Gambling Addictions Threaten Retirement Plans

An advisor helps a woman who blew through $500,000 playing slots. Another helps clients with gambling-addicted husbands.

As gambling platforms multiply, some people in or near retirement might be tempted to roll the dice on their wealth accumulated over a lifetime.

And financial advisors may find themselves on the front line of helping clients for whom casual gambling becomes a compulsion that could drain their savings.

The proliferation of new casino locales and of heavily advertised online gaming sites can be a siren call to those filling emotional needs, according to Felicia Grondin, executive director of the Council on Compulsive Gambling of New Jersey. The nonprofit, which operates under the state Department of Health, has been in existence for 40 years, after Atlantic City joined Nevada in offering casino gambling under the Casino Control Act of 1975, she says.

Senior-age gamblers have a variety of reasons to seek out gambling, she adds. There are the obvious draws, such as the prospect of easy money and the excitement of gambling, whether alone or with friends.

“But gambling also can numb the pain of chronic health problems and provide an escape from lifestyle issues. It can distract from anxiety,” Grondin adds.

The council’s website provides a printable page of handy advice, including warning signs to watch for if a loved one seems to have a problem with gambling. It also provides a hotline and other useful information.

According to data from a 2014 article in the AARP Bulletin, in 2013, for the first time, the American Psychiatric Association officially recognized compulsive gambling as an addiction (rather than a personality disorder), acknowledging that it shares many features with alcoholism and drug addiction.

A Hidden Addiction

When gambling crosses the line into addiction, however, it’s often hard for others — and even for gamblers themselves — to recognize the change.

Family and friends can often tell if someone abuses alcohol or drugs. But gambling can be a hidden addiction.

Gamblers “may feel guilt or shame if they are in debt or may disappear for a period of time,” Grondin says.

One in five problem gamblers are at risk for suicide — one of the highest rates among various addictions, she notes.

And for family members of compulsive gamblers, they may not know of a loved one’s problem until they are deep in a financial hole — college savings are depleted or a home is in foreclosure. In some cases, a gambling addiction can lead to criminal activity such as fraud to help cover debts.

A 2015 short drama, “Empty Spaces,” created by OutreachArts for the New York Council on Problem Gambling, is a powerful portrayal of why an older woman turned to gambling and the impact on her family.

A study by the National Institutes of Health that appeared in the National Library of Medicine in 2019 acknowledges the many services available to help those with a gambling addiction. But it also notes that seniors may not reach out for help as much as they should:

“Very few older people will seek access to specific treatment programs. Therefore, to reduce harm, especially financial, social, and psychological harm, family and social services have a principal role to play and a protective legislative measure could be discussed.” ()

Grondin notes that in New Jersey there is a form of protection for those who feel their gambling is problematic. The state has a “self-exclusion” list a person can elect to join to help control their access to gambling.

On the registration tab, the state Office on Gaming Enforcement in the Attorney General’s Office states: “This page is provided by the Division of Gaming Enforcement as an avenue for gamblers to ‘opt out’ of Internet gambling activity. By taking this action, you are stating that all Internet related gambling activities must cease for the selected timeframe.” Gamblers can always re-instate themselves after they finish their self-exclusion period. This program is in addition to Responsible Gaming Programs enacted by individual casinos, the website states.

Financial Advisors Can Protect Clients

Randy Bruns, CFP, a principal and senior financial planner at Model Wealth Inc. in Naperville, Illinois, shared his experience in helping a client who found herself in what could have become a dangerous financial position.

“We’ve had a few clients over the years where gambling addictions threatened retirement plans. One particular individual was spending through her money so quickly that it threatened to not only deplete her portfolio, but threatened her ability to continue paying long-term care insurance premiums on a terrific policy. We recommended converting a lump sum to a lifetime annuity. This would provide ongoing cash flow in a disciplined manner versus the lump sums they were otherwise depleting,” he told Rethinking65.

Reaching that point involved talks with Bruns’ client and her family about a sensitive topic: Her gambling that had gotten out of control.

In 21 years in his profession, Bruns says he has advised clients facing many challenging life situations: “I never judge anyone for their own problems,” Bruns says.

Instead, he set about finding a consensus on a workable plan for his client, in her early 60s, whose husband had died a few years before. She had inherited her late husband’s $1 million life insurance policy, but had used $500,000 in just a few years and that was just in playing the slots.

As excited as she was to win $20,000 one week, he says, she didn’t factor in that she lost $100,000 during the year to get there.

Grief and Gambling

The client’s loss of her husband explained how the gambling took hold:

“She told me, ‘The casino was one place I could go and not feel alone’” Bruns recalls.

“She wanted help,” he adds.

Developing a solution for preserving his client’s remaining assets involved not just the client but also her grown children.

She agreed to move a large portion of her remaining funds into an immediate annuity. Bruns calculated an amount for a monthly “pension.” This monthly income stream, combined with her Social Security payments, provided enough to comfortably cover her needs and other expenses, including that long-term care insurance policy that she had initiated decades earlier. The immediate annuity was guaranteed by the insurance company, Bruns adds.

“It was a safer and more prudent way to control access,” Bruns says.

Meanwhile, he advised her to close lines of credit at the casinos that were extending the credit at “super-high interest rates,” Bruns says.

These were all moves in the right direction, but, he concedes, “She did not like the idea of surrendering her wealth.”

Nonetheless, her children supported her decision to move about 75% of her funds to the annuity — and he says there is no reason to think that his client will not receive the fruits of the investment for a long time to come.

Compulsive Gambling’s Different Forms

Grondin, of the Council on Compulsive Gambling of New Jersey, says the demographic information developed in the state (for example, about the types of people addicted to gambling) comes mainly through the council’s helpline, 1-800-GAMBLER.

The council’s statistics show that more than two-thirds of Atlantic City’s gambling revenue comes from seniors, who tend to play slots and bingo. And 5% to 10% of senior gamblers will become addicted.

Apart from the financial impact of compulsive gambling, it creates health problems associated with “cross addictions” — alcohol and drug use. The stress of losing money can lead to more anxiety and depression and other health problems such as hypertension, obesity and insomnia. Smoking increases among compulsive gamblers, according to the council’s data.

Gambling in New Jersey is a growing business. For 2021, the industry’s total gaming revenue reported by casinos, racetracks and their partners was $4.74 billion, compared with $2.88 billion in 2020, reflecting an increase of 64.4%, according to that state’s Division of Gaming Enforcement.

This reflects national trends. According to the American Gaming Association, with December revenue yet to be reported, 2021 annual gaming revenue reached $48.34 billion through the end of November, “shattering” the industry’s full-year record (2019) of $43.65 billion and tracking 21.3% ahead of the same eleven-month period in 2019. (U.S. gaming revenue was down in 2020 because of casinos being closed during the pandemic.) HYPERLINK on $48.34 billion: https://www.americangaming.org/new/covid-19-drives-commercial-gaming-revenue-down-31-in-2020/ HYPERLINK on down in 2020: )

Grondin says the council is currently exploring ways to counteract the barrage of advertisements for online gambling and sports betting sites. Advertising “inundates” television ads, for example, and “the council is challenged to compete with that,” she says.

Even day trading can become an addiction akin to gambling. “It’s online, it’s very accessible for all the same reasons,” Grondin observes.

And the COVID-19 pandemic is partly responsible for expanded interest in day trading.

In an article on the council’s website, Grondin said the absence of other things to bet on, such as sports and horse racing, in the early days of the pandemic pushed some gamblers into stock trading platforms that can deliver the same thrill. Her group’s helpline experienced an almost 50% increase in calls related to day trading since the start of the pandemic, she said, although the volume was small compared with calls about lotteries and sports betting. “While it can be a lucrative career for some, it can quickly become an issue for others.”

Bruns says he had another client who was a “compulsive gambler when purchasing individual companies.” She became convinced certain companies were the proverbial “sure thing.” They weren’t, as it turned out. As a fiduciary, he also had her move a part of her portfolio to another firm for this type of trading.

“If you are trading options, you are gambling without a doubt. If you are expecting to make money in three years or less, that is gambling,” Bruns says.

When Spouses are Addicted

As with any addiction, those closest to the addict are deeply impacted by their loved one’s problem.

Stacy Francis, president and CEO of Francis Financial Inc., New York, has made it a mission to empower spouses, often women, through her firm that has a mission to “work with women going through difficult changes in their lives.” Her main focus now is on women in financial transitions, whom her company can support directly, she told Rethinking65.

And, apart from widowhood or divorce, realizing your husband has a serious gambling problem is a crisis many women face.

In a recent podcast by Francis, two women whose husbands were compulsive gamblers spoke about their experiences in trying to maintain a family budget and protect assets while married to someone in the grip of gambling.

Francis first put the problem in context by citing national studies that show as many as 10 million Americans struggle with compulsive gambling. Even more disturbing is the fact that older adults aren’t the only ones. Studies she referred to show one in 20 college students meet the criteria for compulsive gambling, which is double the rate of the overall adult population.

Francis emphasized that family members “can’t confuse love with trust.” And unfortunately, until they learned to become more attuned to the manipulation of the addict in their lives, they each trusted too much.

Resources and Support for Family Members

But the women, one of whom divorced her spouse and one of whom is still married, ultimately prevailed.

They applied practical ideas and found support through Gam-Anon, a 12-step program for families and friends of compulsive gamblers.

Among the personal tools they developed to protect their finances are:

  • Establishing bank accounts in their name only.
  • Keeping their money and savings separate with extra layers of protection, such as notifications if a non-account holder withdrawal was made.
  • Protecting and changing their passwords to limit their spouse’s access to accounts or credit cards.
  • Regularly checking their credit scores for any downgrades.
  • Sleeping and showering with their purse with them — and even locking their wallets in a file cabinet at home.
  • Putting valuables in a safety deposit box that is theirs alone.

Overall, Francis and her podcast guests agreed that being fully involved in the family’s financial management was key. Both partners should see financial statements and be aware of transactions. Oversight of family money should not be left only to one’s spouse — especially if that spouse is struggling with a gambling addiction and will pawn valuables or abuse home equity lines.

Francis also says that seeking professional advice from a matrimonial lawyer is a first step to protect a spouse from the other spouse’s gambling addiction.

Apart from reaching out to legal professionals, a financial advisor or joining Gam-Anon, those seeking help for themselves or a family member or friend can contact the National Council on Problem Gambling, a private, nonprofit based in Washington. There is a 24-hour confidential helpline at 800-522-4700 or visit ncpgambling.org. There are contacts to state organizations and updated news on a variety of gambling issues.

The organization does not take “a position for or against legalized gambling,” the site notes, but advocates “solely for those affected by problem gambling” and treats “all stakeholders with respect.”

The organization identifies March as Problem Gambling Awareness Month.

According to the website, groups across the country will hold conferences, air public service announcements, provide counselor trainings, host health screening days, run social media campaigns and many other activities to increase public awareness of problem gambling and the availability of prevention, treatment and recovery services.

Patricia McDaniel is a freelance writer and editor and former journalist with Gannett’s New Jersey newspapers. She can be reached at pmcd5353@gmail.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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