[SheetWise]

The law is ambiguous. There is no distinction between gambling and insurance, except in the mind of the beholder. According to the law, gambling is illegal because it's a vice that serves no purpose -- but insurance is legal because it promotes commerce. It is ok to run a golf tournament and purchase "hole in one insurance" for a million dollar prize (that's not gambling), but illegal to provide shelter for an independent card game if you might incidentally profit from a sale under the same roof. It would be fun to question one of the actuaries who set the premium for hole-in-one-insurance to find out what variables they considered when setting the price, and if profit was considered.

Here's a recent situation I'm aware of. A friend of mine had an exclusive contract to sell T-shirts at a recent Bowl game. Completely honest activity -- all above board. This game allowed both parties to make a significant sum selling "National Champion" T-shirts immediately after the game, but they didn't know who was going to win. The opportunity to sell 4-5M shirts at $20 (with a cost of $2.50) was irresistable, so my friend simply printed shirts for both sides. There was a clear favorite in the game, so the cost of printing if the probable loser won (in lost sales and unsold inventory) was offset by a wager through an offshore bookie. Sounds a lot like insurance to me.