Call me boring, call me risk averse, call me whatever you like, but I have never understood the allure of gambling in all of its forms. Maybe it’s because I have always been fairly competent with mathematics, and could therefore assess the odds? And maybe that has something to do with why I am an aspiring early retirer?
Or maybe it’s because I have always been so, well… bored… by it all. Perhaps gambling for me is like discussing money for the typical hyper-consumer – of absolutely no interest.
Anyway, whatever your views towards gambling, it is worth understanding some of the basics of this burden on society and why anyone that wants to be Financially Independent should steer clear of it altogether.
Odds of winning
I am simply amazed at the lack of understanding of the odds of actually winning the major prize, because if anyone whose head was able to overrule their heart knew these odds, there is no way that they would spend one more cent on a lottery ticket ever again.
If you weren’t aware of the odds, you might be interested in the following statistics taken from The Courier Mail (Australia), 11 July 1998.
As you can see, the stats cover lotteries, casinos, and that ridiculous game played in pubs and clubs called Keno. In all cases, the odds of winning the top prize are so long that it is ridiculous to even think about them. I probably have a greater chance of becoming King of England (I’m about 40millionth in line for the throne I’m sure) or President of the United States (and I was born in Australia so that means I’m ineligible doesn’t it?).
So if the odds are so poor, why do people still play them? Well I think some people get enjoyment/thrill out of the possibility (however remote) that they might actually win. I, on the other hand, just get bored knowing that there is essentially no chance that I will win, and annoyed that I wasted $5 on a ticket that I could have spent on something that I would actually receive, for example, a pint of beer.
Gambling is like a tax
For those of you that have read my article on cigarettes, you wouldn’t be surprised to learn that I think of gambling like a tax as well. Gamblers feel the “need” to gamble, but don’t get anything for it. This is a bit like a tax, where you need to pay them, but don’t feel like you get anything for them.
Unlike cigarettes though, gambling affects people of all incomes, although it probably affects those in lower income demographics more as there is greater desperation to get a big windfall and there has potentially been less investigation of the very poor odds of success.
So maybe that’s the solution – tell people that gambling is like a tax. Everyone hates paying taxes don’t they?
Don’t give lottery tickets as gifts
My grandmother (may she rest in peace) had a real thing for giving lottery tickets and scratchies as gifts, probably because she was such a problem gambler herself.
I was always secretly amused, even as a young teenager when I first started receiving these gifts from her, because even I could see some glaring issues with choosing such a gift, including:
- Gambling is addictive, and people that young really shouldn’t be exposed to such potentially-addictive activities, let alone have them “promoted” by a loved one;
- If the saying of “it’s the thought that counts” is true when gift giving, it was pretty hard to say that my grandmother put much thought into her gifts since she started giving the same gift to every one of her eight grandchildren; and
- If by some ridiculous stroke of luck I were to actually win, she would expect (and I obviously would want to oblige anyway) to receive a portion of the winnings. As I said, I wouldn’t have a problem giving her some of the winnings, but it gives a new meaning to the notion of giving without expectation of receiving anything in return.
While I believe that people often give lottery tickets for the right reasons (e.g. they are being kind, and they just can’t think of something else to buy), I still wouldn’t recommend giving them as if nothing else they send the wrong message. If you are someone that aspires to be financially independent, you should know that the most effective and dependable way of getting there is through having a real plan rather than relying on luck. And while you may not want to share your plans with your loved ones, we should at least be trying not to spread a conflicting message to those that don’t know any better.
Gambling is a big no no for aspiring FI/REs
Because gambling can have the effect of destroying so much wealth, and lets your heart totally overrule your head when it comes to money, I would much rather see aspiring early retirees instead “gamble” their money by investing in blue chip stocks or a low cost managed fund.
And instead of having a gambling app on their mobile phone they could instead have an online investing app to see how their shares are actually tracking.
So next time you feel like putting money on a horse, try instead transferring that cash into your brokerage account so that you can invest it in some shares with some additional funds from your next pay cheque.
Then you can get enjoyment/thrills every day watching as you “win” and “lose” as the sharemarket goes up an down. It’s probably best not to brag about your wins with your mates down at the pub though, especially if your shares are worth more than their entire net worth!