Most of us, at one time in our lives, have gambled a little bit of money. Whether you packed up your life savings and headed for the Las Vegas blackjack table, or whether you bet your best friend an dollar that he couldn’t beat you in a footrace, gambling can be a fun and harmless pastime.
However, we all know that gambling can be incredibly addictive and dangerous. An overwhelming number of people (recently estimated at 15 million) show signs of a gambling addiction, and those who are addicted tend to incur debt between $55,000 and $90,000. Gambling addicts experience higher rates of divorce, depression, and suicide.
So why gamble in the first place? There seems to be an oxymoron at work here. As anyone who studies “luck,” will tell you—you can’t be lucky unless you take chances and risks. There is an even an old joke that we here at Five Point Capital have heard many versions of. Many years ago there lived an old man who was having a hard time in life. He owed money on his house and land, had little money for food, and as he aged he found himself needing more and more money for medical expenses for himself and his wife. Every single day he went to his local church to pray. He called out to God each and every single day “God, please help me to win the lottery. I beg you.” Time goes on and his situation grows worse, and yet every day he still goes to church to ask God to help him win the lottery. One day, the old man was in the church, got down on his knees, bowed his head, and prayed in a weeping voice, “God, please, please help me to win the lottery,” and proceeded to weep. Hearing this, God couldn’t stand it any longer, and shouted down to the man from the Heavens, “Do me a favor my son…Buy a ticket!!!!!”
This joke demonstrates what many of us feel; we know that our chances of winning the lottery are slim (indeed, casinos usually profit about $30 billion annually), but we still feel that we should at least put our luck to the test, just in case.
In this economy, gambling can go either way. Those who gambled lightly as a simple pastime are now tabling the hobby to save money. The US Casino Report estimates that 60% of Americans have cut back on their gambling spending, which is about the same as the drop in people spending money on dining out. This has drastically impacted the gambling world, and some racetracks in Kentucky have been forced to close or cancel races now that betting is so low. And while in recent history, the amount of money spent each year on gambling has increased (and actually doubled every year since 1997 for internet gambling), this amount actually dropped dramatically in 2008. Casinos experienced their first-ever annual drop in profits since tracking began in 1999, with a drop of approximately $1.6 billion.
However, those who are worse off might be tempted to push their luck a little further, and this can be dangerous. With lay-offs abound and the economy slumping deeper into a recession, some people may turn to desperate measures to slough off some of their debt. And what’s worse, with this economy, getting out of any gambling debts will be even tougher.
Our suggestion here at 5 Point Capital is to treat gambling as you would any other leisure expense, such as dining out or buying new clothes. Look carefully at your budget and see exactly what you can afford to spend each month on gambling. Once you hit that limit, do not allow yourself to go over. And avoid the cardinal sin of budgeting gambling money—if you win money, this does not increase your pool of gambling money. This is your profit to keep. That way you only spend an affordable amount on gambling each month, and will never delve into debt. The worst case scenario is that you spend your gambling allowance, and the best case scenario is that you make a profit.
If you cannot afford to gamble, don’t start. That is the simple rule. If you cannot afford dining out, buying a new CD, or cable television, gambling should go as well. Consider it just as you would any other leisure activity. Budget a trip to the casino just as you would budget a trip to the beach or a cruise.
If you think you or someone you know has a gambling addiction, you can call the Gamblers Anonymous hotline at 888-GA-HELPS.