cool != beneficial

In a letter published in the latest New Yorker, Douglas Robertson writes,

James Surowiecki, in his column on sports betting, writes, “How much difference is there, after all, between betting on the future price of wheat . . . and betting on the performance of a baseball team?” (The Financial Page, September 25th). Future markets in products such as wheat allow farmers and other producers to shield themselves from some financial risks, and thereby encourage the production of necessities. In this sense, the futures markets are more akin to homeowners’ insurance or liability insurance than to gambling on sports. But there is no corresponding economic benefit to betting on sports; on the contrary, there are serious costs involved in protecting the sports activities from fixing and other corruptions that invariably accompany such gambling activity.

This is a good point. I enjoy gambling in semi-skill-based settings (poker, sports betting, election pools, etc.), and betting markets are cool, but it is useful to step back a bit and consider the larger economic benefits or risks arising from such markets. With this being said, there are people who bet on sports like baseball or football, who know when this is just for fun and when to stop. But there are some who do not know when enough is enough. This is the sort of mindset that could get people in financial difficulties and maybe even addiction.

2 thoughts on “cool != beneficial

  1. although just a bit farfetched, one could view sports bets as being useful hedges just like wheat futures are; betting against your team ensures some positive gain to (at least partially) offset the emotional loss from an adverse outcome (i.e., your team losing, rather than a drought on the great plains).

  2. Yes, peter, but notoriously mug punters tend to bet with their hopes not their head, worsening the cost of defeat.

    I have an old friend who survived some years as a professional punter in his youth. His speciality was visiting bars in the home town just before a big match, posing as a supporter of the visitng team. Of course he bet against the home team – and always got really generous odds. But he always made sure the barman held the stakes in escrow, though.

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