House Money

I was at the casino area with my folks today, and I noticed that most of the shops in the area were selling rather high end goods. Everything seemed to be something branded, and costing quite a bit even for basic clothing. At first glance, I thought, ok this is a rich peoples' area and catered to that. Makes sense, only that I wonder why I don't see a similar layout near the glitziest hotels in the vicinity. Just how are these stores paying their rent?

After some thought, I realized that the answer probably lay in the house money effect. True, gamblers near casinos can be high rollers and have the liquidity to purchase a $500 dress at a whim. However, not every gambler is a whale, and surely those coming to visit aren't all rich. That's when I realized that they didn't have to be rich in the net worth sense, but in the current liquidity sense: If they just had a windfall, the house money effect kicks in and they're more likely to purchase pricey goods that they would've normally avoided. That would help explain how the stores got their sales.

If a fairly middle class gambler happened to get say $10'000 from the poker table, it would seem to be a comparatively small expense to fork out $500 for the branded dress. The house money effect suggests that since the money isn't really regarded as the gambler's own anyway, the expense has minimal emotive impact. Odd, but that's how people work apparently. For me, whenever I receive a lump of money that I didn't earn, I'd simply spend as I usually do and then dump the rest in savings. I just see no logical reason to regard given money as any different from money I earned fair and square.