—George Washington in a letter to his nephew, January 15, 1783

The father of his country would be dismayed 225 years later to look upon his child. Legal lotteries in 41 states, horse racing in 43—these would have been familiar even to Washington. But the past quarter-century has seen an explosion in the availability of other forms of gambling, with full casinos legal in 10 states and on Indian lands in 16 others, card rooms in 5 states, and gambling machines (video poker, etc.) by the thousands in convenience stores and other locations in 6 states. And these are only the legal forms of gambling. Sports betting, at least 90 percent of it handled by illegal bookmakers, may run as high as $380 billion annually (the low-end estimate is closer to $80 billion). Most recently, the Internet has made all these forms of gambling available to anyone anywhere.

In assessing the impact of gambling, it is useful to distinguish between places—the neighborhoods, cities, or states where legalized gambling has taken hold—and people. After all, proponents of legalization have never argued that gambling benefits individuals, though subsequent advertising usually appeals precisely to that idea. Instead, they promote gambling as an economic enhancement to the general community. Lotteries and machines (“electronic gaming devices”) would provide money for education and other worthwhile government projects; casinos would be the core of a tourist-like industry, reducing local unemployment, bringing money to other local businesses, and generally improving the local economy. Opponents argue that casinos would also have negative effects on the area, attracting crime and perhaps other illegal commerce, like prostitution and drugs.

The results of various forms of legalization are mixed. Revenues from lotteries, even when dedicated to education, often merely allow states to cut back on other sources of revenue, thus shifting the tax burden to lottery players, who come disproportionately from the ranks of the poor, the black, and the uneducated. Lotteries function in effect as a regressive tax. Casinos, however, do reduce unemployment (though this may not hold for tribal casinos), and casino jobs are generally good jobs, better than what these employees could get otherwise. Casinos raise the value of commercial property, especially property close to the casinos, but not residential property. Particularly for economically depressed areas, introduction of casinos can spark community renewal, but the net effect on business is not always like that of general tourism, with local restaurants and shops flourishing. Often the revitalization affects a narrow slice of the region, as the history of Atlantic City shows. Twenty years after the glitzy casinos opened, the number of bars and restaurants had fallen by 80 percent, and many of the businesses that survive more than a few steps from the casinos are pawn shops and other downscale establishments—the gold coast and the slum, with little in between.

As for the attendant problems of crime, and so on, evidence, especially evidence of direct causation, is lacking. Some gambling centers—for example, Atlantic City and Las Vegas—have high rates of property crime because, as in nongambling tourist areas, the hotel rooms, cars, and sometimes tourists themselves make attractive targets. The crimes committed by losing gamblers desperate for money are likely to be nonviolent—embezzlement mostly and check fraud—and do not have great impact on the localities. Nor is there evidence that gambling adds to other forms of social blight.

If gambling has not brought problems to the areas where it has been legalized and in some ways has brought benefits, the same cannot be said of its effects on gamblers themselves. Most people who gamble lose money—an outcome assured by the odds; over the long run, the house wins, and the gamblers, collectively, lose. Moreover, the games played most frequently, state lotteries, take out the largest house percentage. Still, most people who gamble say they do so for the enjoyment rather than to win money (71 percent vs. 21 percent) and see their losses as a cost similar to that of other forms of entertainment.

For some people, however, gambling becomes a problem. In a typical cycle, even if the gambler starts off winning, he or she eventually loses and then gambles more in hopes of getting even; further losses lead to attempts to recoup, with the gambler tapping into other sources of money—savings, money that should have gone for household expenses (mortgage, rent, food), then credit card debt, loans, and even crime, in a logical if insidious downward spiral. Attendant problems can include loss of job, bankruptcy, divorce, arrest, substance abuse, and suicide, all of which affect not just the gambler but also his or her family and others.

Estimating the incidence of this kind of gambling is difficult. Researchers must rely on self-reports of embarrassing, shameful, or even criminal behavior, and they must be somewhat arbitrary in defining the condition and selecting a time frame. Most analyses distinguish “problem” gambling from “pathological” gambling according to the number of criteria among the 10 listed in the authoritative Diagnostic and Statistical Manual of Mental Disorders (e.g., preoccupation, chasing, lying). Researchers also estimate both “lifetime” incidence (whether the person has ever been a problem or pathological gambler) and “past year” incidence. The population estimates for lifetime incidence range from 0.8 to 1.5 percent for pathological gambling; for problem gambling, estimates cluster around 3.5 percent. Past-year estimates are of course lower: 0.6 to 1.2 percent for pathological gambling and 1.9 to 3.7 percent for problem gambling. The difference between lifetime and past-year rates—anywhere from 50 percent to 300 percent—suggests that many or most problem gamblers overcome the problem, whether by self-reform programs or by just aging out. These incidence rates translate to anywhere from 3 to 8 million Americans with a gambling problem, numbers which are dwarfed by other addictions like alcohol and drugs but which still constitute a social problem.

Undoubtedly, some causes of problem and pathological gambling lie within the individuals, their psychology, and perhaps their brain chemistry. But gambling is affected by external, social factors, notably the availability of gambling, the structure of the game itself, and the social situation of the gambler.

As gambling has become more available, the number of problem gamblers has increased. Areas within 50 miles of casinos have double the prevalence of problem and pathological gamblers. Games where payouts come faster are more likely to “hook” gamblers. In the old days, a horse-race gambler had to wait a half hour between bets. Now, at a track, an off-track parlor, or even from home, one can bet legally on races at several different tracks, and at many tracks, one can play slot machines as well. Casino games (blackjack, craps, roulette) offer one payout per minute. At slot machines, video poker, and other electronic gaming devices, a player can make 10 to 12 plays per minute. More important, with these machines available in ordinary stores, gamblers do not have to make a special trip, as they would to a casino. One Las Vegas psychologist has called the machines the crack cocaine of gambling.

The Internet makes all forms of gambling even more available than video poker machines in 7-Eleven convenience stores. Several factors about Internet gambling suggest that it will increase problem gambling. Because of its newness, however, evidence of its impact is thin. The Internet offers gamblers every form of gambling except state lotteries. Internet gamblers can play at a variety of sites simultaneously at any hour and from any location—home, school, or work. The anonymity and privacy of the Internet allow the gambler to keep the problem secret. By contrast, brick-and-mortar casinos train staff to identify problem gamblers among customers and employees, and even illegal bookmakers may try to help the problem gambler, interventions that are impossible from Internet sites. Finally, the Internet is more accessible to young people, who are more at risk of becoming problem gamblers.

The crucial link for Internet gambling may well be the credit card companies. The most important factor allowing losing gamblers to become problem and pathological gamblers is access to credit. If credit card companies and Internet money transfer companies like PayPal limit or ban payments to gambling sites, players will find it much harder to chase after lost money. Such a ban was at the heart of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which targeted the link between offshore gambling sites and U.S. financial institutions. As of this writing, the impact of the UIGEA on gambling, both pathological and conventional, and on land-based casinos remains unknown.

See also

• Bankruptcy, Personal; Deviance; Values