Kenya and other African countries have seen a proliferation of gambling over the past decade. The popularity of sports betting and other forms of gambling has increased as betting becomes more accessible through the internet and mobile devices. Many people participate in the betting craze without an understanding of the financial consequences of gambling.
A survey by TGM Research in 2022 revealed that approximately 76% of Kenyans engaged in betting. The trend is primarily driven by the wrong perception that one can earn a living from gambling. However, gambling can severely affect your financial resilience. In this blog, we delve into the financial consequences of gambling.
Financial Consequences of Gambling
Debt problems
Gambling stimulates the brain’s reward system, leading to addiction. If you struggle with compulsive gambling, you can repeatedly chase bets that contribute to mounting losses. This may force you to take short-term loans to fund your betting addiction. The debt increases as you desperately chase the big win to get your money back.
Debt problems occur when gamblers have lost much of their services, forcing them to turn to credit to get funds to continue gambling or cover expenses. Gambling-related debt problems put you at a high risk of substance use, psychological distress, crime, suicidality, and adverse family effects.
Loss of savings
Building up savings provides the best way to achieve financial security. However, individuals’ ability to sock away a dollar competes with the fantasy of Mega Millions jackpots. Gambling can reduce your ability to save no matter how often or how much you bet. The risk of losing your hard-earned money through gambling is extremely high. Also, the mounting losses from gambling may drive you to pull money from your savings accounts.
Related:10 Simple Ways to Save Money
High cost of borrowing
Gambling addiction leads many people into debt. Some digital credit providers charge exorbitant interest rates. In Kenya, a 30-day digital loan might have an interest rate of up to 30%.
Loss of productivity
Research has linked gambling-related debt problems with psychological distress, which reduces work performance. The anticipation of the ‘big win’ is mentally involving. Additionally, the devastation of losing bets leads to feelings of despair. Psychological distress is more profound when large amounts of money are gambled.
It is impossible to perform your best at the workplace when you have feelings of despair and regret for losing bets. The thoughts of big stakes and the mounting losses are likely to cause distraction and impair your decision-making capacity. This may limit your chances of promotion.
Employment difficulties
Gambling is also associated with higher rates of unemployment. Lateness, moodiness, absenteeism, irritability, psychological distress, and poor work performance render l gamblers less employable. People with gambling addiction are also likely to be absent from work or take extended breaks to focus on betting.
They are also likely to miss work due to gambling-related physical problems such as dizziness, chronic headaches, breathing difficulties, and stomach problems. Increased work absence and reduced productivity may lead to job loss and future unemployment.
Reduced opportunity to make reasonable investments
Investing involves the commitment of capital or allocation of funds to an asset with the goal of earning income. Gambling losses may deplete financial resources. If you are a victim of gambling losses, you are more likely to find it extremely difficult to raise capital for reasonable investments. Also, gambling may force you to pull money from your investment portfolio. Without reasonable long-term investments, it becomes difficult to build wealth and develop financial resilience.
Neglect of financial responsibilities
Most people who are addicted to gambling are ignorant or careless about their financial responsibilities. For instance, gamblers often fail to pay bills on time because they are always short of money. Other ignorant practices include not paying healthcare insurance, failure to renew asset insurance, and inability to provide basic needs. Financial neglect may result in hefty losses through penalties and fines.
Denial of credit
Although gambling activities do not appear on your credit reports, behaviors associated with compulsive gambling could lead to debt that affects your credit score. Some of the behaviors include;
- Increased credit utilization: Gambling is closely associated with increased use of credit as individuals seek more money to fund the addiction. A high credit utilization brings down your credit scores.
- Missed or late loan payment: If money is lost through betting, you may miss payments to the lenders. Late payment can hurt your credit score. Information about a default on a loan will show up on your credit report, bringing down your score.
Frequent engagement in risky investments
Gamblers have a high propensity to engage in risky investments such as options and futures contracts. A study published in the MDPI journal suggests that younger people with gambling addiction are overconfident when buying high-risk stocks. Risky investments are commonly associated with losses for individual investors.
Forced sale of personal assets
When the financial strain becomes intense, gamblers may sell their houses, cars, or household items in unfavorable terms. The motivation for pawning personal belongings is to get funds for further gambling. Victims may easily find themselves struggling with so much debt.
Conclusion
Gambling has significant adverse effects on people’s financial well-being. For future financial resilience, you should avoid any form of gambling. Avoiding platforms for gambling and people who gamble might be helpful.
Governments need to educate people on the dangers of gambling, especially sports betting. People with early signs of the problem should receive treatment to prevent the behavior from becoming worse.
