What does our love of gambling say about us?
On a warm summer's eve, on a tram bound for Brunswick, I met up with the gambler. We were both too drunk to sleep.
So we took turns a-starin' out the window at the darkness, til the boredom overtook us and and he began to speak.
He said, “Son, I've made a life out of readin' people's faces – knowin' what the cards were by the way they held their eyes. So if you don't mind me sayin', I can see you're out of aces and for a taste of your whiskey, I'll give you some advice.”
I said, “Mate, this is just how my face looks, and are you serious? This is boutique Japanese, single malt, aged 18 years. How ‘bout I give you some shopper-dockets for 2-for-1 pizza.
He said, “If you're gonna play the game, boy, you gotta learn to play it right.
You've got to know when to hold 'em, and know when to fold 'em…”
“Yep, that sounds like the basics of poker. I think I’ve got that.”
“You’ve got to know when to walk away, and know when to run…”
“Yep, pretty sure I’ll be able to figure that out when the time comes.”
“And you never count your money, when you're sittin' at the table. There'll be time enough for counting, when the dealin's done.”
“Again, not really sure what you mean there. If I’m taking big bets I need to know who much of my net worth is on the line. What are you saying? Don’t take stock of your life – don’t celebrate your victories, and mourn for your losses – until after your dead? …I’m pretty sure that’s the opposite of good advice.”
But he went on. “Every gambler knows that the secret to survivin', is knowin' what to throw away, and knowin' what to keep.”
“Yep, coming back to your first point again. Got it.”
“'Cause every hand's a winner, and every hand's a loser. And the best that you can hope for is to die in your sleep.”
“Maybe for you mate. The best I can hope for is to be invited to the Playboy Mansion for Hugh Hefner’s 100th birthday party. That man’s whiskey collection is legendary.
“But statistically speaking, you’re probably right. If you’re a life-time gambler, probably the very best you can hope for is to not make too big a loss.
And that’s the thing about gambling statistics. They’re designed to diddle you over the long run. Pokie machines are calibrated to pay out about 90 cents for every dollar they take in.
That’s enough to give you the illusion of winning and to keep you hooked, but also enough to swindle you of 10% of your net worth over a life-time of play — AT BEST.
Add in the addictive nature of gambling – where it gets straight to your pleasure receptors and gets you craving bigger and bigger hits – and the most likely scenario is that they’ll con you for everything you have.
Pokie machines are the devil in digital form.
And people find it odd that I have strong opinions about gambling. But I’m not a gambling man. I work with chance, and I work with numbers, but I work with numbers that are going to give me a great expected return over the long-run and over multiple bets.
Like I probably know now that 8 out of 10 deals are going to come off. Maybe 1 or 2 out of ten won’t.
That means that on any one deal, there might be as much as a 20% chance that the deal won’t come off (though I also structure my deals in a way that means I’m never at risk of losing too much, even in the worst case scenario.)
So that might seem like a gamble.
But the difference is that I know that over the long run, I’m going to end up way, way ahead. In the long run, I’m going to make a lot of money. When ‘the dealin’s done’ and I’m cashing out my chips in the great casino in the sky, if 80% of my deals come off, I’m going to have done a mile better than “break even”.
At that point the hobo on the tram called me “unAustralian”.
“What’s wrong with Aussie battlers having a bit of a flutter?”
“Laying down $20 once a year on cup day is one thing. Blowing your pension on pokies is another.”
“Australians are a people of gamblers. We lose more per head of population (mostly thanks to pokies) than any other nation on earth. No one else even come close.”
Here’s a thought for you. Gambling is designed to prey on the poor and down-trodden. The politically and economically oppressed.
It offers them a magic bullet to all their problems. When you problems seem so big that only a magic bullet can fix them, you’re drawn to magic bullet solutions.
So why is gambling such an important part of Australian “culture”? Is it because the nation was established as an overflow for the British establishment’s oppressed and down-trodden.
10 year old boys being sent away from their families forever for stealing a loaf of bread? That didn’t happen to rich kids.
And so our love of gambling is a legacy from more oppressed and disempowered times.
But as a Nation we’ve grown up. We come a long way since then. The sooner we ditch the flutter the better.
We should be a nation of empowered entrepreneurs and go-getters, not pathetic break-even gamblers hanging out on trams.
What do you think? Is gambling good or bad?
What does gambling reveal about human nature?
Is the “gambling mentality” at all useful as an investor?