All economies go through different fluctuations, generally following an up-and-down nature. While they will usually shift in one direction or the other (usually towards inflation), the short-term experiences a lot of variation. One of the things that is interesting about this is the way that gambling is affected by these different changes.

First off, it is important to realize what gambling really is. Gambling represents risking something to get a greater reward. This could be in the form of cash (such as at a casino) or anything else of value (such as offering someone free service if they win). Either way, there is a value being put up as a bet, in the hopes of winning greater value in return.

Now, gambling is somewhat special in that whether the economy goes up or down, it still thrives. It makes sense though, when you look at it all in perspective and understand why people gamble, rather than just that they do. That is one of the things we are going to look at, as it helps much better understand the market and its value in relation to things.

Why People Gamble

Different people have different reasons for choosing to risk their valuable items. Some choose to do it because they are relying on a win (or hoping for one) to pay off bills. Some do it just for fun (and do not put as much emphasis on winning, so much as getting a good value per dollar in regards to their time). Others just do it for the thrill, hoping that they can win just for the sake of winning. When you really think about it, getting a jackpot in the lottery or on a high paying casino game brings about both attention from others and self satisfaction. After all, you have achieved something that is very rare, and for most people it will never become a reality.

When the Economy Tanks

When the economy tanks, the first group (those who are gambling in the hopes of a win) are usually seen as spending more money. As money becomes even more tight, the need for a lottery/jackpot win keeps becoming greater and greater. The thing that ends up being thought of at these times is “I hope I win so I can get out of this hole I am in.” The chances of this happening are very very low, but to a lot of people the mentality is that things are not going to change until money is obtained, and the gambling is one of the few ways to make that happen quickly.

Is it a good thing that most people that are gambling do not have the funds to do it (and are instead spending their needed rent money, food money, etc.) and are still hopeful? Definitely not. The effects of this are that it creates some hardships for these people, as well as anyone they have to depend on (such as family or government assistance programs). In other words, the general public ends up having to pay because people gambled away their necessary money. This is not always the case, but it happens enough to make it a big problem. And it does not appear to be anything that is going to change soon.

When the Economy Flies

When the economy gets much better, the second and third groups (those who gamble for fun and those who just like the thrill of jackpots and other big wins) start to take part a lot more. This is not to say that they do not still gamble when the economy is bad, but they usually do it less. Both of these groups are almost always very good at handling their finances, so when they have extra money they gamble it and when they do not, they don't. This is a better way of playing, as it cuts down on how much the money loss (if you do not win) will affect the lifestyle you are used to.

For these groups of people, the gambling does not really impact others in a negative way. In fact, because they are spending money, they are contributing to taxes which ends up helping everyone out even more. Because of this, it is not seen as being so much of a negative, as long as they are playing safely and not throwing away their entire life savings on accident, or on purpose.

Gambling is Here to Stay

As far as I know, gambling has been around pretty much forever. We hear about the most popular poker game, Texas Hold'Em, being played many years ago in the wild west. This is just one of the games that is still here today, but it helps show that there is longevity in it. While not everyone who plays actually gambles, the popularity is still pretty big. In fact, you can find poker at pretty much any casino (if they do not have the table games they will often have electronic versions of some sort) and even online through poker rooms. Some places even hold real life free rolls, where you can play without having to put any money down on the table, yet walk away with prizes (sometimes including cash, other times things like gift cards or other things). While playing for free is not a gamble in its relation to money being risked, it is a gamble in that you are using your time to play (in the hopes of making a win). Unless you are just playing for the sake of playing, but come on, we all want rewards!

Some countries have laws against gambling, which arguably makes no sense. People will always be able to find loopholes in it, whether they just alter their games to fit the laws or playing with friends and their friends. For example, there are many free rolls that are hosted in the US, even in states where gambling is prohibited. What the hosts end up doing is giving out rewards that are not cash. In many places, offering up gift cards is seen as being okay, so they will use Mastercard (or Visa/Discover/etc.) prepaid cards instead. While it is a gift card, it still functions as cash in that these can be used pretty much anywhere.

Positive Effects of Gambling

One word: taxes. With gambling, there is a lot of money that is changing hands. Some are losing a lot, while others are winning a lot. Those who are losing generally have already paid their taxes on income (as they are gambling their income away), so that is already taken care of. The casinos or game hosts, however, win a lot and end up paying taxes on that. And if someone wins a jackpot or other large winning, they pay taxes yet again. This helps contribute a ridiculous amount of taxes, although most people never even think about it. It is the main reason why gambling should be legalized everywhere. More taxes from gambling means less taxes on other things (like housing and possibly even income). Those who are paying the taxes on their winnings are not bothered by it being removed, either, because they won a lot of money. So all in all it is really a win-win scenario.

Problems With Online Gambling

When we are looking at this, we are not just looking at poker, but really any type of gambling. Blackjack, horse racing, etc. are all included. The problem with all of these is that online transactions are handled different than offline ones. Whereas the casino you go to can take your taxes for you (or help organize things so you can easily pay them), online businesses are treated differently depending on whether or not they have a physical presence in your state. As a direct example of this, take a look at Amazon. If they have a physical presence where you live, you must pay taxes on each purchase you make. If they do not, taxes are not tacked on.

The same thing happens to online gambling. Since there are no physical locations (except where the site's offices are located, if they have any) it is hard to determine how to tax each person. This is further complicated by the fact that sites can be hosted anywhere, meaning that players may be on a poker room that is hosted from another country. In these cases we end up with the same tax problems again, but they are even worse because different countries have different opinions on gambling, taxes, etc. The Internet is a great thing for us, but at the same time does cause its problems when it comes to regulation.

What Does the Future Hold?

If you deal with poker sites, you likely already know about “Black Friday,” the day when the US government started really cracking down on poker sites that allow people from the US to play. This is seen as being because of tax regulation problems, which makes sense. But it is also partly due to fear of money laundering, where players can just take their money to a poker site, purchase a lot of chips, and then “chip dump” on someone else so they can cash out. It is hard to tell how often this happens, but there are surely ways to deal with the situation and track when it is happening.

There are still a lot of debates between states as to whether or not they want to allow gambling. Native American land is immune to these rules, making it so that they can create casinos on any land that is under the protection of their tribe. A majority of the time when you go to a casino it is using a loophole in the system (for example the Native Americans, being on the water, etc.). Something that really can not be denied, however, is that the contribution these places make to their home state in taxes are massive.

On the other hand, even places that are allowed to have casinos that you can visit are not allowed to run online gambling sites. It really is an oddity and while I believe it has to do with the lack of ability in relation to taxing, many believe it deals more with the casinos not wanting to lose any business (as people would be more likely to go online from the comfort of their own home rather than having to travel elsewhere to handle their gaming).

What Could Seize Gambling?

I really do not believe there is any real answer to this. Too many people gamble for fun or because of what they feel is necessity, and that keeps it going strong. The prospect of winning more than you put in is a big one, and I do not see that changing. To put it into perspective, one can look at lotteries. They can get jackpots of over 100 million dollars (consider that each person pays $1-3 a ticket) so you can see how popular they are. For states that do not have lotteries, people will actually travel across the state lines to pick up tickets for big winners. Some are willing to drive hours, just so they have a chance at winning. And the same goes with casinos, where people take vacations half way across the country to go make some bets, have fun and hopefully leave with more than they started with.

Do I Believe Gambling Is Wrong?

This is very easy to answer. For me, that is going to be a “no.” I do feel that reckless gambling is an issue, because it puts the burden on others when money is lost (like family members or friends being dragged in to it and having to help break you out of the hole). For those who practice responsible techniques like not spending more than you can afford to lose, and being careful with finances, I see no problems. It can be treated like a game, and it really is one, but you still have to take it seriously if you do not want to lose everything.


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