NCPA - National Center for Policy Analysis

Weak Link Between Gambling And Bankruptcy

August 12, 1999

With gambling rates increasing in tandem with rates of bankruptcy, Congress last year directed the Treasury Department to study a possible relationship. But Treasury says the relationship is "statistically weak."

  • It found that on average, "frequent high-risk gambling raises the probability of bankruptcy by six percentage points from that of the base group, occasional gamblers."
  • It added that frequent high-risk gambling "does appear to be associated with a greater likelihood of declaring bankruptcy, but the low prevalence of this type of gambling suggests that it has a relatively minor impact on the overall bankruptcy rate."
  • Between 1993 and 1997, gross wagering jumped 53 percent, while personal bankruptcies grew at an average annual rate of 11 percent from 1985 through 1998.
  • Bankruptcies hit a record 1.4 million last year.

Treasury attributed the rise in personal bankruptcies to a host of factors -- including increased debt levels relative to income, greater use of credit cards, and a lower social stigma attached to filing. An increase in divorces and higher medical costs were also cited.

Source: Staff Writer, "Study Finds Indistinct Link Between Gambling, Bankruptcy," Wall Street Journal, August 12, 1999.

 

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