Murder, Mayhem and Misinterpretation

Two events occurred that drew the attentions of sports bettors, poker aficionados, small-time hoods, organized crime, the casino industry and, of course, the legal establishment. In one, a sports-betting ring operating “in” the poker room at Atlantic City’s Borgata casino was broken up. The word “in” is in quotes to make it clear that, while the action took place in the casino, its personnel and management have not (so far as is publicly known) been implicated. The second occurred in one of the larger underground poker rooms in New York City where armed robbers held up the club. In the chaotic scene that ensured a gun went off (apparently accidentally, as if that mattered) and killed one of the players, a middle-aged school teacher from New Jersey who was a regular in the room.

There are lessons to be learned here.

The Borgata Boondoggle: That the poker room was the epicenter of this action certainly shouldn’t surprise you. In my book, The New Gambler’s Bible, I noted that if you want find a bookie try any a sports bar, a race track or a poker room. Unfailingly, once you’re known as a regular, a couple of well-phrased questions will lead you to your goal —- who is likely to be the guy sitting next to you.

It’s classic, free-market economic theory. There is a product, people who want it and are willing to search for it, pay for it, take risks to engage in it and use it regularly. This produces an “ecological niche” and people who are willing to run the risks for the potential profit will emerge to fill it.

For reasons that run the gamut from the sensible to the ludicrous, the State of New Jersey has determined that providing such a service is not legal (though they are in the process of reconsidering, stay tuned). So, of course, another non-surprise: When an activity is illegal, we don’t typically see the local pastor jumping in. The niche gets filled by those with the funds, the distribution system in place, the “security,” the time and the lack of respect for legal nuance.

So, economics, psychology and forensic science all point to a virtual certainty: If sports betting is illegal it will take place anyway, almost certainly in locations where people interested in sports and wagering hang out and it will likely be controlled by unsavory folks with criminal backgrounds. Indeed, the Borgata Boondoggle was utterly predictable.

New York’s Poker Playgrounds: The killing that occurred in New York sent shivers down the spines of everyone involved. The room where it went down closed immediately as did every other room in the city (and, yes Virginia, there are dozens of such underground rooms dotted throughout the five boroughs – as there are in every city, town and village in the land).

The events that occurred are as predictable as those at the Borgata, for the same reasons. Poker rooms spring up in virtually every locale because the same free-market principles operate. There is a product that is wildly popular and someone will come forward and provide it. There are needs and desires to be met, profits to be made and an ecological niche to be filled.

Unfortunately, underground poker rooms are convenient targets for thieves. Though the rooms are illegal the police, who usually know about them within a few days of opening, pay little attention. The general rule is “let ‘em alone” so long as they don’t cause trouble or embarrass us. Virtually every room in the greater New York area has been “hijacked” at one time or another.

Is there a moral buried somewhere? Predictably, there have been howls from pulpits and pundits about how gambling is a sin, undercuts moral fiber and calls for stricter laws against the proliferation, if not elimination, of both poker and sports betting. But our analysis demonstrates, convincingly, that such a move would only exacerbate the problem. Instead, legalize, regulate and tax.

Legalize: Gambling is one of several “victimless crimes,” activities that people engage in, find pleasure in, have no victims (i.e., innocent others whose lives are compromised by the activity) but have been declared illegal in particular societies. The “big three” are drugs, gambling and sex. Efforts to stem or eliminate them have proved futile; think Prohibition for the most obvious case. Criminalizing them has never worked and, short of establishing a Taliban-like state, is wildly unlikely to ever be effective.

Regulate: When legal, these activities come under the governmental jurisdiction and regulation. Financially sound companies emerge to provide the services; elements that routinely operate outside the law are excluded. Currently every state but two (Hawai’i and Utah) has some form of legal gambling and we are witnessing a rapid international expansion of the casino business and Internet wagering. Appending poker and sports betting to the list of permitted and regulated activities is a natural extension.

Taxation: The potential revenues are substantial. The underground poker rooms are not filing 1040 Forms nor are the bookies who operate out of every sports bar and race track in the land. Neither are the off-shore Internet gambling sites – but that is another tale for another time.

Legalizing, regulating and taxing have other, hidden, advantages. As noted, when a niche is illegal it is going to be filled by those with little regard for the niceties of the law. It should not surprise anyone that the bookies using the Borgata poker room were members of one of Philadelphia’s major crime families and that the underground poker rooms in New York have ties to organized crime. Illegal gambling is a major source of income for criminal elements. It’s worth noting that before Prohibition gave them their shot at greatness, the Mafia was just a minor annoyance.

Finally, there are other legitimate concerns, specifically problem gambling, underage players, cheating and game-fixing. But legalization and regulation are part of the solution, not the problem. In locales where poker and sports betting are legal and regulated, problem gambling is more easily diagnosed and sympathetically treated, careful scrutiny makes underage gambling far less likely, cheating is more difficult and as for point-shaving and game-fixing, well, for every game-fixing scandal there have been a dozen insider trading scams go down on Wall Street. I hear no howls to outlaw options trading.

Does this column have anything to do with the psychology of poker? I think so, but if not it will serve as my temper tantrum for the month.