Monday, April 11, 2016

Is Jordan's Furniture's furniture "rebate" Gambling?

In what has become an annual tradition in New England, Jordan's Furniture has kicked off their promotion to win "free" furniture.

This year's promotion will get you a "rebate" on furniture purchased IF the Boston Red Sox and New York Yankees face off in the American League Championship Series (ALCS). Past years have involved the Red Sox winning the World Series (at least expectations are tempered this year). They've only had to pay out once, when the Red Sox won the Series in 2007, but it's an interesting marketing tool and I bet it's been a successful one.

But it also got me thinking: Is this "rebate" actually gambling? You're putting money down in the hopes that a specific outcome will occur. The result is beyond your control and you get money back if you win.

Obviously there are subtleties. Most notably, you're getting furniture immediately in return for your money; but I'd argue scratch tickets are similar (albeit on a smaller scale and the immediately awarded hard-good is less valuable).

This leads to the greater debate of how government classifies gambling and the hypocritical reasoning it uses to do so.

"We probably shouldn't have been so annoying with all those ads, huh?"

What is "Gambling"?

Recently, the most publicized debate has been the government's assertion of power to regulate Daily Fantasy Sports (DFS) betting on site like DraftKings and FanDuel. When they were small startups, government looked the other way (or was actually unaware of them). However, when their TV ads became unavoidable, state governments began to step in and assert their jurisdiction over "gambling". (Last month, both sites agreed to shutdown operations in New York while their cases are pending).

Before this assertion, DFS was a new, and thus, unclassified game/business. To play, bettors must use their knowledge of sports to assemble rosters of athletes that score points based on the stats they accrue during games.  Does having more knowledge on the sports, players, and playing conditions affect the bettor's chances of winning? There are "elite" DFS players. As far as I can tell, you cannot be "elite" when playing slot machines, a true game of chance.

At what point does a game become more skill than luck or vice versa?

This has been a long running debate in the world of poker. As it's popularity has grown, so have the number of professional players. Playing against the likes of Daniel Negreanu or Phil Ivey is a losing proposition. 99 out of 100 times, you will lose your shirt to them. Are they more skilled than the average person or are they just extremely, strategically lucky? And yet, most would agree that poker is a gambling game and should be regulated as such.

On the other side, money often exchanges every hole in a round of golf. However, I'd argue with my golf skills, every shot I make is a complete crapshoot. If I started betting holes, I'd surely lose a lot of money. Clearly an exaggeration, but under some definitions, would my game be subject to regulation?

Witches, but gamblers too, probably.

The Evils of Gambling

Historically, the objections to gambling were ones of morality. (Thank you, Puritans of New England). Later, it would be expanded to be the cause of other societal and economic ills.

Some of the more notable negative effects attributed to gambling included: addiction, negative impact on surrounding businesses, disproportionately negative impact on the poor, increased unemployment, increased drug trade, and a conduit for government corruption.

While I won't dispute the last claim, the others are up for discussion and the correlation/causation disconnect is probably prevalent in these conclusions as well.

You, too, can be swayed by a poor understanding in statistics!

Hypocritical Government

Government uses the reasons above to enforce its claims to regulate gambling. While there can be some discussion for government protecting the financial aspects of gambling legalization, if it was truly out to protect the social impact, gambling would be illegal across the country.

Instead, states are slowly legalizing gambling (though tightly controlled) and seeking the financial benefits, in tax income, while touting the employment benefits of large casinos. Further proving its hypocrisy is the fact the existence of state lottery systems like scratch tickets and money-sucking numbers games like MegaMillions and Powerball.

Were the state concerned about addition, they should stop by the local convenience store and watch the weekly customers come in to spend money they would be better served to spend elsewhere. Tens, hundreds, and thousands of dollars are spent on the hopes of winning a jackpot when they'd have a better chance of getting struck by lightning... twice. Combine that with the fact that it was just made even more difficult by adding additional numbers to select.

Is Jordan's Furniture's Eliot a pitchman for societal blight?

Which gets back to Jordan's Furniture...

No, you won't lose your house trying to furnish it with things you can't afford, hoping to win them all for free. But where is the blurry edge between having fun and it being a "problem"? Between trainable skill and dumb luck?

When should the government regulate for the well-being of the public? Should it do so at all?
If it is hypocritical in its definitions and reasoning, how do we call it out?

Just a few thoughts... What are yours?

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