WISCONSIN POLICY RESEARCH INSTITUTE REPORT
July, 1996 Volume 9, Number 6
P.O. Box 487
Thiensville, WI 53092


The Social Costs of Gambling in Wisconsin
William N. Thompson, PH.D.,
Ricardo Gazel, PH.D., and
Dan Rickman, PH.D.
www.wpri.org/Reports/reports.html#Vol9

EXECUTIVE SUMMARY:

  • A random survey of 1,000 Wisconsin adults revealed that 0.90% were serious problem gamblers. This represents 32,425 residents in the state.

  • The survey results led to conclusions that 0.38% of Wisconsin adults were serious problem gamblers because of the presence of Native American casinos in the state. This represents 13, 691 persons.

  • A survey of 98 members of Gamblers Anonymous groups in Wisconsin was used to assess the costs attached to problem gambling. Fifty-five of these persons were considered to be primarily casino gamblers, as they indicated that casinos were a serious problem for them, and that they had devoted more than 90% of their gambling activity to casino play.

  • The serious problem gamblers had experienced average gambling losses of nearly $100,000 each during their career as gamblers. At the time they sought help, the serious problem gamblers had debts averaging $38,644. More than one-fifth had turned to bankruptcy court to ward off their creditors.

  • Twenty-one percent of the serious problem gamblers had lost or quit their jobs because of gambling. On average, these individuals remained out of work for more than one year. More than 60% lost time from work because of gambling. The average lost time for all of the gamblers was about eight hours per month.

  • One-third of the serious problem gamblers stole money in order to gamble. During the gambling careers of all the gamblers, the average amount stolen was $5,738.

  • Eighty percent of the serious problem gamblers had "wished" to die, 70% had thought of suicide, 55% had planned how they would commit suicide, and 23% had actually tried to take their own lives

  • Social costs for many of the dysfunctional consequences of serious problem gambling were calculated. The average serious problem gambler imposed costs of $9,469 upon Wisconsin society each year. The average casino problem gambler imposed social costs of $10,113 each year.

  • The total social-cost impact (a negative impact) of serious problem gambling for Wisconsin, due to the activity of the 32,425 serious problem gamblers, is $307,023,246 per year. The social-cost impact of the 13,691 casino serious problem gamblers if $138,453,113 per year.

  • By design, the researchers projected numbers believed to be very conservative. The actual numbers may be much higher.

  • There should be no expansion of legalized gambling in Wisconsin at this time or in the near future, though it would be advisable to renew compacts for operations of Native casinos at their present (or reduced) levels of activity.

  • The public should be made aware of serious problem gambling.

  • Gambling outlets should take steps to deny or limit access to potential or serious problem gamblers. At gambling outlets, easy, on-site access to money should be limited.

  • Treatment programs for serious problem gamblers should be supported by both the state and gambling operators.

Highlights

The Importance of the Study Results

Sociologist Henry Lesieur, one of the leading students of the subject, indicated that the "mean gambling related debt" of a person in Gamblers Anonymous was between $53,000 and $92,000 (Lesieur, 1992).

Dr. Valerie Lorenz, another leading scholar and treatment practitioner, put the amount at $75,000 (cited in Ubell, 1991).

Lorenz claims that compulsive gamblers cost the state of Maryland alone more than $1.5 billion in "lost work productivity, stolen or embezzled moneys, or state taxes not paid."

John Kindt reported that the annual societal costs of a single compulsive gambler were between $13,000 and $52,000. (Kindt, 1994)

Lorenz reports that nationwide, $80 billion are stolen directly or indirectly from employees with embezzlements or lost work time and work productivity by compulsive gamblers (Lorenz, 1995).

The Cost of Problem Gambling in Wisconsin: The Data

The researchers found that the average "bottomed-out" gambler imposed a cost of $61,000 upon society during his or her last year of gambling.

Some of the games problem gamblers play.

Members were asked what percentage of their gambling losses occurred at each of several games. The average of their indicated percentages was 70% for casino games, 7% for sports betting, 6% lottery games, 5% for race-track betting, 3% for bingo, and 9% for "other" (includes barroom machines and social games).

Volume of Gambling-Related Activity and Source of Funds

The mean gambling loss over a "lifetime" was $98,491 while the median loss was $45,000 (average of $11,940, median of $6,000 per year.)

The 55 casino gamblers had debts averaging $34,533.

Thirty-two out of 98 respondents (31.7%) admitted to stealing from their employer, while 40 out of 82 respondents (49%) admitted to stealing money and other things from different sources.

Only 38 indicated that their spouses were sources of funds--suggesting that most of the problem gamblers may be seeking to hide their problems from the persons closest to them. Only four indicated that they turned to "loan sharks" for gambling funds.

Consequences of Gambling

We found that 70% of the 30 separated or divorced GA (Gamblers Anonymous) members experienced their family break-ups as a result of gambling activity. These domestic failures carry lifetime consequences for the couple's two (on average, 2.2) children.
Furthermore, there are costs associated with family members who may need psychological help and even financial help.

Twenty-one of the 98 (21%) respondents indicated that they had lost their jobs--or quit their jobs--due to their gambling activity.

The average work loss for all 98 respondents was 8.5 hours a month.

A number of GA gamblers received public assistance as a direct result of their gambling activity. Thirteen had received food stamps and seven received Aid to Families with Dependent Children (AFDC) payments. One food-stamp recipient and one AFDC recipient indicated that the money received was used for gambling. Three of seven Social Security recipients gambled with that money as well.

Eleven had been incarcerated because of gambling related crimes. Most of the crimes were property crimes: two forgeries, three thefts, two bad checks, one fraud, one child-support infraction, and three driving while intoxicated. Eight had been on probation because of gambling related crimes. Eleven had been sued due to their gambling debts.

Richard Vatz and Lee Weinberg (1995) report that the cost of formal treatment and rehabilitation for serious gambling problems averages between $20,000 and $28,000 and involves a program lasting 20 to 30 days.

Of those who had inpatient or outpatient care, 39 reported having paid for the care "out of their own pockets," while 35 indicated they had insurance coverage for at least part of the cost. overall, 65 (66%) said their current insurance covers therapy and other treatment programs.

Table A-1 Employment-Related Social Costs
Description
Among All Gamblers  
Among Casino Gamblers
Working Hours Lost Due to Gambling
      Average hours lost per month
7,382
7,692
      Average hours lost per year
88,584
92,304
      Annual Cost (@$15.00 per hour)*
$1,328.76
$1,384.60
Unemployment Compensation Due to Gambling
     Average months receiving Unemployment Compensation

1.327

0.436
     Average months receiving Unemployment Compensation per year
0.292
0.165
     Annual Cost (@ $732 per month)*
$213.99
$120.66
Foregone Income Due to Unemployment
     Average months unemployed
1.946
0.961
     Average months unemployed per year
0.655
0.666
     Annual Cost (@$2,000 per month)
$1,398.14
$1,331.04
Annual Total Employment-Related Costs Per Gambler
*See sources in text, Section VI
$2,940.89
$2,836.30

                                                                          
Table A-2 Costs Due to Bad Debts and Theft
Description
Among All
Gamblers  
Among Casino
Gamblers
Bad Debt Loss
     Average debt when joining Gamblers Anonymous
$38,664
$34,533
     Average bankruptcy debt
      (debt of those under bankruptcy divided by gamblers)

$  8,909

$  9,000
     Annual bankruptcy debt


$  2,974

$  4,256
     Annual cost of bad debts
      (50% of annual bankruptcy debt)

$  1,487

$  2,128
Theft
     Average dollar amount stolen

$ 5 ,738

$  2,648
     Annual cost of theft (average dollar amount stolen)
$  1,733
$  1,674
TOTAL ANNUAL COST OF BAD DEBT AND THEFT PER GAMBLER

$ 3,220

$ 3,802


Police and Judicial-Related Social Costs

Civil Court Procedures

We considered that each court case cost society $3,750.

Twenty-two bankruptcy cases result in annual social costs of $334 for each gambler, considering the gamblers as a whole, and $515 for the casino gamblers. Other civil cases cost $514 for all the gamblers, and $535 for the casino gamblers.

Criminal Justice system costs.

Discounting extreme cases, we determined that all the gamblers stole an annualized amount equaling $1,733, while casino gamblers stole $1,674.

The probation cost was calculated to be $5,600 over two years.

Welfare

Food-stamp costs were set at $2,000 a year for the analysis (SAUS, page 389). The social costs for the entire group were $101 a year and $134 for the casino gamblers.

Totals

We conclude that the annualized social costs for one serious problem gambler in Wisconsin amount to $9,469. As we determined that there were 32,425 such persons in the state, the total social costs of serious problem gambling in the state amount to $307,023,246.

In Perspective

As we determined that the addition of Native American casinos has generated 13,691 serious problem gamblers, the total social costs of these casino serious problem gamblers is $138,453,113. The numbers are conservative. The $138.45 million represents a very large cost for Wisconsin society.

Table A-5 Summary of Social Costs Related to Serious Gamblers
Description
Among All
Gamblers  
Among Casino
Gamblers
Annual Total Employment-Related Social Costs per Gambler

$2,940.89

$2,836.30
Annual Total Bad Debt and Theft-Related Costs per Gambler

$3,220.00

$3,802.00
Annual Total Police and Judicial-Related Costs per Gambler

$2,612.34

$2,551.51
Annual Total Health and Welfare-Related Costs per Gambler

$   695.49

$   922.90
Number of Serious Problem Gamblers in Wisconsin


32,425


13,691
Annual Total Social Costs for Entire State
$307,023,246
$138,453,113


In other states where casinos are purposely placed in cities (river cities, etc.) to maximize revenues, we could expect the social costs of gambling to rise.

Seventy percent of the broken families (divorce and separation) discovered in the GA (Gamblers Anonymous) survey resulted from gambling problems.

The GA members surveyed lost an average of $98,491 (the median $45,000) during their entire gambling life, including the period when they developed a serious problem with gambling. This money represents the potential cost of a college education for both of a gambler's children. If because of their parent's gambling losses, their college funds have been depleted (and creditors would have priorities over children's college funds) and the children do strive "to be all they can be," society will suffer, and there is an economic cost in the suffering.

Preliminary results of our ongoing study of Wisconsin gambling suggest a strong relationship between casino gambling and crime.

No Expansion of Gambling

We re-emphasize the recommendation we made in the April 1995 study. There should be no expansion of legalized gambling in Wisconsin at this time or in the near future.

Controlled Access to Gambling Sites

Many problem gamblers have binge activity extending over long hours If the casinos would have closing hours, even if for only two to four hours an evening, such binge behavior could be temporarily stopped, and a problem gambler could be brought back to reality.

Closing Comments

So now we ask: if the FDA was given the mind-altering "gambling drug" to analyze, would it legalize it? The answer is not easy. But the process it would follow in making a decision is clear. First, they would authorize extensive tests--initially on animals, but then on selected human beings. What would the tests tell them? Look at numbers of 1,000 who answered "yes" to any of the serious problem gambling symptoms--12.9% of all persons questioned, but 19.8% of the gamblers. Perhaps the gambling drug is completely safe for 80.2% of those taking it, but 19.8% show one or more side effects that suggest the use of the "drug" might be dangerous under the wrong conditions. Almost one percent of the population, and 1.4% of the users (gamblers), exhibit serious side effects. These side effects could potentially be life threatening, as this drug leads to widespread urges to commit suicide, and to perform socially unacceptable activities--to steal, write bad checks, cheat on insurance matters, miss work regularly. Nonetheless, the 80.2% believe that the drug helps them relax, allows them to get away from daily work or home problems, and gives them a measure of excitement lacking in other phases of their lives. They believe the drug improves their lives. Moreover, there could be economic advantages for promoting the commerce entailed in merchandising the drug.

Appendix B: The National (and Wisconsin) Council on Problem Gambling

The Wisconsin Council on Problem Gambling was founded in 1993 as a private, non-profit, educational organization. In January 1994, it gained recognition from the National Council on Problem Gambling as the official Wisconsin affiliate of that group.