Stossel Looks at Government-Run Gambling

In a fully free society, government would be drastically reduced in scope to its proper function, the protection of individual rights, and would be financed voluntarily.

We are obviously a far, far cry from either goal, to the point that Ayn Rand, who advocated laissez-faire did not devote much time to the topic since it would be a final detail for hashing out at the tail end of the massive political changes that only a philosophical revolution within our culture could make possible.

But she does touch on the topic:

In a fully free society, taxation -- or, to be exact, payment for governmental services -- would be voluntary. Since the proper services of a government -- the police, the armed forces, the law courts -- are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.

The question of how to implement the principle of voluntary government financing -- how to determine the best means of applying it in practice -- is a very complex one and belongs to the field of the philosophy of law. The task of political philosophy is only to establish the nature of the principle and to demonstrate that it is practicable. The choice of a specific method of implementation is more than premature today -- since the principle will be practicable only in a fully free society, a society whose government has been constitutionally reduced to its proper, basic functions.

The above comes from the online Ayn Rand Lexicon. The next paragraph from its source, "Government Financing in a Free Society," reads:

There are many possible methods of voluntary government financing. A government lottery, which has been used in some European countries, is one such method. There are others.

It was my memory of this paragraph that piqued my interest when I saw John Stossel lay into the bizarre treatment of gambling by American politicians, who treat private betting like a scourge they should eradicate -- but turn around and set up things like government lotteries, which offer worse odds and fall prey to government cronyism.

Given that Rand viewed government lotteries as a way for government to raise funds voluntarily, it is interesting to consider whether these differences are problems and, if so, why.

Stossel reports:

But government is so incompetent, so inefficient, that its off-track betting parlors lose money!

"Government is always inefficient," says [economist Jason] Sorens. "Unions get their cut ... wages are high, benefits immense. It's another reason we shouldn't want government running gambling operations. They do it at a high cost."

[Politician] don't mention that "their" games offer worse odds.

This week, the price of a Mega Millions lottery ticket more than doubled.

Years ago, they sneakily increased the number of white balls in the Powerball lottery, reducing your odds of winning to 1-in-292 million.

"In the private sector, we're used to products improving," Sorens points out. "Only the government running a lottery would make it get worse."

I tried to confront the association representing state lotteries about their scams, but they wouldn't agree to an interview. Instead, they sent a statement that says, "A state-run lottery system offers several key advantages ... strict oversight, helping to ensure fair play, responsible gaming and full transparency."

Bunk.

Government workers are just as crooked as private bettors. In Texas, lottery officials helped certain companies win a $95 million jackpot.

At the outset, the very fact that gambling -- an activity between consenting adults -- is illegal, but shouldn't be, puts criminals in charge of it, and causes most law-abiding citizens to be more ignorant of its consequences than they might otherwise be. (For starters, only a sucker would expect to be able to make a decent amount of money, much less a living, from gambling without a big investment of time and effort.)

The artificially shady nature of gambling means that people expect it to involve such deceptive practices -- like changing the odds behind the scenes -- such that the government doing exactly that doesn't raise hackles. In a free economy, this would damage the reputation of the lottery, causing players to move swiftly to another platform.

And as for operations losing money: They'd go out of business in a free market (rather than presumably staying afloat with loot from taxpayers) and not be forced by improper labor laws to pay extortionate wages and benefits to their employees.

We could go on, but Stossel's reporting provides enough data to conjecture that government meddling in the economy generally and in gambling in particular both damage a legitimate industry while also reducing the amount of money it could take in through this noncoercive means.

Setting those problems aside, such lotteries might well still offer lower odds of winning, or lower payouts than privately-run lotteries. So long as the rules and odds of the game are known, and participation is voluntary, that's not necessarily a problem for the same reason that those aspects of charitable gambling aren't.

There are good reasons for the matter of financing a proper government to belong at the back of the line!

-- CAV