The Gambling Culture

A sermon delivered at the Unitarian Universalist Fellowship ofthe New River Valley, August 21, 2000,by Jim LIttlefield, Fellowshipp member, Professor of Marketing, and intrepid world traveler.

One of my interests is the study of anomalies in society, especially those involved with marketing. When I suspect that marketing is used to inflict harm on society, I am interested. I identify at least some of these as:

  • The Gun Culture Moses (Charlton Heston) recently was committed for alcohol abuse, so now we have some idea of where the NRA’s wild ideas have come from)
  • The Death Penalty
  • Multi-Level Marketing (pyramid schemes in general)
  • The Funeral Market
  • The Gambling Culture, which I will discuss today.

Why Study Gambling?

Ten years ago, there were only two states that permitted the operation of casinos. Now, more than half of the states have casinos and 48 states allow some form of legalized gambling. Americans spend more money each year on gambling than they do on groceries! This is in a country that cannot provide health care for millions of its citizens, cannot provide school rooms with adequate facilities, and has uncounted homeless wandering its streets. Although the organization called Gamblers Anonymous, patterned after AA, is hard at work, the number of people who suffer from problem or pathological gambling is rising. Problem gambling causes disruptions in people’s lives. Pathological gambling is an increasing preoccupation with gambling leading to mounting, serious negative consequences.

One of the worst features of gambling, engaged in by our State government and many others, is the promotion of gambling among our most vulnerable populations: the poor, less-educated and older. Gambling is touted as THE ticket out of poverty, offering a last chance to riches. It sells false hope to those who don’t know better. (Dr. Dobson’s Newsletter, July 1999). What is intrinsically wrong with this? Nothing, I guess, unless you care about squandered resources, people living with unrealistic hopes, people hoping for rewards without working for them. People in all states need more thoughtful, more compassionate attention from their governments.

Not convinced that we have a problem of gigantic proportions? Listen to this: More than $600 billion (that is a "B," folks) is spent legally on gambling each year. One in five homeless people attribute part of their poverty to gambling–yet 37% continue to gamble. Seventy-five percent of pathological gamblers have admitted to at least one felony to support their habit. It is reported that more money is spent on gambling in the State of Mississippi than is spent on all other retail sales combined. It appears that most Americans now think of gambling not as a vice, but as harmless entertainment. (Dr. Dobson’s Newsletter, January 1999)

But, the best is yet to come, my friends. Enter the word "casinos" into your Internet browser. The first suggestion that comes up is "Find Casinos Near You." Fortunately, entering Blacksburg, Virginia produces no casinos. Not for long, given the growth of the gambling industry. Enter Washington, D.C., and seven names and addresses come up, in both Maryland and Virginia. By the way, there is no mention of gambling in the industry literature. Now it is "gaming," implying that harmless fun and games are all that are at stake.

The second suggestion that comes up as a result of entering "casinos" is "Be a high roller." That takes you to a Web site called "Casino Gambling", with a sub-heading that says, "One of over 700 sites with host Bill Burton." The next step for many people, of course, is Internet Gambling, and that is growing by leaps and bounds. States are working to control Internet gambling, without much success. Despite the legal uncertainties regarding Internet Gambling, dozens of Web sites are accepting real money, while many others are allowing customers to play for fun while they wait for the legal waters to clear. (http://www.msnbc.com/news/130421.asp)

Virginia Representative Goodlatte is trying to get legislation passed to control Internet Gambling, but is having no "luck" so far, if you will pardon the expression..

The Lotteries

I guess if I lived in a state that permitted casino gambling, I would be spending more thought on those "games." Given that Virginia has so far had more sense than to allow such operations, I am most incensed by the Lottery, now called the Virginia Lottery, a very prominent state enterprise.

Dr. Philip Cook, a researcher under contract to the National Gambling Impact Study Commission, a federally funded group that submitted a major report in 1999, stated, "It’s astonishingly regressive. The tax that is built into the lottery is the most regressive tax we know." My analysis of the lottery is that it is a "tax on the hopeful whose foundation is ignorance," or, when I am feeling less kind, "a tax on playing dumb." It is clear to me that the knowledge of probabilities and statistics among our general population is missing in action. Otherwise, people would determine the expected value (what they would win with an infinite number of lottery ticket purchases) and see that it is far less than they are likely to spend, a terrible "investment" by any standard. CitizenLink, 10 September 1999)

I do realize that something else is going on in the minds of some of the people who spend their children’s food, clothing, and education money on the lottery. Many people really do know that they have no chance of winning, but they are so desperate that they see winning the lottery as their only chance in life to acquire what they wish and live the way they would like to.

During the National study mentioned above, most lottery directors testified that the impact of lottery revenue was beneficial to the state and its citizens. However, no state could prove that programs would not be funded without the lottery. Indeed, several states experienced reductions in actual general funding for programs for which lottery revenue was earmarked (e.g., education). CitizenLink (10 September 1999)

Who "Plays" the Lottery?

Five percent of all "players" account for more than half of all lottery losses. Each of those individuals will throw away more than $3,800 per year chasing a government-inflamed fantasy of getting rich quickly. People learn that study, sweat, and diligence have become outmoded means to success. Work is nothing but heart-attack-inducing drudgery (Massachusetts) or that the lottery "could be your ticket out" of poverty (Illinois). Individuals earning less than $10,000 per year spend more money on lotteries than any other income group. High school dropouts spend four times as much as college graduates. Blacks spend five times as much as whites. (CitizenLink, 15 October 1999)

Given that I started this discussion in a marketing vein, let me deal with a few marketing topics concerning the lottery.

Distribution of Lottery Sales Outlets

A study of lottery sales outlets in Delaware concluded some years ago that lottery machine locations were placed in the poorest areas where there are the highest unemployment figures. Where Delaware leads, can Virginia be far behind? I have not observed such yet, but there are supermarkets where player-activated lotto terminals have been installed on the customer’s side of the check-out counters. The customer can buy lotto tickets and choose the numbers merely by pressing the appropriate keys on the terminal. The total on the cash register includes the lottery tickets he or she has purchased while waiting for the groceries to be bagged. What convenience! (Lotteries, by Alan J. Karcher, 1989).

Lottery Advertising

State Lotteries spent in excess of $400 million on advertising and promotion in fiscal year 1997. Surely such expenditures have increased by 2000. Much lottery advertising is misleading; some is downright dishonest. The New Republic offered one example–the Washington D.C. Lottery: its slogan is, "A million a Day–Just Play." As of April 1998, no one had won more than $5,000. Lotteries typically advertise only the top prize, which can run into the tens of millions of dollars, and then give the odds of "winning" the lowest prize–often another lottery ticket. (CitizenLink, 1 April 1998)

The New York State Lottery uses two egregious examples of false advertising: First is, "All you need is a dollar and a dream," forgetting to state the miniscule odds of winning. The second is "Hey, You Never Know." Well, folks, I submit you do know. When the odds of winning are 1 in 14 million (Commonwealth of Virginia, as of 1 September 2000, as opposed to 1 in 7 million today), you know that the odds of winning are so low that virtually no one wins. Yes, yes, I know that someone often receives some money from the lottery. However, even though some "body" wins, I am assured that it will not be my body or yours, no body I can relate to, so for me, nobody wins.

I believe, and have often said, that advertisements do not create needs. They merely help to meet needs that already exist–and, yes, many people need and want to get rid of their jobs, spouses, and other impediments to the "good life," as they see it.

In the fall of 1998, McDonald’s restaurants in Colorado ran a "McLotto Meals" promotion, promising a free lottery ticket with the purchase of certain meals. (Dr. Dobson’s Newsletter, April 1999). As far as I have been able to tell, McDonald’s has not repeated this further development of our gambling culture, but when McDonald’s does something, can the other fast food merchants be far behind?

Marketing Research

The Commonwealth of Virginia has spent as much as $1.5 million per year to learn about Virginia’s gambling habits. Telephone pollsters surveyed hundreds of Virginians every week to find out why they play the lottery, and how they might play more. Small groups met every month to try new games, critique old ones and give state officials fresh ideas for advertising techniques. The lottery in Virginia even employed a chemist who developed a "scratchability" test for the latex on instant tickets. (Roanoke Times, 8 December 1996). I am not sure Virginia has continued this work; I haven’t gotten over the realization that it did it in 1996.

The Industry

Throughout this talk, I have referred to the gambling "industry." If you think I am overstating this, look up www.lotteryinsider.com, which touts itself as "The Leading source of lottery, charitable fundraising and promotional gaming news." In Volume 4, No. 9, I learned that the Illinois Lottery and Ameritech have come up with a scheme to award people a one dollar lottery ticket when they buy an Ameritech phone card for ten dollars. The next step is likely to be buying lottery tickets over the phone–and on the Internet!

In its defense, this source also reported on a recommendation by Robert R. Butterworth, a Los Angeles psychologist that the states limit people’s expenditures on Powerball lottery tickets. This was based on reports of people spending up to $10,000 on Powerball lottery tickets in anticipation of winning $250 million. Butterworth has investigated a sensation called "lottery fantasy syndrome," also reported by other counselors. "People purchase a ticket, ignore the odds and start thinking of the impossible: quitting their jobs, buying items that they’ve always wanted, going places that they have never been, and some even think of divorcing their spouses and starting their lives completely over," reports Butterworth. There are many other trade publications in this industry, and the publications, like "gaming" itself, are growing like topsy.

What Can Be Done?

First, there are the Recommendations of the National Gambling Impact Study Commission. The Commission made roughly 70 recommendations to Congress, the states, and the leaders of tribal governments around the country. Included were:

  1. A moratorium on further gambling expansion until more is known about its effects on families and communities.
  2. ATMs and credit machines should be removed from gambling areas.
  3. Internet gambling should be banned.
  4. Betting on collegiate and amateur sports should be banned.
  5. Warnings about the dangers of gambling, as well as the odds should be prominently posted wherever gambling is permitted.
  6. Federal truth-in-advertising laws should be applied to state lotteries.
  7. Political contributions from gambling companies should be restricted (not banned!).

Who Can Stop the Disease?

Maybe no one can stop the serious problems of gambling that are attacking our society. But, if we are to have some sensible changes invoked, I suggest four moves:

  1. Find out what the UUA has done in regarding to gambling and join in.
  2. Join the other churches in our community to lobby our state and national legislators for changes in the regulation of gambling, including the lottery.
  3. Demand that the Virginia Lottery conform to the federal standards of truth in advertising.
  4. Demand that the Virginia Lottery spend part of its proceeds on posting the odds of winning and the meaning of those odds to ordinary Virginians. I believe that posting the expected value of a one dollar expenditure would not be going to far (fewer than fifty cents?).

The Stock Market

There has been a remarkable run-up lately in the stock market, particularly in low dollar value, technology oriented firms with no profits and no apparent future profits (e.g., Amazon.com). I often wonder how much of this "insanity" is due to the Lottery mentality in the country–to the philosophy that facts do not matter, probabilities do not matter, only "luck" matters anymore?

Will you join me in fighting this battle?

Copyright 2000, James Littlefield; Commercial Duplication Prohibited
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