Minnesota State News sat down with Baylor University economics professor Earl Grinols last week following his testimony before the Senate Health and Human Services Committee regarding the social consequences of gambling. A summary of his presentation can be viewed here.
MSN: Can we really prevent gambling in the age of the internet? I can Google “sportsbook” and probably find 30 overseas websites that are happy to take my money.
Grinols: Yes, I think you can. Technology lets us do all kinds of amazing things, especially on the internet. But I would rephrase the question. Can we prevent people from speeding on our highways? It’s pretty clear that you can’t prevent people from speeding even with speed limits. That’s not an argument that speed limits are ineffective.
MSN: That’s an interesting analogy. One analogy I thought of is the drug war. Does that fit, that perhaps you can’t defeat it but you can limit some of the social consequences you discussed today.
Grinols: I think that’s an interesting comparison, because many prominent economists—including Nobel Prize winner Milton Friedman—argued we should legalize currently illegal drugs and that would solve a lot of the problems associated with it. The issue I think has to do with the physical damage done by both. Many young people are led to make irrational choices, in which case it’s one of those rare instances when governments need to step in.
MSN: Talk, if you can, about gambling addiction itself. Is it chemical, emotional…?
Grinols: We are learning there are similarities in how all addictions affect the human brain. Research suggests that gambling addiction is no different than other forms of addiction and ought to be treated in the same way. There are people that have gone “cold turkey” off of heroin. They beat it; they just went of the drug. Other addicts can never seem to quit; they weaken and go back to it. Those patterns are present in gambling addiction. Thus it’s my guess that gambling addiction is a medical phenomenon very close to any other kind of addiction.
MSN: Is it fair to lump all gambling together? Can you put slot machines on par with, say, Texas Hold ‘em, which requires great skill to be successful?
Grinols: I think different forms of gambling have different degrees of harm attending them. We know slot machines are the worst form of gambling. Other kinds of gambling have lesser forms of issues. The lottery is an example of a form of gambling that is probably not as harmful as others. The main argument against the lottery is that poor people— maybe stupid people— tend to use the lottery more than others. So you might have an objection that you’re gathering money from a group of people you might not think should have to pay for it. On the other hand, it’s a voluntary activity. Also, it’s hard to lose $30,000 or $40,000 in an afternoon playing the lottery.
MSN: Do people in places like Las Vegas and Atlantic City, where gambling is legal, do they exhibit the social consequences you describe?
Grinols: Both cities have immense quantities of gambling available to local residents. Of course, they make most of their revenues from people outside their area, which makes them different from casinos of convenience. The social problems of those two cities are huge and they are present. But on the other hand, they are more equipped to address those issues because they are taking in so much money from the outside. But compare that with the Mall of America, where you bring in outside revenues without any social harm, with possible exception of congestion and more traffic police.
MSN: I’ve heard some people say if they wish to outlaw gambling they should ban day-trading as well. Is that a fair comparison?
Grinols: I have been asked that question many times. Shouldn’t the stock market, which involves risky gambles, be treated the same way as casinos? The two do share certain inherent risks and uncertainties. The risk people face in trading is present and cannot be discounted. But the expected return on gambling on a slot machine is negative, whereas the expected return on investing on the stock market is positive. The difference is one group avoids risk, while the other is seeking out risk and has a negative expected return. They are different activities.
MSN: The federal government has been cracking down on credit card companies, making it more difficult to make online overseas transactions. But people can still easily use money orders and things of the like to deposit funds into offshore sportsbook accounts. Can we afford the roadblocks necessary to truly prevent gambling?
Grinols: There is always going to be expense attached to prevention. If the cost of limitation exceeds the benefit of the objective it’s something you don’t want to do. I’d say that telling credit card companies they can’t process gambling debts or gambling related expenses is about as cheap as you’re going to get.