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The Psychology Of Gambling

Posted by on Jan 17, 2009

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This might seem like an odd post for this blog, but stick with me for a bit. Over the last couple of days, I’ve read some stories about people in positions of some type of authority that have been caught stealing money from their organizations and using that money to support their gambling habits. Locally, there is the story of a man who was just sent to prison for stealing $272,000 or so and spending it all on gambling. Then there’s another story of a former local school superintendent who embezzled at least $176,000 from his present school district, and has our local folks wondering if he did the same thing here. And I wrote in a newsletter how another person, this time at a hospital system in California, was able to embezzle over $750,000 over a two year period, and spent most of that on supporting her gambling habit.

I can tell you honestly that I can see the appeal to gambling, and I can also understand how it can consume you. I’m a poker player, and I have those periods of time when I want to retreat into myself and just go play poker. It’s a good thing I’ve become pretty good at it, so that, if I play long term, I will usually come out at least even, if not slightly ahead (I ended up coming back from Reno after all those weeks ahead by around $350), and that’s its appeal Everyone sees that big time score around the corner, that chance at the big, instant money, and the glory that comes with it. And glory does come with it, along with envy, because when you win, everyone else thinks they can win big also.

Anyway, I have felt that tug many times. I didn’t feel it in Reno, but I felt it when I was at a conference in Scottsdale, Arizona, and I felt it when I was at a conference in Ft. Lauderdale, Florida. Gambling is a solitary and social event all at the same time. If you play slot machines, you can sit at a machine for hours, but you’re out in public with a lot of other people doing the same thing, and you also have someone coming by you every twenty minutes or so to see if you want something to eat or drink. If you play poker, you sit at a table with a lot of other people. Sometimes it’s relatively quite, but other times it’s quite a social event, and man, I love hearing older people tell stories, whether they’re old poker stories or other types of stories. Yeah, I’m a sucker for a good story.

When I go to the casino, I have one of two mindsets. There’s the mindset that I’m there to have fun. If that’s the case, then my intention is to be able to stick around for a very long time, sometimes as long as 14 hours, but I’m having fun, I’ve decided how much money I’m willing to lose for it all, and I don’t often come home a winner. Then there’s the mindset that I’m there to win. In this case, I know I’m going to stay for a relatively short period of time, maybe 2-3 hours, the amount I’m willing to lose is minimal, but I now start applying more of those poker skills that I’ve learned over the years, not taking any unnecessary chances, watching every player so I can figure out how they play, and I’m willing to sit for hours and just keep tossing my cards into the muck and wait for only those hands that I know will win, pretty much for sure. Because, in poker, there’s rarely a sure thing (four aces and royal flushes are extremely rare), so you have to be astute and keep your eye on everything, and then hope for the best, based on your calculations.

So, inherently, there is a psychology of gambling. Of course, this isn’t only an article about gambling at a casino. Every day there’s someone who’s ready to take another gamble at something. And, in this day and age, many people are gambling on some sort of business that they can run on their own. If I can, let me tell you about my entry into the consulting world.

I was working at a hospital system, and I started to notice that some thing were occurring that just didn’t make me feel all warm and fuzzy about the status of the organization. I like to think that, with enough information, I can read both people and situations, and I had a feeling something was about to occur. One day I was home on vacation and had what I call a Spidey sense moment. Something told me to go online and read the Rochester newspaper; just out of the blue, just like that.

I went to that site, and the big headline was something like “Hospital system closes hospital.” I knew that was coming in my heart of hearts, and had predicted it almost 3 months earlier. Sure, the proclamations had come down saying they’d never close that hospital because there wouldn’t be enough beds in the city to support it, but I had my information, and I knew it wasn’t true. I just didn’t know when; yeah, maybe I have my own ESP sense of things from time to time. From that point on, I knew I wouldn’t be working at this hospital system within 9 months.

Three months earlier, I had started thinking about my own exit strategy. I was 41 years old, and I knew that was a major defining moment in the life of a man, as to whether a man decides to stay with the status quo, or take a chance to do something else, whether extreme or just something they’ve never done before. I already had it in my mind that, though I might interview for another position, I really wanted to work for myself. I started doing some research, and I also put a little bit of money away, because I knew I wouldn’t jump right in and start earning the kind of money I was earning already, but had a shot at it eventually.

Less than two months after the one hospital had closed, I got word that my department, and two other departments in my own hospital, were being moved to another city. And, because they already had all the directors they needed, they’d create a supervisor position for me, but I’d have to take a 25% pay cut. Well, not only was the other city now another 30 minutes away from where I lived, and I was already driving 70 minutes to work each day, but a pay cut and a loss of freedom that I was used to in my present position, as the guy I’d be reporting to, well, I thought was kind of a jerk. So I said I wouldn’t go, accepted my severance and the offer of going on unemployment, and registered my business name two weeks after my last day on the job.

Talk about your major gamble! When one works in healthcare, they don’t really think of themselves as working in a business. In New York, all hospitals are not for profit, and the rules are different than for profit hospitals. Normally, if there’s only the one hospital in a community, you don’t have to worry as much about advertising because you’re the only close choice and everyone knows you’re there. So, I came into working for myself without some basic marketing or sales skills; I had no real clue.

That first year working on my own, which started in the middle of the year, I earned a little bit of money, nothing great, but fiscally the year ended pretty good. The next year was murder, though. In my first full year of working for myself, my profit was only $7,600; my second year profit was only around $17,000. Good thing I had a lot of credit, and good credit, but, as you know, one can’t live off that, even with my wife working a full time job. But everyone already in business said that if I could last to the third year, things would start to turn around. I wasn’t sure how, since I couldn’t really figure out what would magically change in my life to help it turn around. I had learned a little bit more about marketing, and had talked to a lot of people across the country, but I just wasn’t sure about it all.

On the verge of thinking about declaring bankruptcy, because I just wasn’t sure about it all, my mother called and wanted me to watch some program on TV. I did, and the speaker was giving some motivational words about never giving up, and always keeping a positive spirit and thought alive. Around that same time, I had started listening to motivational tapes and watched the movie The Secret, and started feeling pretty good. I got a paid request to repair someone’s computer, which I can do small repairs, and that paid something, not lots, but it was the start, as it was the first money I’d made that year. Then, only four working days later, I got the call I’d been waiting for, and my consulting business started to take off, and I’ve never looked back. Sure, there are ups and downs, but overall, my income had that opportunity at times to skyrocket, and I like that. Sure, there are those times when I’ll feel as though any control I have is a facade, but in general I have enough control to make sure that my yearly income is fairly steady.

But am I done? Well, obviously not. I actually have two dreams, rather goals, that, long term, I want to get to, and of course they’re going to involve a gamble of sorts. One, I want to be an almost full time professional speaker and seminars. I’ve actually already done a good number of each of these, but not enough so that I could consider them as second nature. I couldn’t live off the number I do now, but I’m working towards that. The other is to learn now to be an internet marketer, such that I wouldn’t have to worry about the long term consulting assignments again because I’d have a consistent income every month coming into the house from the internet. I think this second one is one that a lot of you have also.

But both are gambles. For instance, the time it takes right now to get one big time speaking engagement a year is phenomenal. There’s a lot of research that has to be done, then back and forth negotiations on the fee, then the outline and practice time and the rest of it. Frankly, while working for oneself, it’s hard to do and keep up with everything else. A part of me says that I might have to take a gamble and be ready to give up working on finding consulting assignments to try to get more speaking engagements. That’s not going to happen right now, but it’s something I have to think about. Internet marketing is another story. I don’t have to give up consulting to probably do it right, but I would have to give something up so that I could have more time to learn more things so that I could have the possibility of earning more money online.

It’s a gamble because sometimes it costs us to learn how to do it. In 2008 I spent around $125 to learn how to make more money online, and I did start making more money, oddly enough. The money that I’ll probably consistently make now will pay for the training material I’ve paid for and all of my online time. So that’s a good thing, right? Well, it’s a good start, because I have way more material, ebooks, reports and sound files, that I need the time to get through, that I need to make notes on that I can implement. All of you already know this; internet marketing isn’t as easy as those bad television commercials make it out to be. How many of you are making enough money with your blogs to support you for the rest of your life?

So, there’s really the thing about the psychology of gambling. It has to be recognized that everyone does it in some fashion, and that everyone needs to be able to find a way to control that gamble, or overcome the occasional bad gamble. Would you quit a job that was paying you $75,000 a year to buy your own rig and become a truck driver? I know someone who did, started slowly, then started making a lot of money, and now is back at a tough place because of the economy. However, had he stayed where he was, he’d have lost his job 2 years ago and had to figure out where to go next.

Life is a gamble, no matter what you do. If you think of it that way, you realize that sometimes the gamble is worth it, sometimes it’s not, but with enough information and study you have a better chance to succeed.

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14 Comments »

Ah, Mitch, it is nice that you have written a post on which I can comment. You bet, pun intended, that everything we do in life is a gamble. All actions end up in some reaction or more aptly, response. There can be one of four outcomes – one, you get exactly what you wanted out of the action, two, something less, something more or something totally different. When one takes any action, one must be prepared for any one of these responses. That is why skill, knowledge, effort alone are not enough in life, one must accept that there is a fourth element, call it Chance if you want to be secular, but that determines the final outcome.

I can tell you story after story to buttress my proposition, including one similar to your friend. My class mate, and that is creme de la creme emigrated to the UK to become an Engineer. He was very successful and at one point of time, he almost became the CEO of a subsidiary company of his employers. His marriage went on the rocks and he quit everything and became a long haul, trans Europe truck driver. He retired five years ago after 15 years of being one and has retired to a rural English setting which is out of the world.

Twenty years ago, our alumni, in one of our reunions, had predicted that he will become a top notch CEO.

rummuser´s last blog post..A Chapter Closes.

January 18th, 2009 | 8:30 AM
Mitch:

Thanks for commenting, Rummuser. Yup, gambling comes in all forms, and it can be exhilarating as much as it can be frightening at times. And sometimes, sitting around waiting for things to happen when you think things are status quo can still get you. I’m sure there are 35,000 people in America today who thought their jobs would be safe working at Circuit City.

January 18th, 2009 | 12:57 PM
Boyz II Men:

Your story was motivational Mitch and I’m glad you were able to make it with your attempts to start a business at home. It’s such a hard decision to know when it’s time to quit, and when you need to stick it out longer. From the sounds of things, you made the right choice!

I’ve found a lot of the same challenges with the stock market and it’s hard to keep myself from getting too addicted. It seems too easy to keep throwing money at it in hopes that you’ll make your millions.

January 18th, 2009 | 1:13 PM
Mitch:

Man, the stock market is tough to handle, especially with the volatility of it all. This morning there was a 30 minute infomercial on teaching people how to put their money in the stock market, and of course they had all these testimonials from people saying how much money they were making. Thing is, that’s how Madoff got caught, fudging profit numbers when the entire market was crashing around him. I think there are some things that some folks could do and still make some kind of profit in the market, which I alluded to in one of my other blogs, but overall, it’s a mess right now.

Thanks for the nice words, Boyz; I really appreciate it. I wasn’t sure how many people would read such a long post.

January 18th, 2009 | 1:37 PM
Boyz II Men:

Oh nice, I didn’t know you had another blog. Your posts can be pretty lengthy reads but I enjoy them. They help bring out your personality and add your own experiences to the things you describe.

The Madoff scheme was a shame and I always worry about those things where people hype how much money they’ve made. A lot of it seems to me like the old saying “If it seems too good to be true, it probably is.”

As you said, you’ve got to take risks, but you also have to know when to quit.

January 19th, 2009 | 2:53 PM
Mitch:

Knowing when to quit is the toughest part of it all, Boyz. I know when to quit when I’m at the casino, but overall, I’m not big on “quit”.

As for blogs, I have a third blog also, which you can find here.

January 19th, 2009 | 3:50 PM

Wow Mitch,
What is it about you and LONG posts? 🙂
This is a good one. Usually getting ahead in life is all about risk management. There are seldom rewards without some level of risk. The key is to take smart risks. When if comes to gambling, I’d much rather “gamble” on myself where I have some level of control rather than gamble and buy a lottery ticket… I suppose that’s also why when I do gamble (not often) I’d rather play 21 than slots.
~ Steve, the trade show guru
PS. Now I can’t get that Kenny Rogers’ song out of my head… 😉

Trade Show Guru´s last blog post..Balance

January 18th, 2009 | 4:25 PM
Mitch:

Thanks for the comment, Steve; and if it hadn’t been long, you’d have been disappointed in me. lol

It is always better to gamble on oneself, especially if you’ve put the work and research into whatever it is you’re ready to try to do. But all gambling takes guts initially, because you never know what the outcome is going to be. Having a dream and a goal to focus on helps a lot.

As for Blackjack, I stink at the game, which is why I play poker. I don’t know why I stink at it; guess I’m just not patient enough.

January 18th, 2009 | 6:07 PM

Mitch,

This is one of my favorite quotes and I actually use it in my book, Whatever!, to make a point:

“And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.”

I have always been a risk taker. I believe there is true value in it–even if I don’t succeed in my attempt because there’s always a lesson to be learned.

This is a great post and I’m glad I’m a subscriber!

Beverly Mahone´s last blog post..US Airways Flight 3407

January 18th, 2009 | 4:49 PM
Mitch:

Thanks Bev; I’m honored by your comment. Actually, I haven’t always been a risk taker, which may have kept me away from a music career early on, but I’ve become more open to taking chances as I’ve gotten older. I just want to be more successful across the board; who wouldn’t want that in life, right?

January 18th, 2009 | 6:09 PM

Wow Mitch, after reading this I have no doubt you would make a good speaker. This would have to be one of your longer posts, that’s for sure. I don’t often gamble except for recreational purposes once in awhile as I always lose. Perhaps that is my problem, I don’t set out with that positive will to win.

I agree that starting any business is a gamble but with perseverance success can be achieved. Isn’t it amazing how you mom knew exactly when to call you, when you? Sixth sense perhaps?

Also I found a typo in the post…’mayb3′ One day I hope to catch you out on a grammatical error, but I won’t be holding my breath for that to happen 😀

Sire´s last blog post..Blogging The Money Way With Plugins

January 20th, 2009 | 3:10 AM
Mitch:

Nice catch, Sire; I’m not sure I’d have caught that ever.

Starting a business can definitely be a gamble, and if you succeed it can be sweet. But it’s not easy, and I would hope that most people take more time to study it before just jumping into it.

January 20th, 2009 | 4:47 PM

Mitch, you just got me read the whole 2200+ words post in one sitting 🙂 – the reason being the life lessons in it (and some comments above as well) was so interesting and reflective.

As you rightly said, there are moments and days in life where we take gambles. In your younger days you take gambles without having a clue on what you are upto but you have energy levels of a race horse to come out good (just like the sales assignments years in your case). In midlife a number of crises – career crisis, mid-life crisis, financial crisis, you name it – hit you and you tend to take calculated gambles with informed risks.

It pays to take gambles at times because if you come out good you proved a point and life gets better. But even if you don’t win, you can be at least content beacuse you gave it a try!

Excellent post man!

Ajith Edassery´s last blog post..OIO Publisher Coupon Code – Jan 2009

January 24th, 2009 | 9:17 PM
Mitch:

Thanks Ajith, and I’m glad you were able to make it through the entire thing, although you could have also listened to it. lol

I like the way you phrased this: “you tend to take calculated gambles with informed risks.” Absolutely, although sometimes, people don’t make sure to inform themselves enough of those potential risks. I see just how many businesses start up and then fail because people either didn’t consider something, weren’t flexible enough to change, weren’t paying attention to market trends, or really weren’t ready for the grind of it all. And it can be a grind; some days it’s’ hard to get my mind into a proper place to work. Other days, the output of work I can accomplish is amazing. But when the chips are down, I can pull out all the stops and get something into the bank; that’s tough, but it’s just what one has to be willing to do to take care of oneself and family.

Thanks for your comment, and the read.

January 25th, 2009 | 12:30 AM