I just read “Charlie Hustle: The rise and fall of Pete Rose and the last glory days of baseball,” by Keith O’Brien, and it gave me some insight into the logic of gambling addiction, along with a question.
The insight—which is not a deep insight, or anything original with me, it’s just something that I realized after reading O’Brien’s book—is that gambling addition cumulates. It’s related to what I called “exponential frauds” in my review of Dan Davies’s book.
It goes like this: if you’re a gambler, and you’re like the vast majority of gamblers, you lose. You’re repeatedly playing a game with negative expected value. And if your strategy is to try to make up your losses by further gambling, you’re heading into an exponential spiral.
For a compulsive gambler, a loss is not just a loss, it’s also part of an exponentially growing problem, that the more you lose, the more betting you’ll have to do to try to cover your debts, which leads to larger debts, etc., until everything blows up.
From that perspective, the question, “Why did Pete Rose bet on baseball?” has an easy answer. Pete Rose bet on the horses, and he bet on football, and he bet on basketball; the more he bet, the more he lost; the more he lost, the more he had to cover his bets (he also seems to have stiffed a lot of people along the way); so, eventually, yeah, he bet on baseball because that would’ve seemed to give him the best chance of winning back his money. I expect that the next step would’ve been for him to start throwing games.
I suspect that one reason that some people (including, notoriously Bill James; a good discussion of James’s position on the Pete Rose gambling issue is this post on Baseball Prospectus by Derek Zumsteg, which is all the more impressive given that it was written in 2003, before Rose’s confession that appeared a year later) didn’t want to accept that Rose bet on baseball is that: (a) Rose would be risking his livelihood and reputation by betting on baseball, and (b) he was already betting on other things, so it’s not like he needed baseball to scratch his gambling itch. But this reasoning didn’t account for the exponential spiral. With the financial walls closing around him, betting on baseball was Rose’s last shot at getting out of the hole. It was a natural progression.
O’Brien writes that, many years later, “Pete calculated that his banishment had cost him roughly $100 million since 1990, between lost earnings as a manager and lost sponsorship deals.”
I disagree! Based on Pete’s trajectory, I’m guessing that every one of those hundred million dollars—and more—would’ve gone to bookies. Or, to put it more precisely, those hundred million dollars would never have materialized, because if baseball hadn’t banished him and taken away his main streams of income, he would’ve gone to prison for tax evasion or drug dealing or some other mob-related crime. Had he been able to stop gambling, that would’ve been another story, but the most likely outcome seems to be that the necessary first step would’ve been for him to first spend every dollar he could get his hands on.
The question is: How did it take so long for things to get to that point? It seems that Rose had been addicted to gambling for decades before it all started crashing down. I guess what happened is that he first gambled small enough amounts that he was able to sustain the losses. And for many years his salary was increasing, first because he joined the major leagues and became a star, then later because his later career overlapped with the beginning of the sports salary explosion associated with TV contracts and free agency.
The two exponential time series—Rose’s betting losses and his income—were roughly on pace.
But then in the early 1980s, the curve of losses kept going up and the income stayed flat. For awhile he made up the difference through those notorious baseball card signings, along with a bit of tax evasion and maybe some investments in criminal businesses, but that wasn’t enough either. Next step was to bet on baseball, and you know the rest.
In his mangling of the Rose betting story, Bill James wrote, “Pete Rose, in the mid-1980s, had: 1. Become addicted to gambling, and 2. Largely lost his moral compass. Rose had entangled his life with a number of shady characters . . .” But from O’Brien’s book it seems clear that Rose was already addicted to gambling in the 1960s, and had entangled his life with a number of shady characters back then too. The “moral compass” thing isn’t so clear. I’m guessing that Rose never would’ve stiffed creditors or cheated on his taxes if he didn’t feel that he had to. It’s easier to be moral if you can live a comfortable life without needing to resort to immoral behavior. The gambling addition was already there, as were the shady characters; the moral compass was set aside because, in a classic addicted-gambler move, Rose saw no solution to his gambling problem other than to gamble more.
To me, an interesting aspect of this case is how long it took to blow up: the exponential spiral started slowly enough that Rose’s income, plus his various cheats, were enough to keep his addiction afloat for a long time.
A good reminder that something can be on an unsustainable path but take awhile to get there.
P.S. The sad thing, of course, is that the gambling is the least interesting thing about Rose. There are millions of addicts out there but only one person who played like Pete Rose. This is in contrast, for example, to William Bennett, the mediocre but well connected former Secretary of Education and political pundit, who was entirely uninteresting except for his gambling addiction.
P.P.S. Here’s another story making the same general point about the exponential nature of an addict’s growing problem, someone gambling more and more recklessly to cover the losses which continue to increase until the whole thing blows up.
I thought this podcast on the Jontay Porter story was interesting.
https://open.spotify.com/episode/36aBWEgdZQd5L3m2mmxBUK?si=EiHbqLtQTSK_3OUwoyBeNg
Also, the story of how Ohtani’s interpreter got caught gambling, and the analysis of whether Ohtani was involved, should be very intersting to the statistics-minded.
> the exponential spiral started
Linear growth seems like it’d be enough to bankrupt someone. Seems to fit more with the long time spans too
It’s exponential because the amount bet is proportional to total net losses. The odds actually get slightly better, because whales are given slightly better (but still negative expectation) odds. Linear losses won’t work… someone losing $1000 a day has no interest in betting $1000 per day when they’re down $1 million.
Jonathan:
Yes, I think the bets and the losses kept getting larger and larger.
That said, not every compulsive gambler bottoms out, just as not every problem drinker hits bottom. William Bennett, for example, seems to have kept his gambling under control.
‘The insight […] is that gambling addition cumulates.’ I agree that addition leads to accumulation, but I am sure you wanted to talk about addiction;)
‘A good reminder that something can be on an unsustainable path but take awhile to get there.’ I suppose the textbook example of this would be climate change…
If Pete Rose could have been quietly induced to treat his gambling addiction, he could have been MLB’s biggest asset. He has amazing enthusiasm for the sport. As it is, it appears to be that he is being partially blamed for killing Bart Giomatti. Giomatti was the MLB commissioner who negotiated the botched Rose ban, and then died of a heart attack a week later, at age 51.
“if baseball hadn’t banished him and taken away his main streams of income, he would’ve gone to prison for tax evasion or drug dealing or some other mob-related crime”
“It’s easier to be moral if you can live a comfortable life without needing to resort to immoral behavior.”
Aren’t those two ideas at odds? Shouldn’t taking away his main stream of income make him more likely to become a criminal? I’m going to admit to being relatively ignorant of the broader life of Pete Rose beyond being busted for gambling, so I don’t know how he handled his debts after losing his income.
Wonks:
My take on the Pete Rose story was that he was addicted to gambling, that he kept losing money and then gambling more to cover his debts, so his losses were exponentially increasing, meaning that at some point he’d run out of money, at which point he’d either have to go to rehab or start to commit increasingly serious crimes and violations of baseball’s code of conduct. If baseball hadn’t banished him and taken away his main streams of income, I think his gambling losses still would’ve eventually exceeded his income—indeed, the reason why baseball banished him etc. is that this had already happened. Baseball throwing a few million dollars a year at him wouldn’t have helped; it just would’ve slightly delayed the point at which his debts exceeded the sum of his assets and collateral. Or maybe not; maybe he would’ve chosen that point to go the cops, confess all, get a lenient sentence, and go to rehab. But given his trajectory up to that point, I doubt it.
I don’t see any reason to accept the premise that Pete Rose ever had a moral compass. He was a thoroughly disagreeable fellow with a nasty competitive mentality. There’s not much to learn from his story except that people adore success however achieved.
Interesting, applies more broadly than to Las Vegas. There is the famous recount of Britain declaring war upon Germany’s invasion of Poland. When we think of Hitler, we think of a murderer, but there were other formative aspects of his behavior, perhaps addiction or perhaps not. The British declaration was received by three men, Ribbentrop, Goering, and Hitler himself. A translator was present, of course, and according to him, Hitler asked “What now?” Ribbentrop answered that he expected a French declaration of war with 24 hours. Goering interjected: Now, now, we don’t want to put everything on one card, do we? It was at this point that Hitler went ballistic and said: I have always put everything on one card! When I lost, I doubled, and when I lost again I doubled again. The point is that Hitler behaved like this for the rest of the war, until there was nothing left to double.
“I’m guessing that Rose never would’ve stiffed creditors or cheated on his taxes if he didn’t feel that he had to. It’s easier to be moral if you can live a comfortable life without needing to resort to immoral behavior.”
Rose didn’t “have to” stiff creditors or cheat on his taxes or “need to” resort to immoral behavior, he chose to do so. Or maybe the Devil made him do it.
Gb:
I agree 100% with you that Rose didn’t have to stiff creditors or cheat on his taxes. What I wrote was that he felt that he had to, I assume because it was more important for him to stay in baseball, avoid disgrace, and keep his comfortable lifestyle. That was his choice.
Why do you believe winning would reduce the amount gambled? Some people just crave the action. The win / loss is irrelevant. In fact its only the cumulative losses that stop the gambling.
David:
I don’t think I said anywhere that winning would reduce the amount gambled. What I said was that Rose’s gambling was able to go on for so long because, for many years, his income was increasing steadily at enough of a pace to cover his increased gambling losses.