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Introduction
Poker is heavily regulated in almost every state. The online version of this game is also heavily regulated on the Internet. Compulsive gambling is defined as the uncontrollable urge to continue gambling despite the toll it takes on your life. Critics claim that such gamblers leave their jobs and resort to theft to further support their habits, and it escalates when they are unemployed. However, these regulations do not actually reduce gambling or safeguard the players.
Poker is a zero sum game, but when casinos and online gambling Web sites conduct it, this is no longer true. Then, everyone gains, at least in the ex ante sense. Winners, obviously, win. But by participating, and knowing full well they could lose financially, even “losers” gain in the sense that they value sitting at the table more than anything else they could have done with their time. However, government regulations of poker create a dead weight loss in the economy. If there were no such interferences with this game, the positive effects of legal gambling could be much more widely felt.
In poker, a rational player who wants to win will take the least amount of risk for the maximum amount of return. If we think of poker players as firms, they have inputs and produce outputs[1]. Firms utilize the most efficient means of production to compete with one another, which in turn tends to drive down all profits to zero. The same is true mathematically in the present case. All skilled players bet according to the odds.
One criticism of poker is that it is based on pure chance or luck. Thus, in any game where the house takes part of the pot, the odds will be against all players, who are bound to lose. Only the very lucky leave the table with money. It is this reasoning that leads critics to believe gambling is irresponsible and should be outlawed because people squander their money and always lose over the long haul. They claim that the law frees these gambling addicts from such a fate. If this were true, the same players would not wind up at the table every year at the world poker tournament in Las Vegas[2]. Either that or they must be...