The Daughter Test and Why Steve Levitt is Angry About the Online Poker Crackdown

Economist Steve Levitt says he would love it if his daughter grows up to be a professional player like Annie Duke, winner of the World Series of Poker Tournament of Champions. (Photo by Christopher Polk/Getty Images)

As an economist, Steven Levitt says he has an underdeveloped moral compass. In the past, the University of Chicago professor and Freakonomics co-author has tricked colleagues into drinking cheap wine and opined that drug dealers in Sao Paulo would do a better job keeping communities safe.

But his moral compass went spinning when the U.S. recently cracked down on the top three online poker companies, resulting in 11 indictments. The federal government accused PokerStars, Full Tilt Poker and Absolute Poker of running their operations illegally, including paying banks to secretly process transactions.

“I think it makes no sense at all,” Levitt says. “Most things that are made illegal, everyone agrees on: homicide, theft–there’s a general agreement. And then there are these other activities that fall into a gray area. I think poker is so obviously on one side of the gray area relative to legality that it just doesn’t make any sense to me.”

Levitt says he doesn’t usually get riled up over such issues, but then he realized why he got so angry: his daughter.

“It’s what I call the Daughter Test,” he says. “If the prohibited activity is something I’d think that would actually be good for my daughter to be able to do, then I am in favor of it being legal. But if the activity is something that I would feel terrible if my daughter did, then I would want it to be illegal.”

The economist provides an example: cocaine. Although he says the U.S. is better off legalizing and then regulating the drug, the thought of his daughter becoming an addict is enough for him to side with his paternal instincts.

But what if she wants to become the next Annie Duke?

“How would I feel if my daughter wanted to grow up to be a professional poker player? I think, ‘Well, that wouldn’t be so bad.’ I mean, I would rather have her be a great economist or a professional golfer, but if she had to be something, a professional poker player wouldn’t be a bad thing for her turn out to be. And in the realm I think, why in the world should we make any activity illegal if a father says, I’d actually be happy?”

On Marketplace, hear Levitt and Tess Vigeland talk about how the government should approach regulating online poker.

Here’s where to find Marketplace on the radio where you live.

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  1. mfw13 says:

    While playing poker with real live human beings is generally quite fun, playing poker online is just plain stupid. Most of these companies are located offshore precisely so that they are not subject to regulation (by the US or anyone else), and quite notably, several offshore gaming companies have recently suffered major cheating scandals of various sorts, with customer losses well into the six digits.

    Playing poker (or any other game of chance) online comes down to one simple question…do you trust that the people running the website treat all players equally and fairly? I sure as heck don’t…which is why these companies need to be regulated.

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    • Patrick says:

      Sorry mfw13, but your arguments are wrong on many fronts. If you don’t trust the poker sites you can simply not play on them. They are regulated by tribal governments but that doesn’t even matter. The cheating that happened on some of the sites was exposed by the players who got cheated and the site in question (AbsolutePoker) refunded all money lost to the cheated players. They did this because they wanted customers to keep coming to their site, not because some regulatory agency made them. Compare that with Madoff where regulators were repeatedly alerted and did nothing to stop the scam for decades. The victims were only able to recover pennies on the dollar. Why do we think businesses must be regulated? Most of the time they do the right think to keep there customers satisfied.

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  2. Max says:

    It is quite a move by US government to illegalize online poker, but you should keep in mind that even though this ban is meant with the best intention of reducing gambling in the US, it is highly likely that the opposite will happen. For example, in Holland, soft drugs are always legal and the number of soft-drug users in Holland are considered one of the lowest in Europe. I think the government knows that because there is a tendency that people in general like to do something that is considered as illegal, therefore making it legal will actually turn them off. We, too often, rely too much on our common sense and refuse to see the real data of what actually happens.

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  3. Shane says:

    Many readers seem to have missed the point.

    The “Daughter Test” is just Levitt admitting to his own prejudices. We all have prejudices and biases. Most of us are oblivious to them. People argue vehemently about political issues, and insist that their views are based on reason and evidence. In reality our views can be coloured by mundane things, psychological biases we’re not aware of.

    It’s good to introspect and question these biases. Levitt’s bias is that he instinctively wants to prohibit those things he fears his daughter might be harmed by. But that’s not to say that he thinks the government SHOULD prohibit those things. Now that he’s aware of his bias, he may be able to challenge it. We should all do the same.

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  4. Patrick says:

    Paying a bank to process your transactions, some call that being a client of the bank. The Justice Department calls it bribery. Transferring money from one account you control to another, some call that your legal right. The Justice Department calls that money laundering. Paying taxes to a foreign government because that is where your business is headquartered, some call that part of being a productive member of society. The Justice Department calls that tax evasion. Playing poker, some call that a popular American hobby. The Justice Department calls that illegal gambling. It doesn’t really matter what people think, if the Justice department doesn’t like what you are doing they came come in and grab your money and shut you down. The Mafia should be proud of what the DOJ is doing.

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  5. Mike B says:

    If online poker wanted to solve its problem being placed in the bin of Game of Chance it would be trivial to make modifications that would place the sport solely into the Game of Skill category. Simply replace the real money wagering with non-real money score keeping chips and at the end of the game declare the person with the most the winner and present them some sort of monetary prize.

    Of course everyone I mention this to says that eliminating real money betting would change the character of the game. Well of course it changes the game because it eliminates the addictive dopamine hit one gets from gambling!! The basis of conventional morals usually has some ounce of truth and in the case of gambling it is because it is an addictive activity that can destroy the lives of a lot of people. If people really want to play poker and demonstrate all their mad skillz they should have no problem proving their genuine love of the game by removing the addictive element. If they can’t then they are simply hooked and unable to make a rational decision.

    If you believe that people should be free to addict themselves to whatever they wish then at least their should repay society for the various harm their activity causes, ie the social services that a ruined gambling addict will consume. Well then solve the problem of interstate online gambling properly compensating the localities where the harm actually takes place and then get back to me. I am sure you will find the problem just as tractable as properly collecting online sales tax.

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  6. Dave in Atlanta says:

    The online poker issue is not about morality at all. It’s all about guys like Harry Reid and that Manhattan AG getting their paws on the revenue that sites like PokerStars generate.

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  7. David says:

    @ Mike B What you just described is a poker tournament. They run all the time on online websites.

    All professional poker players are not addicts or addicted to gambling. Most of the professional poker players on the scene are more risk averse than most of you even know. I was once a professional online poker player myself, it was good money just required a ton of work.

    The game itself is a mix of skill and luck. There are different tactics and techniques you can use to win. If you put a novice against a “pro” in a one on one match (online or offline) the pro would win way more often than novice simply because he uses his knowledge of the game, betting patterns, tells, etc.

    Speaking about the addictive nature of gambling is a moot point because there’s a plethora of unhealthy legal activities that one can indulge in that will destroy your life. It also makes no sense that playing poker online is “illegal” when playing in a casino it’s deemed wrong, but still allow other casino games to be online, (blackjack, slots, etc.) is dumbfounding to me. The DOJ is playing a game with the companies because they want a piece of the pie. That’s all it is….. Oh and I totally agree with the daughter test…. It’s a cool idea but can’t be aplied to everything

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  8. Max says:

    Poker players and other gamblers can always try day trading. That’s still legal.

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