Who’s really winning at the slots? It sure ain’t you! Casino gambling brings in $71.1 billion per year, while state lotteries produce another $80.5 billion, and horse racing tracks generate an additional $4 billion every year. The grand total for gambling revenues comes to $250.5 billion.
This all goes to casino owners and stakeholders — and the government that taxes them. The gambling industry generates more revenue than movies, sports, and music combined.
Why Governments Love Casinos
In the U.S., the Federal Government takes a mostly hands-off approach to gambling, leaving it to local government to regulate, except for casinos that are on Indian reservations granted by federal treaties. Income from gambling is also taxed by the Internal Revenue Service, so the government has an incentive to leave gambling alone.
Gambling also has its lobbyists who convince legislators and politicians that gambling is good for the economy. The industry contributes money to politicians and political parties, making supporting the gambling industry even more of a winning proposition for those running for office.
Around the world, taxing and regulation varies and governments are trying to keep up with the expanding industry. In the United Kingdom and Macao, new laws are being made to regulate the growing presence of resort-style gambling properties.
Online gaming has been around for a few years now and is the new frontier for gambling. As the online gaming industry is maturing, governments are putting in more effort to license and regulate online casinos. While this may help ensure that players' accounts and money is secure, it will also – you guessed it — make governments even more money.
The Odds of Winning
Gamblers share an optimism about beating the odds. In reality, beating a casino's odds falls somewhere between tough and impossible. Taking all forms of casino gambling into account, spending $100 an hour in the gaming house results in an average loss of $5.00 per hour.
The fun slot machines make up two-thirds of all revenue collected by casinos. People mistakenly believe that some machines have "hot streaks" when they pay out more. Of course, this isn't true: the odds of winning at slots are 35:2. In fact, these are the worst odds in the casino. The odds of winning the top prize are as high as 1: 33,554,000.
At blackjack, gamblers lose 75% of the time. Winning bets seldom make up for the amount lost on previous bets.
The odds on craps are 17:1 and the odds of winning ten times are zero.
The reason many gambles claim they win is they don't count the money spent at the table. They only count the amount of the bet that won.
People are more likely to sight a UFO than to win the lottery. They are also more likely to die of a flesh-eating disease, get hit by lightning, or die in a car accident.
Who Plays the Lottery
The poor tend to be attracted to gambling because it levels the playing field, making it just as likely they will win as a rich person would. Studies have shown that most lottery tickets are bought in poor neighborhoods. Gambling in general hurts the poor disproportionately, and this is especially true of lotteries.
People in the lowest fifth of income levels are the most likely to play lotteries. When a person reaches his or her 20s and 30s, the rate of gambling tends to go up.
Despite all the money the industry generates for local and national economies, gambling revenues come with a high price tag. Gambling costs society much more than the money people may lose playing the odds.
In the U.S., problem gamblers as a group cost $53.82 billion in treatment over their lifetimes, and this doesn't even begin to cover the real costs. Estimates are that 20% to 30% of habitual gamblers declare bankruptcy compared to a bankruptcy rate of 4.2% among the non-gambling population.
Some 36% of addicted gamblers also lose their jobs, and gambling is related to 40% of the drug problems in the United States. As much as 90% of pathological gamblers gamble with their paychecks or family savings, while 60% of this same group borrow from friends and relatives and another 20% raise money from loan sharks.
Problem gamblers who steal money to feed their habit report taking an average of $135,000 per gambler. Add the lost work hours due to gambling, and the price of gambling addiction rises by another $45 million.
One of the hidden costs of gambling is welfare and other government support. Many gambling addicts end up needing assistance in the form of food stamps and housing subsidies. Ten percent of problem gamblers also receive unemployment benefits.
Then there are mental health and rehabilitation costs, with problem gamblers needing an average of $350 worth of psychological treatment a year, and those who seek long-term treatment incurring $1,000 per gambler. Only 8% of gamblers who receive treatment successfully stop gambling.
Some problem gamblers end up in prison, and the cost of keeping these people in the system is approximately $4,000 per year, per person in the U.S.
It's clear that when it comes to gambling, we all lose.
Better Ways to Make Money Fast
Outside of just buying a "good" stock and holding on to it long term, some smart people have been known make money with swing trading.
Swing traders may hold a stock for as little as a day or a few weeks. They learn to spot short uptrends in a stock's chart pattern. They buy as the stock trends up, then sell when it reaches a peak. Spotting the peaks and valleys is a skill that can be developed over time.
Another option to consider is peer-to-peer (P2P) lending, which has become a big business in recent years. P2P lending platforms connect borrowers to lenders quickly and cheaper than a traditional bank or lending institution. The investor chooses who to give money to and receives payments in interest. These investors use companies that screen the applicants, which reduces the chances of default.
According to Forbes, compared to stock markets P2P investments are less volatile and promise higher returns than traditional investment portfolios. As many government bonds are currently not giving any yield to investors or are in the negative, P2P loans are a better investment idea. Lending Club, Prosper, and Upstart are all highly-regarded P2P loan platforms.
Flipping houses can be an attractive option for making a fairly quick turnaround on a larger investment. The idea is to buy a house, fix it up, and sell it for more than was paid. The turnaround time on this investment can be weeks or months — but may take years if the house is bought at the wrong time or if the investor runs out of money for renovations. A person who buys an undervalued house in a good neighborhood and repairs it can get a big return on investment. Because there's a lot of money involved, this investment is best for people who know something about the housing industry and have personal experience or connections in construction, so they can get the best deals and greatest returns.
The Bottom Line
Gamblers who believe luck is on their side are deluding themselves. Casino odds are the same for everybody when it comes to gambling — and the odds of winning are pretty grim.
Instead of running the risks of losing it all at the casino, there are much better ways to invest and grow your money. There are investment options for every budget, and there's absolutely no way that any form of gambling is going to get you a better return on your money.
With all forms of investment, it pays to be educated. If you're just getting started, make sure to read the fine print and speak to a pro before you put your money down.