Iowans Love to Gamble
By Peter L. Bernstein
July 21, 2007

Gambling has held human beings in thrall for millennia. It has been engaged in everywhere, from the dregs of society to the most respectable circles.

Pontius Pilate's soldiers cast lots for Christ's robe as He suffered on the cross. The Roman Emperor Marcus Aurelius was regularly accompanied by his personal croupier.

The Earl of Sandwich invented the snack that bears his name so that he could avoid leaving the gaming table in order to eat. George Washington hosted games in his tent during the American Revolution.

Gambling is synonymous with the Wild West. And "Luck Be a Lady Tonight" is one of the most memorable numbers in Guys and Dolls, a musical about a compulsive gambler and his floating crap game.

The earliest-known form of gambling was a kind of dice game played with what was known as an astragalus, or knuckle-bone. This early ancestor of today's dice was a squarish bone taken from the ankles of sheep or deer, solid and without marrow, and so hard as to be virtually indestructible.

Astragali have surfaced in archeological digs in many parts of the world. Egyptian tomb paintings picture games played with astragali dating from 3,500 BC, and Greek vases show young men tossing the bones into a circle. Although Egypt punished compulsive gamblers by forcing them to hone stones for the pyramids, excavations show that the pharaohs were not above using loaded dice in their own games.

Craps, an American invention, derives from various dice games brought into Europe via the Crusades. Those games were generally referred to as "hazard," from al zahr, the Arabic word for dice.

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Card games developed in Asia from ancient forms of fortune-telling, but they did not become popular in Europe until the invention of printing. Cards originally were large and square, with no identifying figures or pips in the corners. Court cards were printed with only one head instead of double-headed, which meant that players often had to identify them from the feet – turning the cards around would reveal a holding of court cards.

Square corners made cheating easy for players who could turn down a tiny part of the corner to identify cards in the deck later on. Double-headed court cards and cards with rounded corners came into use only in the nineteenth century.

Like craps, poker is an American variation on an older form – the game is only about 150 years old. David Hayano has described poker as "Secret ploys, monumental deceptions, calculated strategies, and fervent beliefs [with] deep, invisible structures... A game to experience rather than to observe."

According to Hayano, about forty million Americans play poker regularly, all confident of their ability to outwit their opponents.

The most addictive forms of gambling seem to be the pure games of chance played at the casinos that are now spreading like wildfire through once staid American communities.

An article in The New York Times of September 25, 1995, datelined Davenport, Iowa, reports that gambling is the fastest-growing industry in the United States, "a $40 billion business that draws more customers than baseball parks or movie theaters."

The Times cites a University of Illinois professor who estimates that state governments pay three dollars in costs to social agencies and the criminal justice system for every dollar of revenue they take in from the casinos – a calculus that Adam Smith might have predicted.

Iowa, for example, which did not even have a lottery until 1985, had ten big casinos by 1995, plus a horse track and a dog track with 24-hour slot machines.

The article states that "nearly nine out of ten Iowans say they gamble," with 5.4% of them reporting that they have a gambling problem, up from 1.7% five years earlier. This in a state where a Catholic priest went to jail in the 1970s on charges of running a bingo game.

Al zahr in its purest form is apparently still with us.

Good investing, Peter L. Bernstein

Excerpted with permission of the publisher John Wiley & Sons, Inc. from Against The Gods The Remarkable Story of Risk. Copyright (c) 1998 by Peter L. Bernstein.  This book is available at all bookstores, online booksellers and from the Wiley web site at www.wiley.com, or call 1-800-225-5945.

Editor's Note: Peter L. Bernstein is president of Peter L. Bernstein, Inc., economic consultants to institutional advisors and corporations. His semimonthly analysis of the capital markets and the real economy, Economics and Portfolio Strategy, is read by managers and owners of investments totaling over $1 trillion.

Mr. Bernstein is the author of many articles in the professional and popular press, as well as six books in economics and finance, including the bestselling Capital Ideas: The Improbably Origins of Modern Wall Street.

He is the co-editor of Investment Management (Wiley) and was the first editor of The Journal of Portfolio Management.