Gambling Businesses Are Parasites on the Body Politic
A Modest Proposal for Financial Reform
In the attempt to rationalize a predatory business model, some gambling company execs inevitably show their hands. If they flap their gums long enough, trying to explain how they’re really responsible corporate citizens, the ugly truth has a way of just slipping through the oily surface of their PR speak.
Chris Jones, VP of communications for FanDuel, lets the cat out of the bag in a recent Sports Business Journal (SBJ) article about measures taken by online sportsbooks to prevent rapid financial self-destruction of their individual customers.
“We don’t want to shake people upside down and get every penny out of them; that’s not sustainable,” said Jones. “There’s a pool of money. And unlike Las Vegas, if the pool runs dry, I don’t have a free hotel room or a show to give you two tickets to. When that person loses money, they have to decide whether they want to put more money in.”
In other words, it’s ultimately more profitable in the long run to drain a customer slowly than to clean them out quickly, to maximize their so-called “lifetime value” for the company, in the currently vogue language of today’s leading marketers.
“Using machine learning,” writes reporter Bill King in the SBJ article, “FanDuel and other leading sportsbooks have fine-tuned their ability to predict which bettors are likely to deliver the most profit, over a sustained period, and serve them promotions designed to keep them moving in that direction.”
It’s precisely the same strategy employed by parasites in the animal kingdom, which thrive by extracting as many nutrients from their hosts as they can long term, without killing them outright.
The goose that lays the golden egg needs to be kept alive and working for a parasite to succeed, even if the poor old gosling’s feathers fall out and its wrinkled skin hangs loosely on withered flesh.
Decline of Civilization
Leaving aside the parasite analogy taken from the animal kingdom (after all, a parasite’s gotta make a living too, right?) there’s another comparison to be made from human history—between government-sanctioned, privately owned gambling businesses and institutional slavery.
In a paper from 2019 by Jennifer Winters titled, “The Nature of Slavery and Its Imprint on Culture,” published in the WCIU International Development Journal, she succinctly explains: “Slavery, like a parasite, can imbed itself within a society and go undetected. Slavery can be practiced on any group and any people without it being called slavery. The name may be freedom, but the practices determine the product.”
Winters points out that in pre-Christian ancient Rome, slavery was considered by the culture’s most revered intellectuals of their time, including Socrates, Plato, Aristotle and Cicero, to be “a normal and necessary way of life.”
“The Roman Empire did not merely dominate the enslaved it also dominated the free. Half of the Roman Empire’s population was made up of slaves. But the freemen of Rome lived at a bare subsistence level because the predatory ruling class of Rome took any surplus through taxation… The slave-masters abused slaves and the rich man abused the poor man. The mindset of slavery infected every level of society in the Graeco–Roman world.”
The Cover Story
Fast forward to the current situation with legalized sports gambling in the US…
What’s happening, in a nutshell, is that revenue-seeking state governments are granting licenses to online gambling companies to function as legal parasites, in exchange for streaming a part of the take into state treasuries.
Typically, the PR spin supporting these legally sanctioned business operations includes the following basic arguments:
Gambling is happening on the street anyway, and legalizing the activity just migrates it into a safer environment.
The revenue generated for states will go towards noble purposes such as education.
Legal gambling companies will operate ethically and proactively prevent (especially addiction-prone) customers from sustaining financial harm.
This line of reasoning tends to persuade state legislators and bureaucrats, whose desire to suck up more revenue exceeds their willingness to dig deep into the official company line from gambling industry lobbyists.
On point No. 1 above, for example, what evidence exists that legalizing online gambling and permitting ads for it doesn’t significantly expand the total number of people who participate (and lose)?
On point No. 2: How many states that are receiving revenue from legalized gambling have actually increased their budgets for education, and not just moved the money around to fund other priorities, such as paying for government employees’ salaries, benefits and pensions?
On point No. 3: How effective are the brief public service messages required at the tail end of gambling company ads in mitigating financial damage caused among various customers, as opposed to how effective they are in creating and keeping new customers?
A Modest Proposal
If state governments are legalizing gambling ostensibly for the protection and benefit of their citizens, then how about handling the flow of funds in a more holistic way—one that more directly benefits we the people?
Broadly considered, the Alaska Permanent Fund (APF), a state-owned corporation, offers a possibly useful model.* Established in 1976, the fund receives around 25% of profits generated by oil companies in the state, and pays out annual dividends directly to every state resident.
Something similar could be done in the case of gambling operations, which simply extract money from citizens and provide revenue for themselves and government—funds which then pour into slushy budgets that may or may not benefit average citizens (especially those who don’t work for government).
As fundamentally parasitical businesses, gambling companies could be permitted to function but only recoup enough revenue to continue operating and providing their basic service, similar to utility cooperatives. All profits beyond this could go toward annual dividend payments to citizens on a sliding scale, with low-income people receiving the lion’s share.
Cut to Chase
Hey, gambling’s going to happen. It’s almost as old as the oldest profession in the world, which also is going to happen.
Instead of all the BS about how legalization will make everything safer for everybody, let’s just be grownups here and admit what’s really going on.
This is all about money.
State governments have realized they’ve got the big guns and they can take over the racket.
Gambling companies have realized they can cozy up to the guys with the big guns and run the rackets, in exchange for cutting them in on the action.
The way it works, the guys with the guns will move to grab bigger and bigger slices through taxes and fees, while the gambling companies will cry poverty and say they’re already paying all they can.
Instead of this situation, where we just watch as the two allies bicker over their respective takes, why don’t we the people cut out the middleman—both middlemen.
Create a public fund where all profits from legalized gambling are channeled, and pay out the money directly to those in the state who are most in need.
Especially the poor guy with a parasite in his gut, who’s bleeding out. Slowly.
* Unlike oil companies, which produce a useful and (currently) necessary product, gambling companies don’t produce anything of intrinsic value. If online sports books went away today, for example, there would still be the Super Bowl to watch and enjoy next Sunday. Life as we know it would go on.