Letter to the Editor

Risks, rewards of gambling

Wednesday, September 5, 2007

Dear Editor, 

I would like to comment on an article written by Mike (Hendricks) in the weekend edition Sept 1 of The Gazette with regards to Casino Gambling.

First, I would like to compliment Mike, for the general reality that all of the issues of life contain some element of potential mystery and surprise that provide us with some cognitive balance of risk and reward ratios. However, I think that to take a word, term or label like gambling and broad brush it across every discipline from theology, athletics, economics, romance, back alley crap shoots, academics, vocation and politics (with the latter primarily in mind) is very problematic.

Here's why, to transverse across the preceding issues and relate them all with seeming equality to casino gambling is to perhaps do grave disregard to the facts of each discipline. Although all analogies and illustrations do this, Mike's seems to me as the gold standard in this regard.

In order to avoid a lengthy discourse, let me focus upon the vast difference between the substance of stock and bond markets investing as over casino gambling. Already I have made a point worth noting, one is legitimately called investing, the other only gambling and there is a reason why and that reason provides moral and ethical reasons for an astute mind to not broad brush a mutual fund investor who invests say, $4000 a year into an IRA vs. a person of similar means who goes to the town casino and spends $4,000 on a one-armed bandits in a town casino.

Let's compare the difference between investing and gambling. The investor though taking a chance, will normally over a long period of time via dollar cost averaging in quality blue chip stocks or even small caps make money over a 15 to 30 year horizon.

On the other hand the gamblers normally loose the vast majority of the time of time and remain in the red permanently thereafter. The social effect is thus a concentration of wealth amongst a few lucky ones and the house and poverty and penury to the losers. This leads invariably to a much more intense concentration of wealth among a few vs the masses, something that liberals and socialists are supposed to dislike.

Stock and bond investing is inherently investing because when the public provides capital pools for corporations with patents, to buy machinery and manufacture products or discover resources, a large amount of the capital often goes to create jobs and pay employees, the same is true of the revenue once it begins and increases. In fact studies by the NASD, show that publically traded companies created jobs at a much faster rate and at greater numbers than private companies. This is not to say that casinos do not create jobs. Indeed they do. However, the profit margin of casino is roughly 75 percent to 90 percent before employees are paid. Since many of them are private and on reservations their financials are often difficult to know and or to understand, however I do not know of a soul that would argue that their profits are over 50 percent and perhaps as high as 75 percent of gross revenue.

Let me explain by first hand experience what this means. Several years ago, at their behest, I visited one of the most prosperous Indian tribes in America. At their desire I introduced a venture capital investment opportunity with another 1st Nation Tribe that could easily pay a good venture capital return of 22 percent a year. Their response was this to me: we make approximately 70 percent net on our casinos, 22 percent that's not enough to impress our board. You see gambling wealth has a much lower work ethic to reward virtue than does investing. Like the Smith Barney Investment Bank commercial "We Make Our Money The Old Fashioned Way: We Earn It." I am not denying that the two are completely unrelated as per some chance or speculation. However, only in the world of a mythomaniac would one desire to equate casino gambling client, with that of an investment banking client, via a back alley crap shoot! Investing in a Mutual Fund at the Local Edward Jones is by no means similar to playing a slot machine at a Casino. The investor is by intention and design involved in a process of making prudent judgments based upon cognitive material, most often hoping for the success of goods services and products in the marketplace associated with the company or companies invested in. The casino, super lotto and or back alley crap shooter is hardly related to the prior described process. Rather they are primarily antithetical to the investor and counting on blind chance, instant gratification and basically via what almost amounts to a house driven pyramid scheme.

Last but not least, I witnessed an approximately 45-year-old graduate of some kindergarten, in a convenience store the other month staring up into the ceiling and calling out numbers to a cashier that was capturing each $1 numerical capitalization of this poor gentleman, after I waited about 5 to 10 minutes his bill was approximagely $50. This is a stark contrast to the person who sends $50 each pay period to their pension or mutual fund manager, who has analysts who look at intellectual property, products created that meet real human needs and bright employees who serve niches in markets, vs. the Lotto player who is basically on a Pokemon voyage to obtain numbers by chance.

Is there a chance here, yes and at different levels such as common stock, options and futures. However, by no means should one blanketly relate the primary function of Investment Banking to that of casinos and then prior to that allege that it is very similar to a back alley crap shoot. Then after all of that absurdism incognito try to align it with person's religious faith experience.

I understand Mike's needs to perhaps buttress his political viewpoint but inaccurate broadbrushing such as his on the subject of casino gambling and voters is certainly a less than well -thought path for building a case.

I could go much further, such as to speak about the relationship between casino gambling and alcoholism.

Casino gambling and bankruptcies. The high level of Native American unemployment and low productivity vs. the wealth generated by their casinos. The social pollution of casinos is very great and in the minds of many persons of various political persuasions it is greater in its damage than its benefits. Only Cuba's Fidel Castro and North Korea's Kim would equate or substantively relate investment banking as a societal polluter akin to casino gambling and/or crap shooting

Pastor Allan C. Jackson

First Baptist Church


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