In the autumn of 1866, Fyodor Dostoevsky owed money everywhere. He had signed a ruinous contract with the publisher Stellovsky: deliver a new novel by November 1 or forfeit the rights to his work for years. He hired a young stenographer, Anna Snitkina, and in twenty-six days dictated The Gambler. The short novel was about a tutor named Alexei who stands at a roulette wheel in a German spa town convinced that one more spin will set him free. Dostoevsky knew the material. He had been losing at Wiesbaden and Baden-Baden for years, and he would go on losing for five more. What is striking in his letters is not that he gambled but how he explained it. He was not indulging a passion, he insisted. He was trying to pay his debts. He had a system.
That is what Jeffery Degner, research fellow at the American Institute for Economic Research, calls a “rational vice.” I spoke with him on the latest episode of Acton Line about his essay “Rational Vice: Will Gen Z Gamble Its Way to Retirement?” and about why a generation has turned to sportsbooks and prediction markets.
Degner begins not with moral failure but with arithmetic. In the 1970s a median home cost roughly two and a half times median household income; today the multiple is closer to five. The old bargain of degree, job, house, and retirement has been priced out of reach. Meanwhile the instruments of ordinary prudence have been hollowed out. When a savings account or a certificate of deposit pays less than the rate of inflation, the saver is not accumulating wealth but slowly surrendering it. In that environment a contract on Kalshi or a Sunday parlay is not simply irrational. It is a crude attempt to chase yield in a world where the safe path no longer leads anywhere.
Alexei reasons the same way. He mocks the German family patiently piling up capital across generations and prefers to stake everything on a single evening. The vice is rational in the narrow sense that it answers to real incentives.
Degner traces those incentives back further than most commentators do, to August 1971 and the closing of the gold window. What followed was half a century of currency expansion and suppressed interest rates, a regime that rewards borrowers, penalizes savers, and teaches everyone to prefer the present to the future. He calls this an inflation culture, and its fruits are not just economic. Persistent inflation is moral hazard writ large: it makes thrift look foolish and risk look wise.
The data on expectations bear this out. Since the pandemic, consumer sentiment surveys have found Americans aged 18 to 34 more pessimistic about their long-term prospects than their elders, a reversal of the historical pattern in which the young were the optimists. A generation that does not expect tomorrow to be better than today has little reason to sacrifice today on its behalf.
Online sportsbooks now take in billions in handle, and prediction markets have carried wagering beyond sports to interest rates, elections, and celebrity gossip. The activity concentrates among young men, drawn by targeted marketing, the seamless fusion of betting with sports broadcasting, and a higher baseline appetite for risk. Degner cites estimates that as much as a fifth of the money these young men would otherwise have put into 401(k)s and brokerage accounts now flows into betting apps. That is not leisure spending. It is the displacement of a retirement.
Yesterday Nebraska voters weighed in. Initiative Measure 440, a constitutional amendment that would have authorized online sports wagering through the state’s racetrack casinos, failed by roughly 55 to 45 percent in unofficial returns, despite a campaign of more than $22 million by its casino- and sportsbook-backed sponsors. Betting in Nebraska remains legal only in person.
Degner would not, I suspect, be sorry to see it, but he is skeptical that prohibition addresses the problem. Bans and heavy taxation do nothing about the demoralization that makes the wager attractive in the first place. A young man in Omaha who believes he cannot save his way to a home will find an Iowa exit ramp or an offshore app. The deeper work is restoring the conditions under which thrift makes sense: sound money, real financial literacy rather than slogans, a leisure culture less thoroughly commercialized, and a renewal of long-term hope.
Dostoevsky did eventually stop. In 1871, after one last loss at Wiesbaden, he wrote to Anna that something in him had broken, and he never returned to the tables. No decree stopped him. He stopped when his life came to hold more than the next spin: a wife, children, work he believed in, a future he could picture. That is the harder prescription, and the one Degner and I kept circling back to. You cannot regulate a man away from the wheel. You can only give him a reason to walk away from it.