The Deep Corruption of State-Sponsored Gambling

Long-time readers of this blog (both of you) know that I am no friend of gambling. One way to express my stand succinctly is to place myself on a spectrum of opinion ranging from the pro-gambling extreme of no legal or moral restrictions at all, to the anti-gambling extreme of total prohibition root and branch, all the way down to the private Saturday-night poker game among friends. On a scale where 0 is total-pro and 100 is total-anti, I'm about 85. I see no reason to interfere with small-scale gambling among friends and acquaintances, but when gambling becomes a large-scale business from which people earn their living, I start to get uncomfortable. Some new information I ran across recently has turned mild discomfort into acute dismay. But it is a dismay that few people share.

Like any habit, gambling can be addictive. Just as packs of cigarettes carry health-warning labels and booze ads caution users to "drink responsibly," many ads for lotteries and casinos feature 1-800 numbers to call in case you think your gambling is becoming a problem. What I didn't realize until I read Maura J. Casey's article in the November First Things magazine, is that many casinos make a huge fraction of their profits from a small number of gamblers who, by almost any definition, are addicted to the slots. And the slot machines are where an increasing amount of casino revenue comes from.

Casey cites a study by Harrah's, one of the big Las Vegas operations, that revealed the source of 90 percent of their profits: only 10 percent of their customers. Other studies from places as diverse as Nova Scotia and Australia confirm this pattern. So a very small number of people pour money into slots and other games literally as fast as they can push the buttons, and these people make the casinos profitable. And Casey shows how Harrah's has turned to scientific studies to optimize the design of slot machines so that people are not distracted by anything else and can play as often as ten to fifteen plays per minute. Clearly, someone in that state is not a fully rational individual, making the so-called informed choice that casinos claim as their justification for existence. "We're not forcing anyone to play," they say, but when you have a multi-million-dollar corporation with state-of-the-art monitoring and design teams on one side, and some poor cabdriver from Hoboken on his two-week vacation on the other side, most people would say it's not a fair contest.

Add to this the well-known fact that poorer populations spend proportionally much more of their income on gambling than wealthier folks do, and you have a classic case of exploitation. Not only do poor people spend more (one study cited in Scientific American showed that people who earn less than $12,400 a year spend an average of $645 a year-—over 5% of their gross income—on lotteries alone), but one neuroeconomist has found that simply feeling poor makes you more likely to gamble.

I am ashamed to admit that the Texas state lottery—a thing I thought the Baptists here would never allow—uses some of its revenues to support higher education, and indirectly pays my salary. I don't feel strongly enough about it to quit my job, though. That is one of those prudential judgments one has to make, like paying taxes despite the fact that the government spends some of your money on things you don't approve of. But this pattern of government sponsorship of gambling—either directly in the case of state lotteries, or indirectly in the case of state taxation of casinos—creates a deeply corrupt conflict of interest.

When poor, defenseless people are exploited by large, well-funded, well-organized corporations or institutions, there are only a couple of ways they can seek redress. They can organize themselves, but this is hard and poor people generally don't have a lot of free time to devote to organizing boycotts and going on protest marches. Or they can turn to the government for help. By any reasonable political philosophy, one important function of government is to defend people who cannot defend themselves against the depredations of powerful interests. But in the case of legalized gambling, the powerful interests either are supporting the government, or are the government. So this explains how hard it will be to turn back the corrupting tide of state-sponsored gambling that has seeped into nearly all states (Utah and Hawaii being the only exceptions by now), and that has insinuated itself into state budgets as what many view to be an essential revenue stream, especially in these fiscally constrained times. So there is almost a built-in barrier against doing anything through the legislative process to turn back the tide of legalized gambling.

I have a natural hope and a supernatural hope about this matter. The natural hope is that history's pendulum will eventually swing back. Lotteries were common in the early days of the republic—I believe Harvard's founding was partially funded through a lottery. But in the 1800s, public opinion turned against gambling, and if it has happened once, it could happen again. My supernatural hope is that God will act where governments refuse to help the exploited. I don't know when, where, or how, but that's up to God. As for the people responsible for the exploitation, well, the sooner they realize what they're doing and stop it, the better.

Sources: Maura J. Casey's article "Gambling with Lives" appears on pp. 37-41 of the November 2009 issue of First Things. The Scientific American piece on neuroeconomist George Loewenstein's study of how feelings of poverty affect gambling can be found at http://www.scientificamerican.com/article.cfm?id=dangers-irrational-brain. And one of the many studies showing how poor people spend a larger percentage of their income on gambling than other groups can be found at http://www.buffalonews.com/426/story/789628.html.