Bets with prior knowledge

Question

If two people make a bet, and it comes out that one of them had knowledge that gave him the upper hand on the bet, is the bet valid? What if the person with prior knowledge was wrong?

Answer 1

This is not a psak. I am simply thinking out loud with you on this interesting question. I am not a Yadin Yadin, or a Dayan, and certainly if this is l'maaseh, you should be consulting a Dayan.

I have mainly used this source to aid my research. I found this useful too.

Making bets would count as kuvya according to Rambam in Perush HaMishnayot on Shabbat 148b. This is "asmachta".

Check out Pischei Hachoshen 8:21 for details about ashmachta. If two parties engage in a bet, neither of them is really expecting to relinquish the money, therefore the winner is counted as stealing from the loser, halachically.

According to the Rama (Shulchan Aruch Choshen Umishpat 379:2), it doesn't count as asmachta (Rama), but it does according to the Mechaber (see ibid 370), and this is what sefardim follow, although the Rama is a little more lenient (see below). If this is a one off bet, then it doesn't fall under Yishuv Olam either.

It seems ashkenazim mostly follow the second view (possibly due to the Rama stating in 207 that placing all the money on the table should eliminate the issue of theft, and gives all the other conditions, as well as Hilchot Ribbit Y"D 170 which states if the sums are small, people do not care), and permit it, as nowadays most people are not "perpetual gamblers" (for Ashkenazim at least - see Rama), but it should be noted that there are still many teshuvot that forbid it for various reasons (See Rav Moshe Feinstein Y'D 3:35 for eg about taking on new 'addictive' hobbies).

We also should ideally take into account the first view of asmachta.

So, we can see that we should be viewing the bet in light of a regular kinyan/change of ownership, which doesn't take place until the result betted on occurs. If we can even say that the bet was valid in the first place (which will depend on minhag, the sum, the nature of the participants, and many factors), certainly if one of the parties feels that they have been "done in" by the other, that would prevent him relinquishing the money in his heart and the transaction would no longer be valid and the winner would be engaging in some level of theft. This would also apply if the person who won was wrong about their information, as it would still put the loser off handing over the money.

I'm not sure about if the person who had the insider information lost, and it came to light. It could also affect their desire to hand over the money. It could also lead to ill will between the pair and that's a separate topic altogether.

Interesting to note that one of the conditions the Rama gives (ibid, see also 207:13) for allowing gambling is that neither of those betting should feel secure they will definitely win. If one of them had insider information, that might affect that!

Worth considering as well are the laws of "insider information", which can be found in Aaron Levine, Case Studies in Jewish Business Ethics (New Jersey, 2000) pp. 178-190. I do not own this book, so I can't say anything further.

Depending on what it says, if insider information is assur, then if the winner takes the money, this might also constitute "Chamas" (see Tur and Shulchan Aruch CM 359:9 based on Gemara Baba Kama 62a, Halachos of Other People's Money pg. 75), taking something he has technically paid for, but against the owners will. If not, but the loser refuses to pay, this could be considered Oshek ( Vayikra 19:13, Sefer Hachinuch Mitzva 258, Smag Mitzva 156, Shulchan Aruch 359:8, Shulchan Aruch Harav Gezela 4, Halachos of Other People's Money pg. 36. Shulchan Aruch 359:8 writes that the prohibition of Oshek refers to when somebody gives you money willingly, and when it is time to give it back, you refuse to).

See https://halachipedia.com/index.php?title=Being_Careful_With_Other_People for more information on these concepts.

Sof kol sof, it's such a bad idea to engage in a bet! If you do so, please make sure it is a small sum of money, once in a blue moon, and you ideally donate the proceeds to tzaddaka!