It allows so-called “crowd funding” by which people whose net worth is less than $100,000 can gamble away (invest) up to 5 percent of their annual incomes in any get-rich-quick scam (start-up) that any huckster (entrepreneur) may sell them.
* An earlier version of this post stated that “you’ll always get a number far larger than what you put into the pot.” This was a transcription error and has now been corrected.
Organized gambling is a scam. Expect high-stakes poker to be available on every work desk and mobile phone.
Meanwhile, states are increasingly dependent on revenues from casinos, lotteries, and the “Mega Millions” game (in which 42 states pool their grand prize) to partly refill state coffers.
Given who plays, this is one of the most regressive taxes in the nation. In the most recent Mega Millions game — whose winning tickets were drawn last week and whose jackpot rose to $640 million — lottery ticket buyers shelled out some $1.5 billion, most of which went to state governments.
Anyone who says you can get rich through gambling is a fool or a knave. The only sure winners are the organizers — casino owners, state lotteries, and con artists of all kinds.. Multiply the size of the prize by your chance of winning it and you’ll always get a number far lower* than what you put into the pot. The only sure winners are the organizers — casino owners, state lotteries, and con artists of all kinds.
I’m all in favor of more entrepreneurship, and it’s good to give investors another way to participate in emerging companies. Although start-ups will have to market themselves through third-party portals approved by the Securities and Exchange Commission, this is like limiting Bernie Madoff to making pitches over the radio.
Yet America is now opening the floodgates.
And then there’s the “Jumpstart Our Business Startups” or “JOBS” Act, which President Obama is expected to sign into law Thursday. Wrong. The SEC can barely keep track of Wall Street let alone thousands of Internet portals. Multiply the size of the prize by your chance of winning it and you’ll always get a number far lower* than what you put into the pot. That assumption comes from research by the Kauffman Foundation, which counted as a “start-up job” every laid-off worker who morphed into an independent contractor.
Anyone who says you can get rich through gambling is a fool or a knave. In the interest of “streamlining,” Congress has streamlined the way to fraud. This post originally appeared at RobertReich.org.
In December, the Department of Justice announced it was reversing its position that all Internet gambling was illegal. And it particularly preys upon people with lower incomes — who assume they can’t make it big any other way, who often find it hardest to assess the odds, and whose families can least afford to lose the money.
America’s capital market was already a giant casino. But this bill doesn’t do nearly enough to protect the vulnerable.
Robert Reich is the author of Aftershock: The Next Economy and America’s Future, now in bookstores. Why now turn the rest of America into one?
Forget the usual investor disclosures or other protections. Small wonder SEC Chair Mary Schapiro has been one of most outspoken critics of bill.
The bill was sold to Congress as a way to promote jobs (note the acronym) on the supposition that small start-ups create huge numbers of them. That decision is about to create a boom in online gambling
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