The Morality and Regulation of Gambling

Imagine that in the U.S., two activities are quite popular among residents.  Activity A is seen mostly as an activity for recreation or perhaps competition, but Activity B is viewed as a pleasurable activity within a personal relationship.  Although some may view widespread participation in Activity A or Activity B negatively because of religious or moral reasons, most people believe that these activities have their purposes.  Introduce a commercial element to these activities, and both are declared illegal.  However, both the noncommercial versions and commercial versions of these activities remain in existence.  Over time, one state in the U.S. makes both commercial activities legal, with some restrictions.  Half a century later, states begin to legalize Commercial Activity A, but not Commercial Activity B.  Why?

I'm sure I'm not clever enough to have disguised that I'm talking about Gambling (Commercial Activity A) and Prostitution (Commercial Activity B).  Activity A could be described as games of chance like poker, blackjack, and dice, and Activity B could be described as unmarried sexual relations.   

In researching a paper comparing the retail investor and online trading to the online gambler, I have been brushing up on my knowledge of the history of gambling.  Needless to say, it is fascinating.  One of the many aspects that I find interesting is the huge growth in legalization of casino gambling in the past 25 years.   If gambling was sufficiently morally repugnant to criminalize at one point, then how did it rehabilitate itself?  Perhaps the rebirth in gambling is a much-slower, reverse-time lapse photography version of the repeal of Prohibition.  If everyone stops caring about the criminalization of an activity, then perhaps it is time to de-criminalize it. 

I am interested to know why the legalization of prostitution has not seemed to migrate from Nevada to other parts of the country.  Not only has legalization not happened, but I would not predit that legalization will happen, but on an even slower timeline than gambling.  What is the difference?

At the time that most gambling in the U.S. was banned (later part of the 19th century), the noncommercial Activity A (card games, etc.) was not uniformly seen as immoral, although the noncommercial Activity B (unmarried sex) was.  Today, moral views of noncommercial Activity B have relaxed a great deal.  So, it would seem that if views toward noncommercial Activity B became more favorable, that the view of commercial Activity B would.  Not true, however. 

I think one obvious difference may simply be the difference in public perception of the moral dangers of the the two activities.  In a vacuum, the playing of a game of chance with money on the line seems fairly innocuous (to most people) compared to the paying of money for a sex act.  The negative social costs of legalized gambling are usually described as increased crime (gamblers stealing to pay debts), increased costs of social services for gamblers who have lost their jobs and savings, and fractured family lives.  The negative social costs of prostitution can be described as fractured family lives and health risks.  In a world where a politician can claim vigorously that his marriage to his wife is threatened by the marriage of two men in a different state, then I'm sure that we could make the argument that legalized prostitution threatens the institution of marriage.  (Of course, we don't prosecute adultery, but that's a tangent.)  Aside from social costs, I think many people have a gut reaction to prostitution that may be more negative than a gut reaction toward gambling.  Therefore, politicians supporting legalization of gambling have a smaller "family values" hurdle to jump than any politician supporting the legalization of prostitution.

I have a more cynical argument, though.  There's no money in prostitution.  Gambling promises a lot of money for both the jurisdiction that legalizes it and the industry that lobbies for it.  I don't think that it is a coincidence that gambling was legalized in Nevada in 1931 as a response to a depressed economy.  Most of the state lotteries that have sprung up have done so in times of tight state budgets.  States tax gambling revenues quite high and so benefit from the legalization.  And, those in the casino industry have the means and motivation to launch campaigns to legalize gambling.

I am unaware of prostitution industry lobbyists.  Participants in illegal prostitution seem to be widely dispersed and without economic clout.  In addition, proponents for prostitution don't seem to argue for a lucrative revenue taxing system.

Third, while gambling is a social activity -- participants like to gamble with friends in a festive atmosphere -- prostitution is inherently private and secretive.  Patrons of prostitution don't really want it to be out on Interstate 10 with flashy lights where everyone can see.  Patrons won't be joining up for bus trips out to the Chicken Ranch.  So even the people who benefit from illegal prostitution and who might benefit from de-criminalization aren't going to speak out publicly for it.  And without an economic incentive, politicians aren't going to be the ones to speak out for the legalization of prostitution, either.