Illegal gambling activities should be defined as activities requiring the wagering of money or something of material value on an event in which purely random mathematical probabilities determine the outcome. An exception to this rule could be any purely random mathematical lottery in which a cumulative total of at least 50% of all revenues go to an approved charitable cause, towards the funding of an advertised public good (such as K-14 education, universal healthcare, transportation, etc.) and to the payment of taxes of any level government. Sports gambling should also be exempted because the involvement of elements of research move such activities away from purely random mathematical probabilities. Legitimate investments, speculation, stock/commodity trading, etc., should not be considered gambling. Charitable raffles and such games should also be allowed.

Any purely random mathematical lottery in which at least 50% of all revenues go to an approved charitable cause or towards the funding of an advertised public good (such as K-14 education, universal healthcare, transportation, etc.) should be allowed.

All financial transactions due to illegal gambling would be treated as illegal exchanges of money to which all parties involved are guilty. The winners would be required to forfeit all of their winnings to the government. As a penalty, the winners must pay out an additional amount equal to their winnings. In cases of illegal gambling, both parties (the one that owes, and the one that is owed) should each be required to pay a penalty to the government equal to 100% of half the gross gambling wagers made between them, totaling up to $10,000 each. For example, two people, who each agreed to enter into an illegal $10,000 bet, would each be required to pay $5,000 to the government as a penalty for engaging in this illegal activity. As total gambling wagers increase, each party should be required to pay a progressively smaller percentage than 100% of half the gross gambling wagers made between them. For example, gross wager amounts of $50,000 could require each party to repay 75% of half this amount ($18,750 each), wager amounts of $100,000 could require each party to repay 50% of half this debt ($25,000), and wager amounts of $500,000 would require repayment by each party of 25% ($62,500) of half the net gambling debts. A smooth algebraic curve should be fitted through the percentages used in these examples in order to find the proper percentages to apply to wager amounts other than the ones used in the examples. The revenues generated from these fines should be distributed equally to state and local governments (state, county, and city).

If parties to the illegal gambling lie about the amounts of money wagered or won, the difference between what they say they wagered or won and what they actually wagered or won will be treated as theft and the penalty for this additional crime will be a fine equal to the difference plus a multiple of the difference.

The reason people are required to pay progressively less than half of larger gambling debts is because such people are much more likely to have lost self control over their gambling activities (i.e., are addicted to gambling) and could have easily allowed their debt numbers to get out of hand. Since agreeing to engage in a gambling bet is fairly effortless, being mainly a verbal commitment, and since such activities usually affect only the individuals involved (namely, the money wasn’t stolen from anyone else), it would make sense to somewhat soften the massive liability of such debts (while still making them painfully high) and give gambling addicts some hope by creating for them a greater chance of recovering financially from such losses. By setting these gambling fines at high dollar amounts (though far below what each gambler would likely have been required to pay had they lost), ‘losing’ gamblers, especially addicted gamblers, would suffer the consequences of gambling while at the same time the ‘winners’ would be required to pay the same amount as the ‘losers’, thus decreasing the incentive for all sides to participate in such activities. This would give potential ‘winners’ pause and hesitation before entering into a bet because the ‘losers’ could reduce very large gambling liabilities (while imposing significant liabilities on the ‘winners’ at the same time) by just informing the authorities of their involvement in illegal gambling.

If the original winning party still tries to force the original losing party to pay back the debt or any portion of it, that action of forcing or attempting to force payment should be treated as theft or attempted theft requiring restitution plus a punitive multiple.

All parties caught illegally gambling amounts under $10,000 should be required to enroll in a short educational course that explains how gambling works, the principles of mathematical probabilities, and other relevant topics related to gambling as well as the hardships and difficulties gamblers can cause themselves and those around them. Part of this course should include watching personal testimonials or documentaries on the subject. All participants should be required to take and pass a test to prove that they have a functional understanding of the materials in the course. Gamblers illegally gambling amounts in excess of $10,000 would be required to take a much more intensive gambling education course.