Investing

Warren Buffett once tested his kids with a slot machine, and he won

Key Points
  • Sports gambling is coming soon to several states after the Supreme Court cleared the path on Monday.
  • Not everyone thinks sports gambling is a great way to raise state tax revenue.
  • Gambling is "a tax on ignorance," Buffett said at Berkshire Hathaway's 2007 annual meeting.
Warren Buffett
David A. Grogan | CNBC

Warren Buffett once installed a slot machine on the third floor of his home, and his children learned pretty quickly it was a good way to say goodbye to their money.

"I could give my kids any allowance they wanted as long as it was in dimes. I mean, I had it all back by nightfall," he told shareholders at Berkshire Hathaway's 2007 annual meeting, according to CNBC's Warren Buffett Archive. The room rocked with laughter.

"I thought it would be a good lesson for them."

Sports gambling is coming soon to several states after the Supreme Court cleared the way on Monday, but not everyone agrees it's the best way to raise state tax revenue.

Buffett called gambling a "tax on ignorance" in response to a question at that 2007 shareholder meeting. When legal gambling was strictly limited to casinos in Las Vegas, that was one thing, he said. But making it more widely available just encouraged ... more gambling.

"The easier it's made, the more people will gamble," Buffett said. "When a government makes it easy for people to take their Social Security checks and start pulling handles or participating in lotteries or whatever it may be, it's a pretty cynical act."

Humans have a natural tendency for thrill-seeking, and that may be why gambling appeals to many, the Oracle of Omaha acknowledged.

Buffett joked that he isn't immune to this human weakness. His company insures hurricanes, so he likes to watch the Weather Channel.

"It can be exciting."