The Dangers of Gambling

As many of our clients know, one of the distinguishing characteristics of our Biblically Responsible Investing strategies at John Moore Associates is that we avoid investing in companies whose primary revenues come from industries such as gambling, alcohol, abortion, tobacco, and pornography.

Occasionally, someone may ask, “What is wrong with placing a small bet during a vacation?” or “Is buying a lottery ticket really that harmful?” Those are understandable questions. The issue is not necessarily whether every individual act causes immediate harm. Rather, we must look carefully at the business model behind the activity.

Companies that profit from potentially addictive behaviors cannot thrive on occasional customers alone. Their growth depends on attracting more participants, keeping them engaged longer, and encouraging them to spend more frequently.

The casino visitor who wagers $20 once a year is not the gambling company’s most valuable customer. Its ideal customer is someone who returns frequently, wagers increasingly large amounts, and continues playing even after experiencing significant losses.

That distinction matters to us as investors.

Investing Is More Than a Financial Transaction

When we purchase shares of a company, we are becoming partial owners of that business. We participate in its economic success, and our capital contributes, however indirectly, to its ability to operate, advertise, expand, and pursue additional customers.

For that reason, faithful stewardship requires us to ask more than, “Can this company generate a profit?” We must also ask, “How is that profit being generated, and what does the company need its customers to do for that profit to grow?”

Ideally, the businesses we own should promote human flourishing by creating useful products, providing valuable services, employing people, solving problems, and strengthening communities. We recognize that no company is perfect and that applying biblical principles in a complicated economy requires wisdom and discernment.

At a minimum, however, we seek to avoid profiting from and supporting industries whose success is directly connected to addiction, exploitation, or human suffering.

Gambling is one of the clearest examples.

A gambling company benefits when people wager more frequently and lose more money. It may advertise entertainment, excitement, or the possibility of winning, but its profitability ultimately depends on participants collectively losing. For those vulnerable to addiction, the consequences can be devastating financially, emotionally, spiritually, and relationally.

The Harm Extends Beyond the Gambler

Gambling addiction rarely affects only the person placing the bets. It can strain marriages, damage relationships with children, create overwhelming debt, contribute to anxiety and depression, and destroy years of financial progress.

Families often bear the burden long after the bets have been placed. A spouse may discover depleted savings or hidden debt. Children may experience instability because money intended for housing, education, or daily needs has been lost.

One of gambling’s most dangerous traps is the desire to recover previous losses. Instead of accepting the loss and walking away, a person may believe that one more bet will solve the problem. The next wager can then create an even larger problem, producing a cycle that becomes increasingly difficult to escape.

Gambling Has Never Been More Accessible

What was once largely confined to destinations such as Las Vegas or Atlantic City has expanded through lotteries, casinos, sports betting, online gaming, and smartphone applications.

What once required a special trip can now happen in a bedroom, dorm room, workplace, or while watching a sporting event. Betting platforms are available around the clock, wagers can be placed in seconds, and promotions are increasingly woven into sports and entertainment.

The speed, privacy, and constant availability of online betting can make it easier for a destructive pattern to develop before friends or family recognize the warning signs.

Prediction Markets: A New Name for a Familiar Activity

Another development that deserves careful attention is the growth of prediction markets.

These platforms allow participants to risk money on whether a future event will occur. Contracts may involve an election result, sporting event, economic announcement, award winner, or statement by a public figure.

The terminology can make the activity sound more like investing than gambling. Participants may be called “traders,” wagers may be called “contracts,” and betting odds may be presented as market prices.

But changing the vocabulary does not necessarily change the underlying behavior.

When a person risks money on an uncertain event over which he or she has no meaningful ownership interest, productive involvement, or genuine need to hedge, the activity functions much like a wager. One participant gains because another participant guessed incorrectly, while the platform takes its share.

Some event contracts may have legitimate commercial uses, and the legal and regulatory questions are not always simple. However, many consumer-facing prediction markets encourage people to stake money on sports, politics, entertainment, and other uncertain events for the purpose of making a quick profit.

These platforms may also encourage familiar gambling behaviors: constant monitoring, repeated wagering, overconfidence, chasing losses, and the pursuit of rapid wealth without productive work. Because they resemble financial tools, some users may not recognize that they are engaging in gambling or developing a harmful pattern.

We should therefore be wary of efforts to repackage gambling as investing simply by adopting the language and appearance of financial markets.

Stewardship Seeks More Than Profit

Scripture repeatedly warns against the love of money and the desire to become rich quickly. It commends diligence, honest work, generosity, contentment, and wise stewardship.

Investing in a productive business can provide capital that supports employment, innovation, goods, and services. Gambling, by contrast, primarily transfers money from those who lose to those who win, with the operator profiting from the activity.

Revenue is not automatically virtuous simply because it can be taxed, and profit is not automatically beneficial simply because it appears on a financial statement. As Christian investors, we believe the source of a company’s earnings matters.

We do not want our financial interests to depend on customers becoming more addicted, more indebted, or more desperate.

For these reasons, gambling-related companies remain excluded from our Biblically Responsible Investing strategies. This does not mean we are passing judgment on every person who has ever placed a bet. It means we are evaluating the incentives and activities of the businesses themselves.

Our goal is to invest, whenever reasonably possible, in companies that contribute to human flourishing. At the very least, we want to avoid supporting and profiting from industries whose growth is closely connected to addiction, exploitation, and suffering.

Clients and families who would like to learn more about how biblical values are incorporated into our investment-screening process are encouraged to speak with their John Moore Associates advisor.