The progression of gambling addiction from problem gambling to worse levels may be classified into three phases.

The first phase is called the winning phase. This occurs when the gambler strikes a windfall or a series of jackpots that leave them feeling invincible. After this experience, they begin to gamble with an excessive and irrational level of optimism, believing that the first taste of victory was just first of many. At this stage, gamblers express their excitement over their newfound luck, and usually increase the amount of money they are willing to gamble.

Second is the losing phase. In this phase, gamblers begin to reminisce and recount to others their many previous victories even while they are experiencing a losing streak. After a while, they are unable to see gambling as a social activity and begin to gamble alone. Their time alone—whether gambling or not—is spent thinking about gambling, strategies that may be used in future bets, and where they will be able to get more money to gamble again. At this stage they may begin lying to friends and family about where they spend their time and money, and prodding from others to reveal such details causes them to feel irritable and paranoid. It is possible that illegal or legal means of acquiring money for gambling may have caused excessive debts and financial losses to the gambler and his family during this losing phase.

Interestingly, the gambler will still approach gambling with some degree of optimism, believing that by continually gambling he or she will be able to win back the amount of money already lost in previous bets. The difference, however, is that this optimism is now characterized by desperation as they chase their losses with the belief, against odds, that a windfall that will make up for all their losses is underway.

The third and last phase is the desperation phase. It is in this phase that the gambler may be seen as crossing over from problem gambling to more serious levels of gambling addiction. In this stage, the gambler spends nearly all his time gambling or preoccupied by the thought of it, and may begin to feel remorse for which he blames his family, friends, and social circles. At this point, the gambler may have considered or already has succumbed to illegal activities in order to finance the addiction.

Other social indicators of this desperation phase include the gambler facing the possibilities of financial bankruptcy, arrests, and divorce. As an individual, he or she may experience an extreme feeling of hopelessness and, as a result of this desperation entertain thoughts of suicide.

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