Bans won't kill gambling, money gaming will just shift to the Dark Web

As attempts to ban card games in Stalinist Russia show, they simply move underground - or, in the case of online gaming, to the Dark Web

In the 1930s, contract bridge maven Ely Culbertson, who also owned a playing card manufacturing business, went on a tour of the Soviet Union. He was told that sales of cards in the USSR were down 40 per cent year-on-year, and the commissars hoped sales would fall by at least 20 per cent annually until they dropped to zero. 

When he asked why, it was explained that Comrade Stalin wished to eradicate gambling and, therefore, shut down all card games. But it had been discovered that if local cards were unavailable, Russians would play with smuggled Swedish ones. Hence, the Soviets continued producing cards, while “re-educating” inveterate gamblers — if necessary by sending them to the Gulag — to wean them off the dangerous habit. 

Stalin died in 1953. The USSR died in 1991. There are still many excellent bridge and poker players in the successor Commonwealth of Independent States. Similarly, the Islamic regime of Iran banned cards because of the association with gambling. That ban was unenforceable. Iranians continue to play card games, albeit discreetly, using smuggled cards. 

The gambling instinct is hard-wired into Homo sapiens by the evolutionary history of our species. Back in the day, if you wished to eat, drink, or propagate, you had to take risks. You could end up being eaten instead, or clubbed over the head instead of propagating, if you chatted up the wrong potential mate. 

If you want to start a business, you need to take risks. Bill Gates, Steve Jobs, Steve Wozniak and Larry Ellison dropped out of college, while Elon Musk overstayed his visa illegally. Gambling is foundational to every trade in the stock market and in the bond and forex markets. Venture capitalists expect at least half of their portfolios will end in bankruptcy. When you pay a life insurance premium, you are taking a bet you want to lose. Arguably even good science research is a gamble — think of quantum mechanics, or drug discovery, or simply the choice of a productive PhD topic. 

Successful people learn how to gamble with the odds. The net gains from the successes far outweigh the pains. Hundreds of millions have benefited from the gambles taken by Gates, Jobs and Musk, and that over-compensates for all the dropouts and illegal immigrants, who didn’t make it. 

The new online gaming rules attempt to succeed where Comrade Stalin and Ayatollah Khomeini failed. It sets stiff penalties for gambling, which are, however, laughable in comparison to the penalties that could be imposed by the USSR and Iran.

The immediate harm from this new rule is the evaporation of several billion US dollars in the valuations of gaming platforms, and the loss of over 20,000 jobs in the Indian online gaming industry. In the longer term, this move will shut down many legitimate routes to livelihood through digital innovation for programmers and digital artists, because it outlaws entire ranges of games. 

More insidiously, it destroys test-beds in the form of online gaming platforms where people can learn to gamble with the odds while risking comparatively less, and enjoy themselves far more than they would in a classroom where they learnt combination formulae, Markov Chains, Monte Carlo simulations and probability theory. 

Consider the pathway for a talented gamer who dreams up a new game and wants to introduce it to the world. First, the idea must be vetted by a committee, which will classify it as “e-sports” (whatever that means), “social gaming”, or a “money game”. Even if that hurdle is crossed without the processes becoming too time-consuming and soul-destroying, the programmer still has no easy route to monetisation given the way the rules are drafted. 

More likely, such a programmer (and there are many youngsters with innovative gaming ideas) will simply look for an alternative route. That’s easy enough: Just set up a platform on the Dark Web with all the players being anonymous and payments being made in crypto-currency. 

This brings us to another dangerous aspect of the new law. It won’t shut down gambling; it will actively encourage the use of alternative offshore platforms and payment systems instead. A huge number of digitally-savvy Indians already use the Dark Web, and that means they use crypto since all Dark Web payments are crypto. Much like the Soviet practice of using smuggled cards, the new rules could trigger the accelerated adoption of such systems.