by Dr. Lim Teck Ghee
Centre for Policy Initiatives
27 June 2010

Life as a gamble

The cabinet decision not to issue a sports betting licence to Ascot Sports Sdn Bhd is the right one but it was made for the wrong reasons. According to prime minister Najib Razak, the reason for not legalizing sports betting was “the impact it will have from the perspective of religion and politics.”

To get a proper perspective of the issue, it is necessary to get off the religious and political high horse and acknowledge that we are a nation that loves the occasional flutter. And also let us admit that there’s nothing wrong with gambling so long as it is not taken to extreme lengths and becomes a pathological, compulsive or destructive habit.

In a sense, all of life and the various decisions that we make are gambles. Although it may be too much to say that we all have gambling in our genes, scientists have been debating on the extent to which gambling is a manifestation of human behavior for a long time – at least during the last 200 years or so.

In an article, ‘Human Behavior and the Efficiency of the Financial System’ (February 1998) Robert Schiller, the noted financial economist, wrote that “a tendency to gamble, to play games that bring on unnecessary risks, has been found to pervade widely divergent human cultures around the world and appears to be indicative of a basic human trait.”

Further he pointed to studies that estimated that 61% of the adult population in the United States participated in some form of gambling or betting in 1974. They estimated that 1.1% of men and 0.5% of women are “probably compulsive gamblers,” while an additional 2.7% of men and 1% of women are “potential compulsive gamblers.” These figures are probably much higher today.

Similar numbers are recorded in all the highly developed countries whose status the country aspires to. All the countries that our elite regard as role models whether in the East or West, North or South take a liberal position on gambling or gaming as it is sometimes referred to.

Dr Mahathir: Nation’s No. 1 gambler

Even if we do not view gambling as part of normal human behaviour, it has certainly been part of Malaysian culture and politics – not only of the Chinese or non-Malay communities but for the majority of the country’s inhabitants, especially amongst the elite and leaders.

When Dr Mahathir Mohamad stated that he would have approved the sports betting licence for his long-time buddy Vincent Tan, he was being unduly coy and modest in leaving out his own addiction to trying to beat the odds.

In fact, gambling has long been a part of Dr Mahathir’s strategy to make Malaysia a developed nation. It is well known that Mahathir in his first year as prime minister gambled in the tin market with disastrous results. Speculating in tin caused Malaysia – then the world’s leading tin producer – about RM660.5 million in losses.

This staggering loss does not appear to have cooled off the gambling habit of our prime minister at that time. Using Bank Negara money, Mahathir speculated in currency, principally on the British pound which resulted in an even bigger multi-billion ringgit loss when the sterling collapsed in 1992. Estimates of this loss have placed it at over RM30 billion.

The details of Mahathir’s super high stakes betting which went dreadfully wrong have been given some attention in Barry Wain’s book, ‘Malaysian Maverick’. It could be that it was this content rather than any other part that led the Malaysian authorities to think twice about permitting the book’s distribution in the country.

In Dr Mahathir’s defence

In the former prime minister’s defence, it may be pointed out that some analysts see his ill-timed gambles as part of his attempt to take on Western economic dominance. On a more personal note, it should also be pointed out that he was not betting his own money – only the nation’s money. Also that whatever gains that could have been made would have gone into the national treasury – or at least one expects that was the honorable intention.

Finally, as part of the mitigating factors, it may be noted that Dr Mahathir was engaging in a national pastime. Gambling takes place everywhere in the country – as raffles where prizes are given in the form of goods, services or cash; on golf courses as friendly bets between fellow golfers; as part of sales promotional services where you make a purchase on your credit card in the hope that you may end up with a free vacation; and in the stock market where it is glorified as speculation. In short, it is part of our national culture though it has not yet been enshrined into our national cultural policy.
Future policy on gambling licences

Despite the poor track record of our former prime minister in gambling and this latest decision by the current prime minister, let us approach the subject rationally. It is important that this refusal to grant the gambling licence is not a precedent leading to religious norms being further imposed on the population – not only on the larger gambling issue but also on other facets of life and behaviour targeted by killjoys and hard-line religious zealots who are determined to show off their lily white credentials.

Also, by closing the door on sports betting (temporarily, I hope), let’s hope it does not open the Pandora’s box of religious and political taboos to extend to other aspects of entertainment, relaxation and culture that are part of the life of modern society everywhere in the world – everywhere that is except for a few nations that continue to deny their nationals their full freedoms and rights in the name of ‘piety’ and ‘moral virtue’.

The right way for the prime Minister and his Cabinet to handle this – and all future gambling issues – is not to deny Malaysians the right to spend their money as they please but to ensure that lucrative gaming licences such as the sports betting one are given to recognized charities and non-profit organizations and not to cronies.
Various religious or ethnic groups are of the view that they should not partake of such “tainted” money. These groups are of course entitled to this view and should refrain from sharing or taking any part in the “dirty” profits associated with gambling. But there is no reason why the other communities that make up 1Malaysia should be made to toe the strict religious line.

In fact, given the limited resources of the government and the perennial financial constraints in funding schools and other projects for minorities, it makes sound economic sense to tap this source for the national good. There are many good practices that we can emulate such as the Hong Kong Jockey Club’s non-profit gambling operations and the casinos in the United States that are operated by the native Indian communities on Indian reservation lands and where the employment opportunities and profits accrue to the marginalized communities.

For a start though, let’s not show the red card to legalized sports betting prematurely.