On the rise - and risks - of machine gambling (Part 2 of 2)

The most addictive device ever created is being combined with gambling, which is addictive for many people all by itself. What could go wrong?

(Second of two parts. For Part 1, about the radical changes in the last generation that have made slot and poker machines so much more addictive, click here.)

No one has written a compelling memoir of video gambling addiction.

No great novel or movie has described it: no Trainspotting or Requiem for a Dream or Breaking Bad or Leaving Las Vegas (about alcoholism, despite its name).

In fact, we hardly talk about slot and video poker play at all, onscreen or off, though it is the most common form of gambling and generates far more revenue than table games. The “whale” wagering a million dollars on a baccarat hand grabs our imagination (as casinos prefer). But devices produces over 80 percent of all American casino winnings, at least $70 billion a year at commercial and tribal casinos.¹

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(The news you don’t get anywhere else; the stories no one else is even thinking about. The Unreported Truths you need. For less than 20 cents a day.)

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The reason is obvious.

Machine gambling barely qualifies as exciting, much less romantic. It is the quietest, most secret of compulsions, though unlike most addictive behavior it happens in public - not just in casinos, but groceries and gas stations and convenience stories.

If anything, it verges on sterile. Drug addicts find themselves in awful, dangerous places - the filthy underpasses in Philadelphia given over to fentanyl, the tinfoil insanity of methamphetamine cookhouses in Phoenix. A bank of video slots in a supermarket entrance corridor couldn’t look less threatening.

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(I’d like to speak to the manager of this crack house! ALT: But they look so nice!)

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Yet the addiction the machines can be as intense as any drug, as Natasha Dow Schüll explains in her thoroughly researched 2012 book Addiction by Design: Machine Gambling in Las Vegas:

Yesterday a woman bought a whole cart of groceries, lost everything she had, returned all the groceries, and put that money in the machines too. A man’s two toddlers ran around the store with no shoes; employees kept bringing them back, but they’d climb out of the cart and be off again. He promised to leave, but did not…

It can carry real, physical consequences too:

[A player told Schüll]: “My body was there, outside the machine.” Left unattended that way, her body continued to function and express herself — abjectly so, at times. Twice she unwittingly vomited on her shirtfront during sessions of play, and once wet herself.

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People will lose everything to these machines.

Players will start by losing their pocket change and wind up losing their houses, and the slide can be very fast. Sometimes it ends in crime - frequently fraud or other financial offenses rather than violent crime, yet another reason compulsive gambling gets far less attention than drug abuse.

Sometimes it ends in suicide. A 2018 Swedish study found that people diagnosed with gambling addictions were 15 times as likely to kill themselves as the average adult.

So the relentless rise of machine gambling carries several messages worth considering.

First, it shows beyond doubt that people can become addicted to machines and the stimulus and brain changes they produce just as they become addicted to the changes in brain chemistry that drugs produce. (How to treat this or any addiction, and whether to view these compulsive behaviors as a disease, are separate issues.)

Machines can be and are addictive, especially when they offer rapid, repetitive “hits” of information on screens that monopolize the attention users. Gamblers regularly told Schüll they felt they were drawn into the machines, so deeply did they focus on them.

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Second, the manufacturers of devices and their software have considerable control over how addictive they will be. In the case of gambling devices, they have made their machines more ergonomically friendly, to facilitate longer play sessions. They have made transferring money into and out of the machines quicker and easier, to make the breaks in play shorter.

But those changes pale in response to the core innovations of making the rate of play measurable in seconds, while offering games that offer positive reinforcement in almost every cycle, even when gamblers are losing. (For more on the way “multiline” slot devices do this, see Part 1.)

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(Unreported Truths readers get it…)

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You can see where I’m going.

On January 9, 2007, Apple introduced the iPhone, probably the most addictive device ever made. In the 17 years since, Apple’s stock price has risen roughly 80-fold, making it the world’s most valuable company. Close behind it are five other technology companies, including Google and Meta, both of which depend mightly on the addictive power of social media and screen-based entertainment.

These devices and the applications they run take up a greater and greater share of our attention each day. And now, in more and more states, we can gamble on them too.

Besides online sports betting, which is legal in over 30 states, six states have introduced what casinos call iGaming, wagering on phones or other handheld devices.

The two largest are Michigan and New Jersey, both on track for over $2 billion in revenue this year. That figure translates into almost $300 in losses for every adult resident. And the losses are rising fast, up about 25 percent in New Jersey this year.

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(I’m old enough to remember when you had to go to Atlantic City to gamble in New Jersey. Those days, like the Trump Taj Mahal, are no more…)

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After I published part Part 1, a reader wrote in to describe the experience of iPhone gambling (email presented unedited):

As someone that enjoys blackjack, it was fun to bet small amounts when I’m in Jersey. The functionality of the apps are great, easily doubling your last bet (which I’d often do if I lost). Overall you can play blackjack hands in seconds, and instead of starting small I’d start to bet greater amounts.

I cannot stress enough how dangerous this will be for millions of people if and when this is legalized everywhere. I finally quit (banned myself from one of the apps for a year) after losing $7k in about two minutes [emphasis added].

This was not my only relatively major loss. Personally I’m fine from a financial perspective (and thankfully was able to stop while ahead on other occasions), but it will be the downfall for many people.

You read that right. He lost $7,000 in two minutes. In a later note, he explained how:

There are a number of blackjack games on each of the apps and the limit on one is $5,000 per bet, while the other is $10,000. It doesn’t feel like real money given that it isn’t in front of you, and if you lose a thousand dollar bet (for example), you can quickly just Venmo thousands back into the app to bet again almost instantly.

At a casino you would either take out thousands to start (which most people wouldn’t do), or, at the very least, walk back to an ATM machine to take out more cash and have second thoughts.

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Yet the push for online gambling is only likely to increase.

Casino companies make such high profit margins on these virtual games that they are happy to pay a 20 percent tax rate on their gross winnings. For a tax-hungry, high-cost state like New Jersey, that’s hundreds of millions of dollars in fresh revenue a year. And from the point of view of lawmakers, it’s the best kind of tax, since the people ultimately paying it are happy - if not desperate - to do so.

Handheld gambling with no loss limits.

What could go wrong?

We’re about to find out.

1. The exact number is impossible to find because the paucity of information from tribal (Indian) casinos, a huge part of the American gambling industry. In the United States, tribal casinos won about $42 billion nationally from bettors in 2023, compared to $46 billion for the commercial casinos represented by the American Gaming Association. (The AGA figure does not include sports or online betting.)

But Indian casinos disclose almost nothing about their operations on a national basis, except that single top-line revenue figure. The AGA disclosed that slots made up $35.5 billion of the $46 billion in commercial revenue, about 80 percent. The National Indian Gaming Commission does not offer a similar breakdown.

But state figures suggest slots accounted for an even higher percentage of tribal casino winnings than the 80 percent reported by commercial operators. For example, slots made up about 92 percent of the $3.2 billion that Indian casinos won in Oklahoma.

The reason is simple: Indian casinos tend to be smaller and more isolated than commercial casinos and rely more on local players. As a rule, smaller casinos depend more on slots rather than table games. Tables are more expensive and complex to run and compete for a limited pool of larger bettors who will travel further to play.