A Few Words in Defense of Gambling

One of the most ridiculed hypocrises in American culture is our treatment of gambling as a character flaw at same time we regard capitalism as a pure and virtuous economic system, and deservedly so!

Capitalism is gambling, pure and simple.  I’ve been an entrepreneur all my life, and every business has been a gamble.  Not all have been good gambles, and most were not a good bet to begin with.  Sometimes you can overcome that, and sometimes you can’t.

But risk is an intrinsic part of the universe.  It permeates every part of the universe and every part of every activity.  Unless you can figure out how to cheat death, eventually the risk is going to dominate.

Our government has chosen time and time again to prohibit gambling.  Of course, they don’t prohibit all gambling.  Most of their purpose seems to be to eliminate gambling on games of chance, but we can’t overlook that they do restrict and eliminate a lot of gambling that is even more vital to the system.

For example, the government did nothing to stop thousands of people making their bets with Bernie Madoff, but a little more than a year ago, they changed the definition of a “qualified investor’.  If you are not a qualified investor, the government will “protect” you by not allowing you to invest in the next Google or Microsoft before they go public, but it will allow you to lose all of your money in Bear Stearns, General Motors, or AIG.

Qualified investors used to have to have a million dollars in addition to their personal real estate.  Now they need five million.  I guess the logic is that millionaires are not as rich as they need to be, and therefore they need to be protected against making bad bets.  Because start-ups are so shakey and you are so likely to lose, you now need five million to play this game.

The whole idea of qualified investor is so wrong on so many different levels.  It is a huge impediment to the development of new businesses, and new businesses are the lifeblood of capitalism.  It says that they government is more qualified than you are as to how to invest your money.

I don’t think the role of government should ever be to protect people against themselves, but rules like this are even more offensive than gross stupidities like outlawing Internet gambling or casual drug use.  The proper role of the government is to ensure that people have access to all of the information necessary to make the best descion for themselves.  You can’t le3gislate risk out of existence, but you can do a whole lot to make sure that risks are not a surprise.

Let’s take playing poker on the Internet for example.  The current approach is to make it illegal.  The logic is that people are ruining their lives by losing so much money playing poker.  That’s not most people.  The purpose of this law is to protect the weakest.

Most people win a little or lose a little.  Smart people who lose a lot are smart enough to stop playing before it ruins their lives.  Most people are at least that smart.  If they lose at poker, they treat poker as an entertainment expense.  They don’t bet the mortgage payment on a poker game month after month.

I not only beleive that Internet poker ought to be legal, I think everyone oght to spend some time and money on it.  Don’t play for too much money, but play for enough so that it means something to you whether you win or lose.  If you are really broke, you can play for pennies or nickels.  Don’t play for enough so that it has a negative impact on your life if you lose, but do play for enough so that you learn about money management and risk.  Pick a budget and stick to it.

There are many good and sound reasons that some Wall Street firms and hedge hunters recruit poker players, but the primary reason is that poker teaches you about risk.  Everyone in a capitalist society should know everything about risk that they can.


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