If you can prove to a casino you are worthy of credit, they’ll lend you interest-free money. Frequently you don’t have to pay it back for thirty days–sometimes longer. How smart is it for you to use this casino credit?
First of all, you have to assume that the casinos provide credit to players because it is profitable for them to do so. On average, players with access to credit will play more — and hence lose more. Even allowing that sometimes the casinos have problems collecting the money, they come out ahead by offering credit.
I personally use casino credit a lot — primarily for two different reasons. If, for example, I’m planning on playing a $10 machine for four hours, I know from experience that if things go bad, I can easily lose $15,000 or more. I’d rather not carry this much money to the casino. On occasion you hear of muggings or robberies in casino towns. I’ve never been victimized by this (for which I’m very grateful), but why tempt fate? If I got held up and lost $200 it would certainly be traumatic — although not a tragedy. Losing $20,000 would be far more serious, so I try not to have that much on hand. (Sometimes this means getting paid by check on sizeable jackpots.)
Second, I never know how the gambling fates are going to treat me on a particular day. This MIGHT be the day I hit a royal or two and come out way ahead. On the other hand, this might be the day that I lose, lose, lose — at least at the beginning. If I calculate a promotion as being worth $200 per hour (which would be a relatively rare and special event), it would be very inconvenient if I ran out of money before I was through playing. Having extra money on tap at the casino cage is a nice backup. I might lose more, but if I’ve calculated that I have the advantage, I like my chances and am willing to “invest” more.
But whether casino credit is a good idea for me might have little to do with whether it’s a good idea for you. Let’s look at a few things to consider:
a. Are you a winning player? If so, gambling with “their” money is a nice tool. If you’re a losing player, gambling with “their” money will cause you to lose faster.
b. How is your self-discipline? Do you ever gamble when you’re inebriated or otherwise not at your best? How is your personality affected by losing streaks? Is anger management an issue for you? I’ve heard many stories of people getting drunk and losing everything they came with. If these people had a line of credit, they’d likely use it when they’re drunk and regret it later. Having this discussion with you when you’re sober is one thing. Having it when you’re drunk is quite another.
c. How much do you owe on your credit cards? If you pay in full every month, you’re obviously responsible with money and casinos charge no interest on the money they let you borrow. But if you owe a bunch of money on several credit cards and don’t really know how you’re ever going to get financially healthy again, casino credit is not your friend.
d. Is your spouse (if you have one) comfortable with your gambling and the inherent swings? If so, telling them that you’re getting interest-free money will likely appeal to them. If they are not comfortable with your gambling and the inevitable periodic losses, telling them that you’re getting deeper in debt because the casino is offering you money “for free” won’t please them at all.
Fortunately for me, Bonnie and I don’t argue about this. She came along after I was well established and successful. But this isn’t true for all marriages. If your wife “puts her foot down,” what should you do? If the marriage is important to you, using casino credit should probably be avoided.
e. How do you look at April 15? Nobody likes paying taxes, of course, but do you plan it so you have tax money coming back from the government? Or do you work it so you need to pay extra money on tax day? Insofar as I’m concerned, if I get money coming back from the government on tax day, I’ve greatly miscalculated. It’s my pre-paid money I’m getting back, after all. I’d be lending the government my money interest-free. How is that any good?
But I know a lot of folks who’d have trouble paying a tax bill on April 15 if they didn’t have it prepaid. For people like this, borrowing money from a casino might be equally hard to pay back.
Money is funny. Knowing how to use money wisely is not a skill that everybody has. If you gamble, you need more money skills than people who don’t gamble. And even if you have money skills in general, using credit wisely requires additional knowledge and habits that don’t necessarily correlate with how much you earn. There are people with annual incomes of $30,000 with money in the bank and others with million-dollar salaries who are always in debt.
It’s ironic, but the people who have considerable assets and “don’t really need credit” are the ones to whom it’s often the most useful. And the people who are barely scraping by and hence “need the money more” are the ones who should run away from it.
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