Why We Don’t Invest in Gambling and Casinos

by: Cassandra Laymon, CFP®, MBA

I moved to New Jersey in 1996, and one of my first rights of passage was a trip to Atlantic City. I had never gambled before and set aside $100 to play the slots for the weekend. As I was nearing the end of the first $20, I hit the jackpot – $800! I realized that the chances of me hitting it big more than once were nil, so I pocketed the money and was a spectator for the rest of the weekend.

A few months later I found myself in Atlantic City again, and this time I walked away with $250. As I was driving home, I found myself thinking, “this is such an easy way to make money!”  And that, my friends, is how a gambling addiction starts. I was fortunate to realize the error in my thinking, and never again returned to the casinos. There are, however, many people that fall prey to the idea of getting rich quickly and end up trapped in a cycle of addiction.

The Facts:

  • According to Addictions.com, over 80 percent of American adults gamble on a yearly basis and three to five gamblers out of every hundred struggles with a gambling problem. 1
  • 20% to 30% of problem gamblers have declared bankruptcy, compared to 4.2% of low-risk and non-gamblers. 2,3
  • 90% of pathological gamblers gambled with their paychecks and/or family savings. 2
  • 30% of pathological gamblers reported gambling debts ranging from $75,000 – $150,00. 3
  • Over 60% of pathological gamblers reported borrowing money from friends/relatives to avoid credit problems; while 20% borrowed money from loan sharks. 2

How it Happens:

It’s estimated that 20% of gamblers are labeled as “problem gamblers,” (those who have an urge to gamble continuously despite harmful negative consequences or a desire to stop) and they are worth a lot to the gaming industry.  At least nine independent studies demonstrate that problem gamblers generate anywhere from 30 to 60 percent of total gambling revenues. 4

Today’s technology allows casinos to target addicted gamblers, with the express goal of getting them to exceed their limits. Many of the ATM’s that are located inside casinos (some of which you can access without getting up from the machine you are playing) allow you to tap into credit cards and cash advances to keep you playing as long as possible. The casinos lure these targeted customers with free hotel rooms, airfares, a steady flow of drinks and other perks. They also will employ “hosts” to befriend the problem gambler to keep them playing for longer periods of time.

According to Richard Daynard, the president of the Public Health Advocacy Institute, “The business plan for casinos is not based on the occasional gambler. The business plan for casinos is based on exploiting the addicted gambler.” 4

In another deceptive move, today’s electronic slot machines make it possible for game designers to reduce the odds of hitting a big jackpot from 1 in 10,648 to 1 in 137 million. They also employ the tactic of setting “near misses” so that you’re lured into thinking you “almost won” which keeps players in their seats for longer periods of time. 4

Who is most vulnerable to gambling?

  •         College Students: It’s reported that 75 percent of college students have gambled during the past year, and the risk of developing a gambling addiction more than doubles for young adults in college settings. 5
  •          People affected by post-traumatic stress disorder(PTSD) who live with high levels of stress and anxiety on a daily basis. 5
  •         People suffering with mental illness: depression disorders, anxiety disorders, substance abuse disorders, anti-social personality disorders. 5

As you can see, the gambling industry targets and takes advantage of vulnerable people and those with a pre-disposed weakness to get them addicted, just as the tobacco and alcohol industries do. Without the 30-60 percent of the revenues that these customers provide, casinos would struggle to survive.

When you invest in gaming companies, you are profiting from the addictions of others.  You are saying to the company, “Take my money, and get as many people addicted to gambling as possible so we can profit together.” I doubt this is how you really want to make money with your hard-earned dollars.

Are you invested in gaming companies and casinos, without even knowing it? I encourage you to know what you own so you can clearly see the business practices you are profiting from. Learn more by getting your portfolio screened today: https://www.beaconwealth.com/screen-your-portfolio/.

 

1. https://www.addictions.com/gambling/5-alarming-gambling-addiction-statistics/

2. National Opinion Research Center (1999). Gambling Impact and Behavior Study. Retrieved May 1, 2008 from http://www2.norc.org/new/gamb-fin.htm

3. Grinols, E. L. (2004) Gambling in America: Costs and benefits. NY: Cambridge University Press.

4. https://www.theatlantic.com/magazine/archive/2016/12/losing-it-all/505814/

5. https://www.addictions.com/gambling/5-alarming-gambling-addiction-statistics/

 

Financial Planning and Investment Advisory services offered through Beacon Wealth Consultants, Inc.