Addiction

Paul Sorvino in Goodfellas

It used to be that gambling was against the law, then governments figured out they could raise money using it and now it's everywhere.

From the movie "Goodfellas" I got the bit about how the mob boss provides protection for all those people who can't go to the police. They pay him a cut and he protects them, after his fashion.

When I was in school I had a class where we were studying old civilizations. The teacher told us about warlords providing protection for farmers and other peasants, and he asked the question: how much did he charge? People made various guesses, but no one got the right answer, which was half. One half of everything they produced. I don't think much has really changed. If you add up all the taxes you pay these days, I would not be surprised if it came pretty close to 50%. You've got your state and federal income tax, your social security, medicare, property taxes, taxes on beer, wine, liquor and gasoline. You probably also have sales tax. (I don't, I live in Oregon, neener, neener, neener.) Anyway, it's a bunch and it adds up to a big chunk of your income.

The mob makes their money off exploiting people's weaknesses. Gambling, prostitution, drugs, are all things people engage in, but they don't do it for any good reason. It is something innate with people that causes them to engage in these behaviors, not because they have decided that this would be the best course of action.

I heard something recently that said that the bulk of the profit from gambling casinos comes from the small percentage of people who are compulsive gamblers, and that makes some sense to me. Most of what you hear about casinos is that the games are setup so that, on the average, the house makes some small percentage on every game. What doesn't get mentioned as often is the flux.

If you are playing for small stakes, it doesn't make much difference, but if you are playing for large sums of money, the flux can make a big difference. On average, the house makes a small percentage, but sometimes you may get on a streak that can make you or break you. That is the flux. If you don't have enough money to stay in the game through a long losing streak, the house will break you. The house wins, and you have to go make some money somewhere else, probably by working at a job.

So every time the flux goes against someone to the point where they are broke, the house wins big time. And if you have someone who is compulsive, someone who can't stop when they are on a losing streak, the house wins easily. This is were the enormous profits come from, not from Grandma playing the nickel slots day in and day out. She might end up paying for the rent on her chair and the machine, but that's about it.

Now if compulsive gamblers were content to simply lose their own money and then go back to work, that would not be such a big problem. The problem is that they are similar to heroin addicts: they will do anything to get their next fix, beg, borrow or even steal. How many embezzlement cases have we read about where the culprit had a gambling problem? So maybe the Puritans had the right idea. Prohibit everything and maybe they will be able to survive even when the wolves are trying to seduce them into poverty.

So what, if anything, can we, or should we, do about any of this? Well, I don't think you are going to stop it. Gambling has been around as long as there has been money. Prostitution and drugs probably even longer. One thing we could try would be to try and identify those individuals who suffer from compulsive behaviors and try and help them learn to cope. This would be one of those expensive, feel good, liberal programs that the Republicans are always arguing against, and it would be very difficult to show any positive results for a long time. One measure of success might be the reduction in the number of embezzlements over a period of ten or twenty years. Of course, lax accounting or lax prosecution could have the same results. Many embezzlements go undiscovered for years, and who knows how many are never discovered?

Or maybe we should do nothing and let every man look out for himself. If you are so oblivious that someone can be robbing you blind for years, maybe you deserve to be relieved of your financial responsibilities, and more power to those who can exploit human frailties.

Update November 2015. Replaced picture with different one.