Microkhan by Brendan I. Koerner

The Jueteng Economy

October 6th, 2010 · 3 Comments

Filipinos can certaily be forgiven for having mixed feelings about jueteng, their nation’s equivalent of the ol’ numbers racket that used to flourish on these shores. After all, jueteng helped bring down the government of former President Joseph Estrada, who was later convicted of having close ties with the underworld characters who operate the lotteries. And so when officials periodically announce fresh crusades against jueteng, as happened just weeks ago, there are always millions of Filipinos who support the endeavor—especially those with strong allegiances to the Church, which has a long track record of opposing gambling in all its forms.

Perhaps there is a way to stamp out jueteng for good, but the current strategies seem doomed to fail. The main new tactic calls for state-sanctioned lotteries that offer slightly larger payouts than their illegal counterparts. But a Filipino business journalist argues that a different approach is needed—one that educates the wagering masses on the basics of odds:

An illegal, unregulated, and unsupervised operation allows the operator to rig the results and control how much he takes in and how much he pays out. The illegal operator can, for example, arrange a manipulated result that will allow him to pay out to the winning numbers only 30% of the total amount bet. That means 70% stays with the operator. Even with bribes paid out for “protection” up and down the line, that makes for a lot of profit. One should also not overlook the fact that the taxes and license fees that will have to be borne by a legal jueteng operator may even exceed the payola of an illegal one.

A truly serious attempt to eradicate illegal jueteng requires the serious use of textbook market forces: The market demand for legal jueteng must be boosted and the market demand for illegal jueteng must be dampened. Essentially, this means making bettors voluntarily choose to place their bets with a legal (licensed) jueteng operator rather than with an illegal one. Making this happen and thus increasing the demand for legal jueteng entails a consumer-type marketing and advertising approach that makes the betting public acutely aware of the advantages of patronizing a legal operation. This would involve an information and education campaign that will tell of how the illegal game is rigged, how a rigged game cheats the bettor, and how the bettor can have higher expected profits from a fair, unrigged, and supervised numbers game.

A noble plan, but there’s one big problem: the Filipino public has little faith in their government’s honesty, and thus the ability of regulators to ensure that legal lotteries adhere to their posted odds. Jueteng will thrive as long as gamblers trust their cousin on the corner more than a suit-wearing bureaucrat from Manila.

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3 Comments so far ↓

  • tsg

    Theoretically, substantially better odds in legal operations would become self-evident over time, would they not? Payouts would be bigger, more frequent or both. Bettors getting better results would do far more to encourage the shift away from illegal operations than any marketing, education, advertising could ever achieve.

    Of course, the word doing the heavy lifting in the paragraph above is “substantially.” If legal operations can only offer marginally better odds, bettors might prefer stick with the devil they know.

  • Davis X. Machina

    Convenience — phone betting, betting on credit, smaller minimums, more parlays and props — and not better odds — the math is usually better with state-run gambling — is what keeps illegal gambling going in many cases.

  • The Jueteng Economy, Cont’d | Microkhan by Brendan I. Koerner

    [...] two years ago, I wrote about the Philippines’ futile efforts to stamp out jueteng, an illegal lottery analogous to the mob-run numbers games of yore. At that time, the government [...]

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