Re: Australia hilarity
Wed, 30 Jun 1999 16:02:28 -0700

Eliezer S. Yudkowsky, <>, writes:
> Yeah, I've also been thinking about Internet gambling. I see an
> opportunity here to break all the casinos, small-time operations with
> loan sharks, and government lotteries - all the real exploiters - plus
> provide a safe outlet for gambling addicts.
> Run a zero-sum game and make money off of advertising.

The problem is that you can make so *much* money off of gambling where you take a small cut, one or two percent, that a zero sum game would find it hard to compete. The money-making gambling site can afford a much nicer setup, faster connections, remote cacheing, all the other tricks which will be necessary to make for a high quality online experience. The zero sum site can't provide such a high cost delivery. Yes, the odds are slightly better at the zero sum site, but it's not that significant a difference. Especially when you're talking about lotteries, one chance in a million vs one in 1.02 million is pretty trivial.

Maybe a professional gambler, like a poker player who plays a hundred hands a day, would care about getting that last little percent, and wouldn't mind the less than glamorous online surroundings. But for the average guy it probably wouldn't be worth it. Most people seem to play the slot machines in Vegas, which have some of the worst odds.

> Let people bet
> in lotteries on a community basis, say - like, say, the Los Angelos
> Urban Poor Lottery - so that (1) nobody is making money off them and (2)
> they know the money is going to people like them. Actually, when you
> consider the positive effect a few rich individuals can have on a
> community - venture capital, loans, political influence, media
> interfaces - playing a lottery like that might even be rational.

The rationality is because even if you lose, you win, when your neighbor becomes a millionaire and benefits spill over to you? That's a little questionable. For one thing, the first thing he's likely to do is to move to a better neighborhood. And although we notice what the million dollars can buy, we overlook the loss of one dollar by a million people, with its quiet, stealthy depressive impact on the neighborhood economy.

> I bet
> you could grab the entire lottery market that way. Less attraction for
> zero-sum roulette and zero-sum horse racing, but there are a lot of
> gamblers looking for an edge.

Hard to say. There would probably be some interest in it, but it is questionable whether you could take over the whole market.

>From my professional perspective, it is interesting because there are
a lot of possibilities for cryptography in online gambling to prevent cheating. Online card games like "mental poker" and such were some of the earliest modern cryptographic protocols and had a considerable influence on the development of the field.

Some of the same problems arise as in online voting. For example in a lottery, you want to know how much money came in so that you know if they are distributing all the jackpot that they are supposed to. It is like in voting, you want to know that they counted all the votes, but you don't want to reveal who voted or how they voted. The idea is that they publish a record for each vote, or each lottery ticket purchased, such that each person can check that his is counted. But they are blinded in a way that nobody else can tell who participated.