Gambling in American History

Jai Alai is a game that is played on the basic principles used for handball and racquetball games. Jai alai contests are used for pari-mutuel betting in Florida, Connecticut, and Rhode Island and for almost a decade in the MGM casinos of Las Vegas and Reno, Nevada.
The game is considered the oldest ball game played today; it is also considered the fastest game played. Players either compete as individuals or in teams of two. The game is played on a very large court, 177 feet long, 55 feet wide, and 55 feet high. The playing facility is called a fronton. The ball is very hard – harder than a golf ball – and is about three-fourths the size of a baseball. The ball, called a pelota, is propelled by the players toward the front wall of the court. The players hold a cesta, which is a curved basket that extends from one of their arms. They catch the ball in the basket device and then without letting it settle, they propel it back to the front wall. They must retrieve and return the ball before it hits the floor two times.  The balls may move as fast as 150 miles per hour in the games, faster than any other ball in any game.
The game of jai alai may have had ancient predecessors, as the notions behind handball have been found in many prehistoric societies. In its present form, however, the game is traced to Basque villages in the Pyrenees of France and Spain. The origins of the game may go back to the fifteenth century. Mythmakers suggest that the game may have been the invention of St. Ignatius of Loyola, who – like his compatriot St. Francis Xavier – was Basque. What is less mythical is the fact that the game was played during religious festival occasions in the Catholic region. The words jai alai mean “merry festival”. The game has also been known as pelota vasca or Basque vall. The game is celebrated in the classic art of Spain. Francisco Goya created a tapestry called Game of Pelota for the Prado in Madrid. Many mythical heroic characters of Basque tradition were pelota players.
As the Basques and persons from the surrounding regions migrated to the Western Hemisphere, they brought the game with them. It came to Cuba by the beginning of the twentieth century, and it was displayed at the St. Louis World’s Fair of 1904. (Castro closed down games in 1960 as he closed the Cuban casinos). It came to Florida in 1924. Although the game enjoyed some natural popularity for its basic excitement, it did not draw large crowds until 1937, when the Florida legislature authorized pari-mutuel betting on the winners of the games.
In the jai alai game there are eight players (or eight teams of two players each). They play round robin matches. A player (team) who wins a point remains in the game; the loser is replaced with another player (team). They keep playing until one player (team) has scored seven points. In a sweep, one player could score seven straight points but would have to do so by scoring against every other team in the contest. The contests result in one winner with seven points and second- and third-place players (teams) with the next highest number of points. If there is a tie, the tying teams play off for their position. Those making wagers can bet the basic win, place, and show as in horse racing. Jai alai contests also were innovative because they created the quinella, perfecta, and exacta bets. A trifecta bet is also used.
Florida developed many frontons, but play levels pale in comparison with other betting venues such as bingo halls, horse tracks, and Native American casinos. The MGM Grand Hotels of Las Vegas and Reno had frontons until the mid-1980s. Connecticut authorized jai alai betting in the early 1970s, as did Rhode Island in 1976. Efforts to get the sport accepted elsewhere in North America for pari-mutuel wagering have not been successful.

Iowa may have the distinction of having more forms of legalized gambling than any other state. The pastoral agricultural land of the Music Man has more than pool halls to corrupt its youth. It has a lottery with instant tickets and massive lotto prizes via Lotto America; it has dog racing and horse racing – thoroughbred, harness, and quarter horse racing. It has bingo games and pull-tab tickets for charities, and it has casinos – on land, on rivers, on lakes, and on Native American lands. Although many of these games were in place by the end of the 1980s, Iowa led the nation in establishing riverboat gaming with legislation that was passed on 20 April 1989.
Even though the Iowa “experiment” led to a massive expansion of gambling throughout the Midwest, in a sense it was supposed to represent a small incremental change in gambling offerings – not a major change in the landscape. The proponents of casinos for Iowa were responding to a general downturn in the agribusiness economy of the state. They were quick to say they did not want Iowa to “be like Las Vegas”. Indeed, during the legislative campaign for casinos, the words casino and gambling were not used. The casino gambling was supposedly just a small adjunct to riverboat cruises designed to recreate Huckleberry Finn excursions down the mighty Mississippi. Only 30 percent of the boat areas could be devoted to casino activities. Ostensibly, the operators would offer many activities on the boats in order to satisfy the recreational needs of the entire family. Originally the boats had to have actual cruises, betting was limited to five dollars a play, and no player could lose more than $200 on a cruise. These limits have been eliminated, and now boats no longer cruise. Instead, they remain docked while players gamble.

During the last quarter-century of the twentieth century, participation in horserace-betting activities stagnated. Indeed, on-track betting declined considerably, although the decline was offset by a comparable increase in intertrack and offtrack betting. New York’s state authorization of offtrack betting facilities run by a public corporation beginning in 1970 both threatened the viability of on-track wagering and at the same time offered somewhat of a solution to the impending revenue decline. By the mid-1970s there were 100 offtrack betting parlors in New York City alone. New York saw the parlors as a source of public revenue as well as a means to discourage patronage of illegal bookies.
Prior to 1970, only Nevada had offtrack betting activity. Now many other states were examining the New York experience with thoughts of duplicating it.  Initially there were no formal provisions requiring that offtrack facilities share revenues with tracks, nor were there mechanisms for requiring that wagers be pooled. Rather, all such arrangements were ad hoc. The tracks across the country perceived major problems, and they turned to Congress for development of uniform policies to answer their concerns. Even though offtrack betting operations agreed that they were adding to the race-betting activity and were sharing some revenues, the tracks felt that their share was not sufficient to offset losses because bettors were coming to tracks in fewer and fewer numbers. A compromise measure was hammered out in Congress, resulting in the passage of the Interstate Horseracing Act of 1978.
The Interstate Horseracing Act recognizes that there are several interests involved in offtrack betting. There are horse owners who essentially realize economic gains through purses when their horses win races. There is the track, basically a private entrepreneurial venture; there is also the host racing state and its racing commission. There is the operation (public in New York but private in other places) that runs the offtrack betting parlor. And there is the state regulatory commission that oversees the offtrack betting activity. Of course, there are always the players – the bettors.
The act stipulated that the tracks and associations of horse owners would meet and agree on how they would split income from fees charged to the offtrack betting operations. The state racing commission would have to ratify the agreement. As with on-track betting revenues, it would be expected that portions of the offtrack betting wagers would go to the state as a tax, to the track owners, and to horse owners through purses. The three parties would then negotiate with the offtrack betting operators for a fee that essentially would be a portion of the money wagered on races (the “take-out”).
The take-out portion going to the track, the owners, and the host state would be less than the amount taken from the track bettors, as it also had to be shared with the offtrack betting facility and the offtrack betting state. The Interstate Horseracing Act requires that the overall take-out percentage from the offtrack betting activity be the same take-out rates as charged to on-track bettors. This protects the tracks from price competition.
The act also stipulated that the offtrack betting facility cannot conduct operations without the permission of any track within sixty miles of the facility, or if there are no such tracks, then the nearest track in an adjacent state. The act did not address the subject of simulcasting race pictures between the tracks and the offtrack betting facilities.

Gambling through the Internet became an established activity in the mid-1990s, causing great concern to many interests – governments as well as private parties seeing danger in easily accessible gambling.
The Internet system was developed three decades ago by the U.S. Department of Defense in order to connect computer networks of major universities and research centers with government agencies. The growth of the system into what has now become potentially the most active and most encompassing form of communication had to await the advent of the personal computer and its widespread acceptance. By the end of 1998 there were over 76 million Internet stations providing access to 147 million persons in the United States – mostly in their homes. An equal number of computers with Internet access are found in other countries.
There are an estimated 800 host computer sites that either provide gambling directly or provide information services for gamblers. Approximately sixty Internet sites, located mostly in foreign lands, accept bets on a variety of events. Most wagering is on sports events, but several sites also conduct lottery or casino game-type betting. In order to make a wager, a player with Internet access must first establish a financial account with a gambling Internet enterprise. Although the enterprise is typically located in another country, the bettor can send money to the enterprise by using a credit card, debit card, a bank transfer of funds, or personal checks.  Wagers can then be made, and the account is adjusted according to wins and losses.
Internet gambling activity has not yet become a major part of the worldwide gaming industry, but it appears to be growing, and it possesses possibilities for becoming much larger than at present. The National Gambling Impact Study Commission reported that in 1998 there were nearly 15 million people wagering on the Internet from the United States, providing the Internet gaming entrepreneurs with annual revenues of from $300 million to $651 million (National Gambling Impact Study Commission 1999, 2–15, 2–16). This would represent an amount equaling about 1 percent of the legal betting in the land. Gaming analyst Sebastian Sinclair estimated that revenues could reach $7 billion in the early twenty-first century (National Gambling Impact Study Commission 1999, 2–16). If the expansion comes, it will essentially be because the Internet offers bettors a very high level of convenience for their activity, and it also offers a privacy they may especially want because of the illegal (or at best quasi-legal) nature of the activity. It is easier to sit at home and wager on a computer than it is to drive to a casino sports book—especially when we consider that the only legal sports books are in Nevada. The computer is also quicker than bookie telephone betting services. It is also less likely to be intercepted by law enforcement officials.
There are downsides to Internet betting that may provide dampers to the wagering activity. The first issue is integrity. Although a player betting on a sports event has an assurance that he has legitimately won or lost a bet (assuming there are independent news reports on the sports event bet upon), other players wagering on lotteries or, especially, casino-type games have no firm guarantees that the results of the wagering are totally honest. To be sure, some Internet sites are licensed by governments, giving an appearance of legitimacy. The very staid government of Liechtenstein authorizes operation of an Internet lottery, and several Caribbean entities, such as Antigua, St. Kitts, and Dominica, oversee many Internet sites offering a variety of games, as well as sports betting. The oversight activities, however, consist almost entirely of collecting fees from the operators.
The Federal Wire Act of 1961 was confined to betting on races and sports events. It did not speak to casino-type games and lotteries. Hence, some betting on some computer-type games may possibly be legal, at least in the eyes of the federal government – that is, at the present time.
To address these questions with clarity, and to fill the possible gap in the 1961 law, U.S. senator Jon Kyl of Arizona has promoted legislation to amend the Federal Wire Act. His proposed amendment won approval in the U.S. Senate, but as of the end of the 2000 session, it had not come to a floor vote in the U.S. House of Representatives. The Kyl bill would make any and all gambling on the Internet illegal, and it would give the Department of Justice and the Federal Trade Commission powers to enforce the law. As the bill was moving toward passage, it was amended to allow exceptions for legal race betting and lottery organizations.

Insurance has sometimes been compared with gambling. After all, an insurance company acts like a casino as it asks its clientele to wager on whether they will live or die, whether they will be healthy or sick, whether their house will burn down or not, whether they will be victimized by thieves, or other sad circumstances. It would seem that characteristics of insurance could meet the elements in the definition of gambling: Customers put up money (consideration), and they win a settlement (prize) depending upon a factor of chance (whether or not they become a victim). And of course, like a casino, the insurance company charges a fee for the service of offering its product, and the insurance company also sets the prize structure so that it will make a profit – the odds are in the favor of the insurance company.
These things being said, or to a degree admitted to be true, there are still major distinctions between gambling and insurance, distinctions that allow me to neglect the concept of insurance in the remainder of this encyclopedia. Paul Samuelson’s seminal volume on economics points out the differences. In his section on economic impacts of gambling, Samuelson writes that gambling serves to introduce inequalities between persons and instabilities of wealth. Insurance has the directly opposite consequences. Insurance gives people the opportunity to achieve stability in the face of risks that are often inherent in the nature of things – risks of disease, of fire, of lost property.  For a small sum of money, people can purchase policies that will guarantee that the costs of a disaster will not ruin their lives or their families. Gambling purposely introduces risk into a society that is stable; insurance purposely exists to avoid risks. Actually, the insurance company spreads the risks of disasters to a single person among a very large number of persons who buy insurance policies.
Insurance companies may sell policies that cover only a certain set of circumstances. The person purchasing insurance is limited to buying coverage only for “insurable interests”. The insurable interest cannot be as frivolous as the turning of a card or where a ball falls on a spinning wheel. The interest must be a real concern to the policyholder. One can insure his or her own life but cannot insure the life of a total stranger. Insurance companies must limit the amount of insurance sold to values relative to the risks the insurance seeks to avoid. A house can be insured against fire, but only up to the full value of the house. Similarly, health can be insured up to the cost of treatment and collateral losses such as wage losses. The limits on insurance coverage preclude the gambler’s behavior of chasing losses. If the “bad” event does not occur, and a premium payment is thus lost, the insured person cannot simply double the bet for the next period of time. The insurance company and the insured both have disincentives for purchasing excessive policies. Insurance companies make those wishing to have large life insurance policies subject themselves to many medical examinations, including full health screenings. Newly covered persons with health insurance may not be able to receive benefits for a number of months.
By gambling, a person is seeking risks that might severely upset his or her financial stability. By buying insurance, a person is avoiding risks. On the other hand, if a person with a house, other property, or a family dependent upon him or her does not insure the house or property against destruction or himself or herself against illness or death, that person is gambling with fates that strike people often randomly, albeit with some rarity (in short periods of time), but almost certainly over large periods of time.
Gambling activity can be and often is very destructive to personal savings. Insurance, on the other hand, can be seen as an alternative means of savings—savings for a rainy day in some cases. In the case of whole life insurance, savings and investment are encompassed into the policies. Although in some respects the notions of insuring against the occurrence of certain natural events and betting on the occurrence of contrived events may appear quite similar, in actuality they are not very much alike.