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Powerball proves Americans have a love affair with gambling




Since almost every American lined up to get a ticket to the 1.5 billion dollar Powerball jackpot, maybe it's time that the governent noticed how its citizens love to gamble.

Over the years society has been bombarded with negative comments about gambling. "Gambling is a tax on the poor", "gambling is a tax on the stupid", "with gambling a fool and his money are soon parted," etc. And consequently many faith groups and politicians with similar beliefs have condemned gambling arguing that they are obligated to do so in an effort to save society from itself. As a general rule no one really talks about their gambling, but when the Powerball lottery last Wednesday reached a jackpot of almost $1.5 billion it seemed like everyone bought a ticket and the media were all over the place asking Americans how they would spend that kind of money. Wealthy businessmen, multi-millionaire athletes, actors and some of the so-called smartest people in society were at their local retailer to get in on the Powerball jackpot. In fact the internet was abuzz when St. Louis Rams defensive end Chris Long was seen disguising himself at a retailer buying the tickets. Long was interviewed by a reporter and was asked what he would do with the money:

"I already told my old lady if we win, we're going down to Myrtle Beach for about 10 months and we're getting a timeshare, the whole nine yards," Long said. "Maybe a big boat, a couple boats, you know, a lot of boats and we're going to have a great time."

Long became the butt of jokes when he was outed but later admitted that he bought the lottery because "it's a lot of money," despite the fact that Long makes over $13 million a year.

So who exactly buys lottery tickets usually when it's not at these crazy jackpot amounts? The answer not surprisingly is the same wealthy businessmen, athletes, actors etc. as well as everyday Joes whose incomes range from a few thousand dollars a year to several million. And also not surprisingly Americans powerball gambling those are the same people who play fantasy sports, poker and gamble both online and at land based casinos. A study a few years back regarding gambling winnings reported to the IRS showed surprising results. Gambling income was reported to the IRS for all income brackets and actually declined based on income. For those with incomes over $500,000 over 3% from all income brackets reported gambling winnings. For those with incomes over $100,000 but less than $500,000 about 2.5% reported gambling incomes and the percentages fell for every income bracket down to less than 1% for those making under $25,000 and 0.44% for those in the lowest income bracket. And it's safe to say that most of that income was not from lottery tickets but rather from gambling at casinos and online.

If the argument is true that gambling is a tax on the stupid then by deduction the most wealthy, who generally are the most educated and successful, are the most unintelligent in America since they gamble the most! More importantly this study and the fact that billions of dollars was spent on Powerball tickets for this one draw is proof that most Americans love to gamble. But for some reason it's still seen as negative and the question is why?

The faith groups will argue that their condemnation is necessary to protect the most vulnerable in society from themselves but even that argument has to be questioned. When some of the poorest people were interviewed about their lottery play for the Powerball a few years back when the lottery got incredibly high one woman noted that she just wanted some hope. She only bought one ticket for $2 and she simply gave up on her one "treat for herself" for a couple of days to buy the lottery. And stories seemed to indicate that was the norm. The poor were wagering very little at a chance for a dream but it seems that the politicians and faith groups were quick to point out that the $2 could have been used to buy a loaf of bread instead. Of course they also had no problem justifying wasteful expenses for themselves because "they could afford it." Ironically the same woman questioned in that interview was quick to point out that she still gave her usual offering to the church so they didn't miss out. And of course the churches have also been quite anxious to cash in too.

A friend from Arizona sent me a letter from his Methodist church in days before last Wednesday's lottery which stated that their parishioners should resist buying Powerball tickets since one needed to be satisfied with what they had and that it was a sin to yearn for more, especially when winning was just a fantasy. Humorously the letter ended with the following note: "If you do decide to play the lottery in spite of this letter and win, remember that it is your obligation to give 10% of your winnings to the Lord." And one can assume by "the Lord" the church meant "us."

Of course while there are some politicians who truly believe that gambling is dangerous and must be banned because it's a sin, the vast majority of politicians oppose gambling only when they can't benefit directly. The governments love to promote the lottery as a way to gain freedom, they love to promote horse racing to help our economy and industry and they often promote land based casinos when they have a stake. The only gambling they oppose are that which they can't benefit directly from. That's why they have passed laws to stop offshore gambling, why they are fighting to block daily fantasy sports in some states while looking to regulate it in others and why so many states are pushing for legal sports betting provided it benefits them directly. And as for the laws on the books such as the Wire Act, the Travel Act and PASPA, industry analysts I spoke to suggest that the laws were never intended to be treated by governments the way they are but rather those laws have been bastardized to promote an agenda.

One analyst said to me:

"Let's be honest about the Wire Act. The Act was first passed in 1961 to stop mobsters from using telephone lines for illicit activities. The section of the act called the Interstate and foreign travel or transportation in aid of racketeering enterprises lists gambling, prostitution, liquor (where the federal excise tax has not been paid) and narcotics as activities which are illegal by mail or wire. And in another section bribery of public officials was mentioned too. The government at the time was trying to stop trafficking and illegal activities by the mob and introduced the Wire Act to give them a means of enforcement. But ever since, because the word 'gambling' is there, they figured they would apply it every time there was something happening in American society they didn't like. You can be rest assured Kennedy would have had no interest with legal offshore sportsbooks run in the UK, he was concerned about Fat Lip Louie who was going to use gambling money he won running numbers from a telephone to fund a major cocaine ring. And the UIGEA was attached to the SAFE Port Act. It couldn't pass on its own so they had to attach it to a law to protect the border from terrorism. Had the UIGEA not been attached it had no chance of being passed on its own merit."

So where does that take us from here? The answer seems fairly obvious. If the government wants its share of income but is finally willing to admit that Americans have the right to gamble, regardless of their own personal beliefs, then they should pass laws that benefit the government, but also allow Americans to gamble as they like. Effectively it would be similar to what's happening in the U.K. To do anything different is pure hypocrisy and while Americans may have been indifferent to that in the past, since gambling was more or less a taboo topic, it seems now that Americans are speaking out.

There was a huge backlash from New Yorkers after  the stat's Atorney General, Eric Schneiderman, announced he was issuing a cease and desist order against the Daily Fantasy Sports sites and sensing the anger Schneiderman announced he would be demanding money back from the sites to be given back to New York players hoping this would win favor with them. But from posts on sites like Reddit and Twitter the anger doesn't appear to be dissipating. There has been a great deal of anger from those in California for their inability to create an online poker market and one can't forget that Jim Leach lost his seat in the 2006 midterm election almost exclusively as a result of poker players who voted against him to show their disgust at his role in the passage of the UIGEA. And while Americans often gambled in secrecy for fear of being labelled a degenerate, the Powerball lottery and the vast numbers coming forward to talk about it show that Americans just love to gamble and are no longer ashamed of that, Chris Long being the exception.

The U.S. is finally starting to rid itself of the stigma it has attached to gambling, but there's still a lot to be done. Far too many gambling opportunities have been deemed off limits to Americans and there is no reason for it. If there was any doubt that Americans love to gamble the long lines and media attention of Powerball players proves that and the truth is that the government and faith based groups aren't necessarily opposed to it, they just don't want to be short changed. Governments should benefit from gambling too and they do by way of the taxes held on lottery, casino and horse racing bets as well as what is reported to the IRS as gambling winnings. But it's a drop in the bucket if all gambling were actually reported and taxed at the source. I can assure you that sites like PokerStars, the Greek or Pinnacle would be only too happy to give the U.S. government their share if Americans were allowed to gamble there and there are still hundreds of offshore websites that Americans gamble at that the DoJ can't touch but would be only too happy to give money to the U.S. government as well if they weren't treated like pariahs. And faith groups can benefit too. Unfortunately addiction is a real part of gambling and faith groups are terrific in providing support for those with addictions. If a percentage of all gambling income were given to groups to help Americans overcome the addiction then everyone benefits.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!