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Gambling and the poor

Cleveland has just opened its first casino with great fanfare after a great deal of debate on the morality of the gambling, and there have been long lines of people waiting to get in. I don’t really see gambling as a moral issue because there does not seem to be anything intrinsically wrong with people betting on random outcomes as a means of generating pleasure and excitement.

Gambling doesn’t really do anything for me personally because I am a risk-averse person and so the appeal of casinos eludes me. But once the initial crowds die out, I may go to the casino to check out the place but not to gamble, except perhaps for a few hands of blackjack. Over the last five years I attended a couple of education conferences, one in Las Vegas and the other in Biloxi, Mississippi, that were held in a casinos so naturally I visited those floors in the night to see what it was like. I actually spent most of my time talking to the people who worked there and ran the various tables, when there was down time at their site. They were very interesting but did tell me some sad stories about the addicts who came every day and could not seem to leave the place. I did notice that the supervisor kept checking me out, maybe suspecting that I was up to no good since I was just hanging around talking to his staff and not doing anything.

I found the whole atmosphere somewhat depressing, honestly. Very few people seemed to be enjoying themselves. The only exception was the craps table, which had action and a lot of noise and laughter. Another source of fun was the occasional arrival of small groups of young people who clearly were on road trips and just passing through.

The most depressing people to watch were those at the slot machines who played with dour and silent concentration. I just do not see the appeal of slot machines. With the other games one can use at least some strategy, even if the game is based on chance and the odds are always against you. At least the brain is involved to some extent. But the slots machines seem to be purely mechanical, and should have the same appeal as betting on a coin toss. But clearly some people are willing to spend hours and hours at them.

Who exactly patronizes these places and why do they go? I don’t know about casinos but this article in Wired magazine, about someone who cracked the scratch-card lottery ticket code, analyzed the people who purchase them.

While approximately half of Americans buy at least one lottery ticket at some point, the vast majority of tickets are purchased by about 20 percent of the population. These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax. (In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.) On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries—a source of hope for just a few bucks a throw.

5% of $12,4000 is $620 per year. That is a lot of money even for me, let alone for someone working for below minimum wage.

And this is what worries me about gambling. I don’t care about well-to-do people who lose money that they can do without. I do worry about people who think it can be a means of creating wealth and thus gamble more than they can afford and end up even deeper in poverty. A news report about the opening night in Cleveland had this item about the kind of thing that worries me.

Gayle Crowell, a cleaner for University Hospitals, arrived at 2 p.m. to get a spot third in line behind the wristband winners and was strategically positioned to get an unclaimed wristband when they were distributed. The slots enthusiast said she travels about twice a year to border state casinos like Presque Isle near Erie, Pa., and Mountaineer Casino in Chester, W.Va., but plans to be a regular at the Horseshoe Cleveland.

“I’m glad they are opening. We don’t have to go out of town to gamble,” said Crowell, who is in her 50s. “I’m going to be here all the time.”

As a hospital cleaner, she can’t be making much more than minimum wage. Having to travel to a distant place to gamble twice a year is one thing for a person of modest income. That, coupled with her playing just the slots, would limit her losses. But with a casino nearby she has the option of gambling regularly, perhaps even daily, and that is something else entirely and she could end up getting into serious financial trouble, like the people whose stories I heard about at Biloxi and Las Vegas.

For the right kind of addict, winning an occasional game presumably provides enough pleasure to compensate for the more frequent losses. But what gambling really provides poor people is something they have little of, and that is hope. For most poor people, the only way they can envisage for getting out of poverty is either gambling or, even worse, crime.

Comments

  1. says

    I find casinos an occasionally fun diversion. I think that gambling, like alcohol, is something most people enjoy responsibly, and when you try to ban it you just drive it underground and make all the associated problems far worse. I think well-regulated casinos could be a real boon and would like to see it become accepted in more states.

    The lottery, on the other hand, is another story. The way it targets the poor is shameful. Furthermore, while casino games tend to pay back 95+% of the money that players spend, the lottery only pays back ~50%, so you are getting a lot less bang for your buck. I think we are stuck with the lottery now, because so many people enjoy it that killing it would be a political non-starter… but I find it terribly distasteful.

    I did notice that the supervisor kept checking me out, maybe suspecting that I was up to no good since I was just hanging around talking to his staff and not doing anything.

    There are some cons which require a person to distract the pit boss or some other member of the staff — often by means of approaching them with an apparently innocent question. That might have had something to do with it… The only reason I know this is that just the other day I coincidentally stumbled across an interesting list of casino cheating moves here. Fascinating stuff!

    I found the whole atmosphere somewhat depressing, honestly. Very few people seemed to be enjoying themselves.

    Appearances can be deceiving. Sometimes it is similar to the expression on the place of someone who is playing a video game — or for that matter, reading an engrossing piece of literature. I have an anecdote on this…

    A couple of months ago, my wife and I went to a “Monte Carlo Night” charity event for some kind of special school a friend of ours is associated with. They had an auction, and then a little casino set up with fake money that you could then “spend” in a raffle. I was excited to get a seat at the poker table, because although I really enjoy Texas Hold-Em and want to learn more about it, I presently suck at it very badly and therefore it is too expensive to play for real :) (I tried at a friend’s bachelor party a year or two ago, and lost a hundred bucks in less time than I can afford to lose a hundred bucks. heh…)

    After 20 minutes or so, my wife came over and asked if I wanted to check out any other tables. I was doing well, but since it was phoney money I didn’t much care — so I cashed out and went with her. I’d been enjoying myself, but I was sure I’d also enjoy playing some blackjack or something with her.

    Turns out she thought she was “rescuing” me! The expression on my face led her to believe I was incredibly bored, and that I needed an excuse to leave the table. But in reality I was having a blast! We actually ended up getting in a bit of a fight before the misunderstanding was cleared up. I was engrossed in the game, concentrating on strategy, considering possibilities, trying to discern when opponent’s were bluffing… and apparently I don’t smile a lot when I am doing that. But I was most definitely enjoying it!

    So… hard to say. I agree with you about the slot addicts, though, I just don’t see how they could be having a good time…

  2. James says

    I enjoy gambling, but I don’t do it more than a once or twice a year, usually in a friendly poker game with a modest buy in somewhere between $100 and $200. I have only played slots a few times in my life and but I do find it relaxing in an odd way. I have seen the same type of people you described, sitting at the machines and looking almost robotic as they feed coins in. This is perhaps why I don’t play the slots more often. The key to success or at least avoiding catastrophe is that you have to be able to walk away from the slot machine when one of two things happens, you lose the money you rationalized at the start was okay to lose or you hit the amount of winnings you were hoping for. So even the slot machines require a strategy.

    I witnessed the sadist thing on my honeymoon 15 years ago. My wife and I were on a cruise and the dinning arrangements had us sitting with the same two other couples for dinner every night. One of the other couples was newlyweds as well. On the first night of the cruise the newlywed husband went into the casino, apparently after the wife went to bed, and he lost $2,000, the whole sum of the money they had been gifted and had saved for their honeymoon. Needless to say the wife was very bitter and cold towards her new husband, chastising him openly at the dinner table that he ruined their honeymoon. This couple didn’t even show for dinner the last two nights of the cruise. It was terribly sad.

  3. berior says

    Gambling IS an effective mean to create wealth… provided you’re the owner of the casino.

  4. Kevin says

    This pretty much says it all: “In a shocking consumer study, 21 percent of individuals surveyed – including 38 percent of those with income below $25,000 – reported that winning the lottery was “the most practical strategy for accumulating several hundred thousand dollars” of wealth for their own retirement. In addition, 16 percent thought that winning the lottery was the best retirement strategy for all Americans, not just themselves (Consumer Federation of America and The Financial Planning Association, 2006)”

    I just don’t know where to start. Do we teach probability at a younger age? Do we spread the message that even if you spend a million dollars in lottery tickets that you shouldn’t expect to win until long after you’re dead? Or are they right, is it impossible for someone to retire when they are living on minimum wage unless they play the lottery?

  5. Dunc says

    I just do not see the appeal of slot machines.

    Four words: variable ratio reinforcement schedule.

  6. Dalillama says

    They are entirely correct in their belief that th only way that they’ll ever have any savings for retirement is to win the lottery. Given costs of living and thirty years of wage stagnation, people making minumum wage typically havent’ got enough money even to save up for when the car breaks down and needs repairs.

  7. justsomeguy says

    A few years ago I had to travel from Minneapolis to Las Vegas to attend to the estate of my uncle, who died unexpectedly and with no closer family members. The city itself is a depressing place filled with sad, desperate people – the sheer number of pawn shops was a testament to that. When we went to the animal shelter to collect his dog, we learned that it’s the biggest one in the country (the shelter, not the dog, although he did overfeed the poor creature). I can only imagine how many of the animals in there were abandoned by their humans in order to perpetuate their gambling.

    As for the uncle: well, he liked gambling, and he was also meticulous about keeping financial records. He gambled enough to win quite a few $3000+ jackpots (low probability + high frequency will have that effect), but for every receipt displaying a high-value jackpot, there were two receipts from payday loan outfits. Even when he won, he couldn’t win.

  8. OverlappingMagisteria says

    I agree with you that slots are much less interesting than other games like blackjack. The only decision to make is how many coins to put in before pulling the handle.
    However, for me the appeal of the slots is they are typically much cheaper. It’s not hard to find a nickel or quarter slot machine, while blackjack tables will have a minimum bet that is much higher, at least $5 per game. If you’re a pessimistic cheapskate like me and are only willing to lose a little bit of money, your money will last a lot longer on a cheap slot than on a table game.

  9. Kevin says

    But is there really no other investment that has a better ROI than lottery tickets? Could that $600 be pooled together with a few other lottery players and possibly start a business? Surely that would be a better retirement solution, right? It would be pretty hard to sustain through the early years given the lack of start up capital but nearly everything beats the odds of winning the lottery.

  10. stonyground says

    Gambling, like any other ‘vice’ is harmless and enjoyable when done in moderation. There appear to be people with a certain mentality who will flush their lives down the toilet by gambling, that does not seem to be a reason for the rest of us to abstain from a harmless flutter.

    My wife and I enjoy horse racing. We stake the minimum amount which equates to £4 per race, normally six races, so the most that we can lose on a day is £24. We never lose every race and often come out in front. Even if you have a bad day betting, it is still a great day out.

    When my daughter was very young, I became very good at playing crane machines. I had to stop playing them because there was nowhere to put the huge piles of cuddly toys.

  11. SusanP says

    A slot machine is a common example used when teaching students about operant conditioning in introductory psychology courses. Intermittent reinforcement schedules that involve a person (or a pigeon, in the classic studies) getting rewarded unpredictably, like what happens with slot machines, leads to greater persistence in the learned behavior and greater resistance to extinction of that behavior.

  12. smrnda says

    Given that I studied mathematics and took plenty of courses in probability, I have never been able to gamble since I know that the expected value of about every single game is negative.

    As for poor people, if they saved the money they spend on gambling instead of buying lotto tickets, they would still be poor and it’s doubtful that many poor people have any chance of starting a business or any ability to pool enough money together to make any investments. I mean, perhaps the lowest-capital type business you can start is a software company, you just need some computers and knowledge, but it’s not something most poor people can just decide to do. Someone mentioned the figure of $600 – if you are making minimum wage, getting SIX HUNDRED dollars free to spend is a pretty incredible feat – most people I knew who were poor tried to save, but one single unexpected expense, like a doctor’s bill or having to pay for a prescription would just instantly destroy all their savings. If a poor person goes into business it’s going to be something with greater upfront costs and lower returns, like mowing lawns, and how long would it take to earn back the money for equipment? Businesses are normally started on credit which is tough to get if you are poor.

    So I’d say that the utility of a lottery ticket, to me, is less than zero. I know that any other way of spending my money is better. But for someone without the same options as me, it’s the only way they have of possibly getting ahead.

    I think middle class people support gambling as a way to generate tax revenue since they aren’t the ones who pay the cost – monetary or social – of gambling. It’s a tax that hits the poor the hardest, and it’s very American to want to ease the tax burden on the wealthy while finding a way to fix holes in the budget with poor people’s stagnant wages.

  13. Katkinkate says

    My sister goes to play the slots and Keno almost daily. She’s always telling me sob-stories about how much she’s lost today. I have little sympathy. She knows the odds, but there is either a disconnect between the knowledge and her emotions/expectations, or she’s just doing it for fun. I know she doesn’t have to worry about going hungry because Dad’s feeding her, but she’d be a lot richer if she didn’t keep giving her money away to the rich bastards who own the slot machines.

  14. mnb0 says

    I love gambling and betting, but only when the stakes are very low. I only play card games when there is a maximum stake of 25 cents. Then I can switch my brains off without any worries, can take excessive risks and lose ten bucks on an evening. For that money I have had a lot of fun during a couple of hours; of course the chatting is also an essential part.

    It is possible to beat slot machines. Play on until you win a reasonable amount of money and quit immediately. But I still don’t see the fun of it.

    ” I do worry about people who think it can be a means of creating wealth.”
    Your worry is very justified. Suriname, not a very rich country (my salary of 500 Euro a month is higher middle class), “enjoys” way to many lottery games on television. They all are very popular. The usual reason people participate is something like “once I’ll hit the jackpot.” They pursue a dream, confirmed by live reports of winners brought for the TV-camera.

  15. mnb0 says

    That’s quite similar to my attitude. 24 Dollars for several enjoyable hours is not much. There are more expensive hobbies.

  16. tajparis says

    Sure there are better investments for that $600, but I can’t think of any that don’t require being able to outlay the money up front or leaving it tied up for some period of time. Remember, that ~$600 for the lottery is spent a few buck each week. It’s certainly possible for that poor person to save that money up over the year and then dump it into, I don’t know, a CD or something. Then a few years later they will have earned a whopping 5% on their $600.

    When you’re working a crappy low-wage job, living in a crappy neighborhood, in a crappy apartment, surrounded by crappy neighbors, and maybe having the luxury of driving around a crappy unreliable car, it’s pretty easy to think “what the heck, it’s only $5, and people do win. I’ll just skip lunch on Friday.”

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