Pete Rose and gambling addiction: An insight and a question

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.