XVI. On Wagering, Gaming, Insurance

What is wagering? Wagering is a contract in which two or more, contending about the truth or event of some thing, mutually pledge something to themselves, so that it belongs to him who has attained the truth. C. A. 1270; L. 869; Lugo d. 31, n. 73.

Whether wagering is licit? - Wagering furnished with due conditions is of itself licit. For it contains nothing dishonorable, nor is it prohibited by any positive law. The required conditions are: 1. That it not be concerning illicit things; no obligation is given against morals. 2. That it be about a thing doubtful as regards each wagerer; otherwise chance is lacking, and equality is not given, unless one certain about the thing warns the other, and nevertheless the latter wishes to commit himself; for then a donation is presumed as in gaming. C. A. 1270, 1272. 3. That there be equality between the thing which is pledged and the uncertainty of the event, namely that he for whom the greater probability stands promise more, but he for whom the lesser probability stands promise less. 4. That each accept the thing in the same sense; otherwise they would by no means agree upon one thing. L. 869, 870, 878, 879; Lugo d. 31, n. 82, 83.

Whether wagering obliges? - Wagering obliges in conscience by natural law, as any other licit contract. C. I. 1892; C. G. 1965; C. H. 1799; C. B. 762; C. L. 1543: the same is established for wagering as for gaming. Cf. 1247. C. A. 1271: a wager made in good faith and otherwise licit obliges, insofar as not only a price was promised, but also handed over or deposited. But it cannot be sought judicially. Through the Bull of Pius IV In eligendis, wagers concerning the doubtful election of the Pontiff, or concerning his life and death, are prohibited. Gregory XIV, through the Bull Cogit nos, extended this to the election of Cardinals, with excommunication latae sententiae added as regards the election of the Pontiff, and reserved even outside the time of the vacant See. And because wagers of this kind are declared invalid, no obligation arises from them. L. 869.

What is gaming, and how many kinds are there? Gaming is a contract by which players agree among themselves concerning some certain thing or concerning a certain price that will fall to the victor. - There are three kinds: 1. Industrial, which is chiefly governed by the industry of the players. 2. Aleatory, which principally depends on chance. 3. Mixed, which partly depends on industry and partly on chance. L. 871; St. Thomas, 2. 2, q. 168, a. 2.

Whether gaming is licit and valid? - A contract of this kind, considered according to the law of nature, and if the due conditions are present, is valid and licit. The reason is that any owner of his own thing, just as he can dispose of it by giving it absolutely, so can hand the same over to another under some condition, whether that condition is fortuitous or depends on industry. L. 871. Moreover, that gaming, insofar as it is a simple relaxation of the mind, is licit is beyond all controversy. For as the body needs rest, lest it be weakened too much by labor, so the soul also needs rest, lest it be too much wearied by continuous meditation. St. Thomas, 2. 2, q. 167, a. 2. Considered according to the law of nature. For games of mere chance are prohibited by Canon Law. Dist. 35, can. 1. Yet as regards laymen, they say that Canon Law has already been derogated by custom. But as regards clerics, it is disgraceful for clerics to play dice. C. 15, de Vit. et honest. cler. Cf. V. 2, n. 179. By Roman Law certain games, namely of dice and fortune, were prohibited. L. 1, 3, C. de Aleatoribus et alearum usu. By the same Law those who had been beaten in forbidden games could not be sued so that they should pay, and if they had paid, they had an action of recovery. Wherefore the payment made by the loser was not invalid, but was to be invalidated by the judge. But because these laws were penal, or were held as penal, by use and custom, hence, with attention to Roman Law, it is most probable that laymen playing would not sin even venially. L. 883-885; Lugo d. 31, n. 8. According to C. L. 1541 seq., gaming as a means for making profit is not permitted. What someone has gained in gaming he cannot seek judicially. If nevertheless he has paid it, he cannot recover it, except in the case of fraud or deceit on the part of the victor, and of a game of mere chance, commonly di azzardo. And what is lent in the act of this game of mere chance likewise cannot be recovered. According to C. A. 1272, what has been established for wagering is applied to games. Cf. 1244. But all games of chance are held as illicit, and it is declared that they bring forth no obligation. Nevertheless an action of recovery of what has been paid is denied.

According to C. I. 1802-1804 and C. G. 1965, 1967, there is no prohibition of any game. Nevertheless it is established that the law gives no action for exacting payment of that which is owed because of gaming or wagering. Games which contribute to exercise of the body are excepted, such as handling of arms, racing either on foot or on horseback, ball games, etc.; for these an action is granted. Yet it is within the power of the judge even in these to deny the action if the sum deposited for the game or wager has been exorbitant. But if the loser freely paid, he cannot recover what was paid, provided fraud or deceit of the victor was absent, and the loser is not a minor, or interdicted, or declared incapable. According to C. H. 1798-1801, games of mere chance are prohibited, and no action for them is granted to the victor; nevertheless no action is granted to the loser to reclaim what was paid, unless deceit intervened, or he is a minor or made incapable. And the same is established for wagering. Wagers which have analogy to these games are prohibited. Games which contribute to exercise of the body are permitted, as in C. I. and C. G.; and for these games and analogous wagering an action is granted; nevertheless the judge can reject the petition, or reduce the sum owed, if it is excessive. According to C. B. 762, gaming and wagering produce no obligation. But what has been paid cannot be recovered.

If the due conditions are present, which as regards validity are: 1. That the things exposed to the game are proper to the player, and in his ownership, and in his free faculty of disposing; otherwise the contract will be either null, or rescindable, or at least the payment made by the loser will be invalidable. 2. That all force and fraud be absent; hence it is necessary that the players concur freely, and indeed that there be moral equality among them in hope of gaining and in danger of losing. - But for liceity it is required: 1. That nothing dishonorable be mixed in by words or deeds. 2. That there not be present from it proximate danger of sinning, for instance of breaking out into blasphemies, or harm to neighbor, for instance of neglecting care of domestic affairs, of making oneself unable to pay debts or to feed a family, etc. 3. "That it be suited to the person, time, and place, and be duly ordered according to the other circumstances." St. Thomas, 2. 2, q. 168, aa. 2, 3, 4; L. 882;

Lugo n. 28.

Resolutions: If someone gains by exposing stolen money to gaming, apart from which he has nothing else that he might hand over, then he is bound to restore what he has gained, because the contract was null, since he exposed money which the co-player could not acquire. But if he has other money, it makes no difference at all that he stole the money from the one playing with him or from another. Since he was equal in solvency, he will indeed be able to retain the profit, for it is the fruit of his own industry; but the obligation always remains of rendering to another what was taken from him by theft. - L. 875.

Whether someone is bound to restore what he has gained from a son of a family in gaming? - Resp. Negatively, if the sum lost by the son of the family is from his own goods, of which he has perfect ownership. Affirmatively, if the sum lost is from the father's goods, or from his own goods of which he himself has only direct ownership. Except unless the sum is of small moment, in which the consent of the father is presumed, who would not wish to deny honest recreation to the son, or unless it is some moderate part deducted from the food which the father supplies to him. "Nevertheless it is probable that in that case, if the son of the family does not wish to pay what was lost in the game, he can licitly oppose the exception and is not bound to pay, reserving something from his food." L. 876, 871-873.

Whether a victor who is much more skilled in a game, so that he certainly foreknows that he will be victor, is bound to restore? - Resp. Affirmatively, much more probably, because the equality required among players is lacking, and therefore justice is injured. Hence one notably more skilled must withdraw from the game, or remit something of advantage to the adversary. Thus the more common opinion, against some. Yet in practice restitution should not be urged if the matter concerned a thing of lesser moment; or even when the adversary, sufficiently warned, nevertheless stubbornly wished to play. Then no deception would have intervened. - According to C. A. 1270, 1272, in wagering and in gaming, if the defeated party was previously conscious of the event, donation is presumed. But it is otherwise in public games. For in these the prize is promised to him who excels the others. L. 881.

Whether, according to the law of Roman Law, a victor in a prohibited game is bound to restitution, or the loser is bound to pay in the same game?

Resp. To the 1st: Negatively before the sentence of the judge, because by positive law the contract is not declared invalid, but only illicit, and an action to recover is given to the loser. Resp. To the 2nd: The first very probable opinion affirms. The reason is that by natural law the contract was valid, and therefore the loser is bound to stand by it until he judicially opposes an exception or seeks restitution. The second and more probable opinion denies. The reason is that the law, by giving to the loser a right to defend himself by exception or by recovery of what has been paid, also gives an absolute right not to pay. For to what purpose is someone bound to pay, if he can immediately recover what was paid? According to more Recent Laws also the victor is not bound to restitution, and the loser is bound of himself to pay, since the game is not prohibited by the aforesaid laws nor declared invalid, unless force or deceit intervened. But if the game is prohibited by the same laws, it can perhaps be sustained not improbably that the laws implicitly removed the obligation of paying, since the judge could not urge it by his own sentence. - L. 887-894. Cf. here 1247.

Whether gaming is valid if a large sum of money is exposed at one time? Resp. The first opinion denies. The reason is that because of prodigality the game is base. The second opinion affirms, of itself, more probably, if the players are able freely and fully to dispose of their goods without detriment to family and creditors, because the players then freely dispose of their own goods, and knowingly and willingly undergo danger equally; and therefore there is no injustice. Nor does the reason of prodigality press; for it is also base to play from the greed of profit alone, although this greed, as that prodigality, of itself is only light. Yet who would say that a game is invalid because the players are moved by desire for profit? Moreover profit can well be illicit without being invalid. Yet, practically speaking, they do not seem to be disturbed in the tribunal of penance who would not wish to pay a large sum which they had lost. And this either by reason of good faith, not to be disturbed, or because by positive Law the judge can reject the petition when the matter concerns games approved by the law itself, but the sum agreed for the game is excessive. Cf. 1247; C. I. 1803; C. G. 1966; C. H. 1801; C. B. 762; L. 735; Gousset 889.

Whether one who uses fraud while playing is bound to restitution? "He is not bound to restore who uses those clever tactics which the rules of the game and received custom allow, since each knows that such tactics are customary, and thus tacitly and freely consents to them; e.g., 1. If, having stronger cards and being sure of victory, he increases the wager, or simulates fear, so that the adversary increases it. 2. If, knowing that he has lower cards, he dissembles and increases the wager, so that what had been placed may thus be left to him. 3. If he looks at the cards of another from that one's negligence alone and without fraud; otherwise, if he places himself so that he can see, or appoints another by whom he may be warned. 4. If while playing he learns to know cards from the back, which he had not previously marked nor known. But he who uses frauds not customarily employed, or unknown to the co-player, e.g., steals cards, or marks them with signs on the back, or uses marked cards, or those which he knew beforehand while the partner is ignorant, or by some art arranges them, etc., is bound to restore not only the profit, but also as much as the hope of gaining, indeed even of playing with him, was worth to the other." L. 882, 877.

Whether, if someone injuriously compels another to play, he can afterward retain what he gains? "The first opinion denies, because damage following from an injury must altogether be restored.... But the second opinion affirms that he can retain it, because then not the coercion or the game, but rather chance or the skill of the one coercing was the cause of the damage.... This opinion, speaking of itself, is more probable to me, unless the co-player who coerced surpassed the one coerced in skill at playing; for in that case I think he is bound to restitution of at least part of what was gained, according to the measure of skill by which he excelled the other. The reason is that that contract, notwithstanding the injury of fear inflicted, was sufficiently voluntary on each side, and valid, according to the more common opinion reported.... I said, speaking of itself, for if the one who suffered fear seeks restitution of the money lost, Lessius rightly teaches that the one inflicting fear is bound to restore what was gained." L. 880; St. Thomas, 2. 2, q. 32, a. 7, ad 2, etc.

But what if someone compels only by importunate requests? - "Sanchez, etc., still hold that he cannot retain it. But Lessius, etc., far more probably contradict, because requests do not remove the voluntary, just as threats do not; as Busenbaum asserts from the common opinion with Bannes and Molina." L. 880.

What is a lottery? It is a contract by which, several persons paying money toward a certain thing or toward a certain sum of money placed in the middle, a right of drawing lots is acquired; whence, once the drawing has been made, some have the whole proposed prize, some a part, some nothing.

Whether a lottery is licit? Resp. Affirmatively of itself. For a lottery can be regarded as the sale and purchase of hope and of the right to a certain prize to be acquired by drawing lots. But as it is licit to bargain concerning the danger of some thing, so also it is licit to buy hope and the right to some thing. It is said of itself; for accidentally from extrinsic circumstances it can become illicit, e.g., if from it a family were to be thrown into misery. C. A. 1267, 1269. According to C. B. 763, a lottery does not induce obligation unless it has been approved by the State; otherwise, the dispositions established for gaming and wagering are applied to it. Cf. 1247.

What conditions must be observed in a lottery, lest it become illicit? The first condition is that there be no fraud in drawing the tickets, nor in paying the prize which has fallen. The second condition is that proportion be preserved between the smallness of the price and the greatness of the uncertainty of the hope, and at the same time with the greatness of the prize, and, in a public lottery which is constantly repeated, with the greatness of the danger to which the owner of the lottery is exposed, so that he can always satisfy future victors. There are some who add a third condition, namely that the profit in the lottery not exceed that which would be had in honest business if the money were spent in it. But this condition is established by no reason, since then the profit received in any aleatory contract, and generally the profit received in gaming, would be illicit. For this is proper to these contracts, that uncertain chance intervene, to which the contracting parties voluntarily subject themselves; and, when chance favors, it often happens that someone receives in a short time a profit which even in a long time his own industry would not produce.

C. A. 1273, 1274.

What are stock-exchange games? Stock-exchange games are commonly called certain business and mercantile operations which are ordinarily made in the money market through intermediaries, who are called exchange agents. They are called games because titles of public revenues are sold and bought, which, according to various circumstances of society and governments, have varying value; whence the aforesaid operations are aleatory, and a certain wager intervenes concerning the variety of values of this kind, namely concerning their increased or diminished price. But they are called stock-exchange games from the public place, or money market, which is called the stock exchange.

Whether stock-exchange games are licit? - Various stock-exchange games, more or less complex, are reduced to the following simple mercantile and business contracts. 1. Someone buys a title, e.g., of 1000 lire, at the current price, and with counted money of 900 lire. The annual revenue of the title is 50 lire, namely at the rate of 5 per 100. Through days, through months, through a year, through several years, the buyer receives the aforesaid revenue. Certainly nothing illicit is present in this matter, for it is a certain simple purchase, or a simple consignative census, or a simple constitution of revenue. But if the buyer, when a good occasion is offered and seized because the price of public revenues has increased, sells the title of that annual revenue of 50 lire, at the current price and for counted money, for 1100 lire, he indeed receives a great profit, but again there is nothing illicit in this matter; for it is a certain simple sale, and the profit is owed from the changed price of titles in the market. And if someone, intending this profit, buys several titles of annual revenues at the current price and for counted money when the price is lowest, so that he may resell them for counted money when the price is highest, business properly is had, which of itself has nothing illicit.

2. If someone again buys a title of annual revenue of 50 lire at the current price of 900 lire, not for counted money, but on credit to a term, e.g., for fifteen days, for a month, then either the title is immediately given, or only when the term arrives, or the fixed day, which day is called the day of liquidation: the first, the fifteenth of the month. If the first occurs, nothing is had except a certain purchase made on credit, by which the buyer can profit if on the appointed day the value of the title increases, or on the contrary the seller can profit if on the appointed day the value of the title decreases. Nothing indeed illicit is in this matter. But if meanwhile the seller demands the legal interest of the money until the price is paid, he can do this by right, since it is not equitable that the buyer retain the thing and the price for himself and enjoy the utility of both. Then sale and purchase and mutuum intervene at the same time, or a simple mutuum.

If the second is verified, then the danger of detriment is equal for buyer and seller, and likewise the hope of profit is equal for both; for meanwhile the value of the title can increase and can decrease. Therefore when the day arrives on which the seller must hand over the title and the buyer the price, if the value of the title has increased, the profit will belong to the buyer; if the value of the title has decreased, on the contrary the profit will belong to the seller. Therefore, since equality of both is preserved, nothing illicit is had here of itself.

3. The seller and buyer likewise make a contract to a term or to a day, but the seller does not hand over the title to the buyer in the present, nor does he oblige himself to hand over the title to the buyer when the day arrives. Similarly the buyer neither hands over the price to the seller in the present, nor obliges himself to hand over the price of the title to the seller when the day, or the constituted term of the contract, arrives. Therefore the seller and buyer oblige themselves, when the day arrives, only to hand over the difference of the value or price of the title in the present, or today, and of the value or price of the same title on the constituted day. It is therefore a certain wager concerning the increase or decrease of the price, in which again equal danger and equal hope exist for seller and buyer. For if, when the day arrives, the value or price of the title has increased, the buyer gains this difference of value, to be handed over to him only by the seller without the title. But if the value of the title has decreased, then the seller gains that difference of value, which the buyer alone must hand over to him, without the remaining price of the title, namely the excess of the former price constituted on the day of the contract over that lower price which the title obtains on the established day. Wherefore neither is anything illicit of itself had here, just as nothing illicit would be had in the simple contract of wagering concerning an increase of the value of the title on the part of the buyer, who hopes that it is to be increased, and therefore buys; and concerning the diminution of the value of the title on the part of the seller, who fears it, and therefore sells. But this contract would be illicit if someone certainly knew, by private knowledge, that the value of the titles was soon to be increased. For then by the contract someone would give nothing to the other; he would not give the right to profit if the price were diminished, which would be altogether fictitious. And although the other is ignorant of this, that false and empty right does not for that reason cease to be such, since the price is certainly to be increased and the other certainly knows this.

4. The buyer, buying a title, with only part of its price immediately paid, to a term or to a day, reserves to himself the right, when the day arrives, either of demanding execution of the contract, or of withdrawing from the contract, leaving to the seller that price already given. Since the right which the seller grants to the buyer is appreciable by a price, this contract is just if the price is proportionate. The proportion of this price depends on various circumstances and on the varying concurrence of sellers and buyers. The right of rescinding the contract is sometimes conceded to the seller himself, with a premium left to the buyer. This conditioned purchase and sale is called operation with premium; the two preceding ones are called operations to a term.

5. A mercantile relation, or reportus, is a certain species of retro-sale. It consists first in selling for a lower current price, immediately paid, any titles which are sold in the money market, and immediately redeeming the same at a price to be paid at a term, or on a day, but higher. C. I. Comm. 73. Here also no illicitness of itself appears; for there is a double sale of the same thing, or the sale of a thing with its immediate retro-sale, and if due equality of price is preserved, certainly there is no injustice. In the second sale, or in that immediate retro-sale, the thing indeed is sold at a term for more than it was bought. But this arises from the fact that within a short time the price of these titles is changed according to common estimation. But from the fact that the thing will probably be worth a certain amount on the constituted day, the seller can take the norm of the price. Wherefore this second sale, or retro-sale, is an aleatory contract by which both the seller and the buyer can profit, namely if the price of the title, on the constituted day, has grown or decreased still more than the price foreseen by the seller and to be paid by the buyer. Gur. Cas. 946-950. According to C. B. 764, the contract of paying by the loser to the gainer the difference between the agreed price of merchandise or of a monetary title and the price at the time of delivery is considered as a game. Cf. 1247.

What is insurance? "A contract of insurance is that by which someone takes upon himself the danger of another's thing, obliging himself either gratuitously or for a certain price to compensate it if it perishes. But if this is done gratuitously, it is a gratuitous promise; if for a price, it is as it were a purchase, by which the insurer sells his obligation of furnishing to another his thing unharmed. For its justice it is required that the event of the thing be uncertain to each, at least as regards the knowledge which they have concerning it, because otherwise equality is not preserved." L. 911. For the same reason it is likewise required that the insurer be equal to paying what he promised if the thing perishes, and that on the part of the insured the price be proportioned to the danger.

Nor indeed according to C. I., C. H., C. G. can someone insure the same thing for its whole value with several insurers. Nor can he insure it for a quantity exceeding the value of the same thing. According to C. H. 1795, this agreement is ineffective for such a part. Lugo d. 31, n. 97; C. I. Comm. 417, 426, 429, 430, 431, 433; C. A. 1288, 1289, 1291; C. H. 1791, 1792, 1795, 1797; C. G. Comm. 346, 348, 357, 359; C. L. 1538, 1540. Insurance is treated in the Italian Commercial Code, for it is considered as the object of commerce; whence nothing about it is in the Civil Code.

According to C. I. Comm. 417, insurance is a contract by which the insurer obliges himself, by means of a price or premium, to repair detriments and damages which can come to the insured from certain fortuitous events, or from superior force, namely that which cannot be resisted, or to pay a sum of money according to the duration or events of the life of one or several persons. Hence all immovable and movable goods and life itself can be insured. - The contract of insurance must be made in writings, C. G. Comm. 332; C. H. 1793, 1794; C. I. 420. Insurance of life is entirely different from a life census. For it is a contract by which someone obliges himself to pay each year, during his life, a certain determined pension, and another obliges himself to pay a certain determined sum, after his death, to his heirs.

Resolutions: If the insurer is certain that the thing is already safe, he unjustly seeks the price and is bound to restore. If the insured certainly knows that the thing has already perished, he cannot make a pact concerning its insurance. Likewise, if he himself was the cause that the thing perished in order to obtain the premium of insurance, he is bound to restitution. L. 911; C. I. Comm. l.c.; C. G. Comm. 348; C. A. 1290, 1291; C. H. 1797.

What are the obligations of the insurer? - 1. The insurer must be solvent, C. I. Comm. 433; C. G. Comm. 346. But the insurer can cause another to insure his pledge. C. I. Comm. 422; C. G. Comm. 342.

2. The insurer must furnish compensation for detriments and damages which happen to insured things from fortuitous events or from superior force. But he by no means must furnish compensation for detriments and damages which arise from a defect inhering in the thing which was not declared, nor those which are owed to the action or fault of the insured, or of those acting in his name, or of agnates or cognates who are named in the instrument; nor furnish compensation for damages produced from war or from popular tumult, unless a contrary agreement existed. C. I. Comm. 434. Cf. C. G. Comm. 350 ff.; C. A. 1290.

3. Insurance against fire embraces all damages inflicted by fire, from whatever cause it was produced, except what has come from grave fault personally imputable to the insured himself, and except the case of war or popular tumult. C. I. Comm. 441.

4. The insurer is freed from the obligation of paying when by an act of the insured the dangers are changed or aggravated, by the change of some essential circumstance, so that the insurer would not have given consent if it had existed from the beginning. C. I. Comm. 432.

5. If a third party inflicted damage, the insurer who repaired the damage has an action against him. According to C. I. Comm. 438, the insurer who repaired the damage is substituted into the rights and actions of the insured. But the latter is held concerning every detriment brought by him to rights of this kind. But, setting aside this law according to which the contract of insurance is understood, although, speaking of itself, the insured has been made indemnified by the insurer, for that reason the damager is not freed from the grave obligation of repairing the damage of the one damaged. Nor does he satisfy this obligation by distributing the sum to be restored among the poor, or by spending it on pious causes; for thus the right injured by him is not repaired. Neither the poor nor pious causes were damaged by him. But what the insured receives by force of the contract of insurance, and of the price paid for it, does not exclude the right by force of the real injury inflicted on him from the damaging. The titles and rights are quite diverse. Speaking of itself; for by force of the preceding law and of the contract of insurance, understood according to its norm, it suffices that the damager compensate only the insurer for the damages; and consequently what the damaged person has received from the damager he is bound to hand over to the insurer.