New Internationalist

Bust! the gambling boom

Issue 412

Welcome to the flashing lights of the world casino where plankton play fruit machines. David Ransom on the globalized world of gambling and the jaw-dropping gambles of the globalized economy.

There’s always a chance that the light at the end of the tunnel is an on-coming train. But what chance? You can work it out if you wish – depending a little on the circumstances, it’s apparently about one in five.1 In fact, you can work out the odds on almost anything – even the outcome of the current boom in gambling itself.

And boom there certainly is. In the US, the burgeoning wonderworld of Las Vegas is now all but matched by Atlantic City – in 2006 they had earnings of well over $100 billion between them.2 In Britain, the Church of England recently bewailed the ballooning national spend on gambling, which has risen in each of the past four years by $8 billion to $80 billion.3 More than two-thirds of the adult British population now has a regular ‘flutter’.4 Why, the country even has its own, industry-funded Centre for the Study of Gambling at the venerable University of Salford. In Thailand, where citizens – if not tourists – have for years been barred from casinos, the Government, in a change of heart, has announced plans for several new ones.5 The Norwegian Government, which retains a monopoly on gambling, is under assault for ‘restraint of trade’. In New Zealand/Aotearoa an invasion of Australian ‘pokies’ – a voracious form of slot machine – included a toy pokie designed for use by children aged as young as three.6 Online gambling is only in its infancy, but already matches pornography as a source of spam – and as the most lucrative trade on the internet.

What’s going on? And why now?

*Hard-wired*

After all, gambling has been around for just about as long as anyone can recall. In one sense, everyone is a gambler. Consciousness perches precariously on a present strung between a past that cannot be changed and a future that can only be guessed at – the occasional leap in the dark is hard to avoid altogether. Psychology suggests that gambling is in some way ‘hard-wired’ into the human psyche. At climactic moments it may even compare with sex, which it also rivals – along with alcohol and narcotics – in its compulsive potential.

The throw of the dice or the fall of the tarot cards have been used over the centuries as a relatively painless alternative to organized religion in divining the will of god or defying the dictates of doom. Such insolent practices have, naturally, met with severe religious proscription. In public, gambling has invariably been condemned as a ruinous vice. Cautionary tales permeate folklore, tragedy and comedy alike.

The Russian novelist Fyodor Dostoyevsky (himself an inveterate gambler) took the bull by the horns in The Gambler. He places a quarrelsome band of chancers in a hotel in Roulettenberg, where they await the demise – and legacy – of a wealthy ‘Grandmother’ in Russia. Unhappily for them, she turns up in Roulettenberg herself, carried aloft in an armchair by servants, and takes to the roulette wheel on her own account, with predictable results.

I once came across a seafarer who told me that, during World War Two, he had been rescued from the mid-Atlantic after being torpedoed and cast adrift in an open boat – twice. The chances of being saved in this way even once were, he assured me, vanishingly small. You might have bet that his life would be blessed with good luck. Unfortunately, so did he. In the end, labouring on the US railroad, shunted into a siding in the Midwest, soaked in booze and bored to distraction, he lost his last penny betting on which bird would be the first to fly from its perch on a telegraph wire.

*Winners and losers*

By convention, gambling is best confined to the hopelessly poor, who have nothing to lose (though they may also lack the stakes), and the unduly rich, who can afford it. The earliest official lotteries in Britain – used to fund colonial adventures, particularly in North America – were always won by the nobility, who were the only ones able to buy a ticket. In the 18th century, members of the exclusive White’s Club in London took to betting on which of their number would be the first to topple off their armchairs into the great beyond. Rather more recently, the legendary Australian gambler, Kerry Packer, is reputed to have lost $30 million in a single session – but, as a proportion of his total wealth, this represented less than a day’s earnings.7 =paragraph However, deep in the recesses of the European Enlightenment, something else had stirred. Two French mathematicians, Blaise Pascal and Pierre de Fermat, perfected a theory of probability. They demonstrated that, with the judicious use of calculation and circumstance, one could work out probability – and, if one acted accordingly, in the long run one could win. The theory found its most celebrated expression in ‘Pascal’s Wager’, which suggested that, in the longest run of all, the safest bet is always on the existence of god.

If the world is a dictatorship of vengeful gods then there is, paradoxically, little point in putting this theory to the test. But if probability is a rough guide to the future, speculation becomes a reasonable basis on which to build a new order – a purpose slowly beginning to emerge from the superstitions of the medieval era in Europe. Industrial capitalism was, at the time, only in its infancy, but it offered an excellent vehicle for experiment, producing wonderfully material results. Aided by science – which begins with speculation of a rather different kind – risk-taking was elevated to a virtue, economics to the science of self-encrichment. Why have a flutter on the weather or that twitch in the armchair opposite, if the pickings from tulips, guano or railways were that much richer? What was more, wealth accumulated in this way might be taken as a sign of blessing by god, dispassionately dividing people into winners and losers.

As a social model this did, however, have its limitations. It takes time for probability to work its way through. This implies the progressive impoverishment of the poor, who lose in the short run and are taken out of the game, and the cumulative enrichment of the wealthy, who can ride out the losses until they win.

The legendary Australian gambler, Kerry Packer, is reputed to have lost $30 million in a single session – as a proportion of his total wealth, this represented less than a day’s earnings

The problem was that capitalism resembled this model a little too closely. So, in much the same way as like magnetic poles repel, fine moral distinctions between the two had to be created. ‘Gambling’ would be confined to an underworld of charlatans and mobsters. Gangsterism was necessary because hard cash is invariably taken off the average gambler by ‘the bank’, and control over this kind of certainty leads quite naturally to violence. So the authorities had reason to intervene, issuing permits and licences, which in turn opened the way to taxation – and a mutual advantage in keeping the game in play. Meanwhile, legalized ‘gaming’ would be restricted to the outcome of games and sports, suggesting the leisurely nature of a harmless pastime.

In the first half of the 20th century this formal distinction became a little harder to sustain, what with the engulfing violence of two world wars, the fortunes lost in the Wall Street Crash or gained from the war economy, and the worldwide impact of the Great Depression. Despite official assurances to the contrary, and the increasing orthodoxy of capitalism, the underlying similarity between capitalism and the casino became more explicit as the system itself became more dominant. This was symbolized in the second half of the 20th century by a sort of tribal ritual, acted out around the enormous profits to be made from gambling. The triumph of ‘deregulation’ allowed for the transfer of control over the Las Vegas casinos from the Mafia to Wall Street, and the emergence of giant, globalized, utterly conventional ‘entertainment’ corporations in the process.

*Regeneration*

Perhaps the oddest outcome was in Britain. A Victorian legacy of regulation meant that the British were still under-performing in the gambling stakes in 1993, when the National Lottery was launched. Since then, according to Camelot – the corporation that runs it – the Lottery has funded ‘the biggest programme of civic regeneration since the 19th century; that is, an average of 93 lottery grants for every single postcode district’.8 With the Labour Government in 1997 came an insistent corporate proposal to launch a network of super-casinos (warehouses for slot machines), of which Britain was sadly deprived. These would ‘regenerate’ urban wastelands, much as they were said to have sustained Native American reserves in the US, suggesting that by now gambling could be associated with social justice and the traditions of the Labour Party. Ludicrously misconceived, the proposal was diluted and then dropped.

Even so, when the US Government moved to outlaw internet gambling, the British Government jumped to the defence of the biggest players – PartyGaming, Sportingbet and 888, all of which turned out to be based in Britain. The European Commissioner for Trade, former Labour Party Svengali Peter Mandelson, duly warned that ‘discrimination against EU companies cannot be part of the mix’.9 Gambling had arrived, an industry like any other, with shareholders, CEOs, fancy ‘remuneration’ packages, a huge payroll, university degree courses, political donations and influence to match.

*Plankton and microbes*

There is, however, one basic distinction that needs to be made. Betting on some things, like horse racing, blackjack or poker, can involve an element of skill. There are professionals who use complex systems based on probability theory to make, in the long run, a very comfortable living indeed – they may not think of themselves as gamblers at all. Casinos do their very best to keep these people out.

But roulette, slot machines and lotteries are at once the most random, the most addictive and by far the largest, most lucrative component of this new gambling ‘industry’. It is sustained by people who are known to the industry as ‘plankton’ and will necessarily lose. Slot machines in particular are programmed to ensure that, while jackpots keep hope alive, probability works for the machine, not the gambler.

The dealers of Wall Street or the City of London might prefer to imagine that what they do resembles the first kind of gambling rather more than the second. Certainly, the computerized formulae from which they make their money have their roots in the mathematics of probability. But then, seemingly out of the blue, there comes a ‘crash’, and it is clear that they’ve been promoting pokie machines all along.

How on earth could the worst financial mess since the Great Depression have been triggered by mere ‘sub-prime’ people in the US? How could this possibly have led to the ‘securitization’ of the world’s entire financial system? It seems to make no sense at all.

Until, that is, you recognize the resemblance between sub-prime people as they’re perceived by high finance, and plankton as they’re perceived by the gambling industry. Both are prey to what is, essentially, the same predator – ‘the bank’, an alchemist that can make hard cash for itself out of converting human hopes and dreams into almost anything, including calamitous fantasy. The only difference is that when things go sour for high finance, the sub-prime plankton who bet are replaced by the microbes who pay taxes, keeping the same fundamental law in place – the bank cannot go bust. Despite the blood on dealing-room floors, the confessions of greed, the lessons duly learned and the reforms earnestly proposed, the bonuses are still paid to some, the homes taken from others, and the hopeless addiction deepens, permeating the social fabric more profoundly as it goes.

Just how profoundly can been glimpsed in this description of archetypal compulsive gamblers, based on the hard-earned experience of Gamblers Anonymous:

‘A lot of time is spent creating images of the great and wonderful things they are going to do… They often see themselves as quite philanthropic and charming people. They may dream of providing families and friends with new cars, mink coats and other luxuries. They picture themselves leading a pleasant, gracious life… Servants, penthouses, nice clothes, charming friends, yachts and world tours are a few of the wonderful things that are just around the corner…

‘When they succeed, they dream still greater dreams. When failing, the depths of their misery are fathomless, as their dream world comes crashing down. Sadly, they will struggle back, dream more dreams… No-one can convince them that their great schemes will not someday come true… for without this dream world, life for them would not be tolerable.’10 =paragraph A guesstimate (based on one of the most detailed recent surveys) of the number of compulsive gamblers is 0.5 per cent of the British population, or 30 million people if replicated worldwide.11 Implicit in their experience is a lurking dissatisfaction, an absence of meaningful hope in prevailing circumstance, a despairing urge to beat the system at its own game. Not for nothing is the corporate motto of Camelot: ‘Serving the nation’s dreams.’

But how different are compulsive gamblers from everyone else? Exactly what distinguishes the dreams of the compulsive gambler from those of consumer society? Plainly, very little indeed. And so what? Are we not, indeed, hard-wired in just this way?

*Short-circuit*

Well, people are hard-wired in all sorts of ways, including the instinct for survival, the desire for peace or security. Some of these circuits run in opposite directions and are more liable than others to blow a fuse. The dreams of the compulsive gambler short-circuit, turn to self-destruction – life is reduced to winning at a game of pure chance, without reference to justice, value, reason or civility. This may illustrate many things, but surely not the best principles on which to found a just and durable society.

‘However ridiculous it may seem to you that I was expecting to win at roulette,’ brags Dostoyevsky’s narrator at the outset of the novel, ‘I look upon the generally accepted opinion concerning the folly and the grossness of hoping to win at gambling as a thing even more absurd. For why is gambling a whit worse than any other method of acquiring money? How, for instance, is it worse than trade? True, out of a hundred persons, only one can win; yet what business is that of yours or mine?’

Roulette, slot machines and lotteries are at once the most random, the most addictive and by far the largest, most lucrative component of the new gambling boom

By the end of the novel, his outlook has darkened to blackness: ‘Who am I? I am zero – nothing. What shall I be tomorrow? I may have risen from the dead and begun life anew.’

Pascal’s Wager is the only one left.

When this particular circuit prompts the self-destruction of an individual, it may add pace to a story, even some great novels along the way. But when it prompts the self-destruction of ‘stakeholders’ in human society, and thereby even the planet they inhabit, the option no longer exists. Probability turns to certainty, the odds come down to zero. With this it is unable to function. Lacking self-awareness, its only option is denial – the greater the certainty, the more profound the denial.

So it was that the dealers of Wall Street or the City of London led the way towards the most recent financial precipice. So it is that consumer society can watch the probability of climate change turn to certainty while standing transfixed in its path. And so it will be that the boom in gambling will turn out to have been what it was all along – an on-coming train.

  1. Mike Atherton, Gambling, Hodder, London, 2007.
  2. The Innovation Group (4/07).
  3. http://cofe.anglican.org/news/pr1808.html
  4. http://gamblingcommission.gov.uk/Client/detail.asp?ContentId=288
  5. http://guardian.co.uk/world/2008/mar/05/thailand
  6. http://gamblingwatch.org.nz/index.asp?PageID=21458221036
  7. Graham Sharpe, Gambling’s Strangest Moments, Robson Books, London, 2007.
  8. http://camelotgroup.co.uk
  9. The Guardian, 11 March 2008.
  10. www.gamblersanonymous.org
  11. The British Gambling Prevalence Survey, 2007, www.gamblingcommission.gov.uk

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