Here is my proposal to eliminate problem gambling forever: scrap all laws restricting gambling. I know this might sound surprising (ok possibly crazy) but hear me on...
Today it is extremely expensive to open a casino. I'm not sure what the laws for offline casino are, but license costs for a new online casino are 100s of 1000s to millions USD per year. Subsequently there are very few companies that compete in this space -> there is artificially limited supply -> the price for gambling is high. The price for gambling is the players average loss per bet (called the house edge). It varies from a few % to over 10% for most casino games. It's what makes the gambler loose in the long run.
Say online gambling were legal in the US. There would be way way more online casinos competing for the player. This competition would drive down the house edge to either very close to or actually 0. A 0% house edge would do away with problem gambling. Gambling addicts make 1000s of bets per day, and the law of big numbers dictates that they would not loose money over the long run. This does not even factor in that online casinos would be VC funded, and would not need to make a profit for a long time, which would drive down the price even further.
This isn't just a lofty libertarian theory. The bitcoin gambling market is largely deregulated and the house edge in bitcoin casinos is way lower (1% - 0.1%) than for regulated casinos. Recall that regulated casinos have to somehow pay huge licensing costs to the state, that's money that their players have to loose.
Long story short, it is my conviction that online gambling laws are what make gambling addicts loose money (and much more, see article). Do away with the regulation and the market forces will lead to a state where gambling addicts do not loose any more money.
Are gambling addicts limited by time or by money? If they're limited by money then reducing the house edge just means they'll play more before going bust.
It will never happen, since the state wants its cut.
Also, why open a Casino? That's expensive. It's much cheaper to run your own daily numbers game. The old street level games were popular because the "policy kings" apparently took less than the state does in legal lotteries.
A slot machine based on this principle exists and was presented at ICE last year (forgot the name). However keep in mind that the stock market grows at single digit percentage points per year. Slots machines only run for a couple of seconds, so there's no real profit made in that time frame. (As far as I can recall the rational for this system was of legal nature).
If one can make this work this would be huge. One could offer casino style games at a house edge of 0% (house edge = the amount that the house wins on average on every bet). This would not only be a super compelling value proposition to gamblers, it would be a huge step towards eliminating problem gambling: A gambling addict that plays at a 0% house edge would not loose money in the long run.
I run a small bitcoin casino called fastbets.io. We should talk to see if there is a potential for a collaboration (feel free to email [email protected]).
> A gambling addict that plays at a 0% house edge would not loose money in the long run.
This isnt true because the house edge is the average return. the individual players can have a positive or negative edge depending on their skill. this would be like playing poker without a rake.
Alexjikim, you are 100% right. I was thinking about classic casino games that are pure games of chance (where my statement would be correct). However, the OP crablar wants to offer games of skill where alexjikim's analysis is spot on. Would still be a huge improvement over the status quo though.
I find that Wikipedia article on "Gambler's ruin" pretty misleading. What is not mentioned there is that in a 0% edge game, the party with the higher bankroll has a lower chance of loosing it all, but she'd be losing a lot in that case. If she wins (very probable) she'd only be winning a small amount. That's still a fair game.
Today it is extremely expensive to open a casino. I'm not sure what the laws for offline casino are, but license costs for a new online casino are 100s of 1000s to millions USD per year. Subsequently there are very few companies that compete in this space -> there is artificially limited supply -> the price for gambling is high. The price for gambling is the players average loss per bet (called the house edge). It varies from a few % to over 10% for most casino games. It's what makes the gambler loose in the long run.
Say online gambling were legal in the US. There would be way way more online casinos competing for the player. This competition would drive down the house edge to either very close to or actually 0. A 0% house edge would do away with problem gambling. Gambling addicts make 1000s of bets per day, and the law of big numbers dictates that they would not loose money over the long run. This does not even factor in that online casinos would be VC funded, and would not need to make a profit for a long time, which would drive down the price even further.
This isn't just a lofty libertarian theory. The bitcoin gambling market is largely deregulated and the house edge in bitcoin casinos is way lower (1% - 0.1%) than for regulated casinos. Recall that regulated casinos have to somehow pay huge licensing costs to the state, that's money that their players have to loose.
Long story short, it is my conviction that online gambling laws are what make gambling addicts loose money (and much more, see article). Do away with the regulation and the market forces will lead to a state where gambling addicts do not loose any more money.
(full disclosure: I run a bitcoin casino)