Frequently Asked Questions

Predatory gambling is when state governments partner with powerful corporate gambling interests to use gambling to exploit and defraud citizens and their communities across the United States.

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest. It’s exempt from truth-in-advertising laws, giving gambling corporations wide latitude to market gambling, grossly exaggerate chances of winning and aggressively lure citizens to lose their money.

Without the legal, administrative, regulatory, and promotional privileges provided by state governments, lotteries, regional casinos and other commercialized gambling operators would not be spreading into mainstream American life as they are today. They would likely still exist only on the fringes of the society.

Predatory gambling is far different than social gambling events like the office Super Bowl pool, your March Madness bracket or a Friday night poker game with the guys in the neighborhood. The differences include:

1. The presence of a “house” which means the participant will inevitably lose over the long-term.

2. The speed of the games

3. The “buzz” or high people get when they play.

4. The frequency of gambling and the length of time doing it.

5. The amount of money people lose

6. The business practices used to promote it.

The most revealing truth about the fraud behind government-sanctioned gambling is that nearly all of the people who profit from regional casinos and lotteries and the public officials who lobby to bring them in, don’t gamble themselves. (See the FAQ list below.)

The most profitable form of government-sanctioned gambling, slot machines, are designed mathematically so users are certain to lose their money the longer they play. At the same time, the machines are literally designed so citizens cannot stop using them, exploiting aspects of human psychology and inducing irrational behavior.[i] Every feature of a slot machine – its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics – is designed to increase a player’s “time on device” – which means how long a person plays.

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest. This drive for profits explain why lotteries are exempt from truth-in-advertising laws, giving gambling corporations wide latitude to market gambling, grossly exaggerate chances of winning and aggressively lure citizens to lose their money.

[i] Natasha Dow Schull, PhD, Addiction By Design, Machine Gambling in Las Vegas, (2012), available at http://press.princeton.edu/titles/9156.html

No. Government-sanctioned gambling has been a spectacular failure as a revenue source. It’s THE biggest budget gimmick and the calling card of anti-reform politicians across the U.S.

According to the Rockefeller Institute of Government at State University of New York-Albany, the organization doing the best independent research on public revenues from gambling: “In the long-run, the growth in state revenues from gambling activities slows or even reverses and declines.”[i]

That’s because income from government-sanctioned gambling does not grow over time like general tax revenue. In addition, expenditures on education and other programs will grow more rapidly than gambling revenue. Thus, new gambling operations that are intended to pay for normal increases in state spending add to, rather than ease, long-term budget imbalances.[ii]

Also troubling for taxpayers, gambling operators are not allowed to fail by the state. For example, when casinos come up short, states usually provide new infusions of money, reduced taxes, reduced funding for gambling addiction measures, or other concessions such as lifting smoking bans and loss limits, in order to sustain revenues and profitability.[iii] Rhode Island, Delaware, and New Jersey, to just name a few, have all taken special steps within the last few years to help casinos that might otherwise fail. Public tax dollars too often prop up gambling operators.

There is no debate among scholars that those who are financially desperate look to government-sanctioned gambling as a way to improve their lives and help them escape their financial condition.

It’s become a Hail Mary investment strategy, one that dooms them to inevitable failure. This is a critical issue because asset-building, the opposite of commercialized gambling, is almost non-existent for nearly half the country’s population.

States are marketing $50 lottery scratch tickets to low-income families, SEVEN TIMES HIGHER THAN THE STATE’S MINIMUM WAGE.

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest.

The business model for state lotteries and regional casinos depends on blatantly exploiting the financially desperate and the addicted. It cannot survive without these citizens.

Because of government-sanctioned gambling, millions of men and women and their families have sacrificed and hurt so much to provide needed revenues to American government, but no one has ever thanked them for their “service.” There are no parades with American flags fluttering in the breeze. No yellow ribbons.

Our country simply renders them failures.

“No taxation without representation” was one of America’s founding principles. After 45 years of state governments using lotteries and regional casinos to exploit and defraud their own citizens to extract as much money as possible, the time has come to add the principle of “No taxation by exploitation” beneath it.

To all the non-gamblers out there, “You Pay Even If You Don’t Play.”

  • The nation’s corporate and political elite have transformed gambling from a private and local activity into the public voice of American government, such that ever-increasing appeals to gamble, and ever-expanding opportunities to gamble, now constitute the main ways that our government communicates with us on a daily basis. Nothing else comes even close.
  • For the two-thirds of citizens who never gamble, they end up paying higher taxes for less services and worse state budget problems over the long term. They foot the bill for the inevitable budget deficits produced by state-sanctioned gambling.
  • They also pay in an even more damaging way. Government-sanctioned gambling is the sterile transfers of money from millions of ordinary people’s pockets into other people’s pockets, producing nothing new and nothing of lasting value. Its economic impact is similar to throwing your money on the street so someone else can pick it up – it redistributes wealth without creating it.
  • Because this nonproductive activity nevertheless uses up time and resources, it reduces our national standard of living. For all of us.

While there may be risk associated with buying shares in the traditional stock market, that is where the analogy ends.

Tellingly, nearly all of the people who profit from regional casinos and lotteries and the public officials who lobby to bring them in, don’t gamble themselves. But all of them put money into assets like stocks and real estate.

Why?

Because it’s a statistical certainty that the vast majority of people will lose money gambling at regional casinos and on state lotteries.

In sharp contrast, the Annualized Dow Jones Industrial Average Return (DJIA) including dividends reinvested was 11.02% between 1950 and 2016, for an astounding 66 year total DJIA return of 116,125%. While the DJIA can and has gone down in some of those years and that people can and do lose money speculating and trying to time the market, the record of steady, conservative stock market investing is excellent.

In addition, commercialized gambling operators hire the brightest people they can find (e.g. odds-makers, computer programming whizzes, sophisticated marketers) for the specific purpose of taking as much money as possible from customers. On the other hand, the investment industry hires the smartest and best-performing analysts it can find in order to help make money for customers. It’s about as different as it can get.

Watch one of the world’s greatest stock market investors, Warren Buffett, describe why government-sanctioned gambling is a public fraud and should be phased out.

No American jurisdiction has EVER documented a decline in illegal gambling after states began sponsoring gambling, regardless whether it is lotteries, casinos or internet gambling.

In fact, illegal gambling tends to increase for a number of reasons:

  • Untaxed illegal operators can offer better odds and tax avoidance that legal operations cannot.
  • Once gamblers start betting legally, they become less averse to gambling in unlicensed venues
  • Law enforcement in gambling states view illegal gambling as a state revenue issue rather than a criminal activity, making enforcement less of a priority.

It’s inevitable that the amount of illegal gambling will only increase if commercial gambling is authorized:

  • If the illegal gambling operators supposedly cannot be controlled, as the big commercial gambling operators cry,  then how can you control and regulate the gambling operators you license?
  • If you can’t shut down the illegal operators now, how would you possibly shut down licensed operators who don’t follow the rules?
  • When gambling operators call for “regulation,” what they really mean is government granting monopolies and awarding regulatory advantages to favored firms.

The criminalization of for-profit lotteries and casino-style gambling was successfully practiced for a large portion of American history. This does not mean illegal gambling was absent from society, but public institutions did their best to contain it. They did not incentivize citizens to lose their money gambling.

No group has suffered more because of government-sanctioned gambling than America’s youth.

  • Millions of kids are growing up in families who are financially desperate due in large part to adult family members gambling away their paychecks, household savings and government-subsidy checks.
  • Many kids now spend countless hours at home by themselves while one or both parents gamble regularly at the nearby casino or on the gambling machines at the local tavern.
  • Millions of American kids grow up to get hooked on government-sanctioned gambling.
  • Many kids make local headlines for being found left locked in the car alone in casino parking lots while their parent or grandparent chases their losses inside the casino.

With the zeal of a teetotaler, there is one truth that most commercialized gambling operators and the public officials they partner with all have in common: they don’t gamble.

Here’s just one of dozens of jaw-dropping examples:

“Most of the people I met inside I.G.T. told me they never played slot machines on their own time. When I asked one I.G.T. artist if he ever plays, he acted as if I had insulted him.” Slots are for losers,” he spat, and then, coming to his senses, begged me to consider that an off-the-record comment.”

This is an excerpt taken from a New York Times Sunday Magazine cover story on slots which included a visit to the headquarters of International Gaming Technology (I.G.T.), America’s biggest maker of electronic slot machines.

Watch “The Smartest Guys NOT in the Room:”

State government shouldn’t be telling people how to live by encouraging them to gamble on state lotteries or at regional casinos, especially on games they are guaranteed statistically to get fleeced.

In the process, they are violating the rights and freedoms of the two-thirds of the public who almost never gamble yet are being forced to foot the bill for the lower standard of living and budget deficits that state-sanctioned gambling leaves behind.

Government is not merely permitting private, consensual behavior like buying a square in your Super Bowl office pool. This is a big government program that actively sponsors gambling for-profit and promotes it by granting monopolies and awarding regulatory advantages to favored firms.

If people want to gamble, then continue to allow private and informal gambling with small and unlicensed games like office pools.

One can be a libertarian on this while at the same time believing that we cross an unacceptable ethical line when we go from allowing individuals to gamble to allowing our government to set up a massive marketing and distribution scheme urging people to do so.

explain desire to change financial condition, to escape. also distinguish between social gambling and predatory.

What separates predatory gambling from alcohol, tobacco and similar activities is predatory gambling is a big con game.

  • Citizens are being conned into thinking they can win money on games they are guaranteed to get fleeced.
  • All of the non-gamblers are being ripped off because they are footing the bill, experiencing worse public budget problems and a lower standard of living.

Government-sanctioned gambling is THE signature issue of anti-reform politicians from both political parties across the United States.

Instead of providing solutions to their state’s problems, these politicians placed the interests of powerful corporate gambling operators over the interests of ordinary citizens.

They passed the buck on difficult fiscal choices by promoting the biggest public budget gimmick there is: government-sponsored gambling.

But just as importantly, it is also political reformers from both parties who are the ones calling for predatory gambling to be phased out.

This explains why Stop Predatory Gambling is the most diverse organization in the United States, one in which progressives work side-by-side with conservatives to improve the common good.

  • State-sanctioned gambling is used as a tax and a revenue resource source for the civil government. Fundamentally, if a believer in limited government is true to their beliefs, they should oppose state-sanctioned gambling for this reason.
  • Any tax gives the civil government more power to grow while drawing resources from the private economy where they are more effectively used. From a free market standpoint, if the civil government spends more money on something, it undermines private entities ability to operate in that way thus providing those in the private sector less incentive to produce.
  • What about the costs to regulate gambling- whether it be casinos or lotteries? These costs are added public expenditures which limited government advocates are supposed to be against. Not only are we talking about more government spending, but the actual size of the civil government must also grow in order to operate its gambling program.
  • Early American lotteries were public-spirited and progressive, unlike current state lotteries.
  • A typical colonial lottery was instituted to finance specific public works projects, such as bridges or roads, and participation was seen more as a charitable contribution (like today’s raffle) than a form of gambling.

Present-day lotteries:

  • Have become a permanent revenue source for the states, and in the process, turned citizens into permanent habitual gamblers.
  • Their operations are contracted out to professional gambling firms
  • Their economic burden is regressive rather than progressive
  • Their customers are largely indifferent to their objectives
  • Political approval for modern lotteries was secured by promising to earmark funds for things like education and care for the elderly yet the actual use of lottery revenues has rarely, if ever, been so constrained.
CkirbyFrequently Asked Questions