Gambling doesn’t exactly have a good reputation. Most Christian denominations are very chary of it (my mother’s church had only recently relaxed the ban on church tombolas when we moved to the area in 1978). It is haram for Muslims. Even among agnostics and atheists few would regard it as a laudable activity.
Some of these moral objections come from the greed that the lure of large prizes can provoke. Some comes out of the potential impact on losers.
We all have to decide where our own red lines lie. You’re here reading this, so it’s pretty likely that you’ve overcome any qualms you have about the basic principle of gambling. Where do we start getting scruples?
The Betfair Next President market that has just closed has thrown up a number of challenges for bettors. One is a question of ethics. Quite a few seasoned gamblers have stopped to wonder whether it is right to bet on a proposition that had apparently already been conclusively decided. Is it right to enter into a bet that you can scarcely conceivably lose?
To answer that we first need to take a few steps back and look at the original ethical problems of gambling. First, some definitions. This 1905 article on the question of ethics in gambling defines it thus:
“Gambling is the determination of the ownership of property by appeal to chance. By chance is here implied the resultant of a play of natural forces that cannot be controlled or calculated by those who appeal to it… Gambling may be described as “pure” or “mixed” according as the determining power of chance is or is not blended with other powers. Few so-called games of chance are entirely destitute of skill, even if the skill consists entirely of speed or accuracy in calculating “chances.” ”
So gambling is a continuum. Flipping a coin is pure chance. At the other end of the scale, some card games involve much more skill. One lawyer heroically persuaded the Supreme Court of California that bridge is not a game of chance such as brought it within the net of gaming offences. (The eminent judges evidently did not play at the clubs that I frequent. Or perhaps they did play and didn’t want to criminalise their own hobby. Poker never got such favourable treatment. Anyway, I digress.)
Where does political betting sit on this continuum? A lot depends on the market you’re betting on. If you’re betting on the colour of the chancellor’s tie at the budget, it’s basically chance. If you’re betting on the result of the London Mayoral election, you have a lot of information to process and a correct assessment of the odds is much more a matter of skill.
Generally, most political betting markets involve a fair element of skill. Luck is rarely eliminated completely, of course, but the same is true of investment on the stock markets (another activity that can certainly provoke greed).
What makes gambling, as opposed to investment, problematic is that it is a zero sum game. The money staked goes into the hands of one of the bettors (and/or the bookie or marketmaker). No new money is generated. That means that the winner is profiting at the direct expense of the loser.
Two risks flow from that. First, as already noted, the winner may be taking money that the loser can ill-afford to lose. As it happens, the government is currently consulting on a review of the Gambling Act 2005 and it is looking closely at how to regulate problem gambling.
Secondly, in a bet where skill is involved, the winner may have had an unfair informational advantage.
What constitutes an unfair informational advantage? Assiduously making use of publicly available information, making deductions from that and sharing and testing those deductions with peers (for example, on a political betting website) seems fair enough.
But that second risk is a very real risk in political betting. Think of markets such as Next Speaker or Next Leader of the Labour Party. Those with an inside track (fellow MPs, for example) will have a much clearer idea who is papabile than ordinary members of the public. If you’re not one of the inner circle, it’s always worth remembering that when betting on such markets – I try to make it a rule never to bet on next Speaker for exactly that reason. (It would be interesting to know how many MPs insider deal on such political markets. I doubt we’ll ever find out.)
How much do we need to take into account the position of your counterparty in betting? If you don’t have private information and you’re not a professional bookie actively advertising your services, then in my view not at all. Your counterparty is someone who is in the same position as you, but has taken a different view of the true odds. They have passed the marketmaker’s mandated checks. They are trying to take your money off you. They will be gleeful if they do.
All those Trumpsters betting – after the election – on their man winning the 2020 presidential election at odds of 30/1 or more on Betfair were not altruistically donating their money to regular gamblers. They thought they were going to make a killing. They wanted you to take that bet on. They still do, as the current prices in the Trump Exit Date 2 market show.
If, as I do, you think they’re deluded, you don’t need to hold back. There are routes, however unlikely, by which they could win on that market – a coup, for example – and they are banking on them. They think I’m deluded too and they are salivating at the opportunity of taking my money off me. The rule against shooting sitting ducks does not apply to willing gamblers.