How Much Do You Lose Gambling
- How Much Is Too Much To Lose Gambling
- How Much Do You Lose Gambling Taxes
- How Much Money Can You Lose Gambling
- How Much Did You Lose Gambling
- How Much Do You Lose Gambling Losses
The gambling industry around the world is huge, but the biggest market is the United States, where gamblers lost a staggering $119 billion in 2013:
- You lose $5 on insurance and win $15 on your original bet, $10 net gain. 3) You don't have blackjack but the dealer does. You win $10 on insurance and lose your original $10 bet, a push. 4) Neither you nor the dealer have blackjack and you win the hand. You lose the $5 insurance but win $10 on your original bet, $5 net gain.
- You can't deduct more in gambling losses than you have in gambling winnings for the year. For example, suppose you reported $13,000 in gambling winnings on Line 21 of Form 1040. Even if you lost.
If you start gambling with $50 you might set a loss limit of $25. But this is only one way to set a limit. Many players assume they should lose no more than 40-60% of their stake on any game. This is a “soft loss limit”. The amount of gambling losses you can deduct can never exceed the winnings you report as income. For example, if you have $5,000 in winnings but $8,000 in losses, your deduction is limited to $5,000. You could not write off the remaining $3,000, or carry it forward to future years. The gambling industry around the world is huge, but the biggest market is the United States, where gamblers lost a staggering $119 billion in 2013.
[The Economist]
That's a crazy amount of money; more money than Bill Gates has (with $72 billion) or Warren Buffett (with $58 billion), and only $11 billion less than the two men put together.
What intrigues me is the question of why so many people gamble. After all, everyone knows that the odds are stacked against gamblers, whether they're betting on slot machines, horse racing, football, roulette, bingo, or lotteries. Even the games where it is possible for a highly skilled player to consistently make money — blackjack and poker — are big losers for the vast majority of players. And why do some players — problem gamblers, around 1.8 percent of the population — end up losing vast amounts of money, going into debt, and sometimes even losing their families and homes?
Different individuals gamble for a mixture of different reasons. The reasons are subtly different for each individual, but are usually a mixture of the following:
1. Escapism, entertainment, and boredom: The places that people go to gamble — like casinos, hotels, card rooms, bookmakers, and even online gaming websites — offer an escape from everyday life, and the opportunity to do something different, usually with a possibility of hitting a large payday. The vast majority of people who play the lottery don't win, but they all get the opportunity to dream about what they would do if they did win. In this sense, gambling can be seen as a form of entertainment, and those multi-billion dollar losses are the cost of being entertained, just as people pay to watch sports, listen to music, or play computer games.
2. Social activity: Gambling is a deep rooted part of American culture — 80 percent of Americans gamble at least once per year. Gambling with friends and family — whether that's in a casino in Vegas, or a card game at home, or making football or basketball bets among work colleagues — is widespread.
3. Excitement and thrill: The sense of anticipation and risk creates an adrenaline rush and the payoff releases a surge of dopamine. Dopamine is a neurotransmitter associated with the feeling of pleasure, and even elation. When you receive a hug from a loved one, dopamine levels rise; when you engage in sex, dopamine levels spike; when you win a bet, they shoot up as well.
4. Self-esteem: Casinos roll out the red carpet and dish out complimentary drinks, free stays in suites, shopping vouchers, and other gifts for big-time gamblers. That can be a huge self-esteem boost. So too can giving away winnings to friends or family, tipping service staff large amounts, or making gifts to charity.
5. Self-delusion and the Dunning-Kruger Effect: Some gamblers believe they are lucky or special and will beat the odds and win, unlike the vast majority of gamblers. While this is true in the long run for a very tiny minority of sharp, mathematical gamblers in certain games like poker and blackjack — just as it is possible for a tiny minority of investors to beat the stock market — it is untrue for the overwhelming majority of players. Inexperienced gamblers (and investors) may fall victim to the Dunning-Kruger Effect — the tendency for unskilled individuals to overrate their skill and ability, and underrate the difficulty of the task at hand. They may also create narrative fallacies and rationalizations to justify their belief that they can beat the odds and win.
So that covers the behavior of many casual gamblers, but for problem bettors, the issue is often addiction. The primary addiction, however, may not always be to the rush of winning — some research suggests that gamblers get the biggest kick from coming close to winning, and then losing. And some gamblers may be addicted to the aforementioned escapism or self-esteem highs.
The global gambling industry forecasts that betting losses will continue to rise. And they're probably right. After all, it's been common knowledge for a very long time that most people lose at gambling in the long run. That's what keeps casinos in business. And yet, people keep keeping them in business.
Gambling is good business, or at least a profitable one. According to the American Gaming Association, in 2012 the 464 commercial casinos in the U.S. served 76.1 million patrons and grossed $37.34 billion.
Each year gaming revenues in the U.S. yield more profits than the theatrical movie industry ($10.9 billion) and the recorded music industry ($7 billion) combined. Even the $22.5 billion combined revenue of the four major U.S. sports leagues is dwarfed by earnings from the commercial casinos industry.
Gambling is such good business that despite reported negative impacts — such as increased poverty and unemployment, higher crime rates, and decreased property value in nearby neighborhoods — the state of Illinois early this year passed a law to allow slot machines in all establishments that sell alcohol.
Gambling is not just common, it's also accepted. Despite the fact that for an estimated 4 percent of the population gambling represents a problematic and even pathological addiction, 85 percent of Americans feel that gambling is either perfectly acceptable for themselves or if not themselves for others in a country where more than 20 states now allow some form of commercial casino.
It's not too hard to see why casino lobbyists believe casinos make a positive contribution to the communities in which they operate.
It's far less easy to understand why so many Americans enjoy gambling even though it tends to result in the loss of money.
You lose, the casino wins
As a general rule, we tend to repeat behavior that produces desirable results and avoid behaviors that result in loss. We repeat jokes that people laughed at, choose jobs that we enjoy and that pay the most money, and avoid behaviors that produce fines. Following this logic, one would expect a gambler to only play as long as they are winning and then cut their losses when they begin to lose.
Yet gambling appears to operate differently; players play faster after losses and bet persistently regardless of the percentage of payback, magnitude of return, or the lack of winning entirely. So what encourages gambling behavior if losing occurs more frequently, and payouts do not exceed buy-ins?
One explanation is that gamblers poorly judge the actual probability of winning, even as their pile of tokens and coins dwindles before them.
Some examples of this phenomenon can easily be seen in the language of gamblers. 'My luck is going to turn,' 'A win is coming,' or 'I am on a hot streak,' are all statements that speak to an over-confidence in one's ability to predict functionally random events.
Gamblers will often say these things after an unusual series of outcomes, for example, ten straight losses on red at roulette. The gambler may then proceed to bet more on red, in the false hope that the next spin is more likely to come up red due to the overall probability of the game (50 percent chance of red).
This flawed logic is called 'The Gambler's Fallacy.' It stems from a misunderstanding of how probabilities are assessed; in fact the outcome of the previous spin of the roulette wheel has no influence on the outcome of the next spin. The probability of red remains stubbornly fixed at 50 percent.
Missed it by that much
Another example of how gamblers misjudge losing outcomes can be seen when individuals respond to losses that are similar in appearance to a win. Receiving two out of three symbols necessary to win on a slot machine is a loss but players often respond to this 'near miss' with excitement, increased betting and more persistent play.
How Much Is Too Much To Lose Gambling
Winning and almost winning are such similar events to many people that they respond in the same way to both. People pause, for example, for longer after a win than a loss. This is known as a 'post-reinforcement pause.' People often pause for longer after a near-miss.
It's no accident near misses are pretty common on slot machines.Mark/Flickr, CC BY-SA
How Much Do You Lose Gambling Taxes
Winning and almost winning are so alike in gamblers' brains that research on the dopamine-transmitting pathways of anticipation and reward show remarkably similar activation patterns for a near-miss and a win.
Near-miss effects are not limited to outcomes that look similar to win. Outcomes that are closer to a win in a more abstract sense also cause a similar response.
For instance, the near-miss effect has been demonstrated in games where 'nearly winning' might relate to scoring a number that is close to a winning number, such as in blackjack.
Near-miss outcomes are not the only form of almost winning that contributes to the behavioral confusion faced by gamblers. Modern slot machines also present a myriad of features that are designed to confuse outcomes.
Slot confusion
One feature present in almost every modern slot machine is the partial win or 'loss disguised as a win.'
Since slot machines have gone from the traditional 3-reel 1-line slot machine to the modern 5-reel video slot, often with 25 or more winning lines, near-miss outcomes have become almost unidentifiable from other losing outcomes.
By encouraging individuals to play on more than one line, casinos have created a scenario where players are awarded a win on almost every spin.
Despite the increased frequency of winning, the proportion of money returned is often far less than the entire bet, such as winning 10 cents on a 50 cent bet. This 80 percent loss is accompanied by the same sounds on the machine as a real win and occupies the same area of the screen that wins are reported in.
Since noticing near-misses on modern slot machines is difficult, game makers have incorporated other game features such as free-spin symbols, mini-games, and progressive awards, which create new near miss situations while often not guaranteeing any increased value of a win themselves.
For example, special symbols might be placed on the reels that provide 10 free spins whenever three appear anywhere within the game screen. These symbols will often make a special sound, such as a loud thud when they land; and if two symbols land, many games will begin to play fast tempo music, display flashing lights around the remaining reels, and accelerate the rate of spin to enhance the saliency of the event.
When you win these sorts of outcomes you feel as though you have won a jackpot; after all, 10 free spins is 10 times the chances to win big money right? The reality is that those 10 free spins do not change the already small probability of winning on any given spin and are still likely to result in a loss of money. For many games, features such as this have entirely replaced standard jackpots.
These features share one important characteristic: they allow the casinos the ability to provide more outcomes that feel like a win while not increasing the actual payout. The effect of these features is so significant that in 1989 the Nevada Gaming Commission banned algorithms that purposefully increased the prevalence of near-miss outcomes. Of course, this only applied to the intentional increasing of near misses when a loss is already determined, i.e. artificially producing a near miss instead of what the reels would have normally landed on.
Unfortunately, these laws do not preclude the intentional design of reel layouts that, without additional manipulation, produce frequent near misses and losses disguised as wins. These laws also do not apply to the newer game features which either highlight the near miss, such as accelerating reels, or create entirely new topographies of outcomes, as is the case with free-spins or mini-games.
While the question of how to best manage artificial manipulations of near misses may be a topic of future regulatory discussion, the decision to play games with these illusions will ultimately fall upon the end user.
As long as you are willing to expose yourself to the game in the first place, the casino need only sit back and wait. And with increasing availability of casinos across the U.S., they won't need to wait long.
How Much Money Can You Lose Gambling
The authors do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.
How Much Did You Lose Gambling
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