Lotteries could be a bigger goldmine for the Moon than gold itself. (“Nugget” credit: Phil Smith, courtesy of Sam Dinkin)

Virgin lottery territory

by Sam Dinkin
Monday, May 16, 2005

The First Great Virginia Lottery in 1612 provided half the budget for the settlers of Jamestown.
— J. Ezell, Fortune’s Merry Wheel: The Lottery in America 1960 (via I. Nelson Rose and Martin D. Owens, Internet Gaming Law, 2005)

Lotteries are an effective way to raise cash. They are occasionally outlawed because they have been crooked or too successful at getting money from the poor. Long before lotteries were hawked as voluntary taxation to fund education, they were used for colonization. Perhaps it is time to use them to fund colonization again to go to space.

History of colonization lotteries

This is not an idea original with me. Before there was Virgin Galactic and Volvo, there were cash sweepstakes for spaceflight. Spacelaunch.org (now defunct on the web) offered a $5,000, 20-year savings bond in 1998 for a trip to space. We will see if we can afford a flight to space for $5,000 in 2018 dollars. We will see if prices come down a factor of 40 in 10 years. If inflation is 3% for 2009-2018, we will need prices for spaceflights to come down by a factor of 50.

There was even a spaceflight lottery back in 1990. Space Travel Services Corporation sold trips to Mir. It sold well. So well that the principals got arrested and have a conspiracy theory why every space lottery will fail. Meanwhile, back in the mid-1980s one person proposed how to fund the National Commission on Space’s $700-billion exploration plans: a national lottery.

National lotteries for colonization go back much further than that. The Continental Congress tried to raise some cash via lottery. This did not work too well for them. But we have come a long way from fixed prize lotteries with open entry. It is now possible to have high prizes with very low entries by using a third-party underwriter. While the underwriters charge a high premium, it eliminates the risk that you will sell only 75% of the tickets and lose money. The underwriters might demand a minimum number of plays but that would represent far less than 10% of the size of the jackpot. Jamestown had better luck funding the Virginia Company under its third charter via lottery.

Making lotteries work under existing law

Lotteries today exist in legal limbo. States happily encourage their own lotteries while outlawing everyone else’s. It may be possible, however, to conduct a lottery with US participation without a US state sponsor. In Internet Gaming Law, the definition of gambling is “consideration, chance, prize”. What if these elements could be disaggregated? Suppose there was an offshore escrow service where one of the participants placed $10 and another placed a ticket for a $200,000 suborbital flight and there was a $2 escrow fee. So far we have consideration and prize. But what if the chance element was disaggregated? If the escrow terms merely said the referee was SpaceShot, Inc. of Austin, Texas, how could it be shown that chance was involved? SpaceShot could use whatever means it wanted to determine who owns the escrow assets. Perhaps it could separately contract with the participants to test if a third-party Keno pick came in. There might be chance and no consideration and no prize. Why would SpaceShot do that without getting compensated? Perhaps it is owned by an altruist who wants to see demand for space flight grown.

Internet Gaming Law also states, “Up to February 2004, when more than 1,400 gambling websites service a worldwide market worth about $6 billion, no one has ever gone to prison for merely making a bet on the Internet.” So if betting is safer than operating, perhaps the operator’s identity could be switched. If there is a Java applet for lottery hosting that runs on many, many computers that advertise on a central offshore casino advertising site, perhaps they all could attract one bettor willing to place bets of one suborbital ticket against a $10 prize with odds of 19,999 out of 20,000. It may take a while for the law to catch up with the business process reversal. If the central server gets bothersome like it was to Napster, then perhaps a peer-to-peer gambling network will emerge.

Of course, anyone willing to be quiet about their operation or just live offshore does not have to worry about these niceties. There is little dispute that the US can charge American citizens with certain crimes, no matter where they live. However, extradition may be another matter that is much more difficult for prosecutors to achieve.

At issue is that some states make offering gambling on the Internet a crime even if the server is in a place where Internet gambling is legal. This is bad law. Extraterritoriality of this sort makes it risky to conduct any kind of non-consensus trade on the Internet. It would be reasonable for a state to request that a server block addresses in a jurisdiction and even prosecute its citizens for playing, but to arrest a national for doing something legal in a jurisdiction where they are is unfair. As reasonable as it might sound, asking for rationality in this area is perhaps overly optimistic.

In order to put together a pot of gold to colonize the Moon, lotteries may be the ticket. Let’s hope that they turn out more like the Jamestown lottery and less like the ill-fated Continental Congress lottery. Virgin Galactic’s sweepstakes could give way to lotteries for seats on Virgin’s lunar shuttle to New Virginia.

Sam Dinkin is a regular columnist at The Space Review. He can be reached at (888) 434-6546 and thespacereview@dinkin.com.

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