Wednesday, December 09, 2009

When the Gambling Bug Bites

“Why do they send stuff like this to us?” my wife asked, referring to a brochure we had received in the mail about Mesquite, Nevada. I suppose it’s because we happen to be in the right demographic categories. After all, you can see plenty of Utah license plates on cars parked at any of the gambling establishments near the Utah’s borders. (Pretty much all forms of gambling are illegal in Utah.)

We choose not to gamble for personal and religious reasons. My first career was in accounting. I have difficulty putting money in a vending machine where there is a reasonably high expectation of ‘winning’ the desired product. I can’t imagine putting money into a slot machine where the chance of breaking even is much lower. The same holds true for other games of chance. After all, those casinos weren’t built using customers’ winnings.

Many look at gambling as a form of entertainment that has a price attached, just like other forms of entertainment. For example, you willingly pay to receive psychological pleasure from going to a movie. It is argued that gambling works the same way.

However, like a number of other pursuits, gambling is known to be highly addictive. As explained in this Wikipedia article, addiction “is a chronic neurobiologic disorder that has genetic, psychosocial, and environmental dimensions….” It is characterized by one or more of the following:
  • Continuation of demonstrably detrimental behavior.
  • Compulsion to engage in the harmful behavior.
  • Preoccupation with the negative behavior.
Addiction is often accompanied by deviant behavior such as lying and stealing.

When it comes to gambling, researchers know that habitual gamblers place a much higher psychological value on a dollar won than on a dollar lost. That’s one reason that gamblers often regale others with tales about their winnings while rarely mentioning their losses. In their minds, $20 won beats $100 lost. The short-term pleasure of getting their ‘hit’ — actual chemical changes in the brain from engaging in risk — is worth the sacrifices necessary to get that hit. It works the same way with pornography, addictive drugs, and other addictive behaviors.

I once worked with a woman whose entire persona — dress, grooming, speech, mannerisms, etc — came across like a traditional farmwife out of place in an office environment. She once looked wistful as she referred to her husband and said, “I believe that gambling is his most favorite activity in the entire world.” She described how frequently they made weekend trips to Wendover, Nevada to gamble. I remember thinking that these people had a problem.

This WSJ article tells the woeful tale of the former owner of The Oriental Trading Company, who blew $127 million gambling over a two-year period and now faces criminal charges for his gambling debts. Terry Watanabe had proven himself an adept businessman when he grew the “modest toy business [inherited from his father] into a catalog empire that raked in $300 million in revenue by the time of its sale in 2000.”

It seems clear from the article that Watanabe was addicted to work — to running the business. After selling the company at age 43, he apparently sought other channels for his compulsive character. He eventually found his way into a casino. Before long he found himself feted by casinos that gave him all kinds of expensive perks and fed his alcohol addiction while he gambled away as much as $5 million in a single session.

The casinos deny any wrongdoing. One spokesperson quoted in the WSJ article notes that the casino business she represents was an “early advocate and funder of organizations that help gambling addicts.” Frankly, that’s like excusing a heroin pusher that donates to a drug rehab program.

Capable adults are accountable for their own behavior. Given his business savvy, it’s difficult to argue that Mr. Watanabe was so callow as to be innocently taken in by the casinos that fleeced him. But the casinos were certainly complicit in feeding — and taking advantage of — his addictions. They probably did nothing illegal. Whether some of their actions were wrong is another matter.

It is always wise to be wary of businesses whose main trade model is based on generating gain from promoting addictive products or services. The demand for these things exists, of course. But the perversity of the incentives in such commerce means that these businesses are happy to profit from your self destruction.


Charles D said...

I fully agree with your comments about gambling. I would point out that they apply to Wall Street speculation as well, except that when you gamble with other people's money you hurt them perhaps more than you hurt yourself.

I also oppose state lotteries, licensing of horse and dog racing tracks and other forms of gambling. It promotes behavior that is detrimental to many as well as promoting the idea that we can and should get something for nothing. It is very appealing to lawmakers that find it far easier to setup a lottery than raise taxes.

FelixAndAva said...

Charles, wouldn't it be better for lawmakers to trim all their perks and pork than to siphon more money out of the pockets of those who worked to earn it?

Charles D said...

Of course it would, but it would also be good if the lawmakers were honest and cared about the people of their state and were willing to raise taxes judiciously in order to fund things that benefit everyone.

FelixAndAva said...

When "raising taxes judiciously" means squelching economic activity to the point that jobs are lost, how "caring" is that?

You seem to believe that it's up to government to decide how much of the fruits of their labors workers and earners may keep and how much "should" be confiscated to expand government well past the intent of the founders of our country.

Charles D said...

I figured you might think that. I put the welfare of the people above the intent of the founders.

FelixAndAva said...

And how does squelching freedom by confiscating what "the people" work for and earn contribute to the welfare of those who DO produce and contribute? How do you expect the productive to continue producing when they just see it all grabbed away to be given to those who choose not to contribute (with generous cuts going to the "more equal than others" types who decide distribution)? Ever take a look at what happens in countries where workers are not allowed to retain the fruits of their labors?

Charles D said...

If there were no taxes and no government, none of us would have had the opportunity to earn any money. I'm sure you have no problem with the government taxing you to pay for things you think the government should do. We just differ about what the government should be doing with our money.