"the gambler neither renders a constructive service to obtain the thing desired, nor offers a fair price or value in exchange, nor does he or she receive it as a voluntary gift from a generous benefactor. ...

....

5. Other concerns about various forms of gambling have been expressed at a more personal level. Legalized gambling can be regarded as detrimental to persons and communities when it:

a) increases the number or further degrades those maladjusted persons who take refuge from the problems of life by indulging compulsively in gambling;
b) diverts personal and family incomes from basic business, professional and civic services essential to community well-being;
c) contributes to an increase in broken homes or undermines the moral fiber, character, and integrity of people and community by giving public sanction to covetous desires to get rich quickly, at the expense of neighbors, without providing any skills or services which enrich the life of the community. ...."
The Presbyterian Church (U.S.A.) has a long history of opposition to all forms of gambling as an "an unchristian attempt to get something for nothing or at another’s expense", and has advocated against the spread of all forms of gambling and in favor of regulation of existing gambling with a goal of eventual abolition.

The Assemblies of God proclaim that "gambling is a form of evil" to be avoided because it is an attempt to "gain something for nothing" and because it can lead to greed, addiction, financial ruin, and broken families.

The Seventh-Day Adventists "have consistently opposed gambling as it is incompatible with Christian principles":
"It [gambling] is not an appropriate form of entertainment or a legitimate means of raising funds.

Gambling violates Christian principles of stewardship. God identifies work as the appropriate method for gaining material benefit; not the playing of a game of chance while dreaming to gain at the expense of others. Gambling has a massive impact on society. Financial costs result from crime committed to pay for the gambling habit, increased policing, and legal expenses, as well as associated crimes involving drugs and prostitution. Gambling does not generate income; rather it takes from those who often can ill afford to lose and gives to a few winners, the greatest winner of course being the gambling operator. The idea that gambling operations can have a positive economic benefit is an illusion. In addition, gambling violates the Christian sense of responsibility for family, neighbors, the needy, and the Church.

Gambling creates false hopes. The gambling dream of "winning big" replaces true hope with a false dream of a statistically-improbable chance of winning. Christians are not to put their hope in wealth. The Christian hope in a glorious future promised by God is "sure and certain"- unlike and opposite to the gambling dream. The great gain that the Bible points to is 'godliness with contentment.'

Gambling is addictive. The addictive quality of gambling is clearly incompatible with a Christian lifestyle. The Church seeks to help, not blame, those suffering from gambling or other addictions. Christians recognize that they are responsible before God for their resources and lifestyle."
The Reformed Church in America also takes a moral position opposing gambling:
"Gambling has become an addictive and detrimental part of this culture, as people seek easy answers and easy money instead of hard work and community responsibility. Too many individuals and too many governments have become addicted to the false promises of gambling. It is time to renew the call for RCA congregations and individuals to work against this scourge of society…Gambling distorts one’s view of the sovereignty and providence of God, it encourages greed and covetousness, it reflects a deficient perspective on work, and it promotes poor stewardship of resources."
The Mennonite Church strongly opposes gambling and many quasi-gambling activities such as high-risk investments, raffles, and sweepstakes:
"Gambling in its many different forms has been a problem to society for generations. It has been the ruin and destruction of many people who have willingly or otherwise fallen into its heartbreaking trap. Gambling includes such things as casino gambling, horse racing, high risk investments, state-sponsored lotteries, and church- and civic group-sponsored raffles. Sweepstakes may also constitute a form of gambling, and we would caution our members regarding any such involvement.

We believe that all forms of gambling are wrong and that Christians who are serious about their faith and practical holiness will want to avoid involvement in any way. Gambling promotes the myth that there is a shortcut to financial success apart from God-honored labor (Eph. 4:28). It promotes pleasure at another's expense and emphasizes getting rather than giving (Acts 20:32-35). Churches and charitable organizations sometimes use raffles and games of chance for fund-raising purposes. They may rationalize that the end justifies the means or follow situational ethics in these instances, but that does not make it right.

....

Gambling often becomes an addiction and is a continual source of heartache, poverty, and suffering to those homes where one or more members are ensnared. The existence of groups such as Gamblers Anonymous, which attempt to help individuals over come their addiction, confirms the seriousness of this problem.

....

We believe the state-sponsored lottery is not a Scriptural way to raise funds for even the most noble of causes. It promotes the illusion to the poor that they may soon be the recipients of instant wealth and released from the hopeless cycle of poverty in which they find themselves. In reality, many of the poor waste some of their limited resources on the lottery."
The United Church of Christ (UCC) also preaches against the perils of online gambling:
"[T]he Internet is fraught with forces that can alienate us from God. Because the Internet is world wide and distributed, the influence of these 'demonic' forces can be so widespread as to overwhelm the beneficial influences of the Internet. Users can succumb to broken, alienating lifestyles—isolation, gambling, pornography, character assassination to name a few. As followers of Jesus we are called to continue his ministry of exorcism, as he exorcised the 'unclean spirit', so we are called to 'exorcise” these alienating influences."

~ Rev. John A. Mills, "The Internet and God's Grace", Common Lot, No. 115, pp. 16-17 (Winter 2009).
* * * * *

Appendix B—Representative American Court Opinions re Gambling


I.  The Third Great Awakening & Social Gospel Era (1850s - 1910s)
"The suppression of nuisances injurious to public health or morality is among the most important duties of government. Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the wide-spread pestilence of lotteries. The former are confined to a few persons and places, but the latter infests the whole community; it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plunders the ignorant and simple."

~ Phalen v. Commonwealth of Virginia, 49 U.S. 163, 8 How. 163, 12 L.Ed. 1030 (1850).

"If lotteries are to be tolerated at all, it is no doubt better that they should be regulated by law, so that the people may be protected as far as possible against the inherent vices of the system; but that they are demoralizing in their effects, no matter how carefully regulated, cannot admit of a doubt. When the government is untrammelled by any claim of vested rights or chartered privileges, no one has ever supposed that lotteries could not lawfully be suppressed, and those who manage them punished severely as violators of the rules of society and morality.

....

They [lotteries] are a species of gambling, and wrong in their influences. They disturb the checks and balances of a well-ordered community. Society built on such a foundation would almost of necessity bring forth a population of speculators and gamblers, living on the expectation of what, ‘by the casting of lots, or by lot, chance, or otherwise,’ might be ‘awarded’ to them from the accumulations of others. Certainly the right to suppress them is governmental, to be exercised at all times by those in power, at their discretion."

~ Stone v. State of Mississippi, 101 U.S. 814, 11 Otto 814, 25 L.Ed. 1079, 1 Ky.L.Rptr. 146 (1879).

"By incorporating the interdict of lotteries in the constitution, and associating it with the fundamental guaranties of life, liberty, and property, the people of New York signalize by the most emphatic manifestation their sense of the enormity of the evil they so seek to suppress. That evil consists in the temptation and facilities afforded by the lottery for the indulgence of the passion of gambling—an indulgence, by all experience, as inimical to the well-being of the state as of the individual."

~ Irving v. Britton, 28 N.Y.S. 529, 529-30, 8 Misc. 201 (NYC Ct. Common Pleas 1894).

"Furthermore, it is argued that the precise mischief that the Legislature sought to correct is present in the transaction shown in this information; that not for any purpose of benevolence, but for gain derived from classes of persons easily subject to temptation and who can ill afford such use of scanty means of subsistence, the defendants developed and nurtured in those who yielded the perverted moral nature of the gamester, fascinated by hope and expectation of fortune’s favor, which may give him without service or effort on his part the benefit of others’ toil, thus engendering or increasing deteriorating and destructive emotional qualities, selfish greed, false standards of conduct, diseased sensationalism, and resultant slothfulness and dishonesty, and impeding the cultivation of wholesome character, the spirit of service and honor which makes the good citizen; that it would be unworthy of enlightened jurisprudence to allow the evident legislative intent of guarding the public welfare from the influence of this nefarious evil to be defeated by an ingenious device to evade the law by a mere variance of form of procedure, which leaves unchanged all the injurious effects."

~ People v. Mail and Express Co., 179 N.Y.S. 640 (NYC Ct. Spec. Sess. 1919).

"It is the one playing at the game who is influenced by the hope enticingly held out, which is often false or disappointing, that he will, perhaps and by good luck, get something for nothing, or a great deal for a very little outlay, This is the lure that draws the credulous and unsuspecting into the deceptive scheme, and it is what the law denounces as wrong and demoralizing.

....

'Had not this plan [a lottery scheme] been watched by the vigilance of the law, can there be any doubt that numerous persons would have purchased tickets, prompted by the hope of gain? Are there not inseparably connected with it the same fascination and excitement and intense desire for gain, which gather around the gaming table? Like any other species of gambling, lotteries have a pernicious influence upon the character of all engaged in them. This influence may be as direct and the immediate consequences as disastrous, as in some kinds of gambling, which rouse the violent passions and stake the gambler’s whole fortune upon the throw of a die. The temptations, however, are thrown in the way of a larger number and a better class. The evil may spread more widely and infect more deeply.'"

~ State v. Lipkin, 84 S.E. 340 (N.C. 1915) (citations omitted).

"Gambling is there recognized as an evil, and those provisions are designed to operate against it. The evils of gambling are matters of common knowledge. It tempts men to squander the money needed by their families or their business. It tempts trusted employes to embezzle and risk their employers’ money in the hope of making great gains. It creates dissatisfaction with the slow rewards of steady industry. It ruins both those who lose and those who win."

~ Zeller v. White, 106 Ill.App. 183 (1902).

II.  Abolition Era (1920s - 1950s)

"The evil flowing from them [lotteries] has been the cultivation of the gambling spirit,—the hazarding the money with the hope by chance of obtaining a larger sum,—often stimulating an inordinate love of gain, arousing the most violent passions of one’s baser nature, sometimes tempting the gambler to risk all he possesses on the turn of a single card or cast of a single die, and ‘tending, as centuries of human experience now fully attest, to mendicancy and idleness on the one hand, and moral profligacy and debauchery on the other.’

....

'Almost all modern states have, at some period of their history, employed lotteries as a means of revenue. But though they supply a ready mode of replenishing the public treasury, they have always been found to exert a mischievous influence upon the people. The poor are invited by them rather than the rich. They are diverted from persistent labor and patient thrift by the hope of sudden and splendid gains; and as it is the professed principle of these schemes to withhold a large part of their receipts, a necessary loss falls upon that class which can least afford to bear it.'"
~ City of Roswell v. Jones, 67 P.2d 286 (N.M. 1937) (citations omitted).

"The lust for profit by catering to and commercializing the gambling spirit has given rise to many ingenious devices resulting in very may decisions by the courts dealing with the application of lottery statutes similar to ours.

....

Obviously the increased income above noted must come from paid admissions. Paid for what? Paid for the chance to draw the prize or jack pot. Thus 'the hazarding of money with the hope of obtaining by chance a larger sum' is of the essence of the scheme.
To the extent this gambling spirit is aroused in the community, the higher the gambling fever rises, the more successful the enterprise."

~ Grimes v. State, 178 So. 73 (Ala. 1937).

"The purpose of the Legislature was to discourage and repress gambling in all its forms and the law is to be construed so as to accomplish, so far as possible, the suppression of the mischief against which it was directed. The evil which the law chiefly condemns is betting and gambling organized and carried on as a systematic business. The reason is obvious. Curb the professional with his constant offer of temptation, coupled with ready opportunity, and you have to a large extent controlled the evil. ...

The root of the evil lies in the explotation by professionals of the gambling instinct innate in human nature. This, the statute condemns and seeks to eliminate not by regulatory prohibitions but by absolute suppression. ...

It is not questioned that gambling, in the various modes in which it is practiced, is demoralizing in its tendencies and therefore an evil which the law may rightfully suppress without interfering with any of those inherent rights of citizenship which it is the object of government to protect and secure. Gambling is injurious to the morals and welfare of the people and it is not only within the scope of the state’s police power to suppress gambling in all its forms, but its duty to do so. The present tendency of courts and Legislatures is to extend the law of nuisances to every sort of gaming. Am.Jurisprudence, Vol. 24, ‘Gaming & Prize Contests’, Sections 3 and 11. Gambling is a pernicious practice, the offspring of idleness, and the prolific parent of vice and immorality, detrimental to the best interests of society, and encouraging wastefulness, thriftlessness and a belief that a livelihood may be earned by means other than honest industry. The use of these machines is a racket and constitutes a fraud on the innocent public who are unaware of the insidious evil of the display. They contribute directly to delinquency among children and instill and develop a desire to gamble among those who frequent them."

~ People v. Gravenhorst, 32 N.Y.S.2d 760, 771, 778 (Ct. Spec. Sess. 1942) (emphasis added) (finding pinball machines to be illegal gambling devices).

"The evils attending a system of lotteries, and against which the laws of this State arraign, consist in the risk which people are willing to take in hazarding their money with a chance of losing the same, without any or but very little benefit whatsoever, and with but a remote prospective gain. This species of gambling which inflicted serious injury upon certain classes of the community, prompted the prohibition of lotteries in this State."

~ People v. Psallis, 12 N.Y.S.2d 796, 797 (NYC Mag. Ct. 1939)

"‘But casual betting or gaming by individuals as distinguished from betting or gambling as a business or profession, is not a crime. ... The evil which the law chiefly condemns (N.Y.Const. art. I, § 9) and makes criminal (Penal Law, art. 88) is betting and gambling organized and carried on as a systematic business. The reason seems obvious. Curb the professional with his constant offer of temptation coupled with ready opportunity, and you have to a large extent controlled the evil. It is clear that in the eye of the law the professional gambler and his customer do not stand on the same plane.' ...

....

The passion for gambling permeates all strata of society. Among the poor its psychological root may be found in the dull and prolonged monotony of uninteresting drudgery which makes up the normal workaday life of large masses, affording but little scope for spontaneity or self-expression. Gambling furnishes an escape—hence arises their instinctive zest for the unexpected and the hazardous, as salt to an otherwise tasteless fare. In addition, the desire for gain and the hope that fortune will smile upon them, so that with the winnings they may obtain something hitherto unobtainable because of limited income, are strong motivating forces. At the other end of the economic scale, in the leisure classes, we find that the ennui resulting from idleness and dilettantism furnishes the same stimuli to gambling and other excesses as do monotony and acquisitiveness among the poor. In between, among people of the so-called middle classes, the spread between earnings and necessary spending is greater than among the poor. Having more money at their disposal than is absolutely needed for necessities, they have the wherewithal for speculation. The desire to increase one’s wealth in that manner, though operating with diminishing force, is still present; and added to that, the gaming impulse is sometimes stimulated by the conscious or unconscious aping of the customs and habits of those in the upper levels.

Thus, assured of generous patronage from all walks of life, the inventive genius of man has devised many plans and ways by which those who like to gamble may satisfy their desires. It is unnecessary here to describe these various forms. Each has its countless followers of both sexes, with large numbers of people indulging in more than one form. It is evident, therefore, that gaming is too widespread and too general for society to shun its devotees as pariahs: there would be too many such outcasts. Of course, it cannot be defended upon ethical grounds. Moralists and economists decry the vice as a canker upon our social structure. They condemn it as leading to habits of recklessness, waste, and idleness. They deplore it because it cultivates a distaste for honest labor and a desire to obtain riches without working for them. As we approach an ideal state of living, gambling may die—its demise hastened by an aroused public conscience and by a more general realization of its harmfulness; or perhaps the solution may be found in channeling the passion into more useful fields of endeavor. Until that day arrives, however, or until our lawmaking body expressly decrees otherwise, people have the legal right to gamble, and that right cannot be restricted to special forms or to certain classes of people. To permit some to hazard fortunes on the fluctuations of the stock market; to permit others to wager, in sepulchers of plush and gold, hundreds of dollars on the turn of a card or the spin of a roulette wheel; to permit still others to bet varying numbers of dollars on the outcome of a horse race; to hold immune from prosecution purchasers of lottery and sweepstakes tickets and even tax their winnings as income—in short, to tolerate participation in all other forms of gambling, but to deny to persons of limited means the right to wager a few cents on the selection of policy numbers, is in effect class discrimination without logic or reason behind it. None of these groups of chance-takers is any wiser than the others—all may be properly regarded as foolish—but the foolishness of the policy player is no more antisocial than that of the rest, and therefore cannot be regarded as criminal in the light of present-day public opinion."

~ People v. Revolta, 295 N.Y.S. 102, 104-06, 162 Misc. 555, 558-59 (NYC Mag. Ct. 1937) (citations omitted).

"In this scheme there is present every element of the evils attendant upon mass gambling. A small stake concealed within the price of admission gives its chance for a large prize, which may become large enough to arouse intense cupidity; there is the excitement of drawing a lucky number with its attendant exultation for one fortunate individual; there is depression and disappointment for a thousand losers, many of whom must think enviously of what they could do with so much money had they won it, and there is the constant temptation to continue to play in the hope of winning. We have thus created cupidity, envy, jealousy and temptation—the very things sought to be avoided by that enlightened public policy of most of the world which has outlawed lotteries."

~ Iris Amusement Corp. v. Kelly, 8 N.E.2d 648 (Ill. 1937).
The New York Court of Appeals also noted the negative effects of large-scale illegal policy and numbers syndicates. With respect to a conviction of a member of the Dutch Schultz gang for bribery of public officials in connection with a policy syndicate, the court found the gang was "a well-organized business, successful in effective corruption of police and magistrates and in the destruction of public confidence in the orderly processes of justice in a democracy." People v. Hines, 284 N.Y. 93, 100, 29 N.E.2d 483, 487 (NY Ct. App. 1940).


III.  Modern Era (1960s - 1990s)

"It seems to us that, if we are to apply the strong public policy test to the enforcement of the plaintiff’s rights under the gambling laws of the Commonwealth of Puerto Rico, we should measure them by the prevailing social and moral attitudes of the community which is reflected not only in the decisions of our courts in the Victorian era but sharply illustrated in the changing attitudes of the People of the State of New York. The legalization of pari-mutuel betting and the operation of bingo games, as well as a strong movement for legalized off-track betting, indicate that the New York public does not consider authorized gambling a violation of ‘some prevalent conception of good morals (or), some deep-rooted tradition of the common weal.’

The trend in New York State demonstrates an acceptance of licensed gambling transactions as a morally acceptable activity, not objectionable under the prevailing standards of lawful and approved social conduct in a community. Our newspapers quote the odds on horse races, football games, basketball games and print the names of the winners of the Irish Sweepstakes and the New Hampshire lottery. Informed public sentiment in New York is only against unlicensed gambling, which is unsupervised, unregulated by law and which affords no protection to customers and no assurance of fairness or honesty in the operation of the gambling devices."

~ Intercontinental Hotels Corp. v. Golden, 203 N.E.2d 210, 213, 254 N.Y.S.2d 527, 531 (N.Y. Ct. App. 1964) (citation omitted).

"There are some forms of speculative enterprise which are pure gambles, but which nevertheless, by virtue of legislative fiat, are given public sanction—most notably pari-mutuel betting, bingo (N.Y.Const., Art. I, s 9) and the State Lottery. These exceptions to the rule are hedged about with safeguards—on the theory, I suppose, that a restricted public evil becomes a public good."

~ Liss v. Manuel, 296 N.Y.S.2d 627,631, 58 Misc.2d 614, 617 (NYC Civ. Ct. 1968).

"Gambling in this State in general is prohibited (General Obligations Law § 5–401). The Lottery is authorized because it is operated with the specific purpose of raising funds for education (see, NY Const, art I, § 9; Tax Law § 1600 et seq.). Public policy continues to disfavor gambling; thus, the regulations pertaining thereto are to be strictly construed."

~ Ramesar v. State, 636 N.Y.S.2d 950, 224 A.D.2d 757 (S. Ct. 3d App. Div. 1996).

"With regard to the first asserted interest—alleviating the social costs of casino gambling by limiting demand—the Government contends that its broadcasting restrictions directly advance that interest because “promotional” broadcast advertising concerning casino gambling increases demand for such gambling, which in turn increases the amount of casino gambling that produces those social costs. Additionally, the Government believes that compulsive gamblers are especially susceptible to the pervasiveness and potency of broadcast advertising. Assuming the accuracy of this causal chain, it does not necessarily follow that the Government’s speech ban has directly and materially furthered the asserted interest. While it is no doubt fair to assume that more advertising would have some impact on overall demand for gambling, it is also reasonable to assume that much of that advertising would merely channel gamblers to one casino rather than another. More important, any measure of the effectiveness of the Government’s attempt to minimize the social costs of gambling cannot ignore Congress’ simultaneous encouragement of tribal casino gambling, which may well be growing at a rate exceeding any increase in gambling or compulsive gambling that private casino advertising could produce. And, as the Court of Appeals recognized, the Government fails to “connect casino gambling and compulsive gambling with broadcast advertising for casinos”—let alone broadcast advertising for non-Indian commercial casinos.

....

Ironically, the most significant difference identified by the Government between tribal and other classes of casino gambling is that the former is “heavily regulated.” Brief for Respondents 38. If such direct regulation provides a basis for believing that the social costs of gambling in tribal casinos are sufficiently mitigated to make their advertising tolerable, one would have thought that Congress might have at least experimented with comparable regulation before abridging the speech rights of federally unregulated casinos. While Congress’ failure to institute such direct regulation of private casino gambling does not necessarily compromise the constitutionality of § 1304, it does undermine the asserted justifications for the restriction before us. There surely are practical and nonspeech-related forms of regulation—including a prohibition or supervision of gambling on credit; limitations on the use of cash machines on casino premises; controls on admissions; pot or betting limits; location restrictions; and licensing requirements—that could more directly and effectively alleviate some of the social costs of casino gambling."

~ Greater New Orleans Broadcasting Ass’n, Inc. v. U.S., 527 U.S. 173, 119 S.Ct. 1923, 144 L.Ed.2d 161 (1999) (citations omitted).

"In 1808 the British Government appointed a Select Committee to inquire into the evils of lotteries and the effect of the laws which had been instituted to regulate them. We quote the following discussion of its report from Williams, Flexible Participation Lotteries (1938), Chap. II, page 5:

‘In the report of this committee, many instances were adduced of the most serious evils arising from lotteries. These included cases where people living in comfort and respectability had been reduced by their speculations to ‘the most abject state of poverty and distress’; cases of domestic quarrels, assaults, and the ruin of family peace; fathers deserting their families and falling into want and disgrace; mothers neglecting their children, sometimes leaving them destitute; wives robbing their husbands of the earnings of months and years; and the pawning of clothing, beds and wedding rings in order to indulge in speculation. ‘In other cases children had robbed their parents, servants, their masters; suicides had been committed, and almost every crime that can be imagined had been occasioned, either directly or indirectly, through the baneful influence of lotteries.’’

It is abundantly clear from this description of the evils attending ‘lotteries,’ as that term was commonly understood, that they were the result of speculation. Their operation depended upon the wagering by the participants of money or something of monetary value on the chance that they would win something of far greater value."

~ Cudd v. Aschenbrenner, 377 P.2d 150 (Or. 1962).

"However, assuming that not all gambling activities are inherently injurious to public morals, and may be considered merely as a type of trade, occupation or fundraising activity, it is well established that if the manner in which a trade, occupation or other activity is conducted will probably result in injury to the public order or morals, the police power of the State may lawfully be used to eliminate the hazard. We conclude that the legislature could reasonably determine that commercialized gambling for profit is typically conducted in such a manner as to threaten the public order and morals, and seek to suppress it, while allowing religious and charitable organizations to conduct bingo games and raffles without violating the due process rights of individuals such as defendant McCleary.

....

We find that the distinction made between individuals and organizations conducting lotteries for personal profit and the exempt organizations, which, by virtue of their legal status, are not allowed to profit from their activities except in such a way as to promote purposes and goals that proceed from charitable, civic or altruistic motivations is a reasonable one and that it bears a rational relation to the purpose of the gambling prohibitions in general. The reasons traditionally cited for prohibiting gambling fall into two basic categories: (1) that the activity is inherently immoral or that it tends to weaken morals and encourage idleness, and (2) that the unwary public needs to be protected from the unscrupulous operator. The legislature in 1979 could reasonably have concluded that bingo games and raffles are not inherently immoral, and that they do not have a totally pernicious influence on the character of the player. Further, that the player’s motivation of personal gain through gambling is tempered by the knowledge that his or her 'donation' is going to generally charitable or public service purposes. In addition, it could reasonably be determined that the consequences to society are not the same as those where the profit goes to commercialized gambling, or that the danger to society is different from that posed by professional gambling inasmuch as the game operator is, for example, a regulated charitable or religious organization and not a 'fakir' or 'nimble trickster.'"

~ State v. McCleary, 308 S.E.2d 883 (N.C. Ct. App. 1983) (citations omitted).

IV. Contemporary Era (2000 - Present)

"While it is undeniable that recreational gambling for those who can afford it has become more socially acceptable than it once was, the suspicion which Ohioans have regarding the potential negative effects of gambling was reaffirmed in 1996 when a proposal to amend Ohio’s Constitution to allow riverboat casinos was defeated 62 percent to 38 percent. Many arguments in favor of a Constitutional ban on lotteries (and legal prohibition of many other forms of gambling) retain much of their force. Such arguments provide the rationale for the once total, but now partial, ban on lotteries:

1. There appear to be certain persons who are more vulnerable to the lure of gambling than others. Indeed, the parties in this case have stipulated that one of the plaintiffs is a “recovering addicted gambler.” Because of the large prizes, lotteries can provide a special challenge to such persons.

2. Even if one adopts the position that such persons are totally responsible for their gambling conduct and that, therefore, the state should not concern itself with the effects of the gambler’s “weak character” on himself/herself, the compulsive gambler’s family members and friends, who cannot be regarded as responsible, also suffer.

3. The resources of both charitable and public social service agencies end up being used to deal with the effects of excessive gambling, instead of being used for other beneficial purposes for which they might be used if there were no legalized lotteries.

4. Gambling has the reputation of being associated with racketeering and organized crime. Gambling, because of its suggestion of easy money, would be especially attractive to persons who are interested in acquiring wealth, but who lack a sense of obligation to return value to others in the form of services or products. Hence, gambling has a reputation for being a magnet for the criminally inclined type of person. Hence, even legalized gambling threatens to become the locus of illegal activity.

5. Ill-gotten gains from such illegal activities could then be used as seed money for other illegal ventures.

6. Any increased racketeering and organized crime, not to mention the lotteries themselves, increase the opportunities and motives for the corruption of public officials. Because of the large amounts of money involved in state lotteries, not to mention multi-state lotteries, and the fact that results might be subject to being manipulated by a relatively small number of public officials, the temptation for public corruption is present.

7. Once a public official has engaged in such corrupt activity, then blackmail and connections with organized crime established in the initial corrupt enterprise, may make it more difficult for the public official to choose to refuse to engage in further corrupt activity.

8. By allowing lotteries and gambling, and especially by sponsoring lotteries and gambling, the state encourages gambling behavior and, thereby, increases the likelihood of all of the negative effects summarized in items 1 through 7.

When the people of Ohio decided to constitutionally ban lotteries, it was presumably based upon ideas such as these about the likely effects of permitting lotteries. When they later decided to amend the ban three times so as ultimately to allow only two exceptions to the ban which serve important social functions (public education and charity), the people demonstrated that they remain suspicious of lotteries, and are willing to accept the risks associated with partially lifting the constitutional ban on lotteries only when doing so serves some important social function."

~ Ohio Roundtable v. Taft, 773 N.E.2d 1113 (Ohio Ct. Common Pleas 2002).

"In my opinion, striking this language would also open the door wide to all heretofore illegal gaming practices in this state, including video poker. Because of this very real consequence, I am concerned that striking this critical language from the statute would beget, as elucidated by the General Assembly in 1816 when amending section 16-191-40, the "impoverishment of many people, corruption of the morals and manners of youth, ... the tendency which is vice, misery and crime, as examples in this state have abundantly proven." These dire concerns resonate as much today as they did nearly 200 years ago. I do not need to remind any person of the havoc wreaked upon this State as a result of the "pernicious" practice of video poker. Although there are other sound provisions outlawing video poker, I am loathe to strike the critical language from the general ban on gaming in the event that it guts these provisions, and consequently, South Carolina's longstanding prohibition against gambling."

~ Town of Mount Pleasant v. Chimento, 737 S.E.2d 830 (S.C. 2012) (Toal, C.J., concurring) (citations omitted) (italics in original, emphasis added).

"The State wields police power to protect its citizens' health, welfare, safety, and morals. On account of ties to organized crime, money laundering, gambling addiction, underage gambling, and other societal ills, '[t]he regulation of gambling enterprises lies at the heart of the state's police power.'

Internet gambling introduces new ways to exacerbate these same threats to health, welfare, safety, and morals. Gambling addicts and underage gamblers have greater accessibility to on-line gambling-able to gamble from their homes immediately and on demand, at any time, on any day, unhindered by in-person regulatory measures. Concerns over ties to organized crime and money laundering are exacerbated where on-line gambling operations are not physically present in-state to be inspected for regulatory compliance. Washington has a legitimate and substantial state interest in addressing the effects of Internet gambling."

~ Rousso v. State, 239 P.3d 1084 (Wash. 2010) (citations omitted) (emphasis added).