Social Sciences in China (Chinese Edition)

No.3, 2016

 

The Legal Regulation of Gambling

(Abstract)

 

Xu Defeng

 

From the perspective of the law, gambling is an agreement between different parties which takes the occurrence of an uncertain event as the sole foundation for the transfer of property. Unlike insurance transfer or risk diversification, gambling produces extra risks. From the point of view of socio-economic effects, a natural person’s gambling may decrease social welfare as measured by marginal utility, while a legal person’s gambling may harm a creditor’s rights and interests, increase systemic risk, and generate a massive economic collapse or costly crisis. The regulation of gambling should adopt different strategies in accordance with the different types of gambling. The gambling element in market transactions associated with gambling, such as securities, futures and financial derivatives, should be tolerated, but the possible negative effects of gambling should be strictly guarded against. Gambling unrelated to market transactions, including lotteries, casinos and all forms of gambling between individuals, should in principle be legally prohibited, but in exceptional cases where permission is granted, there should be a supporting system that effectively curtails the negative effects of gambling. The gambling element is widespread in commercial transactions, and the “gambling/risk” framework rolled in with insurance considerations can provide a new angle on the unified interpretation of the various current legal systems.