Gambling: America's Overlooked Addiction I

 

I've been thinking about gambling lately, and I believe it's one of the most overlooked problems in America.

I was listening to an interview with Anthony Pompliano, the Bitcoin investor and commentator, and he suggested that gambling may be one of the biggest problems facing our country. That got me thinking

about my own experiences.

I know something about gambling because I've been there.

Back in the early 1990s, I attended Gamblers Anonymous for a couple of years. My particular problem wasn't slot machines, horse racing, or poker. It was commodity trading.

Most people don't think of trading commodities as gambling. They think of it as investing or speculating. But when you're trading with borrowed money and enormous leverage, the distinction can become pretty meaningless.

In those days, I was sometimes trading with leverage of approximately 20 to 1. That means a relatively small movement in the market could wipe out your investment.

And here's the really dangerous part: When things are going your way, you begin to think you're a genius.

You make money. You make more money. You start thinking you've figured out the system. Maybe you'll be rich soon. Maybe you'll never have to worry about money again.

Then the market turns against you.

Suddenly, your profits disappear, your original investment is gone, and you may even owe your broker money.

I've experienced that kind of thinking, and it isn't pleasant.

The Gambling Mentality

One of the things I learned in Gamblers Anonymous is that gambling isn't necessarily about money.

It's about excitement.

It's about adrenaline.

It's about the anticipation that something wonderful is just around the corner.

You convince yourself that the next trade, the next lottery ticket, or the next spin of the roulette wheel is going to change your life.

And sometimes you win. That's what makes gambling so dangerous. Winning reinforces the belief that you can do it again.

But the losses eventually catch up with you.

I think gambling also has a connection to the economy. When people are struggling financially, they may become desperate for a way out.

Instead of gradually improving their situation through work, saving, and careful spending, they look for a shortcut.

Maybe it's the lottery. Maybe it's sports betting. Maybe it's trading options or commodities on margin.

The common thread is the hope of getting rich quickly.

Of course, not everyone who gambles is financially desperate. Some people have plenty of money. They're simply addicted to the excitement.

And some of us experience both motivations.

Now We Have Cryptocurrency

Today, I find myself dealing with some of the same temptations.

I trade Bitcoin, and I've used leverage of approximately three to one on Kraken.

That's considerably less than the 20-to-1 leverage I once used in commodities, but it's still dangerous.

A market decline can do enormous damage when you're using borrowed money. And cryptocurrency is particularly volatile.

I believe Bitcoin has a future. But believing in an investment doesn't mean that borrowing money to speculate on it is a good idea.

That's something I have to keep reminding myself.

There's a difference between owning an asset because you believe in its long-term value and risking money you can't afford to lose because you hope to make a fortune.

Sometimes that difference is more psychological than financial.

The Mind Can Play Tricks on You

I've had my own struggles with mental health over the years.

My mind has sometimes produced elaborate delusions, including imagined adventures involving Hollywood celebrities and even time-traveling combat.

I mention this because I know how convincing the mind can be, even when the things it tells us aren't grounded in reality.

Gambling can create its own kind of distorted thinking.

You begin believing that you're smarter than the market, that a losing streak has to end, or that one more trade will recover everything you've lost.

You can convince yourself of almost anything when you desperately want something to be true.

And when you combine that kind of thinking with borrowed money, the results can be devastating.

Why Don't We Take Gambling More Seriously?

We've spent decades warning people about alcohol and drugs.

We've developed treatment programs, support groups, and public education campaigns. Although those problems certainly haven't disappeared, at least we recognize their dangers.

But gambling?

We advertise it everywhere.

Sports betting has become part of watching a football game. Lottery tickets are sold at convenience stores. Casinos promote themselves as entertainment destinations. And anyone with a smartphone can speculate in financial markets at the touch of a button.

We're making it easier and easier to gamble while often failing to recognize the people who are getting hurt.

The damage doesn't stop with the gambler.

Families suffer. Marriages break down. Savings disappear. Retirement accounts get emptied. People borrow money they cannot repay.

And sometimes the gambler keeps going because admitting defeat seems worse than losing even more.

The Lesson I Keep Learning

Looking back, I sometimes wonder how different my financial life might have been if I had simply worked, saved, and invested conservatively.

I probably would have been better off.

But knowing that intellectually and living by it are two different things.

That's the problem with gambling addiction. You can understand the mathematics, recognize the danger, and still feel the temptation.

I learned a great deal from Gamblers Anonymous, and perhaps the most important lesson was that I wasn't alone.

There were other people who thought the way I did. People who chased losses, dreamed of sudden wealth, and repeatedly convinced themselves that the next time would be different.

I'm not writing this as somebody who has all the answers. I'm writing it as somebody who still has to examine his own behavior.

Maybe that's where solving America's gambling problem begins: recognizing that gambling doesn't always look like gambling.

Sometimes it looks like an investment account.

Sometimes it looks like a financial opportunity.

And sometimes it looks like the answer to all your problems.

But the promise of easy money can turn out to be the most expensive promise of all.

— Working the System