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Late in 2017, I was having dinner with a senior official from one of the multinational organisations. The official was from Netherlands and we were discussing everything under the sun.
Suddenly I popped up a question: “You guys have legalised prostitution and marijuana in the Netherlands. What is the rationale behind it?”
He replied: “We know we have problem at hand. Banning it would not kill the demand – just that the market will go underground. Instead, when we legalise it, we treat it as a service. And as a service, we start generating revenue from it. At the same time, it pushes up the prices, and there is public declaration about it – so people get dissuaded from it, as well.”
His answer left me thinking and analysing the counterproductive effects of the ban culture – a global practice of tabooing things that are considered as a vice by one or several cultures.
Public Policy Word Cloud, Image Source: © Robwilson39 | Megapixl.co
The governments and policymakers across the globe have a bad habit: they try to make things easy for their own convenience, whatever might be the cost. So, in this case as well, rather than thinking about a solution that may include some work, they go about banning things.
The prime example of policymakers making life comfortable for themselves on expense of the masses has been the concept of bailouts. Rather than working out a solution where gullible stakeholders in business don’t suffer in case of insolvency, governments come up with blanket bailout schemes. And the biggest victim in these bailouts are the smallest guys in the ecosystem, and at times the cleanest.
Bet On Betting?
Betting and gambling have been considered a vice in many cultures across the globe. So, what do governments do about it? Ban it. The global gambling market is pegged at a whopping value of US$500 billion. Mind you, this is the number tumbling out of just the official gambling channels.
Casino Gambling Gaming Craps Table Game, Image Source: © Wisconsinart | Megapixl.com
The underground gambling market would probably be triple the size – and that is the case with any banned activity in the world. The masses start attaching ‘forbidden fruit’ value to the commodity – and both demand and consumption of it spirals up.
But earlier this week, the city of New York moved to legalise online betting, however, with clause that it would be run by the state through New York Lotteries. The aim? To fetch as much revenue as possible for the state.
This move seems to be in a right direction and is likely to impact the opinion of entire world. We should remember the phrase that “when the US or China sneeze, the world catches a cold”. With the financial capital of the US opening the door to regulated gambling, it would soon set a precedent for many other places across the globe to shun taboos associated with it.
This is probably why the stocks of Australian betting company, PointsBet (ASX:PBH) have surged by almost 9% since the announcement was made on Tuesday. The company does not have much to do with the legalisation of betting in New York and also, it’s not among the front runners for betting.
But probably investors are buoyed on the prospects of global acceptance of regulated gambling.
The opinions expressed in this blog are those of the author and they do not reflect the opinions or views of the organisation.