Sec. 2. #Uneconomic character of gambling.# This prevalence of chance sometimes tempts men to say that business is “a gamble.”  But a distinction in principle must be made between gambling and legitimate risk-taking.  The chances enumerated above are not sought, but avoided as far as possible; yet they must be borne by some one if productive enterprise is to continue, and the burden must somehow be distributed throughout the community.  Gambling is, however, a kind of risk-taking which has a very different economic and moral quality.  Gambling creates the hazard, making the gain or loss of income depend on an event that is not a necessary part of productive enterprise.  Typical gambling is the transfer of wealth on the outcome of events absolutely unpredictable, so far as the two gamblers are concerned.  Examples are the shaking of unloaded dice or the honest dealing of a pack of cards, and the betting on prices in so-called “bucket-shops” by persons having no connection with the market of real things, and seeking to get something for nothing as a result of mere chance.

Cheating is not a necessary mark of gambling, altho the cruder forms of dishonesty, such as the loading of dice or the collusion of horse-owners or of horse-jockeys to deceive the betting public, are so common that they seem often to be an essential feature.  Gamblers recognize fair as opposed to unfair methods.  Fair gambling is a kind of minor morality within the immoral field of gambling, like the honor found among thieves.  The chance-taking in gambling has no useful purpose or result outside itself.  Betting and gambling do not produce wealth, but merely shift the ownership of existing wealth.  The gamblers constitute themselves a little fictitious economic circle, and they transfer gains and losses on the turn of events that have no practical objective result within their circle except to determine the direction of the transfer.  Even when fairest, gambling must, in its average results, be uneconomic.  In any economic trade each trader gains by getting goods that are, on the marginal principle, to him more valuable than the other kinds of goods he gives up.[1] But in gambling the winner gets all, the loser gets nothing.  If two men of like incomes gamble the additional desires that the winner is able to gratify are (by the principle of decreasing gratification) less in amount than the desires which the loser must forego.  As a result the loser is often depressed and seriously injured by the loss of his income, the winner makes reckless and extravagant use of his winnings.  Easy come, easy go, is the rule of gamblers.

Moreover, gambling reduces the amount of wealth by relaxing the motives of economic activity, diverting energy from productive enterprise, tempting men into dishonesty to offset their losses, and leading them into speculation and embezzlement.

Sec. 3. #Borderland of gambling.# Ranging between the extremes of unavoidable risk-taking and of gambling are a number of cases of a mixed nature.  In nearly all wagers, judgment in some degree influences the choice of sides.  One man bets on a horse whose pedigree and performances he knows thoroly; another judges by the horse’s appearance as it comes upon the track.  The professional bookmakers have the latest possible and most exact information on which to base their bids.