What Is Gambling?

Like most people these days, when I need to define a word, I visit Google. This is what comes up when I search for “definition of gambling,” although I’ve paraphrased it a bit to make it more readable:

The word “gambling” is the gerund or present participle of the word “gamble,” which is a verb that means “to play games of chance for money.” It also means “to bet.”

Google also provides an example sentence, which I’ll skip, as I think most people reading this get the general idea. But I will include the list of synonyms, as I think that adds some clarity, too:

• Bet
• Place or lay a bet on something
• Stake money on something
• Back the horses
• Play the ponies

The secondary definition read: “to take risky action in the hope of a desired result.”

That definition also includes a list of synonyms:

• Take a chance
• Take a risk
• Stick one’s neck out
• Go out on a limb

Finally, the origin of the word comes from an obsolete word that’s a verb form of the word “game.” That word is “gamel,” and it was in common use in the early 18th century.

Why would a definition of gambling make for an interesting blog post, though?

Read on and find out.

Are Poker and Other Games of Skill Gambling?

Besides blogging, I also edit some of the gambling-related pages on the Wikipedia. Occasionally, some well-meaning person will come in and revise the “poker” article to take out references to the word “gambling.” Their contention is that since poker is a game of skill, it’s not gambling.

I contend that those well-meaning editors are mistaken. Poker is a game of chance in the short run and a game of skill in the long run, but the main criterion used to determine whether it’s “gambling” is whether you’re risking money when you play.

If you’re not risking money, I’d suggest you’re playing poker wrong. Without the betting component, the game is essentially meaningless. I think this holds true for any gambling game. Sure, you can play slots for free online with no money at risk, but I can’t imagine that such an activity is interesting or entertaining at all.

It’s the act of betting that makes an activity “gambling.” With poker, you can’t play if you’re not betting. That’s an essential aspect of the game. And if you’re betting something with no value, like play money chips or toothpicks, the stakes lose their meaning. The nature of the game changes when there’s nothing at risk.

If you bet on who’s going to win a game of darts or a game of billiards, you’re betting on a game of skill. Most people would contend that you’re still gambling, regardless of whether skill determines the outcome in full or in part.

But you also have legal definitions of gambling to consider. After all, since gambling is one of those activities that’s often regulated by the government, the legal definition of what gambling is matters. In the case of some of the people who’ve been imprisoned for illegal gambling activities, it matters a lot. (Luckily, there aren’t many people with that dubious distinction.)

Legal Definitions of Gambling – What Is and What Isn’t Gambling?

USLegal.com offers a legal definition of gambling that might come in handy, too:

A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome. Gambling does not include bona fide business transactions valid under the law of contracts, such as the purchase or sale at a future date of securities or commodities, contracts of indemnity or guaranty and life, health or accident insurance.

This seems to preclude, at least to some extent, games of skill. The major criteria involved, though, seem to include risk or uncertainty and the possibility of gaining or losing something of value. The definition’s exclusion of “bona fide business transactions” is useful, too.

But in the United States, anyway, not all activities qualifying as “gambling” are “illegal gambling.” Some activities constitute “legal gambling.”

Under Federal law, gambling qualifies as illegal if it meets any of the following criteria:

1. If it violates a state law
2. If it involves 5+ people who are running the activity as a business
3. If it’s a gambling business that’s operated for 30+ days or that’s made more than $2000 in a single day

Of course, some companies are allowed to conduct gambling businesses provided they’re licensed to do so.

#1 on that list is important, too, because it highlights the fact that what’s legal and illegal as it relates to gambling varies from state to state. Some devices are illegal when they’re used for gambling, for example. The age of the participants can matter, too. Some states make certain activities legal, while other states might not allow them—horse racing is an example. Another example is Oklahoma—until recently, Oklahoma tribal casinos were allowed to offer gambling games, but only if they didn’t use dice or spinning wheel to determine outcomes.

Keep in mind that I’m a blogger, not a lawyer. I do research, write what I believe to be true, and let you make your own decisions.

Most states also use something called “The Dominant Factor Test” to decide whether something is considered legal gambling. This is the question of whether chance is the most important factor when determining the outcome. It most often comes up in court cases related to poker.

The premise is that poker isn’t illegal gambling because it’s more a game of skill than it is a game of chance. One of the arguments for this stance relies on an analysis of over 103 million hands on PokerStars. Since over 3/4 of those hands were determined without a showdown, it’s clear that how the players played their hands had more to do with the outcomes than random chance.

For practical purposes, I’d say that poker is still gambling. For legal purposes, I’d say it’s a game of skill. Some lawyers and judges agree with me; others disagree.

Also, I should point out that The Dominant Factor Test is NOT an element for deciding the legality of gambling in every state, either. It’s commonly used, but it’s by no means universally used.

Common Activities that Everyone Agrees Constitute Gambling

It might be useful to make some observations about some of the common activities that everyone agrees constitute gambling. One broad category of these activities is casino games.

Casino Games

You can subdivide casino games into table games and gambling machines. Casino games, by their nature, are games where the casino banks the action. Players don’t compete with each other; they compete with the house. This distinguishes casino games from traditional types of poker where the players compete with each other for the money.

Table games are casino games that are played at tables set up for that purpose. (Duh!) The most common table games include the following:

• Baccarat
• Blackjack
• Craps
• Roulette

Those aren’t the only table games played at casinos. Older games like Sic Bo still get played, and lots of newer games, like Casino War and Three Card Poker are also popular. None of these other games get the kind of exposure as the examples in the bulleted list, though.

The nice thing about table games is the lower house edge. All casino games present the players with bets where the house has a mathematical advantage. That’s how the casinos stay in business, in fact. Most table games offer a house edge of less than 5%, although some bets on some table games are much higher than that.

The drawback for the gambler with table games is that they’re more complicated than gambling machines. With some games, you must learn which bets carry the higher and lower house edge for the casino. With other games, your decisions matter. For example, if you make mistakes in how you play your blackjack hand, the house edge is higher than it might otherwise be.

Gambling machines, on the other hand, are easily recognized. They can be organized into 2 broad categories: slot machines and video poker. The 2 types of games look eerily similar, but they have significant differences educated gamblers should understand.

Slot machines are games where your outcomes are determined by a random number generator that controls how often specific symbols show up on the reels and paylines for the game. You have no way of knowing those probabilities, so the house edge for a slot machine is impossible to determine. In competitive areas like The Strip in Las Vegas, the house edge for slot machines might be as low as 5% or 6%, but in other areas, the house edge might be as high as 25% or more.

Video poker, though, duplicates the same probabilities you’d see from a deck of cards. Any specific card in a deck of cards shows up with a probability of 1/52. Since that’s the case, we can calculate the payback percentage for a video poker machine that’s played with optimal strategy.

The house edge for most video poker games is considerably lower than the house edge for slot machines. In fact, video poker games with good pay tables often have a house edge lower than that of any other casino game besides blackjack. The trick to taking advantage of video poker is twofold—you 1st must learn to recognize the best pay tables, and the 2nd is to learn to play those games with close to optimal strategy.

Sports Betting

Most people understand that placing bets on sports is also a form of gambling. I’m not aware of much controversy regarding The Dominant Factor Test when it comes to sports betting, but I’m assured by the experts that skill is the predominant factor here in the long run, too.

The number of sports you can bet on through a bookmaker is staggering. The most commonly bet sports in the United States include baseball, basketball, football, and hockey.

But you can also bet on golf, MMA, and Nascar.

Most bookmakers, either in Vegas or offshore, also offer a wide variety of prop (or proposition) bets related to the worlds of entertainment and politics. A recent example of this relates to the anonymous op-ed published in The New York Times. Overseas books are offering odds on who wrote the op-ed.

From the world of entertainment, it’s common for bookmakers to offer wagers on who’ll win various awards like the Oscars or the Emmys.

Bookmakers get their profits from “the juice” or “the vig.” In many cases, this means that they ask their customers to wager $110 to win $100, but they also often offer lopsided odds which results in a guaranteed profit as long as they get equal amounts of action on either side of the event.

Most people can’t pick winners well enough to overcome the juice, but if you can pick winners against the point spread over 53% of the time, you can win consistent money betting on sports.

Fantasy sports can be considered a type of sports betting. That IS a case where The Dominant Factor Test has been coming into play lately. With the potential rise of legal sports betting, lately, though, fantasy sports will probably be heavily regulated.

Bingo and Other “Picking Numbers” Type Games

Bingo is probably the most socially acceptable form of gambling in the world today. You can find some of even the strictest churches offering bingo games, although they often offer prizes rather than cash. It’s a simple game that most people learn to play in childhood.

The lottery resembles bingo. It’s all about guessing or randomly choosing numbers that match a drawing of some kind. The lottery is unusual in being the only type of gambling I know of that the government operates. The funds from the lottery are supposed to be earmarked for educational purposes in most states, but it’s clear that they usually fund corporate subsidies instead.

The house edge for such games is high, by the way—especially for the lottery.

Other Card Games

You can place friendly wagers with almost anyone socially when playing cards. People bet on games like hearts, rummy, and spades all the time. These games are often played for low stakes.

I know people who bet on their outcomes during games of Scrabble and Monopoly, too.

Really, any kind of game that can be played can involve wagering.

Potential Risks Involved with Gambling

Gambling, like alcohol and drug use, is an inherently risky activity to engage in. Sure, some people drink and do drugs with impunity. Some people gamble with impunity, too.

But don’t underestimate how dangerous gambling can be just because it doesn’t involve putting a substance in your body. The reactions of your brain chemistry to gambling activities is just as real and just as risky as its reactions to various controlled substances.

Gambling addiction is a real thing. If you find that you’re no longer enjoying your gambling but can’t stop, it’s probably time to stop.

Conclusion

The definition of gambling seems clear-cut at first glance, but when you start bringing legal issues into it, the waters start getting muddy quickly. The law makes a distinction between legitimate business enterprises that involve risk and gambling. It also often distinguishes between games that are predominantly decided via skill versus games that are predominantly decided via chance.

Skill versus chance is only one of the aspects of an activity that make it “gambling.” The risk of something of value in exchange for the possibility of winning something of value is another aspect.

Most people know what gambling is when they see it. Understanding the various kinds of gambling and what matters related to them is the crucial distinction.

It’s hard to understate the risks that gambling might pose to a person besides just a short-term loss of a small amount of money. Some people are constitutionally incapable of gambling without developing a compulsion to gamble more. When that happens, look out. Lives are ruined, relationships are destroyed, and some people even commit suicide.

If you think you’re developing a gambling problem, get help.

If you’re able to gamble for fun without developing a problem, my hat’s off to you. I don’t buy into the whole “gambling is immoral” line of thinking.