- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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Governments are getting desperate and political risk is at an all-time high. Unless you change your strategy, it will drain your wealth.
I am not a gambler... don't believe in it. It's immoral and it's a waste of money.
I am also not a politician... don't believe in it. It's immoral and it's a waste of money.
But just because something is harmful, addicting and destroys families doesn't mean the government won't stand behind it and promote the hell out of -- especially if it generates tax dollars.
You won't hear about it on CNN or on the front page of The New York Times, but the tiny state of Delaware just made a big leap into the world of nefarious gambling.
Last week, the First State made good on its nickname and became the first state to legalize online casino gambling.
That's right... thanks to the state's elected "leaders," Delaware residents no longer have to pry their sweaty backs off the couch to play a game of roulette or lose a few hundred bucks at the blackjack table.
They can lose their money in the privacy of their own home.
But here's the funny part... immediately after last week's controversial vote, Delaware's Senate wanted to rescind the vote because a lawmaker who opposed the bill accidentally voted in favor of it.
His hearing aid was turned off.
He got confused... and his state earned a windfall.
By the time the puzzled senator figured out his mistake, the state's greedy governor had already signed the controversial bill into law. With millions of dollars of tax money on the line, he wasn't about to let lawmakers have a second chance at voting -- even if that was the "ethical" thing to do.
Here's the deal with gambling in America. If you and I do it in our garage, it's illegal. But give the government a cut of the proceeds... you're good to go. They'll even help you market it.
Like everything, it's all about the money.
Delaware was one of the first states to open its borders to slots and then table games. But shortly after, West Virginia, Pennsylvania, Maryland (which took as much as 60% of Delaware's gambling business) and New York followed suit.
... and so did tax revenues.
Right now, Delaware lifts about $250 million from the pockets of gamblers in the name of tax revenues. But as gamblers head to competing states, the number is falling fast. Revenues were down by double digits last year.
But now that the First State has opened the doors to gambling from your iPhone, the trend is likely to reverse. By as early as next year, the new rules will put an extra $7.75 million into the state's checking accounts.
That means the state's gamblers will lose somewhere in the neighborhood of $17 million to the online slots and table games.
My point with telling you all this is not to cite the hypocrisy and moral deficiency of a government gone wild. It's obvious. You already know that story.
My goal is to use Delaware's latest move to show you the same thing I told my Unconventional Wealth subscribers last week. Political risk is at an all-time high. Stay away from anything associated with it.
Five years ago, casino stocks were hot. We were told the number of casinos would be limited and markets would be protected.
Now, though, you can't drive 30 minutes without passing a parlor and, soon enough, you'll be able to open a casino in your living room.
The government's sudden love of wagering is not because the economy is so hot we've all got money to lose... and it's not because we found a fresh way to fix families broken by a gambling addiction.
Nope... it's because your local political hero spent more than he had.
He's broke and desperate. And he'll pick your pocket to right his wrong.
Political risk is all around us. It's baked into the dollars in your wallet. It's in the insurance premiums you paid last month. And it's in the majority of stocks in your portfolio.
If your net worth changed because the Fed bought more bonds last week... you're infected with political risk.
There are no simple ways to avoid it. But I recommend owning things you can touch and hold. Gold's good. Land is better.
It would be great if you did, but you don't have to shun stocks entirely. We've got equity stakes that are booming despite the political uncertainty. We sold one last week for gains of over 45%.
The trick is to stay above the fray. If the market's jiving left, the odds are good you need to go right. If Congress is voting... you need to sell. And if a politician is talking... he's lying.
Betting on government is a gamble you will never win. Political risk is every investor's largest foe.
From the Inside,