The gambling markets and addiction

As usual, on his show Last Week Tonight, John Oliver nicely explains how these rapidly growing online betting markets like Kalshi and Polymarket (that I have previously discussed here) work and why they are such a menace.

Warnings are being issued that gambling in the US is getting out of control because of the ease with which the new apps can be used to make bets on pretty much anything at any time.

Gambling addiction is spiraling “out of control” in the US, a leading campaigner for stricter guardrails has warned, as experts from around the world are set to gather in Boston to push for more regulation of the industry.

The rapid expansion of online gambling, prediction markets and sports betting platforms, “demands a public health response”, according to Harry Levant, director of gambling policy at the Public Health Advocacy Institute (PHAI), urging policymakers to intervene.

“You regulate the distribution, the speed, the type, the access to the product, because the product is what’s dangerous,” he said, calling for gambling to be treated like alcohol or tobacco. “The problem is the product, not the people,” said Levant. “We have a crisis here.”
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Sports betting has been legalized in 39 states and Washington DC since the landmark 2018 supreme court ruling.
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On both the federal level and in numerous states, legislation has been introduced to regulate online gambling. One of the bills that will be talked about on Friday is the Safe Bet Act, introduced in Congress by Tonko and Blumenthal, which seeks to establish “minimum federal standards” for legal sports betting and seeks to impose limits on marketing, introduce affordability checks and restrictions on apps using artificial intelligence to track players and create bets.

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The shadowy world of gambling on world events

In most gambling, as in the casinos or in betting on the outcome of sporting events where there is no doubt as to what the result is, there is usually a clear way of deciding whether you won or lost the bet. But the new betting markets like Kalshi and Polymarket allow you to bet on events where the outcome may not be that clear-cut. Hence there has to be some standard associated with the bet that tells you how the outcome is to be judged.

So, for example, take the bet that the US and Iran will agree to a permanent peace deal by a specific date, where the options for dates are April 22, April 30, May 31, and June 30. How would one judge that? The rules state it as follows.
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Explosive growth of legal gambling in America

When I was around 13 years of age, our neighbors had five children, three of whom were close in age to me. They would invite me to play card games at their place and we played for money. It was not high stakes in any absolute sense but it was for me since all I had was just the little pocket money that my parents gave me. So I did have thrill (if you want to call it that) of fearing a real loss. It was exciting to gamble and I was quickly getting drawn in and looked forward to playing after school. But I would end up losing consistently. After a while, while I could not prove it, I became convinced that the siblings were cheating by colluding against me. They were Indians and would sometimes speak and sing in Hindi, a language that is not spoken in Sri Lanka and that I did not know, and I think that they were communicating with each other. Anyway, I got tired of losing in an unfair game and stopped playing with them after a while. It was my first taste of how the gambling system is usually rigged against you and I lost my taste for it and never got attracted to it again.

Gambling in sports in the US has an ugly history with players accused of adjusting their play in order to make money by getting particular results. This led to federal laws that banned it and for the longest time it was restricted to just in-person gambling in the state of Nevada, primarily Las Vegas. Professional sports leagues vigorously opposed any attempts to legalize it nationwide, arguing that it would lead to the death of sports due to suspicions of cheating. But in 2018, the US Supreme Court overturned the federal ban, saying that the constitution did not allow for this federal power and that it was up to the states to decide whether they wanted to allow gambling or not, and then it was off to the races, as states vied to attract gamblers.
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