Gambling is seductive. I learned that lesson the first time my wife and I visited Foxwoods Resort Casino, one of the world's largest, in a cozy wooded town in southern Connecticut. We were playing the quarter slot machines, and Karen won about $25, which came pouring out in that delicious silver cascade of coins. We were hooked. And, of course, we lost it all before we left.
We are like America.
We are a gambling, risk-taking culture, perhaps a product of our frontier origins, where greed overcomes any vestige of Puritan temperance. I've not seen a discussion of how gambling has consumed us in the context of the catastrophic risk-taking that has led America to the brink of economic disaster.
America is addicted to gambling. Let us count the ways:
- State lotteries have been used more and more to fund essential government services, such as education. If you don't think lotteries penalize the poor, go to a 7-Eleven sometime and check out who is purchasing tickets.
- Casino gambling, much of it related to Native American tribes, has spread from places such as Las Vegas and Atlantic City to all corners of the country, including the Bible-thumping South.
- Poker -- especially Texas Hold 'em -- has become a television sport on ESPN and other cable channels. Online gambling, along with pornography, is one of the few businesses to make huge profits through the Internet.
The World Series of Poker is attracting younger and younger gamblers, many of whom learned their trade online as high school students.
- Fantasy sports leagues have changed the way people, especially men, view sporting events, not through the lens of their favorite team, but through the success of individual players they have drafted onto their virtual team.
- Sports gambling is huge in America. Oddsmakers advertise on sports radio programs, and almost every newspaper I know publishes the betting odds in agate type. An NBA referee is in prison for point shaving.
But what has this to do with Wall Street, you may ask. And I answer with two words: Day trading. I'm no expert on these markets, but I've read about day traders and have talked to a couple about their "work." They seem like gambling addicts to me, trying to time the markets on the thinnest of margins, hoping to score quick profits and avoid big losses.
The only stocks I own are part of my retirement plan, purchased through mutual funds. Every once in a while, with the help of an adviser, I move my investments around. This is supposed to be a responsible practice and has a name. It's called diversifying your portfolio. The idea behind it is to recognize the difference between risk and volatility. Volatility is defined as the normal ups and downs, some of them dramatic, that occur over short periods of time. Enlightened risk-taking, so it goes, is based upon the confident expectation that the markets will rise over long periods of time.
But every time I talk to my financial adviser, she asks me how much risk I am willing to assume, and she calculates that within her recommendations. Whatever we call it, I would argue that at its core, all such investments are a form of gambling. And when the culture of gambling overtakes the culture of managing risk, as it appears to have done in recent years in some of our most important financial institutions, the poorhouse is just around the corner.
I could argue that the public resentment against the heads of these failed and irresponsible companies comes from a sense of injustice that no one should be rewarded for their greed and stupidity at the poker table. In the old Wild West, Doc Holliday would shoot anyone with an ace up his sleeve.
With the exception of a few of the boys and girls reporting in places like Vegas, I don't see many journalists connecting the dots between our general addiction to gambling and what has brought the country to its knees.
how stabilizing it would be for Wall Street to establish...
