For as long as I’ve been involved with Socially Responsible Investing, its practitioners have declined to invest in gaming stocks.
Digging through files looking for some ideas on the current casino chaos in Massachusetts, I found three quotations that shed some light on another controversy: divestment of fossil-fuel stocks.
In the first, the novelist (my all-time favorite) describes a character whose villainous investment (and how he came to make it) was less ambiguous when she wrote than it might be now:
On one point he may fairly claim approval at this particular stage of his career; he did not mean to imitate those philanthropic models who make a profit out of poisonous pickles to support themselves while they are exposing adulteration, or hold shares in a gambling-hell that they may have leisure to represent the cause of public morality.
George Eliot, Middlemarch  (New York: Bantam Classics, 1985), p. 133.
I’ve used the next quotation in another piece on gaming (‘The Sands of (Our) Time’, Oct. 26, 2012)). It retains its bite:
Degrees of separation between gangsters and friends of gangsters, between homicidal goons and corporate hustlers, are some how less meaningful now that gambling stocks owned by Harvard University and the California State Employees Pension Fund are part of what the authors call a “grand alliance of upperworld and underworld.”
James McManus, “Profiles In Corruption,” New York Times Book Review, April 15, 2001, p. 10. McManus is referring to Sally Denton and Roger Morris, The Money and The Power (New York: Alfred A. Knopf, 2001).
So how did we get to the point where such investments are acceptable? Perhaps it comes down to one of the most complicated, most subtly influential public figures of my lifetime. Here was a man who changed norms.
Frank Sinatra, the greatest vocalist in the history of American music, elevated popular song to an art. He was a dominant power in the entertainment industries — radio, records, movies, gambling — and a symbol of the Mafia’s reach into American public life. More profoundly than any figure, excepting perhaps Elvis Presley, Sinatra changed the style and popular culture of the American Century.
Benjamin Schwarz, “His Second Act,” Atlantic, July 2007, p. 113.
Frank Sinatra paid no apparent price for his status. Far more importantly, I think, he made us tolerant – even accepting – of that corruption in our lives, if not our portfolios.
A less attractive character, though no less great in his field, paid an enormous price for gambling. But when you read the following on Pete Rose, think about the compensation schemes for American executives and the incentives for management governance norms have baked into business:
In sports, the people that participate in the games cannot gamble on the games for reasons that are somewhat obvious to most people who aren’t serving a lifetime ban from baseball.
Norman Chad, “The Book on Rose,” Boston Globe, January 12, 2004, p. C3.
Stock options and stock performance-based bonuses look even less benign in the context of Pete Rose.