Financial Infidelity and Gambling
It’s easier to understand sexual infidelity; the action or state of being unfaithful to a committed romantic partner or other sexual partner. Understanding financial infidelity is less obvious.
Financial infidelity (FI) occurs when a partner in a marriage or committed relationship intentionally hides or purposefully withholds money-related information from their partner due to fear or shame. By its very definition FI can be hidden bank accounts, accrued debt, secret spending, or investments in high risk financial instruments.
Brokerage trading apps don’t discern financially prudent trades from compulsive or addictive intention.
For those who experience financial infidelity the betrayal is exposed with the discovery of hidden credit cards or bank accounts, late payment notices on mortgages, loans, or credit cards. But, most people don’t immediately associate gambling with FI. That is because the losses from gambling underlie the need for infidelity.
When Investing Is Gambling
Financial infidelity is commonly associated with sports betting or casino gambling. The evidence for FI is murkier when we talk about investing. Yet, compulsive or addictive trading in high-risk stocks, stock options, and financial instruments can lead to significant financial losses that drive a cycle of higher risk taking to recoup losses.
The better part of this decade has seen substantial investment returns on major U.S. indexes. Investors have piled into stocks and financial instruments as major indexes have continued to reach new highs. The surge in the stock market has provided an environment for some to misinterpret profit with easy reward.
Most invest with moderation and sound judgement, but for individuals who are at risk of compulsive or addictive behaviors, and who engage in high risk and adrenaline seeking behaviors, the line blurs between prudent investing and gambling. Brokerage trading apps allow easy access to trading and with that, an unchecked opportunity for those at greatest risk for compulsive behavior. Easier access can lead to an increase in high-risk trading and the potential for massive losses. Brokerage trading apps don’t discern financially prudent trades from compulsive or addictive intention.
Prevalence of Gambling Addiction
Gambling is hardly a modern phenomenon. Changes in federal laws have provided ample opportunity for more prevalent online sports betting, by younger individuals via smartphone apps or websites. Gambling addiction—similar to food, sex, and work, are known as process or behavioral addictions. Gambling is one of the most common behavioral addictions. According to the National Council on Problem Gambling (NCPG), approximately 5 million Americans meet the criteria for compulsive gambling. However, as few as 8% of these individuals will seek help.
Gamblers Anonymous (GA) has provided hope and support since 1957 for those who struggle with problem gambling. An article published in the Wall Street Journal illuminates the increase in attendance at GA due to problematic gambling of stocks, stock options and other risky financial instruments. The allure of high financial returns in get-rich-quick cryptocurrency trading has added to a spike in GA attendance.
What Goes Up Must Come Down
The proverb, Trees Don’t Grow to the Sky, is an apt metaphor for gambling. The proverb is most often used to describe the dangers of mistaking soaring returns as having no limits to upward growth. Yet, there are limits for all financial cycles or profit runs.
In an article published in the Wall Street Journal, “More Men Are Addicted to the ‘Crack Cocaine’ of the Stock Market,” addiction counselors were quoted saying, “gambling in financial markets often goes undetected and can be tough to track because individuals confuse their actions with investing. Unlike sports betting apps such as FanDuel and DraftKings, most brokerage apps don’t post warnings about gambling or offer hotlines to seek help. The proliferation of financial instruments, along with flashy brokerage apps that make them easy to trade, has also helped some gamblers convince themselves that they weren’t actually placing bets.”
Financial Infidelity and Addiction
Brian Knutson is a professor of psychology and neuroscience at Stanford University. When interviewed for the WSJ article about high risk trading, Knutson said, “Like the anticipation of sex or delicious food, a financial gamble like an options trade can flood your brain with feel-good chemicals, said The bigger the financial payout or tastier the dish, the stronger the rush. That anticipation can keep a trader going back to place another bet, forming a reinforcing habit, added Knutson, who has studied risk-taking in financial markets for more than two decades. “It’s not just the release, per se, of the dopamine, but the speed of the release that’s reinforcing.”
Steps to Take
Healing from FI involves confronting all aspects of the betrayal. This can include:
- A full financial disclosure that includes a list of all hidden debt, totaled losses to date, late payments, active gambling, etc… (“Coupleship Inc: From Financial Conflict to Financial Intimacy,” includes a full chapter on FI.)
- The support of an attorney for legal consequences or a CPA and financial professional for tax and financial planning support.
- Twelve step programs to address addictive behaviors. Gamblers Anonymous, Debtors Anonymous, Alcoholics Anonymous, etc…
- A financial therapist to address the broken trust in the relationship.
