Warren Buffet Remarks

Recent comments made by anti-casino supporters regarding what Warren Buffet thinks of casinos and gambling led me to take a closer look at what Mr. Buffet said and in what context it was said. I am not sure why Mr. Buffet’s opinion should mean more than the next guy other than he is also part of the very wealthy upper class, and perhaps it is another sign that they are running out of ammo, but in any case it was brought up so I will address it.

Mr. Buffet’s remarks were made at the 2007 Berkshire Hathaway annual meeting. A German shareholder asked if Buffett and Charlie Munger (Vice-Chairman of Berkshire Hathaway) thought gambling companies have a great future. Buffet responded “Yes, as long as it’s legal. People love to gamble. In stocks, by the way—day trading came close to gambling. People like to gamble. They will enjoy watching a football game more, especially a dull one, with a few dollars on it. We insure hurricanes, so I watch The Weather Channel. It can be pretty exciting! The desire to gamble is huge. As states learned what a great source of revenue it is, they’ve made it easier to gamble. When my kids were little, I put a slot machine on the third floor of our house. I could pay them any allowance, [yet] as long as it was in dimes, I had it back by nightfall. I’m not a prude about it, but gambling is a tax on ignorance. It’s socially revolting to see a government that preys on the weaknesses of its citizenry. [Taking people’s] Social Security checks [for gambling purposes] is a pretty cynical act by government. It is not government at its best.

Munger said,” I would argue that casinos use a lot of clever psychological tricks and cause grievous injury. It’s a dirty business, and I don’t think you’ll find a casino soon in Berkshire

This was the whole statement. It seems Mr. Buffet thinks that legal gambling companies have a great future. It also seems like Mr. Buffet has no problem doing business with these “dirty business” companies as Berkshire Hathaway insures Harrah's Entertainment Inc., the world's largest casino company against property damage at 50% over the cost of their last insurer.

Where does Harrah’s get the money to pay Buffet? Looks like it is all that “dirty money” and Buffet is just fine with that and is willing to gamble that the hurricane season will be nice to him. It seems he gets excitement from it.

Sources:
http://jvbruni.com/Berkshire%202007annualmeeting.pdf
http://www.newsmax.com/money/archives/articles/2006/6/6/183514.cfm