As cost of living rises in the US, what could this mean for the gambling industry?

The cost of living is on the rise in the US, so how could this affect the gambling industry?

According to the US Consumer Price Index (CPI), the cost of living, as measured by the price of goods and services, has increased by 2.4% over the past 12 months, as shown by data from the Bureau of Labor Statistics. That’s a sped-up rate of growth from the 12-month period prior, which saw a rate of 2.3%.

The index showed that prices for basic necessities, outside of food and energy rose by 2.8% over the same period, while food and energy costs increased by 2.9%. Put simply, life is getting more and more costly for the average American.

Times of economic uncertainty have aligned with increased gambling activity in the past, as seen in this study looking into Iceland between 2007 and 2011. During that period, where three major banks in Iceland went bankrupt in October 2008, some interesting gambling patterns emerged.

Specifically, more people bought lotteries and scratch cards and played bingo, while fewer played in casinos and with electronic gambling machines. The trend seemed to suggest that people were more inclined for ‘casual’ or opportunistic games, rather than going to dedicated gambling locations like casinos.

This could stem from a desire to ease financial difficulties with a lucky windfall, or perhaps stem from motivation to escape a stressful situation. After all, several studies suggest that emotional stress can drive people toward gambling as a coping mechanism, with such games offering a diversion from stress while placing bets.

The same phenomenon was tracked during the pandemic, with more recent studies tracking behavior across that period noting that, despite largely cutting back on spending, online gambling surged, seemingly as a way to cope with lockdown stress and financial anxiety.

“In lean times, a few key drivers tend to emerge: desperation, escape, and optimism bias,” explained cognitive psychologist and mental health columnist Mark Henick. “Desperation can make the ‘big win’ fantasy feel not just alluring but necessary; you start to believe gambling is a viable strategy to fix your finances.

“Escape comes into play when life feels overwhelming; the casino, the lottery, or the betting app becomes a comforting refuge from reality.”

While the motivation to gamble more during times of stress is understandable, the risks still remain. In fact, impulsive gambling can come with greater risks than typical gambling not borne out of stress.

“When markets fluctuate and money worries intensify, decisions tend to change from prudent planning to spontaneous risk-taking,” explained Steven Buchwald, Managing Director of Manhattan Mental Health Counseling. “This change heightens the risk of irresponsible gambling that can undermine your money and your psyche.”

“Taking a moment before risking money is necessary,” advises Buchwald. “Take a conscious moment to evaluate your mood. Stress and anxiety tend to trigger gambling desires. Implementing a 24-hour waiting period before placing any bet allows your mind to shift from emotional reactivity to clear thinking. During this time, writing down your motivations and potential losses can anchor your decisions in reality.”

It’s also vital to set firm financial boundaries – before you start playing. This helps to maintain control and limits on your spending, protecting your assets. In addition, breaking this boundary is a sign of compulsive behavior that could need further professional attention.

“Taking time to reflect protects your finances and mental well-being,” Buchwalk adds. “Awareness and self-regulation reduce impulsive decisions fueled by economic stress. Responsible gambling requires more than luck; it demands clear thinking and firm limits.”

Featured image: Pexels

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