IAG December 2015

Gambling
and the law
holder is merely betting a small sum with
the expectation of winning a larger sum if a
certain contingent future event occurs.
Systems similar to modern insurance are
at least 3,500 years old. Shippers, merchants
and financiers developed schemes to share
the risk and spread unexpected losses
caused by pirates and shipwrecks.
Insurance as a separate contract first
developed in Genoa in the 14th century, and
was again focused on marine shipping. The
long history of maritime insurance made
it the least susceptible to being viewed as
merely gambling in more modern times.
The Great Fire of London, in 1666,
appears to have led to the creation of the
first fire insurance.
Insurance probably would have been
ignored by lawmakers if not for two
developments. Owners of fire insurance
policies seemed to be having a few too many
fires. And operators found ways of turning
insurance into pure gambling.
A gambling fever swept England in the
17th and 18th century. As UNLV scholar
David G. Schwartz put it, men would bet on
anything: “on whose grandmother would
live longer or whether a surgeon might
successfully save a particular patient.”
This turned what was merely a way for
merchants to lessen their risks into wideopen
wagering. People would take out life
insurance policies on celebrities. During the
Nine Years’ War of 1688 to 1697, insurers
took wagers on which cities would be the
targets of military action.
Probability theory, on which both
insurance and gambling is based, was
developed in the 17th century at the behest
of professional bettors.
Conventional gambling and insurance
came together with the creation of “lottery
insurance” and “insurance offices.” Lottery
tickets were extraordinarily expensive, at
least £10, more than a year’s wages for
most workers. So, shares in full tickets
were sold for much less, similar to how full
tickets for Spain’s “El Gordo,” which cost
€200, are sold today in half-, quarter- and
smaller slices.
But hustlers figured out how to sell
chances for even less. “Clients” could
“ensure,” for one shilling, that a particular
number would not be drawn from the state
lottery wheel on a particular day. These
“policies” paid £10 if the number was drawn.
Looking just at the required three elements, insurance
has “prize”, “chance” and “consideration”. After all,
a policy holder is merely betting a small sum with
the expectation of winning a larger sum if a certain
contingent future event occurs.
The practice spread to America. Even
today, the illegal numbers racket is often
called “policy.”
Parliament made sporadic efforts over
the years to eliminate lottery insurance. On
April 4, 1792, the House of Commons debated
The Lottery Bill, to help reimburse loyalists
who had suffered during the American
Revolution. The standard arguments were
raised about the evils of gambling, whether
the state should profit from the vices and
weaknesses of its citizens, the dangers of
competition from foreign lotteries, and the
discussion of lotteries as a “voluntary tax.”
But then one Mr Rose (probably no relation)
defended the lottery by declaring “that
the evils complained of formerly existed …
but he had reason to think they existed no
longer. They had not arisen from lotteries
themselves, but from the illegal insurance
offices that had been opened. Those offices
were now put an end to …”
What finally led to a crackdown on
insurance was the unseemliness, and
danger, of people buying life insurance on
well-known strangers.
December 2015 inside asian gaming 31