Chapter 38 Key Takeaways

Core Concepts

1. Loss Limits Are the Safety Net Beneath Discipline

Loss limits exist to contain the damage when discipline fails. They convert an unbounded risk (a bettor in a tilt spiral betting until ruin) into a bounded one. Loss limits should be implemented at three time horizons:

2. Hard Stops vs. Soft Stops

The two-tier system: Soft stop at 2.5% daily loss triggers a mandatory 2-hour break; hard stop at 4% daily loss terminates betting for the day.

3. Self-Exclusion and Cooling-Off Periods

Self-exclusion is a formal, binding mechanism for serious gambling concerns. Cooling-off periods are voluntary, flexible breaks. Both serve different needs:

4. Problem Gambling Recognition

The DSM-5 Gambling Disorder requires 4+ of 9 criteria over 12 months:

1. Tolerance (increasing amounts needed)
2. Withdrawal (restlessness when stopping)
3. Loss of control (unsuccessful attempts to stop)
4. Preoccupation (persistent gambling thoughts)
5. Escape (gambling when distressed)
6. Chasing losses
7. Lying about gambling
8. Jeopardizing relationships or opportunities
9. Financial bailout from others

Severity: Mild (4-5), Moderate (6-7), Severe (8-9)

5. The True Test of Healthy Betting

Profitability is not the test. The test is whether the activity contributes to overall wellbeing across four dimensions:

• Financial: Is the overall financial picture healthy, not just the betting account?
• Relational: Are relationships unharmed by the time and emotional energy of betting?
• Psychological: Is emotional response proportionate? Can you stop voluntarily?
• Physical: Is sleep, exercise, and health unaffected?

6. Tax Obligations by Jurisdiction

7. Ethical Principles

• Do not bet on insider information
• Do not profit from suspected match fixing; report it
• Do not facilitate underage gambling
• Be honest about results when sharing publicly
• Avoid predatory practices in picks services
• Support operators with responsible gambling measures

Key Formulas and Calculations

Loss Limit Calculation

Daily hard stop = Current bankroll x Daily loss limit percentage
Example: $10,000 x 4% = $400

Dynamic Recalculation

New daily limit = Updated bankroll x Daily percentage
If bankroll drops from $10,000 to $8,000:
New limit = $8,000 x 4% = $320 (contracts proportionally)

Concurrent Exposure

Exposure percentage = (Sum of all pending stakes / Current bankroll) x 100
Recommended maximum: 15-20% of bankroll

Override Expected Value Analysis

EV of individual bet = Stake x Edge = $3,000 x 0.04 = $120
EV of override decision = EV of bet - (P(tilt) x Expected tilt cost)
                        = $120 - (0.25 x $8,000) = $120 - $2,000 = -$1,880

PGSI Scoring Reference

Loss Limit Implementation Checklist

• [ ] Daily loss limit defined and documented (3-5% of bankroll)
• [ ] Weekly loss limit defined and documented (7-12% of bankroll)
• [ ] Monthly loss limit defined and documented (15-25% of bankroll)
• [ ] Soft stop threshold set below daily hard stop
• [ ] All limits calculated dynamically from current bankroll
• [ ] Automated enforcement active (no manual override possible)
• [ ] Response plan documented for each limit trigger
• [ ] Concurrent exposure limit set (15-20% maximum)
• [ ] Limits reviewed and updated in monthly review

Cooling-Off Protocol Quick Reference

1. Define duration in advance and communicate to accountability partner
2. Remove access: Log out, delete apps, enable website blockers
3. Define resumption criteria (at least four specific conditions)
4. Ease back in at 50% stakes for the first week
5. Schedule a review 30 days after return

Tax Record-Keeping Essentials

Regardless of jurisdiction, maintain:

• [ ] Complete betting journal with per-bet records
• [ ] Bank statements showing deposits/withdrawals to sportsbooks
• [ ] Sportsbook account statements (download regularly)
• [ ] Screenshots of significant individual bets
• [ ] Records of betting-related expenses (if claiming professional status)
• [ ] All tax forms received (W-2G, etc.)
• [ ] Records retained for at least 7 years

Emergency Resources

These resources are confidential, free, and available 24/7.

Self-Assessment: Chapter 38 Readiness

Before moving on, confirm you can:

• [ ] Calculate appropriate loss limits for a given bankroll at all three time horizons
• [ ] Explain the difference between hard stops and soft stops
• [ ] Design a two-tier loss limit system with specific dollar amounts
• [ ] Describe when self-exclusion is appropriate vs. a voluntary cooling-off period
• [ ] List at least six of the nine DSM-5 criteria for Gambling Disorder
• [ ] Score and interpret a PGSI self-assessment
• [ ] Identify at least five behavioral warning signs of problem gambling
• [ ] Explain why profitability does not equal healthy gambling
• [ ] Describe tax obligations in the US, UK, and Australia
• [ ] Identify ethical violations in insider information and match fixing scenarios
• [ ] Design a return-to-betting protocol after a mandatory break
• [ ] Access and provide helpline numbers for problem gambling resources