Growing Number of Traders Seek Professional Help : Compulsive Gambling Hits Commodity Pits

He was just 19 years old when he went to work in the Chicago commodity pits, and within two years he’d bought his own seat on the exchange. Soon he was earning as much as $200,000 a year speculating in corn, beans and stock options.

Risking his fortune every day for a living, he soon found himself doing the same thing for pleasure, betting heavily on sports.

Somewhere between the ages of 20 and 27 he says he “crossed the line.” The distinction between professional speculating and private gambling began to blur.

He joined Gamblers Anonymous and gave up betting on sports, but that did not help, he says, because he traded like a gambler. Unwilling to recognize a bad bet and take his losses, he threw good money after bad until he was almost $1 million in debt.

“You trade to stay high,” recalls the trader, who admits that in today’s increasingly risky markets, the distinction between speculating and gambling is as much psychological as fiscal.

Almost unheard of a decade ago, compulsive gambling on financial markets now comprises a small but rapidly growing percentage of those who seek psychiatric or other kinds of help.

Gamblers Anonymous last spring added stocks, options and futures contracts to its list of forbidden fruits for compulsive gamblers, along with lottery tickets, office pools and bingo games.

Problem Increases

The self-help group acted after a survey this year of 201 members revealed that 8% of them were engaged in speculating on a weekly basis. Another 22% had been so at some time. Ten years ago, in a similar survey, only one person mentioned speculating in commodities as a form of gambling.

“The money in commodities is three times as big as in sports,” says the Chicago trader, who says he has conquered his compulsion and now campaigns anonymously against the danger of gambling in the markets.

He claims that 1% of the traders in the commodity futures pits in Chicago have acknowledged that they are compulsive gamblers, but he added that there are probably a lot more who are not ready to admit it.

The hot line of the New Jersey Council on Compulsive Gambling now gets between five and 15 calls a day from financial speculators, said Arnie Wexler, its executive director. “A couple of years ago, you never heard of this. Last week, a Pennsylvania stockbroker admitted to me, ‘All I am is a legal bookmaker.’ ”

A year ago, Business Week magazine said new kinds of investments had turned the financial markets into a “casino society”--a designation disputed by the promoters of the innovative investments.

“If these markets attract people who want to take risks, I am hard-pressed to see how that can be an indictment of our industry,” said John Damgard, president of the Futures Industry Assn. “Faulting the derivative-products industry (for fostering compulsive gambling) would be like blaming the highway department for building bridges for people to jump off.”

Difficult to Differentiate

There is an element of risk, a little bit of gambling in any type of investment, but what differentiates investing from speculating, and speculating from compulsive gambling?

“If I knew the answer to that question, I’d win a Nobel prize,” said Dr. Joseph Ciarrocchi, a clinical psychologist who directs Addiction Services at Taylor Manor Hospital in Ellicott City, Md.

Taylor Manor Hospital is one of three facilities in the country that treat compulsive gamblers. The others are Brecksville Veterans Administration Medical Center in Ohio and South Oaks Hospital in Amityville, N.Y.

Taylor Manor’s residential program consists of daily individual and group-therapy sessions intended to get patients to stop denying that they have a problem, and to admit that luck or other external factors are not to blame.

Talking about gambling problems is accompanied by leisure counseling, emphasis on sports participation and stress management using such techniques as biofeedback.

Temptation--such as making playing cards available--is not part of the therapy, said Ciarrocchi. Peer pressure discourages cheating.

At Taylor Manor the treatment for financial speculators--professionals as well as amateurs--is no different from that for garden variety gamblers such as card sharks, horse players or sports bettors, according to Ciarrocchi and counselor Dick Richardson.

The sooner the Wall Street types realize that they are no better than the Main Street types, the quicker their recovery occurs, the therapists said. When the patient has used other people’s money to speculate--a frequent phenomenon--he is taught to budget funds to repay the debt rather than counting on scoring big to win the money back at one time.

Powerless to Stop

There are an estimated 6 million compulsive gamblers in the country, according to the U.S. Public Health Service. Such a person is defined as powerless to stop betting, as one whose activity has caused continuing emotional and financial problems.

There is no known genetic disposition to compulsive gambling, the counselors said. Like alcohol and drug addiction which often accompany it, compulsive gambling is recognized by the American Psychiatric Assn. as a “compulsive disorder.” Gamblers Anonymous calls it a disease.

That description has rarely been accepted by the courts, which have come to recognize alcoholism and similar disorders as defenses against criminal charges.

Gary Lewellyn, a 33-year-old Des Moines stockbroker who embezzled $16 million from his father’s bank and used $22 million in credit from several Wall Street firms to play the market, tried in 1982 to plead not guilty by reason of insanity on the grounds that he was a compulsive gambler.

The judge refused to accept the defense. Lewellyn was convicted of embezzlement and fraud and sentenced to 20 years in prison.

Since then, Monsignor Joseph Dunne, president of the National Council on Compulsive Gambling, said his organization has been successful in some cases in securing probation rather than incarceration for gamblers of this type.

Perhaps one in 1,000 compulsive gamblers seeks help, judging from the 6,000-strong membership of Gamblers Anonymous, a self-help group founded in 1957 and patterned after Alcoholics Anonymous.

Costly Treatment

The number who get treatment in a hospital or on an outpatient basis is a small fraction of that, given the cost. Room and board at Taylor Manor amounts to more than $300 a day.

Asked to draw a profile of the typical financial speculator, experts in the field described him (fewer than one in 10 is female) as 40 years old, married, a college graduate, socially acceptable, extroverted, eloquent, charismatic, a very productive employee.

Because compulsive gambling is usually regarded as a greater stigma than alcoholism, the attitude of corporate employers is unpredictable, according to hospital administrators.

Some firms fire gamblers outright and take legal action if they steal other people’s money. Others swallow the loss and quietly arrange treatment.

Some medical insurance covers compulsive gambling treatment, but other insurers refuse to do so unless there is depression or another addiction involved. About a third of the gamblers are also addicted to alcohol or drugs, according to Wexler.

Abstinence is the treatment recommended by Gamblers Anonymous. Not so much as a flip of the coin is permitted in recovery. Support groups such as Gamblers Anonymous have a sponsor system so that a troubled or tempted recovering gambler has someone to confide in. There is no cure for compulsive gambling; the relapse rate is about 50%.

Abstinence may be possible for the sometime speculator, but what about professionals whose job creates constant temptation?

Should Monitor Trades

For them, “it’s like the alcoholic who goes back to tending bar,” said Ciarrocchi. “If it’s not possible to transfer a recovering compulsive gambler to another, less volatile job, all his trades should be carefully monitored.”

Bonnie Adkins, co-ordinator of Brecksville’s Gambling Treatment Center, added: “If they go back into the business, we recommend that they deal in long-term investments, not those with a short turnover. They cannot invest for themselves in high-risk areas.”

The commodity trader mentioned earlier is an example of a compulsive gambler for whom the treatment has worked.

While continuing to trade under close supervision by his former employer, he has managed to pay back a third of his $1 million in debts. It will take him 15 more years to make restitution.

He goes to Gamblers Anonymous meetings once or twice a week and returns once a month to the hospital for treatment, and to counsel other patients.

He said he went back to being a commodities trader because it was the only way he knew to make enough money to repay his debts.

But he admits that it’s a terrible temptation to work six hours a day in the pits and not succumb to the urge: “If there weren’t someone there saying ‘stop,’ I wouldn’t last.”