This week, Gail explains why an increasing number of seniors and teens are susceptible to gambling problems.

Dear Friends,

As I wrote last week, gambling — in all its forms— is becoming more prevalent in this country. In fact, based on what I was able to dig up on the Internet, it appears that all but three states — Utah, Hawaii, and Tennessee — allow some form of legalized gambling. Thirty-eight states plus the District of Columbia sponsor lotteries. Then there are the "mega-lotteries" that combine several states.

It's tough to put a number on this, but Ed Loomey, director of the New Jersey Council on Compulsive Gambling (search), claims $900 billion was bet across America in legal gambling last year. But that could be an understatement because of the difficulty of tracking the latest gambling venue: The Internet.

Joseph Kelly, a law professor at the State University of New York (search) College at Buffalo and an online gambling consultant, says an estimated $12 billion was bet over the Internet last year, worldwide. He adds, "The U.S. is about 60 percent of the market."

Though they may not agree on the dollars involved, experts agree on this: Internet gambling is exploding. While it's illegal for a U.S.-based operation to offer on-line betting, there's nothing to stop someone from setting up shop outside this country. According to Kelly, while Internet gambling firms located in, say, the Isle of Man or Antigua are heavily regulated, there are also unscrupulous operators on the Internet.

Prosecutors have tried to crack down on Internet gambling by going after the intermediaries. In 2002, PayPal (PPL) and Citibank (C) settled with New York state and agreed to stop extending credit to state residents engaged in on-line gambling. The U.S. Attorney in St. Louis has assembled a grand jury to look into various media outlets — newspapers, TV channels, etc. — that carry advertising for Internet gambling websites.

But the government's efforts in this area hit a major snag thanks to a case in Louisiana. A number of individuals who, in Kelly's words, "were dumb enough to click the mouse and bet the house" sued MasterCard and Visa to get their money back, claiming the credit card companies were, in effect, part of an illegal enterprise. They lost the case. However, as a result of this case and the actions involving Citibank and PayPal, many credit card companies now refuse to extend credit for online betting.

Trying to stop Internet gambling by drying up credit is a "dumb idea" according to Kelly. "When you get the credit card companies out of the business, people switch to electronic cash. It's practically a money-launderer's dream." That's because it's harder to "follow the money" with e-cash. Online winnings can be wired to a third country, leaving little, if any, paper trail. While this form of Internet payment isn't yet popular in this country, it is widely used in Europe.

Let's face it, people who want to gamble online are going to find a way to do it.

And our closest ally is on the verge of making it even easier: In a few weeks, the British Parliament is expected to approve Internet gambling. If all goes according to schedule, online gambling operators will be able to legally set up shop in the U.K. by early next year. And did I mention, Ol' Chap, that this legislation will specifically allow these British operations to accept bets from folks located outside the country?

Why would the British do such a thing? Well, as our colonial forebears would say, "To collect a tax, of course!"

Once Great Britain caves, look for U.S. lawmakers to take another look at things in this country. A bill currently pending in Congress would establish a commission to study Internet gambling with the express purpose of regulating it. In other words, if you can't bet 'em, then tax and regulate 'em!

Just to set the record straight: I'm not against gambling per se. I've been known to occasionally buy a lottery ticket and even drop some quarters into the slot machines on rare trips to Vegas. For most people, gambling is fun, exciting, entertaining, and harmless. (Notice I didn't say "wealth-building.") However, this is not the case for the estimated 7.5 million Americans who, according to the 2001 National Gambling Impact Study, have a gambling problem. In my opinion, organizations that benefit from legalized gambling — including state governments — have a responsibility to provide help for these folks. Surprisingly few states do this.

The folks who work at organizations that do provide some help for compulsive gamblers have noted a disturbing demographic trend: An increase in gambling among Americans at opposite ends of the age spectrum, seniors and teenagers.

Both age groups often have two key attributes essential for gambling: Disposable income and time.

According to the Arizona Council on Compulsive Gambling (search), "seniors are gambling in record numbers." In 1998, the Arizona CCG's Helpline reported that 25 percent of the calls received came from those over age 55; by 2002, the number had risen to 35 percent.

Most seniors fall into the category of "escape gambler," someone who gambles in an attempt to temporarily forget about the pain or discomfort of their life. Research indicates many seniors start to gamble when they lose their spouse. Gambling provides a distraction to temporarily take their mind off their loneliness. Other retirees take up gambling to relieve despression caused by the loss of status they feel as a result of leaving their jobs. In the words of the Arizona CCG, these retirees are using gambling to "self-medicate" themselves. "The casino machines in particular create an anesthetizing quality that temporarily releases them from emotional end even physical pain."

In addition, gambling has lost the old social stigma it once had, especially for women. In fact, religious and social groups often sanction gambling by sponsoring everything from bingo to riverboat gambling bus outings. And for lonely retirees, these trips — often with the same group of people— can fill the void many feel for companionship, if only for a few hours.

Retirees, like 70 percent of all casino gamblers, love the slots. And that, according to Loomey, suits casinos just fine. He claims slot machines are more addictive than the table games (blackjack, craps) and have bigger profit margins. In Nevada, according to Loomey, the house take on slots is 1 to 3 cents per dollar bet. The profit margin is higher in Atlantic City. "New Jersey machines have a computer chip that's programmed to randomly allow people to win 93 percent of the time," says Loomey. That means the house is making 7 cents on every dollar.

Slot machines don't require anything but electricity and an occasional new bulb. Labor costs are zero. Slots don't call in sick. They don't make overtime. And as along as they occasionally go "ka-ching", it keeps the customers satisfied. And coming back.

Factors that often trigger compulsive gambling aren't isolated to seniors. The International Centre for Youth Gambling Problems and High-Risk Behaviors (search) at McGill University in Montreal, Canada lists depression, loneliness, anxiety/stress, boredom, "feeling like a failure" and "feeling rejected" among those factors.

Sound like a teenager you know?

Research by the International Centre for Youth Gambling concludes that gambling's "popularity is on the rise amongst both children and adolescents...in both legal and illegal forms." If it makes you feel any better, this is not a problem isolated to developed countries. The Centre says "an alarmingly high percentage of children and adolescents worldwide have been

found to engage in gambling activities." About 80 percent of high school students admit they gambled for money in the past year. Several studies estimate 4 to 8 percent of adolescents have a "serious" gambling problem.

Given the pressures of being a teenager — wanting to fit in, be accepted, wear the right clothes, relieve boredom — the escape and excitement that gambling offers are powerful attractions. The McGill Centre found that gambling is "the most popular high-risk activity among teenagers." In other words, a higher percentage of teens gamble than do drugs, smoke cigarettes, or drink alcohol.

This is no surprise to Keith Whyte, Executive Director of the National Council on Problem Gambling. "Kids love to take risks," he says. The good news for parents is that this tendency usually spikes between the ages of 18 and 24, and then tapers off. But he points out that kids get their values from their parents. "Parents are modeling acceptable behavior for their kids."

Indeed, the McGill Centre found that "it is not unusual for parents to purchase lottery tickets for their children at an early age or to take them to play bingo." While most kids aren't going to grow up to be a compulsive gambler just because Aunt Sally slipped some Scratch'n'Win tickets into their birthday card, preliminary studies suggest a connection between the age at which someone starts to gamble and whether they develop into an adult who is a problem gambler.

OK, it's unlikely a 12-year old is going to be able to waltz into a casino and hit the slots. However, the avenues available to under-age gamblers are probably more numerous than you might imagine. As Whyte points out, "When is the last time someone carded a person buying a lottery ticket?"

He says 30 percent of kids 12 to17 years old have bought a lottery ticket in the past year.

Then there are the one-armed bandits you can find at highway rest stops. (And I'm not just talking about those in Nevada.) Ever see someone policing who drops some coins into those slots?

And, while reputable Internet gambling websites require proof of age, any kid smart enough to get a fake driver's license to buy beer can use the same piece of identification to get the OK to roll the dice online.

If you think someone you love — no matter what their age — may have a gambling problem, it's important to recognize the warning signs. The most common one is a change in a person's social relationships. She no longer hangs out with the same friends. He stops attending the gatherings he used to go to. The individual withdraws from the family. Whyte says the Internet is especially appealing to the compulsive gambler because it offers anonymity and social isolation. Plus, when you're using credit or other non-cash methods of betting "it doesn't feel like you're spending money."

There are dozens of organizations you can tap into for help, including Gambler's Anonymous. The National Council on Problem Gambling's Web site has a 10-question test to take to determine if gambling is becoming a problem in your or someone else's life. It's at: http://www.ncpgambling.org . This same site will also help you find counseling in your area. You can also call NCPG's toll-free, confidential hotline: 1-800-522-4700. Many states have chapters of the Council on Compulsive Gambling.

Like any addiction, gambling can destoy the addict as well as their family. Help is available. But you've got to make the first move.

Take care,

Gail

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