RESEARCH Business Economy

GAMBLING
Government sponsorship removes social stigma from gaming

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

5/1/03

Photo by Bill Wiegand Over the last two decades, however, public attitudes toward gambling have become "permissive," while those toward drugs and tobacco have hardened, says John W. Kindt, an Illinois professor of business and legal policy, in the current issue of Emory Law School's Bankruptcy Developments Journal.

CHAMPAIGN, Ill. — Legalized gambling has become the biggest pastime in America. Americans spend more money on various wagers than they do on movie tickets, spectator sports, theme parks and video games combined.

The growth of legalized gambling, combined with the rapid increase in credit-card usage and consumer debt, is changing societal attitudes toward both gambling and personal bankruptcy, argues a professor of business and legal policy at the University of Illinois at Urbana-Champaign.

Historically, gambling has been viewed as a "vice" that was shunned by respectable society and discouraged by government, along with illegal drugs, prostitution, tobacco and alcohol.

Over the last two decades, however, public attitudes toward gambling have become "permissive," while those toward drugs and tobacco have hardened, John W. Kindt writes in the current issue of the Emory Law School’s Bankruptcy Developments Journal.

What accounts for the change? According to Kindt and co-author John K. Palchak, an Illinois law school graduate and former credit union analyst, gambling has become socially acceptable chiefly because of its active government sponsorship. Local and state governments have embraced lotteries and casinos as a way to finance public projects by skimming off some of the revenues going to these activities, while downplaying the risks and negative side-effects of gambling.

The combined effect of government support of legalized gambling, easy credit and a bankruptcy code that allows a debtor a "fresh start" appears to be leading to new social-norm production among gamblers and their fellow group members, Kindt and Palchak wrote.

"This new norm seems to discourage stigmatization for those who gamble uncontrollably and get into financial difficulty. The desire of social groups to enhance their collective esteem leads these groups to push to eliminate enforcement of group norms that stigmatize their members. … Gamblers enjoy a good chance of successfully eliminating the negative stigma of gambling-induced bankruptcies because of the lack of incentives to oppose their efforts by non-gamblers."

In their article, Kindt and Palchak recommended that the bankruptcy code be amended to prohibit the easy discharge of gambling debts. They also call upon legislators to ban automated teller machines near casinos and forbid the use of credit cards to gamble. Legislatures should maintain loss limits such as the $500 loss limit in Missouri.

"These policies would act as brakes on the explosive rise in unsecured debt in the U.S.," they concluded. Their study is titled "Legalized Gambling’s Destabilization of U.S. Financial Institutions and the Banking Industry."