Selling Hope, Casino-Style

When a jurisdiction considers introducing legal casino gambling, the public debate tends to be dominated by the yes-or-no question concerning the opening of casinos. This (understandable) focus takes as a near-given, then, the manner in which casinos themselves operate. Nevertheless, the benefits and costs of casino gambling are closely tied to details of casino behavior. These details are particularly vital because much gambling behavior is suggestive of less-than-rational decision making by consumers. Regulations can be instituted that offer some protection against disordered gambling, without impinging in a serious way on the choices of ardent but content and (arguably) rational bettors. These regulations tend to fall into three categories: information provision, commitment devices, and debiasing. This paper examines the prospects that such regulations hold for reducing disordered gambling, and develops guidelines for casino regulations that are likely to improve social welfare relative to current standard practices. [The title of this paper is an homage to a pivotal book about lottery gambling by Charles T. Clotfelter and Philip Cook, Selling Hope: State Lotteries in America, Harvard University Press, 1989.]