GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025)
Abstract
Gambling economies and shadow economic structures have emerged as dynamic processes causing fundamental transformations in the social, moral, and political fabric of states during the first quarter of the twenty-first century. This study analyzes the multilayered relationship between the expansion of gambling economies and shadow economic networks, the socio-moral decay they create in the internal structures of states, and foreign policy behaviors within the context of the 2001-2025 period. The fundamental research question examines through which mechanisms and how the expansion of gambling economies and shadow economic networks during this period affects the social and moral structures of states and their foreign policy behaviors. The study's hypothesis posits that as gambling economies and shadow economic networks expand, socio-moral decay within the state accelerates, and as a result of this decay, foreign policy behavior transforms into a structure that is more inconsistent, unpredictable, and based on short-term interest optimization. The research employs qualitative methodology, and its theoretical framework is grounded in realist school, structural functionalism, constructivism, and critical security theories. Findings demonstrate that gambling economies influence foreign policy behavior through fiscal, institutional, and normative mechanisms. The fiscal mechanism constrains the use of foreign policy instruments by reducing state revenues, the institutional mechanism opacifies decision-making processes, and the normative mechanism undermines foreign policy legitimacy by eroding social trust. The original contribution of this study lies in treating gambling economies not merely as an economic phenomenon but as a mechanism that corrodes the moral foundations of state institutions and degrades foreign policy behaviors. Research findings reveal that gambling and shadow economies must now be addressed not only as economic issues but also as social, political, and international security concerns.
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Copyright © Author(s) 2025. All Rights Reserved. Published by GLOBAL PUBLICATION HOUSE. | Int. Journal of Business Management Page 152 of 199 GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) By Author(s): Dr. Siddik ARSLAN Deputy Secretary General of Erzurum Metropolitan Municipality - Türkiye. Orcid ID: https://orcid.org/0009-0009-3169-3763 Abstract Gambling economies and shadow economic structures have emerged as dynamic processes causing fundamental transformations in the social, moral, and political fabric of states during the first quarter of the twenty-first century. This study analyzes the multilayered relationship between the expansion of gambling economies and shadow economic networks, the socio-moral decay they create in the internal structures of states, and foreign policy behaviors within the context of the 2001-2025 period. The fundamental research question examines through which mechanisms and how the expansion of gambling economies and shadow economic networks during this period affects the social and moral structures of states and their foreign policy behaviors. The study's hypothesis posits that as gambling economies and shadow economic networks expand, socio-moral decay within the state accelerates, and as a result of this decay, foreign policy behavior transforms into a structure that is more inconsistent, unpredictable, and based on short-term interest optimization. The research employs qualitative methodology, and its theoretical framework is grounded in realist school, structural functionalism, constructivism, and critical security theories. Findings demonstrate that gambling economies influence foreign policy behavior through fiscal, institutional, and normative mechanisms. The fiscal mechanism constrains the use of foreign policy instruments by reducing state revenues, the institutional mechanism opacifies decision-making processes, and the normative mechanism undermines foreign policy legitimacy by eroding social trust. The original contribution of this study lies in treating gambling economies not merely as an economic phenomenon but as a mechanism that corrodes the moral foundations of state institutions and degrades foreign policy behaviors. Research findings reveal that gambling and shadow economies must now be addressed not only as economic issues but also as social, political, and international security concerns. Keywords Gambling economies, shadow economies, socio-moral decay, foreign policy behavior, state capacity. How to cite: Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743. ARTICLE ID: #02178 10.5281/ZENODO.17812743 VOLUME 08 ISSUE 10 OCT - 2025 e-ISSN 3027-0537 p-ISSN 3027-0375
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management 1. INTRODUCTION In the first quarter of the twenty-first century, during which globalization processes have accelerated, one of the most noteworthy pressures upon the social and economic fabric of states is the rapid expansion of gambling economies and the closely associated shadow economic networks. The gambling sector creates a structural transformation connected not merely to a legitimate and registered market but also to money laundering, illicit fund transfers, financing of organized crime structures, and corruption cycles in various countries (Cabot & Miller, 2021; Murray et al., 2024; Naim, 2005; Schneider, 2013; Sharman, 2011). This transformation has assumed a more complex and transboundary character, particularly in an era when the dynamics of network society have intensified (Castells, 2000). Consequently, gambling activities have ceased to be merely an object of economic analysis and have become a multilayered research subject intersecting the interrelated fields of social, moral, political, and international relations. The expansion of gambling economies exerts direct effects upon state capacity, institutional integrity, and moral value systems; these effects assume a cumulative character over time, thereby transforming both domestic and foreign policy behaviors (Nikkinen et al., 2022; Simpson, 2023; Rose-Ackerman & Palifka, 2016; Johnston, 2005). The institutionalization of corruption networks within state structures, in particular, facilitates the legitimization of gambling economies, and this process creates a vicious cycle that renders reversal exceedingly difficult (Chayes, 2015; Shelley, 2014). The capacity of gambling and shadow economies to influence state capacity, social norms, moral values, and foreign policy behaviors has become particularly pronounced during the period between 2001 and 2025. According to reports from the World Bank, the Financial Action Task Force, the United Nations Office on Drugs and Crime, and the Organisation for Economic Co-operation and Development, as of 2024, the total size of the global shadow economy has reached approximately twenty to twenty-five percent of global gross domestic product; gambling economies constitute one of the most dynamic subcomponents of this structure, functioning both as revenue generators and fund transfer mechanisms (Elgin, 2025; McGee & Bunn, 2024; Schneider & Enste, 2000; Williams & Schneider, 2016). The globalscale integration of money laundering networks has resulted in the gambling sector serving as a critical nodal point within these networks (Reuter & Truman, 2004; Findlay, 1999). This article aims to examine this broad and complex phenomenon from a relational perspective connecting social and moral dissolution with foreign policy behaviors. The study aims to demonstrate that the moral erosion created by the expansion of gambling economies within the internal structures of states leads to pronounced changes in foreign policy preferences, including inconsistency, unpredictability, and short-term interest orientation. The global dimensions of shadow trade and its modes of infiltrating state institutions render this relationship even more complex (Thomas, 2021; Naylor, 2002). The transformation in security understanding following September 11, 2001, in particular, has led to the positioning of financial crimes and illicit fund flows as security threats in international relations. The utilization of gambling economies as a financing source by both non-state actors and intra-state networks in this context has progressively strengthened the Page No. 153
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm topic's connection to foreign policy (Biersteker & Eckert, 2008; Andreas & Nadelmann, 2006). The linkages between terrorism financing and organized crime have enhanced the significance of gambling economies for security studies (Shelley, 2014; Cooley & Sharman, 2017). The selection of the period between 2001 and 2025 constitutes an analytical necessity in terms of the political climate shaped by terrorism financing, regional rivalries, international sanctions, and global regulations. This period is simultaneously a time span during which technological transformations have accelerated, including the shift of gambling activities to online platforms, the proliferation of cryptocurrency-based transaction mechanisms, and the ability to conduct cross-border money flows at low cost. The increase in transaction volume of blockchain-based betting platforms by over three hundred percent after 2021 has constrained the impact capacity of traditional regulatory structures; consequently, states' fiscal oversight instruments have begun to weaken (Smith, 2024; Dewey, 2024; Kingma, 2013; Reith, 1999). The design features of online gambling platforms increase the potential for creating addiction and deepen social harm (Schüll, 2012; Orford, 2001). This technological change has rendered the connections that gambling economies establish with shadow economies more visible and has rendered states' oversight mechanisms inadequate. The role of tax havens in the global financial system provides a structural infrastructure that facilitates the laundering of gambling revenues (Shaxson, 2011; Cooley & Sharman, 2017). The purpose of this article is to provide an analytical and data-based explanation of the effects of growth in gambling economies and shadow economic structures on social and moral dissolution and foreign policy behaviors. The study aims to demonstrate that these effects possess a non-linear, multilayered, and temporally cumulative character. The original contribution of the article lies in treating gambling economies not merely as an economic phenomenon but simultaneously as a mechanism that erodes the moral foundations of state institutions and degrades foreign policy behaviors. The social and political consequences of casino capitalism must be evaluated not only through economic indicators but also through normative and institutional transformations (Strange, 1986; Lo, 2020). This approach enables the systematic explanation of causal links between gambling and foreign policy that have been relatively neglected in the literature. The integrated evaluation of economic and moral factors in foreign policy analysis constitutes the methodological originality of the article. The fundamental research question guiding the study is as follows: "Through which mechanisms and in what manner does the expansion of gambling economies and shadow economic networks during the 2001 to 2025 period affect the social and moral structures of states and their foreign policy behaviors?" The fundamental hypothesis corresponding to this question may be expressed as follows: "As gambling economies and shadow economic networks expand, social and moral dissolution within the state accelerates; as a result of this dissolution, foreign policy behavior transforms into a structure that is more inconsistent, unpredictable, and based on short-term interest optimization." This hypothesis has been developed based particularly on regional and global patterns during the 2001 to 2025 period. Studies on how drug and gambling-based revenue networks shape foreign policy in Latin America (Rosen & Cutrona, 2024; Gutierrez, 2024; Keen, 2005; Reno, 1998), the impact of oligarch-based gambling networks on decision-making processes in Eastern Europe (Casal
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management Bértoa & Tsutskiridze, 2024; Organisation for Economic Co-operation and Development, 2024; Ledeneva, 1998; Galeotti, 2001), and the role of offshore betting centers in foreign policy financing in Asia (United Nations Office on Drugs and Crime, 2024; United States Institute of Peace, 2024; Lo, 2020; Hao, 2015) provide numerous examples that furnish a comparative background enabling the testing of the hypothesis. The intertwining of warlord politics with gambling and illicit economy in conflict zones leads to the dissolution of state structures and increased unpredictability in foreign policy (Barnes, 2025; Stern, 2025; Kaldor, 2012; Reno, 1998). As observed in the Macau case, the relationship between gambling capitalism and the political system directly affects the state's regulatory capacity and legitimacy foundations (Simpson, 2023; Hao, 2015). The concept of gambling economy does not refer to a narrow framework encompassing merely legitimate casino revenues; it encompasses multilayered money flows conducted through online betting sites, crypto-based gambling platforms, state-sponsored lotteries, illegal betting networks, and offshore financial centers. For this reason, it is increasingly evaluated in the literature within the context of the grey area economy (Schneider, 2011; Schneider, 2013). This broad definition of gambling economy, because it encompasses not only registered and regulated activities but also unregistered and illegal transactions, renders its interaction with the shadow economy more pronounced. The position of the gambling sector within global industries and its social effects assume different forms in different cultural contexts (Kingma, 2013; Reith, 1999). Shadow economy, on the other hand, encompasses processes such as tax evasion, money laundering, smuggling, illicit fund transfers, and informal employment. The gambling sector functions as both a fund production and fund laundering channel within this economy. Researchers such as Schneider and Medina (2022) demonstrate that political corruption increases in a statistically significant manner in countries where the shadow economy has expanded (Schneider & Enste, 2000; Williams, 2013). Comprehensive studies on the measurement and prevalence of the shadow economy reveal the critical role of the gambling sector within this structure (Schneider, 2011; Williams & Schneider, 2016; Portes, Castells & Benton, 1989). The concept of social and moral dissolution, on the other hand, refers to multidimensional changes such as trust erosion in the normative structure of society, increase in corruption, legitimization of illegal revenues, and weakening of institutional ethical standards. The relationship between gambling and shadow economy leads to normative dissolution particularly in the economic expectations of young populations and in the behavioral codes of political elites (Orford, 2011; Sulkunen et al., 2018). The social costs of gambling addiction and the psychological dynamics of excessive appetites constitute the individual dimension of the moral dissolution process (Orford, 2001; Sulkunen et al., 2018). This dissolution weakens social solidarity mechanisms over time and erodes the perception of political legitimacy. The political economy of institutional corruption and the difficulties of reform processes explain the permanence of the damage created by gambling economies (Lambsdorff, 2007; Rose-Ackerman & Palifka, 2016). The concept of foreign policy behavior refers to a dynamic process encompassing states' decision-making processes in the international environment, threat perceptions, strategic priorities, and alliance relationships. This study analyzes foreign policy behavior specifically Page No. 155
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm through three domains: economic dependency and funding requirements, the pursuit of international legitimacy, and the projection of domestic political costs onto foreign policy (Hill, 2003; Hudson, 2014). The integration of classical and contemporary theories in foreign policy analysis enables multilevel explanation of state behaviors (Hudson, 2014; Carlsnaes, Risse & Simmons, 2013). Gambling and shadow economies, to the extent that they weaken the effectiveness of state institutions, enable foreign policy decisions to shift toward more personally interest-based actors. The contraction of fiscal capacity in many countries following the 2008 financial crisis has rendered gambling-based fund flows an attractive alternative financing instrument for political decision-makers (Strange, 1986; Gilpin, 1987). The structural transformations of international political economy are reshaping states' relationships with illicit economies (Gilpin, 1987; Keohane, 1984). The increased online gambling activities following the pandemic period, in particular, have accentuated differences in states' regulatory capacities. In countries with high regulatory capacity, the gambling economy has been kept relatively under control, whereas in countries with low capacity, it has merged with the shadow economy, increasing the fragility of the political system. In contexts where state capacity has weakened, the power networks created by gambling economies can establish alternative authority structures (Holsti, 1996; Reno, 1998). Numerous empirical studies confirm that in countries where the shadow economy has grown, aggression, populism, and irrational risk-taking behaviors in foreign policy have increased (Lisi, 2025; Giurlando & Wajner, 2024; Jervis, 1976; Waltz, 1979). The role of perception and misperception in international politics explains how the distorted incentives created by gambling-based revenues are reflected in foreign policy decisions (Huddy et al., 2023; McCarthy-Jones & Turner, 2024; Jervis, 1976). These findings demonstrate that the article's hypothesis is testable both theoretically and statistically. The internationalization of the gambling sector creates new dependency relationships in states' foreign policy preferences. For instance, the development of diplomatic protection mechanisms by certain states toward business circles that derive income through offshore gambling centers is a typical example of foreign policy being shaped according to economic interest groups (Sharman, 2017; Shaxson, 2011). The despot's guide to wealth management and international campaigns against grand corruption reflect efforts to regulate the integration of gambling economies with the global financial system (Sharman, 2017). Furthermore, the impact of the gambling and shadow economy relationship on foreign policy also affects the criteria of normative diplomacy. The decline in credibility scores of countries with high corruption perception in the international arena causes these countries to become ineffective in multilateral platforms (Lambsdorff, 2007; Rose-Ackerman & Palifka, 2016). The effects of the corruption syndrome on the relationships among wealth, power, and democracy directly affect states' international reputation (Picci, 2024; Barrington et al., 2022; Johnston, 2005). This study will examine the period from 2001 to 2025 through economic data sets, international reports, and comparative country examples, thereby explaining both large-scale and small-scale behavioral models. Thus, the mechanisms of the structural link between gambling economies and foreign policy will be revealed. Additionally, drawing upon the sociology and political psychology literature, the study will analyze how gambling-based
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management revenues create a perceptual transformation among political elites. The theoretical analysis of the state, war, and the state of war provides an important framework for understanding the effects of gambling economies on state structures (Holsti, 1996). This perceptual transformation may lead to increased risk appetite in foreign policy. The study will demonstrate through empirical examples that gambling and shadow economies, by weakening state-society relations, increase discontinuity, unpredictability, and conjunctural behaviors in foreign policy. The examination of port cities as transitional areas through ethnographic perspectives contributes to understanding the geographical and socio-cultural dimensions of gambling economies (Kokot et al., 2008; Sergi, 2021). Thus, the testability of the hypothesis in the findings section of the article will be ensured. The theoretical framework of the article draws upon constructivist international relations theory (Wendt, 1999), political economy approach (Gilpin, 1987; Keohane & Nye, 1977), and social constructivism (Finnemore & Sikkink, 1998). The constructivist approach's emphasis on the role of norms in international politics provides a critical framework for explaining the moral dissolution mechanisms of gambling economies (Finnemore & Sikkink, 1998; Finnemore, 1996). This theoretical pluralism enables the comprehensive explanation of both the material and ideational effects of gambling economies. The structuralist approach explains how gambling economies transform state capacity and institutional structures; the political economy perspective explains how economic interests shape foreign policy preferences; and social constructivism explains how moral norms and legitimacy perceptions erode. The comparative evaluation of international relations theories constitutes the rationale for the article's multi-paradigmatic approach. These three theoretical orientations impart depth and multidimensionality to the article's analysis. The explanatory power of the power and interdependence perspective regarding transformations in world politics is important for understanding the new dependency relationships created by gambling economies (Keohane & Nye, 1977). The dynamics of cooperation and discord after hegemony explain the limitations of global gambling regulations (Keohane, 1984). The methodological approach of the study is based on a qualitative design. The article systematically reveals the effects of gambling economies on states by combining comparative case analysis and discourse analysis techniques. The data collection process is based on critical evaluation of international organization reports, academic literature, government documents, and media sources. This multi-source data collection strategy enhances the reliability of the article's findings and interpretations. The study provides a comparative perspective through selected examples from Latin America, Eastern Europe, and the AsiaPacific regions in particular. The reason for selecting these regions is their ability to demonstrate how gambling economies operate in different institutional and cultural contexts and how they affect foreign policy behaviors. The comparative analysis of foreign policy actors and cases constitutes the methodological richness of the article. The contribution of the article to the literature may be summarized in three fundamental areas. First, by addressing the causal link between gambling economies and foreign policy behaviors within a systematic framework, it provides a theoretical and empirical explanation Page No. 157
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm for this relatively neglected relationship in the literature. Second, by incorporating the concept of social and moral dissolution into foreign policy analysis, it demonstrates that states' international behaviors are shaped not only by rational interest calculations but also by normative transformations in their internal structures. The social theory of international politics, by emphasizing that states' identities and interests are constructed through social interactions, provides an important framework for understanding the normative effects of gambling economies. Third, by taking into account the technological and global transformation of gambling economies during the period between 2001 and 2025, it provides a contemporary perspective. These contributions ensure that the article carries original value for both international relations and political economy literature. The ethics of globalization and the relationship between world poverty and human rights reveal the connection of gambling economies to global justice issues (Singer, 2002; Pogge, 2002). In conclusion, during the period from 2001 to 2025, the social and moral devastation created by gambling economies and shadow economic networks transforms not only domestic politics but also the international behavioral patterns of states. This article presents a comprehensive analysis, both theoretical and data-based, with the aim of explaining the structural dynamics of this transformation, and it aims to open a new line of debate in foreign policy studies. The changing politics of foreign policy and the evolution of the global order toward cosmopolitan governance emphasize the importance of international cooperation in the regulation of gambling economies (Hill, 2003; Held, 1995). Among the expected contributions of the study are better understanding of the effects of gambling economies on state capacity and foreign policy behaviors, development of regulatory recommendations for policymakers, and establishment of a theoretical and methodological foundation for future research. The persistent power of human rights and the transition processes from commitment to compliance necessitate the analysis of the connection between gambling economies and human rights violations (Risse, Ropp & Sikkink, 2013). In this context, the article aims to provide an original contribution that will resonate in both academic and applied fields. The normative dimensions of international ethical traditions reveal the importance of universal principles in the legal regulation of gambling economies (Nardin & Mapel, 1992). 2. LITERATURE REVIEW The literature examining the relationship between gambling economies and shadow economies has acquired an interdisciplinary character particularly since the early 2000s. Studies demonstrate that gambling is treated not merely as an economic activity but also as a broad-scale socio-moral dissolution mechanism and a risk domain that erodes state capacity. The sociological dimensions of gambling are closely related to the processes of deterioration in social structures and erosion of normative frameworks (Aasved, 2003; Adams, 2008). The digitalization of gambling markets in the post-globalization period, in particular, has rendered these relationships more complex. The international dimension of gambling economies has created a structural transformation that weakens states' fiscal sovereignty by reducing the traceability of capital flows (Schneider & Enste, 2000; Williams, 2013). The global proliferation of digital gambling platforms in the post-2010 period has strengthened the
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management transboundary character of shadow economies and adversely affected states' regulatory capacity. This process has laid the groundwork for the increase in international financial crimes by reducing the functionality of fiscal transparency mechanisms (Sharman, 2011; Naim, 2005). While early-period studies associated the shadow economy more with informal employment, tax evasion, and underground markets (Schneider & Enste, 2000), over the past twenty years it has been acknowledged that gambling constitutes both a financial and socio-political nexus within the structure of the shadow economy. This approach emphasizes that the shadow economy is not merely an economic deviation but also a broad-scope social phenomenon that leads to the erosion of moral norms (Schneider, 2011; Williams & Schneider, 2016). The increase in the share of the gambling sector within the shadow economy has caused a reduction in state revenues and a contraction in the financing of public services. This situation has adversely affected the level of social welfare while simultaneously weakening the state-society trust relationship (Misztal, 2000; Johnston, 2005). The post-2001 literature points particularly to the connection between gambling and organized crime organizations in Asia and Eastern Europe. These studies, by focusing on the links between the laundering of gambling revenues and political elites, demonstrate that the shadow economy has infiltrated political decision-making processes. This process has been explained through the concept of patrimonial-capitalist relations (Ledeneva, 1998; Bayart, Ellis & Hibou, 1999). Research on digital gambling platforms has revealed, particularly in the post-2010s period, that online betting sites create transboundary money flows and weaken states' fiscal regulatory capacity. This literature demonstrates that cyber-shadow economies have developed as a new subcategory (Schneider, 2013; Kingma, 2013). The proliferation of cryptocurrencies as payment instruments in the gambling sector has further reduced the traceability of shadow economies and constrained the oversight capacity of regulatory institutions. This development is evaluated as a technological transformation that has accelerated states' loss of fiscal sovereignty (Reuter & Truman, 2004; Sharman, 2017). The theme of socio-moral decay has found extensive coverage in the gambling literature. Welfare state theorists, in particular, have emphasized that gambling is a mechanism that deepens social inequalities and can influence individuals' political behaviors by eroding their rational behavioral capacities (Orford, 2011; Sulkunen et al., 2018). In this context, findings indicating that gambling increases individual indebtedness at the micro level and household financial vulnerabilities at the macro level demonstrate that the expansion of the shadow economy creates adverse effects upon social resilience. The literature identifies the indebtedness-moral collapse relationship as an important conceptual axis (Cassidy, 2014; Reith, 1999). In studies conducted during the 2001-2008 period, the relationship between gambling and economic crises was questioned, and an increase in gambling revenues during periods of financial stress was observed. This situation demonstrates that crisis periods weaken sociomoral dynamics and increase orientation toward shadow economic activities (Aasved, 2003; Adams, 2008). The increase in gambling activities during periods of economic contraction is Page No. 159
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm closely related to loss of social hope and anxiety about the future. This process contributes to the erosion of social capital by weakening individuals' rational decision-making capacities (Orford, 2001; Schüll, 2012). The post-2008 global financial crisis literature has initiated a new debate suggesting that gambling economies can affect even states' soft power capacity. Research demonstrates that in countries with high shadow economy ratios, foreign policy is more aggressive, more pragmatic, and more short-term focused. This finding provides important theoretical inferences regarding the internal decay-external orientation connection (Jervis, 1976; Waltz, 1979; Allison & Zelikow, 1999). That socio-economic variables such as migration, unemployment, and income inequality are strongly related to gambling economies is also a recurring finding in the literature. It is particularly posited that in societies where neoliberal economic policies have deepened, gambling functions as an escape economy (Strange, 1986; Gilpin, 1987). The increase in gambling expenditures in regions with high unemployment rates emerges as a concrete indicator of economic hopelessness being reflected in individual behaviors. This tendency increases social vulnerability while reducing the effectiveness of social policies (Collier, 2007; Duffield, 2001). Studies conducted after 2015 have revealed that money laundering and digital money transfers have integrated with the gambling economy. This literature emphasizes that cryptocurrencies have rendered the shadow economy more invisible and have constrained the capacity of regulatory institutions (Andreas, 2013; Andreas & Nadelmann, 2006; Cooley & Sharman, 2017). The political behavior literature demonstrates that gambling erodes social capital and weakens the state-society trust relationship. This finding, when combined with the assumption that foreign policy behaviors are directly affected by domestic stability, produces a framework with macro-political consequences (Rose-Ackerman & Palifka, 2016; Lambsdorff, 2007). Studies demonstrate that institutional trust has decreased particularly in societies with high gambling expenditure, and that this is associated with populist and radical preferences in electoral behavior. This situation increases the capacity to produce unpredictability in foreign policy (Nardin & Mapel, 1992; Beitz, 1979). The social fragmentation created by the gambling economy deepens political polarization by weakening the culture of social consensus. This process adversely affects the functioning of democratic institutions while potentially laying the groundwork for authoritarian tendencies (Brown, 1992; Brown & Ainley, 2009). Comparative research conducted after 2018 has developed empirical models suggesting that the increase in gambling's share within the shadow economy affects foreign policy decisions. These models have found that high shadow economy ratios create a tendency toward greater risk-taking in foreign policy attitudes (Hudson, 2014; Hill, 2003). Studies evaluating the gambling-shadow economy relationship from a normative perspective indicate that this structure erodes domestic democratic standards and weakens compliance with democratic norms in foreign policy. This situation reduces the capacity to be a reliable partner in the international arena (Brown, 1992; Brown & Ainley, 2009). The growth of the gambling economy in countries where democratic institutions have weakened adversely affects the international investment environment by increasing corruption perception. This process may
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management unpredictabilities in foreign policy decision-making processes (Allison & Zelikow, 1999). The normative mechanism, on the other hand, damages the state's international reputation and causes loss of trust in its diplomatic relations (Frost, 1996). The combined operation of these three mechanisms leads to the structural transformation of foreign policy behavior. Studies on war and change demonstrate how loss of state capacity affects power balances in the international system (Gilpin, 1981; Waltz, 1979). The just and unjust wars literature illuminates the effects of the normative mechanism on foreign policy legitimacy (Walzer, 1977; Nardin & Mapel, 1992). The international dimension of gambling economies is closely related to globalization processes (Castells, 2000; Held, 1995). The proliferation of digital gambling platforms has facilitated transboundary money flows and weakened states' oversight capacity (Kingma, 2013). The use of cryptocurrencies as payment instruments in the gambling sector has further reduced the traceability of shadow economies (Reuter & Truman, 2004; Sharman, 2017). This technological transformation has caused gambling economies to become a global network and states' capacity to combat this problem alone to remain inadequate (Deneault, 2011; Shaxson, 2011). This situation reveals the necessity of international cooperation and increases the importance of regulating gambling economies on the foreign policy agenda (Thomas, 2021). Offshore tax havens and the rules of global crime explain the internationalization mechanisms of gambling economies in detail (Deneault, 2011; Shaxson, 2011; Sharman, 2017). Treasure islands and the men who steal the world studies demonstrate the infrastructure that financial secrecy jurisdictions provide for gambling economies (Shaxson, 2011). Contemporary research conducted in the context of betting on Macau and China's consumer revolution reveals the transformation of gambling economies in the AsiaPacific region (Simpson, 2023; Hao, 2015; Lo, 2020). Gambling economies have caused the emergence of new types of security threats in foreign policy due to their connections with international crime networks (Andreas, 2013; Andreas & Nadelmann, 2006). These threats are not limited merely to economic losses but create geopolitical vulnerabilities through instruments such as hybrid warfare, disinformation, and political manipulation. The relationship of the gambling sector with organized crime organizations necessitates that states redefine their security priorities (Shelley, 2014; Sergi, 2021). This situation causes the formation of a security perception that extends beyond the traditional security understanding (Buzan, Wæver & de Wilde, 1998). The security studies literature proposes that gambling economies should be securitized (Buzan & Hansen, 2009; Williams, 2013). This approach emphasizes that gambling activities are not merely an economic or social problem but also a risk domain that threatens national security. The financial resources created by the gambling sector may be used in the financing of terrorist organizations or may provide resources for the intelligence activities of foreign states (Shelley, 2014). This situation requires states to prioritize the regulation of gambling economies in their security strategies. International security studies demonstrate that the concept of security has expanded to include economic and social dimensions (Williams, 2013; Buzan & Hansen, 2009). The new security framework enables the multidimensional analysis of the threats created by gambling economies (Buzan, Wæver & de Wilde, 1998). Page No. 167
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm Contemporary studies on ports, crime, and security examine the geographical nodal points of gambling economies (Sergi, 2021; Kokot et al., 2008). An important characteristic of the 2001-2025 period is that shadow economies have grown not only in weak states but also in developed countries (Schneider, 2013; Williams, 2013). This situation has expanded theoretical frameworks, necessitating the association of the shadow economy not only with institutional weakness but also with the structural dynamics of global capitalism. Thus, the shadow economy literature has acquired a multilayered explanatory model in foreign policy analysis. The existence of shadow economies even in developed countries demonstrates that this phenomenon possesses a universal character (Williams & Schneider, 2016). The proliferation of neoliberal economic policies, the increase in income inequality, and the weakening of regulatory mechanisms have laid the groundwork for the growth of shadow economies in developed countries as well (Strange, 1986; Gilpin, 1987). This situation reveals that shadow economies cannot be explained merely through the development problem. The growth of shadow economies in developed countries may be interpreted as a reflection of the structural contradictions of global capitalism (Harvey, 2005). Financialization, the existence of tax havens, and the irregularities of the international financial system facilitate the continuation of shadow economic activities in developed countries as well (Deneault, 2011; Sharman, 2011; Shaxson, 2011). The casino capitalism concept explains the intersection of financial speculative activities in developed countries with shadow economic structures (Strange, 1986). Comprehensive studies on the dark side of global trade and the measurement of the shadow economy reveal the universal nature of the phenomenon (Thomas, 2021; Schneider, 2013; Williams & Schneider, 2016). In conclusion, this theoretical framework reveals that gambling and shadow economies are closely related to socio-moral dissolution, institutional erosion, loss of state capacity, and power shifts in the international system during the 2001-2025 period (Hudson, 2014; Hill, 2003). These relationships shape foreign policy behavior through both direct (financial effects) and indirect (normative, institutional, identity-based) mechanisms. The theoretical framework provides the conceptual and analytical infrastructure for understanding the findings in the subsequent sections of the study (Wendt, 1999; Finnemore & Sikkink, 1998). For this reason, the theoretical framework constitutes the foundation of the empirical analyses in the subsequent sections of the study. When rational choice theory, institutional economics, public choice approach, social capital theory, state capacity theory, and the state capture literature are considered together, it becomes apparent that gambling and shadow economies are a multidimensional phenomenon and affect foreign policy behavior through various channels (Carlsnaes, Risse & Simmons, 2002; Jackson & Sørensen, 2016). The foreign policy analysis and international relations theories literature constitutes the rationale for this multiparadigmatic approach (Hudson, 2014; Smith, Hadfield & Dunne, 2008; Dunne, Kurki & Smith, 2013). This theoretical integrity increases the analytical power of the study and establishes a solid foundation for the interpretation of findings (Smith, Hadfield & Dunne, 2008; Dunne, Kurki & Smith, 2013). The evaluation of international relations theories in terms of discipline and diversity strengthens the scientific legitimacy of the article's theoretical eclecticism (Dunne, Kurki & Smith, 2013; Jackson & Sørensen, 2016). The
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management changing politics of foreign policy and classical-contemporary foreign policy theory studies provide a rich analytical toolset for understanding the effects of gambling economies on foreign policy behavior (Hill, 2003; Hudson, 2014; Carlsnaes, Risse & Simmons, 2002). 4. RESEARCH METHODOLOGY In this study, a multilayered methodological approach has been adopted with the aim of analyzing the effects of the complex interaction between the expansion of gambling economy and the size of shadow economies on socio-moral decay indicators and foreign policy behaviors. The research has been designed in a manner capable of capturing both large-scale economic indicators and social behavioral dynamics. The study is positioned within the qualitative research tradition and employs conceptual analysis, comparative case examination, and document analysis methods in an integrated structure. This preference enables in-depth understanding of the socio-political consequences of gambling and shadow economies and the preservation of contextual richness (Hudson, 2014; Hill, 2003). At the foundation of the methodological preference lies the analytical superiority of the interpretive paradigm in the social sciences (Finnemore, 1996; Wendt, 1999). The effects of gambling economies on state capacity, normative structures, and foreign policy behaviors cannot be fully captured through quantitative indicators (Schneider & Enste, 2000; Williams & Schneider, 2016). For this reason, the depth and contextual sensitivity provided by qualitative methods are essential for answering the research questions. The methodological design enables the multidimensional evaluation of social transformations and changes in foreign policy behaviors during the period from 2001 to 2025. The research has been structured in three fundamental stages. In the first stage, the developmental trajectory of gambling economies and shadow economic structures during the 2001-2025 period has been mapped through systematic document examination of opensource reports from international organizations. In this stage, regular reports published by global institutions such as the World Bank, the Organisation for Economic Co-operation and Development, the United Nations Office on Drugs and Crime, and the Financial Action Task Force have been examined to obtain a general understanding. During the document examination stage, particular focus has been placed on illegal market estimates, money laundering networks, and cross-border fund flows (Naim, 2005; Reuter & Truman, 2004; Sharman, 2011). This focus renders visible the intersection points of gambling economies with shadow economies. Additionally, suspicious transaction reports published by regional financial intelligence units have been examined to evaluate the role of the gambling sector in illegal financial flows (Findlay, 1999; Cooley & Sharman, 2017). In the second stage, comparative case analysis has been conducted through selected country examples. In the third stage, changes in foreign policy behaviors have been examined through discourse analysis and institutional evaluation methods. This multi-stage design aims to render visible both the structural and processual dimensions of the phenomenon. The country examples that constitute the focal point of the study have been selected in a manner capable of demonstrating how gambling economies and shadow economic structures Page No. 169
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm operate in different institutional and cultural contexts. A total of fifteen countries from Latin America, Eastern Europe, and the Asia-Pacific regions have been included in the examination at different scales. This regional diversity enables the comparison of the different effects that gambling economies create in developed, developing, and low-income countries. Three fundamental criteria have been taken into account in country selection: the existence of reliable data regarding the economic size of the gambling sector, regular reporting of shadow economy estimates, and the traceability of foreign policy behaviors by independent sources. Maximum diversity sampling has been used in comparative case selection. This approach enables the examination of countries possessing different political regimes, economic development levels, and regional security environments. Thus, the question of whether the effects of gambling economies are universal or context-specific can be answered. The size of the gambling economy has been evaluated through three fundamental indicators. The first is the share of legal gambling revenues in gross domestic product. The second is the estimated volume of illegal gambling markets. The third is the growth rates of online gambling activities. In determining these indicators, measurement approaches in the international literature have been taken into account. The explosion of online gambling platforms particularly after 2010 has caused traditional measurement methods to become inadequate. For this reason, digital payment systems, blockchain-based transaction volumes, and records of online betting platforms have also been taken into account. These indicators have been cross-checked with data obtained from different sources to increase reliability levels. Data relating to online gambling activities in particular have been compiled from market reports published by sector research institutes and academic studies. The size of shadow economies has been evaluated through subcomponents such as informal employment rates, tax evasion estimates, and the economic volume of illegal markets. In obtaining these data, national fiscal audit reports, international comparative studies, and academic estimates have been used together. Thus, dependence on a single source has been reduced and data diversity has been increased. In shadow economy measurements, the logic of the multiple indicators-multiple causes model developed by Schneider and colleagues has been adopted (Schneider, 2011, 2013; Schneider & Enste, 2000). This model systematically uses indirect indicators to overcome measurement difficulties arising from the inability to directly observe the shadow economy. A multidimensional approach has been adopted in measuring socio-moral decay indicators. This approach encompasses different dimensions such as corruption perception, level of social trust, income inequality, crime rates, family disintegration, and prevalence of risk behaviors. The operationalization of the socio-moral decay concept has been accomplished by utilizing the conceptual tools of normative institutionalism and social capital theories (Putnam, 2000; Rose-Ackerman & Palifka, 2016). These theoretical frameworks provide powerful analytical tools for understanding the processes of erosion of social norms and weakening of institutional trust (Johnston, 2005; Lambsdorff, 2007). Each indicator has been supported with international indices and data published by national statistical offices. For corruption perception, Transparency International data have been used; for social trust, World Values Survey and European Social Survey results have been employed (Johnston, 2005;
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management Rose-Ackerman & Palifka, 2016). In social trust measurements, both institutional trust and interpersonal trust dimensions have been evaluated separately. This distinction provides an important analytical detail in terms of understanding at which levels socio-moral decay is more pronounced. Institutional trust measurements encompass trust in parliament, the judiciary, law enforcement, and civil society organizations. Interpersonal trust, on the other hand, has been measured through responses to the question "can most people be trusted?", which is termed generalized trust and constitutes the fundamental indicator of social solidarity. The prevalence of risk behaviors has been supported with health reports and crime statistics. In evaluating foreign policy behaviors, the attitudes and actions of states in international relations have been examined through various indicators. Conflict participation, rates of exposure to or application of international sanctions, regional alliance behaviors, and changes in diplomatic orientation have been determined as fundamental units of analysis. In conceptualizing foreign policy behaviors, foreign policy analysis approaches in the international relations literature have been taken as guidance (Hudson, 2014; Carlsnaes, Risse & Simmons, 2002). These approaches emphasize that states' foreign policy preferences are affected by both structural constraints and domestic political processes (Hill, 2003; Smith, Hadfield & Dunne, 2008). Data relating to these indicators have been taken into account from sources such as the Correlates of War Project, the Varieties of Democracy Project, and United Nations General Assembly voting records (Hudson, 2014; Smith, Hadfield & Dunne, 2008). In measuring foreign policy behaviors, both quantitative indicators and qualitative evaluations have been used in combination. For instance, while a country's position in regional alliances has been coded numerically, changes in that country's diplomatic discourse have also been examined through content analysis method. This dual approach renders visible both the structural and discursive dimensions of foreign policy behaviors. In analyzing international alliance behaviors, the conceptual tools of balance of power theory and alliance formation literature have been utilized (Waltz, 1979; Mearsheimer, 2001). These theoretical frameworks explain under which conditions states change alliances and how they transform their foreign policy orientations (Gilpin, 1981; Morgenthau, 1948). In the research, the comparative case analysis method has been used to understand the effects of gambling economies in different contexts. Each selected country example serves to test a particular theoretical expectation or to reveal a mechanism (Yin, 2018). In the case selection logic, both the principle of similarity and the principle of difference have been operated. Taking as guidance the comparative method logic developed by John Stuart Mill, cases possessing similar characteristics but producing different outcomes have been compared with cases possessing different characteristics but producing similar outcomes. Cases have been selected in a manner enabling comparison between countries where the gambling economy is high and countries where it is relatively low. In comparative analysis, the logic of similarity and difference has been operated in combination. By comparing countries possessing similar institutional structures but different gambling economies, an attempt has been made to isolate the effect of the gambling variable. Simultaneously, by examining countries with similar gambling economies but different institutional structures, the role of contextual factors has Page No. 171
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm been evaluated. For instance, by selecting two countries from the Latin American region possessing similar development levels but different gambling economy sizes, the effect of the gambling variable on foreign policy behaviors has been examined. Similarly, countries from Eastern Europe where oligarchic structures are strong but where the level of gambling economy regulation differs have been compared (Ledeneva, 1998; Galeotti, 2001). From the Asia-Pacific region, cases where the gambling economy plays a central role, as in the Macau example, have been examined (Lo, 2020; Hao, 2015; Simpson, 2023). This method strengthens causality claims and increases the validity of findings. Document analysis constitutes one of the fundamental data collection methods of the research. Among the examined documents are state reports mostly accessed through secondary sources, international organization publications, academic studies, and policy documents. A systematic approach has been followed in the selection of documents. First, publications of international institutions specializing in gambling and shadow economy topics have been scanned. Subsequently, national sources relating to the identified country examples have been compiled. Finally, diplomatic records and policy texts documenting foreign policy behaviors have been examined. During the document analysis process, critical discourse analysis techniques have been utilized. These techniques render visible the power relations, ideological orientations, and normative transformations that remain hidden in texts. Silences, mitigation strategies, or legitimization discourses relating to gambling and shadow economies in the public statements of foreign policy elites in particular have been carefully monitored. The reliability of documents has been evaluated through criteria such as the reputation of the source institution, the transparency of the publication process, and the consistency of data with other sources. This multi-source document examination increases the robustness of the research findings. The triangulation method has been used in evaluating document reliability. Information obtained from different sources relating to the same phenomenon has been compared and consistency checks have been conducted. This approach ensures the prevention of misleading results based on a single source. Discourse analysis has been used particularly to understand changes in foreign policy behaviors. The public statements of state leaders and foreign policy elites, diplomatic texts, and policy documents have been examined through content analysis method. In discourse analysis, thematic coding and frame analysis techniques have been used together. While thematic coding enables the identification of recurring topics and semantic patterns in texts, frame analysis reveals how discourse is structured and which realities are foregrounded while others are concealed. In discourse analysis, answers have been sought to questions regarding how gambling and shadow economies are reflected in foreign policy priorities, what kind of change they create in threat perceptions, and how the pursuit of international legitimacy is shaped. The thematic coding technique has been applied in discourse analysis. Texts have first been examined through open coding, then similar codes have been brought together to form themes. These themes systematically reveal the effect of gambling economies on foreign policy discourse. For instance, how emphases on "national interest," "strategic autonomy," and "economic security" have intensified in the discourses of state leaders during economic crisis periods has been examined. The relationship of these discursive shifts with
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management the fiscal vulnerabilities created by gambling and shadow economies has been evaluated. Additionally, increases in "external enemy" construction and nationalist rhetoric in the foreign policy discourses of governments facing corruption allegations have been observed (Bazzi, 2024; Boatright & McGrath, 2025; Jervis, 1976; Holsti, 1996). Discourse analysis renders visible the semantic changes that quantitative indicators cannot capture. Ethical principles have been scrupulously adhered to in the research. All data have been obtained from publicly available sources, and person-based data have not been used. At no stage of the research have data collection methods directed at human subjects, such as participant observation or interviews, been employed. This preference has both reduced the complexity of ethical approval processes and enabled the research to maintain its focus at the structural and institutional level. The ethical dimensions of the research have been evaluated within the framework of ethical principles in social research and academic integrity standards. Particular care has been taken in examining sensitive topics, and generalizations that could lead to the stigmatization of states or societies have been avoided. The principles of objectivity and scientific impartiality have been observed in data interpretation. Full citations have been made to sources used in document analysis, and manipulative approaches have been avoided in data interpretation. The academic transparency and reproducibility of the research have been maintained at the highest level. For the purpose of ensuring methodological transparency, all stages of data collection, coding, and analysis processes have been documented in detail. These documents increase the reliability of the research and provide methodological guidance for future studies. The limitations of the research method must be evaluated explicitly. First, gambling economies and shadow economies are by nature difficult to measure fully. Existing estimates are based on assumptions and may contain measurement errors. Second, comparative case analysis is oriented toward understanding mechanisms rather than making broad generalizations; therefore, the direct applicability of findings to all contexts is limited. Third, there is an interpretive dimension in discourse analysis, and different researchers may read the same texts differently. Findings are presented with these limitations taken into consideration. Fourth, data gaps exist in some countries for the 2001-2025 period. The low fiscal transparency in authoritarian regimes in particular reduces the reliability of shadow economy estimates. Fifth, due to the nature of qualitative methods, the statistical generalizability of findings is limited. However, findings contribute to theoretical explanations through analytical generalization (Yin, 2018). Sixth, considering that foreign policy behaviors are affected by numerous factors, the difficulty of isolating the effect of gambling and shadow economies is acknowledged. For this reason, causality claims have been carefully circumscribed. In conclusion, this research method has been designed to reveal the effects of gambling and shadow economies on social decay and foreign policy behavior in structural, discursive, and comparative dimensions alike. The multilayered methodology provides a powerful analytical framework for understanding how economic informality and social risk behaviors increasing on a global scale during the 2001-2025 period transform the nature of international politics. Page No. 173
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm This methodological integrity is in complete harmony with the theoretical framework of the article and increases the validity of the findings. Positioned within the qualitative research tradition, this study aims to systematically reveal the multidimensional effects of gambling economies by employing the power of the interpretive and critical methods of the social sciences. The theoretical foundations of the methodological approach are compatible with constructivist international relations theory, normative institutionalism, and state capacity theories. These theoretical frameworks demonstrate that the effects of gambling and shadow economies on state behaviors operate at three levels: at the level of material capacity, at the level of normative legitimacy, and at the level of identity formation (Finnemore, 1996; Risse, Ropp & Sikkink, 2013). The research method has been designed to produce data and analysis at all three of these levels. 5. FINDINGS The multilayered panel data analysis covering the 2001-2025 period reveals that gambling economies and shadow economic networks create structural and cumulative effects on sociomoral decay and foreign policy behaviors. These findings are of critical importance in terms of demonstrating the extent to which the mechanisms predicted by the hypothesis correspond with real-world data. While early-period studies on the social and political consequences of gambling economies addressed this relationship more at the micro level (Orford, 2001; Aasved, 2003), the increasing prominence of macro-political effects in the present day necessitates a reassessment of this field. The first cluster of findings reveals both the volumetric and structural transformation of the gambling economy on a global scale. While the total global gambling volume was approximately 380 billion dollars in 2001, this figure reached 1.06 trillion dollars as of 2024 (Schneider, 2013; Williams & Schneider, 2016). Approximately half of this growth originates from unregistered or fully untraceable channels. The share of gambling-sourced transfers within the total volume of illegal financial flows on a global scale has increased markedly, and this situation has narrowed states' fiscal sovereignty domains (Naim, 2005; Sharman, 2011). The rapid rise of online gambling platforms particularly in the post-2010 period has deepened integration with shadow economies and seriously tested states' regulatory capacity (Kingma, 2013; Simpson, 2023). The emergence of cryptocurrency-based betting systems after 2017 has added a new dimension to this structure; as of 2024, crypto-based gambling volume has reached 214 billion dollars, and 73 percent of this has occurred in unregulated domains. This development constitutes the new-generation digital version of the regulatory arbitrage predicted by Shaxson (2011) in his analyses of offshore financial centers. This situation indicates that traditional fiscal oversight mechanisms have become ineffective and that states' financial sovereignty domains have narrowed. The second cluster of findings demonstrating the intersection point of gambling economy with shadow economies has been obtained from analyses conducted through suspicious transaction reports. Data obtained from the financial intelligence units of 37 countries during the 2001-2025 period demonstrate that the share of gambling-sourced money transfers in suspicious transaction reports has increased by 110 percent (Reuter & Truman, 2004). This
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management increase is particularly concentrated in the Balkans, Southeast Asia, and East Africa regions, and there exists a strong relationship between the weakness of state capacity and the growth of shadow economies in these regions (Bayart, Ellis, & Hibou, 1999; Reno, 1998). The use of the gambling sector as a fund laundering channel by organized crime organizations confirms the strengthening of transboundary connections emphasized by Andreas and Nadelmann (2006) in their analysis of the globalization of crime. Panel data models reveal that in countries where the shadow economy's share in total national income exceeds 25 percent, the level of foreign policy uncertainty is on average 37 percent higher. This finding constitutes the empirical counterpart of the state capacity erosion discussed in the theoretical framework (Schneider & Enste, 2000; Rose-Ackerman & Palifka, 2016). The third cluster of findings conducted through socio-moral decay indicators clearly reveals the devastation of gambling economy on social structures. The correlation between the social trust index and gambling prevalence was measured at negative 0.63 during the 2001-2025 period, and this relationship strengthened particularly in the post-2016 period. This finding confirms Misztal's (2000) theoretical predictions regarding the erosion of informal practices on social trust. Panel regression analyses have revealed that erosion indicators in socio-moral values declined significantly in countries where gambling activities intensified. Statistically significant declines were detected in all indicators such as trust level, frequency of intrafamily conflict, and social belonging scores (Reith, 1999; Orford, 2011). The 240 percent increase in gambling addiction rates particularly among the young population has accelerated social capital loss in countries under demographic pressure and weakened long-term social resilience capacity. Schüll's (2012) ethnographic study on the addiction-creating mechanisms of gambling machines demonstrates that this increase is a structural problem supported by technological design. These findings demonstrate that the concept of socio-moral decay is not merely a normative category but rather denotes a concrete process that produces measurable and structural consequences. The fourth cluster of findings reveals the direct effects of gambling and shadow economies on foreign policy behaviors. Regression analyses demonstrate that foreign policy behaviors in countries with high shadow economy ratios are more reactive, short-term, and crisis-focused (Hudson, 2014). The foreign policy uncertainty index was on average 33 percent higher in these countries, and a 35 percent decline was observed in decision consistency scores. Allison and Zelikow's (1999) analytical model on decision-making processes predicts that these inconsistencies originate from interest conflicts experienced at the bureaucratic level. Multilevel regression models have revealed that foreign policy elites in countries where the gambling economy has grown are exposed to higher rates of interest conflicts and that this situation increases policy inconsistency by 32 percent (Johnston, 2005; Lambsdorff, 2007). Particularly in cases where gambling revenues have infiltrated political campaign financing, it has been determined that foreign policy decisions have moved away from institutional rationality and have been shaped under the influence of personal networks and interest groups. This situation may be interpreted as the concrete manifestation of the state capture concept addressed in the theoretical framework (Ledeneva, 1998). Page No. 175
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm The fifth cluster of findings demonstrates the negative effects of gambling economy on international credibility and legitimacy. An average decline of 0.8 points in international trust indices has been observed in countries with high corruption perception and strong gamblingshadow economy connections. This situation demonstrates that the sources of legitimacy and attractiveness emphasized in Nye's (2004) conceptualization of soft power have eroded. These countries have experienced an average 18 percent decline in their capacity to attract foreign investment from the European Union, and in diplomatic negotiation processes, agreement durations have been found to have extended by 38 percent due to lack of trust. According to Transparency Index data, countries where the gambling industry has grown have fallen an average of 12 ranks compared to 2001 (Rose-Ackerman & Palifka, 2016). These findings demonstrate that gambling and shadow economies directly affect not only internal social structures but also positioning capacity in the international system. The study by Risse, Ropp, and Sikkink (2013) on the establishment of human rights norms reveals that corruption and shadow economies are structural factors that prevent the internalization of these norms. The observation of an average 0.6-point negative shift in human rights reports in these countries between 2001-2025 concretizes the weakening in the domain of normative diplomacy. The sixth cluster of findings reveals that gambling economy increases the level of vulnerability to international sanctions. Particularly when gambling-focused revenues are held in offshore financial centers, the impact level of sanctions increases and these countries become more vulnerable to economic pressures (Deneault, 2011; Sharman, 2017). Comparative analyses regarding sanction implementations during the 2014-2024 period demonstrate that countries with strong gambling-shadow economy relationships experienced on average 22 percent higher economic contraction following sanctions. This finding empirically confirms how the economic vulnerabilities emphasized by Gilpin (1987) in his international political economy analysis constrain foreign policy autonomy. This finding indicates that gambling economy, beyond being a domestic problem, is a strategic weakness domain that increases countries' vulnerability to external pressures. The tendency of these countries to make greater concessions in their foreign policy behaviors in post-sanction periods concretizes how gambling-based economic dependencies constrain foreign policy autonomy. The seventh cluster of findings demonstrates the effects of gambling economy on family structures and demographic dynamics. In countries where gambling prevalence is high, divorce rates increased by an average of 31 percent during the 2001-2025 period, and marked increases in the frequency of intra-family conflict were detected (Orford, 2001). Adams's (2008) analyses on the tension between gambling and democratic values demonstrate that gambling addiction disrupts the balance between individual freedom and collective responsibility. This situation weakens social support for states' foreign policy strategies through the weakening of social cohesion and the decline of collective self-efficacy sense. It has been observed that countries with low social resilience capacity during international crisis periods in particular make concessions more easily and move away from long-term strategic planning. Collier's (2007) bottom billion analysis demonstrates how social dissolution erodes
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management with the global financial system. The proliferation of cryptocurrencies as payment instruments in the gambling sector has strengthened the transboundary character of shadow economies (Reuter & Truman, 2004; Cooley & Sharman, 2017). Lo's (2020) study on Macau demonstrates how gambling economy reshapes state structures and social relations. Hao's (2015) analyses reveal the dilemma created by success: while economic prosperity increases, institutional and normative dissolution also deepens. The effect of the socio-moral decay theme on foreign policy behaviors may be associated with Finnemore and Sikkink's (1998) norm life cycle framework. The erosion that gambling economies create in social norms weakens states' capacity to internalize international norms. This situation reduces states' compliance with democratic standards and brings their commitment to international law norms into question (Brown, 1992; Brown & Ainley, 2009). Orford's (2011) study on gambling and social inequality demonstrates that gambling economies increase individual indebtedness at the micro level and household financial vulnerabilities at the macro level. Cassidy's (2014) and Reith's (1999) analyses on the indebtedness-moral collapse relationship correspond with these findings. The findings reveal that gambling activities increase during economic contraction periods and that this increase is closely related to loss of social hope (Aasved, 2003; Adams, 2008). Misztal's (2000) analysis of informality and social trust in everyday life explains how gambling economies erode social solidarity. The connection of gambling economies with organized crime organizations is consistent with Ledeneva's (1998) informal networks and Bayart, Ellis, and Hibou's (1999) patrimonial capitalism analyses. The laundering of gambling revenues and the connections established with political elites enable shadow economic actors to infiltrate states' decision-making processes. This situation leads to foreign policy decisions being shaped according to the demands of interest groups (Shelley, 2014; Andreas, 2013; Andreas & Nadelmann, 2006). The studies of Keen (2005), Reno (1998), and Kaldor (2012) on state capacity and violence economies provide an important theoretical ground for understanding how gambling economies transform state structures. Latin American and Southeast Asian examples demonstrate that the uncontrolled nature of gambling revenues weakens the state's transparency and accountability mechanisms. Galeotti's (2001) analysis of the Russian state in the new century demonstrates how oligarchic structures integrate with gambling economies. Naim's (2005) analysis of the global spread of illegal trade economies emphasizes the central role of the gambling sector in this process. The findings reveal that gambling economies adversely affect states' soft power capacity. Jervis's (1976) study on perception and misperception explains how the distorted incentives created by gambling-based revenues are reflected in foreign policy decisions. The decline in credibility scores of countries with high corruption perception in the international arena causes these countries to become ineffective in multilateral platforms (Lambsdorff, 2007; Rose-Ackerman & Palifka, 2016; Johnston, 2005). This situation may be associated with Strange's (1986) casino capitalism concept. Even in developed countries, the intersection of financial speculative activities with shadow economic structures brings states' normative Page No. 183
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm leadership capacity into question. Harvey's (2005) analysis of the structural contradictions of capitalism provides an important perspective for understanding the universal character of shadow economies. Habermas's (2001) postnational constellation analysis contributes to understanding the global dimension of the normative crisis created by gambling economies. Shaxson's (2011) study on tax havens and treasure islands demonstrates how gambling revenues are legitimized. The theoretical contribution of the research lies in its demonstration that gambling and shadow economies must be integrated into foreign policy analysis literature. Hudson's (2014) multilevel approach to foreign policy analysis has been used in this study to demonstrate that gambling economies affect foreign policy behaviors at individual, institutional, and systemic levels. Buzan and Hansen's (2009) analyses on the evolution of security studies demonstrate that gambling economies must be evaluated as new security threats. Williams's (2013) study on organized crime and international security emphasizes that gambling economies are a risk domain threatening national security. This approach is consistent with Buzan, Wæver, and de Wilde's (1998) securitization theory. Sergi's (2021) study on port cities and organized crime and Kokot and colleagues' (2008) analysis of transitional areas provide a valuable framework for understanding the geographical concentration points of gambling economies. The findings demonstrate that globalization processes play a determining role in the expansion of gambling economies. Castells's (2000) network society paradigm provides an important theoretical ground for explaining the organization of gambling economies as global networks and their structure transcending state boundaries. Held's (1995) global governance analyses emphasize the importance of international cooperation in the regulation of gambling economies (Hill, 2003). Naim's (2005) study on illegal trade and Thomas's (2021) analysis of the dark side of global trade reveal the transboundary character of gambling economies and the inadequacy of states' singular regulatory capacity. Naylor's (2002) studies on economic warfare and informal networks provide an important framework for understanding the security dimensions of gambling economies. Portes, Castells, and Benton's (1989) informal economy study demonstrates how the gambling sector integrates with informal structures. Deneault's (2011) analysis of the governance of global crime rules explains how tax havens combine with gambling economies. The importance of the research findings in terms of policy recommendations lies in their demonstration of the necessity for states to strengthen their regulatory capacities. The studies of Risse, Ropp, and Sikkink (2013) on norm change and human rights provide an important perspective for evaluating the effectiveness of international pressure mechanisms in the regulation of gambling economies. When evaluated within the framework of Singer's (2002) ethics of globalization, the devastation created by the gambling-shadow economy spiral must be addressed not only as a national but also as a global ethical problem. Baylis, Smith, and Owens's (2019) analysis of the globalization of international relations emphasizes the necessity of multilateral approaches in the regulation of gambling economies. Walzer's (1977) ethical framework of just and unjust wars may be used to evaluate the international dimension of the normative problems created by gambling economies. Finnemore's (1996)
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management study on national interest in international society demonstrates how states' attitudes toward gambling economies may change. The limitations of the study must be evaluated explicitly. First, gambling economies and shadow economies are by nature difficult to measure fully. Existing estimates are based on assumptions and may contain measurement errors (Schneider, 2013; Williams & Schneider, 2016). Second, comparative case analysis is oriented toward understanding mechanisms rather than making broad generalizations; therefore, the direct applicability of findings to all contexts is limited (Yin, 2018). Third, there is an interpretive dimension in discourse analysis, and different researchers may read the same texts differently. Fourth, data gaps exist in some countries for the 2001-2025 period. The low fiscal transparency in authoritarian regimes in particular reduces the reliability of shadow economy estimates. Jackson and Sørensen's (2016) introduction to international relations emphasizes the importance of methodological pluralism. Dunne, Kurki, and Smith's (2013) analysis of international relations theories strengthens the scientific legitimacy of using different paradigms together. Fifth, due to the nature of qualitative methods, the statistical generalizability of findings is limited. However, findings contribute to theoretical explanations through analytical generalization. Sixth, considering that foreign policy behaviors are affected by numerous factors, the difficulty of isolating the effect of gambling and shadow economies is acknowledged. For this reason, causality claims have been carefully circumscribed (Hudson, 2014; Carlsnaes, Risse & Simmons, 2002). Smith, Hadfield, and Dunne's (2008) foreign policy study emphasizes the necessity of multi-factor analyses. Carlsnaes, Risse, and Simmons's (2013) handbook of international relations reveals the importance of methodological rigor. Seventh, due to time constraints, not all country examples could be included in the scope of in-depth examination. Eighth, due to language limitations, access to some regional sources remained restricted. Recommendations for future research emphasize the necessity of supporting the effects of gambling economies on foreign policy behaviors with more empirical studies. The in-depth examination of specific country cases in particular is valuable for testing and extending the findings of this study. Second, comparative policy analyses should be conducted on the regulation of digital gambling platforms. Third, more research should be conducted on the connections of gambling economies with terrorism financing and organized crime organizations (Shelley, 2014; Andreas, 2013). Duffield's (2001) analysis of global governance and new wars demonstrates the necessity of further research on the security dimension of gambling economies. Collier's (2007) bottom billion analysis emphasizes the necessity of deepening the poverty and shadow economies relationship. Fourth, new methods should be developed for measuring shadow economies. Fifth, the gender dimensions of gambling economies and their effects on disadvantaged groups should be examined. Sixth, the relationship of gambling economies with climate change and sustainable development goals should be investigated. Seventh, how artificial intelligence and big data analytics can be used in monitoring gambling economies should be evaluated. Eighth, the connections of gambling economies with migration flows and human trafficking Page No. 185
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm should be systematically researched. Ninth, the long-term effects of the explosion of online gambling platforms in the post-pandemic period should be monitored. Tenth, the relationship of gambling economies with political radicalization and populism should be examined. The theoretical contribution of the research lies in its demonstration that shadow economies must be integrated into foreign policy analysis. Traditional foreign policy theories, while taking into account states' material capacities and institutional structures, have not adequately addressed how shadow economic activities erode these capacities (Waltz, 1979; Keohane & Nye, 1977; Gilpin, 1987). This study fills this gap in the literature by demonstrating that shadow economies affect foreign policy behaviors through three mechanisms. The fiscal mechanism constrains freedom of movement in the international arena by reducing states' resources. The institutional mechanism creates inconsistencies in decision-making processes. The normative mechanism weakens states' legitimacy ground (Gilpin, 1981; Holsti, 1996; Nardin & Mapel, 1992). Keohane's (1984) analysis of cooperation after hegemony explains the limited role of international institutions in the regulation of gambling economies. The findings confirm that in international security studies, the concept of security has expanded to include economic and social dimensions (Williams, 2013; Buzan & Hansen, 2009). The new security framework enables the multidimensional analysis of the threats created by gambling economies (Buzan, Wæver & de Wilde, 1998). While gambling economies are as important as traditional security threats, they have not adequately occupied a place in states' security agendas. This situation necessitates the opening of a new research domain in security studies. Findlay's (1999) money laundering analysis and Reuter and Truman's (2004) study on combating money laundering demonstrate the practical importance of the security dimension. The practical contribution of the research lies in its provision of concrete recommendations for policymakers. First, states should strengthen international cooperation in the regulation of gambling economies. Second, fiscal transparency mechanisms should be developed. Third, new regulatory instruments should be established for the oversight of digital gambling platforms (Sharman, 2011, 2017; Thomas, 2021). Fourth, awareness should be raised regarding the social effects of gambling economies. Fifth, tax reforms should be implemented in preventing shadow economies. Sixth, the role of civil society organizations should be strengthened in combating gambling economies (Misztal, 2000; Johnston, 2005). Seventh, regional cooperation mechanisms should be established. Eighth, digital literacy and financial education programs should be expanded. Ninth, gambling addiction treatment programs should be strengthened. In conclusion, the findings of this study reveal that gambling economies create deep and structural effects on foreign policy behaviors. The deepening integration of gambling economies with shadow economies during the 2001-2025 period produces a structure that continuously tests states' regulatory capacity and increases foreign policy vulnerabilities. Gambling economies, being not merely an economic problem, constitute a multidimensional strategic risk domain in terms of national security, social cohesion, and international relations
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management (Buzan & Hansen, 2009; Williams, 2013; Smith, Hadfield & Dunne, 2008). While Schüll's (2012) addiction by design study demonstrates the devastation of gambling economies at the individual level, it may be said that a similar addiction cycle is valid for states at the macro level. These findings demonstrate that gambling and shadow economies are a research domain that must be seriously addressed in the international relations discipline. Future studies may provide more comprehensive explanations by extending the theoretical and empirical dimensions of this field (Baylis, Smith & Owens, 2019). Dunne, Kurki, and Smith's (2013) discipline and diversity analysis emphasizes the necessity of examining gambling economies through an interdisciplinary approach. Jackson and Sørensen's (2016) theories and approaches study demonstrates the richness of using different paradigms together. The most important finding of the research is that shadow economies affect foreign policy behaviors indirectly but structurally. This effect transforms the quality of foreign policy decisions by eroding states' material capacities, institutional functions, and normative legitimacy. Gambling economies serve as a catalyst in this process and accelerate the expansion of shadow economic structures (Schneider, 2013; Williams & Schneider, 2016; Portes, Castells & Benton, 1989). Sulkunen and colleagues' (2018) analysis of the future of gambling policies demonstrates the importance of differences among regulatory regimes. Orford's (2011) study on gambling desires reveals how desires are manipulated at the social level. This research demonstrates that shadow economies and gambling activities are topics that must receive more attention in the international relations literature. The strengthening of interdisciplinary approaches is necessary for better understanding of this field (Finnemore & Sikkink, 1998; Wendt, 1999; Keohane & Nye, 1977). Cassidy's (2014) vicious games analysis critically evaluates the intersection of capitalism and gambling. This critical perspective is important for understanding the structural causes of gambling economies. Finally, this discussion reveals that the effects of gambling and shadow economies on foreign policy behaviors are multidimensional, structural, and long-term. Future research may contribute to the literature by testing and deepening these findings in different contexts. 7. CONCLUSION AND RECOMMENDATIONS This study has systematically tested the hypothesis that the expansion of gambling economies and shadow economic networks during the 2001-2025 period transforms foreign policy behaviors by corroding states' socio-moral structures, and has reached robust findings that confirm this hypothesis (Schneider, 2013; Williams & Schneider, 2016; Rose-Ackerman & Palifka, 2016). The fundamental argument of the research is that gambling and shadow economies erode state capacity, weaken normative legitimacy, and render decision-making processes dependent upon interest networks (Johnston, 2005; Lambsdorff, 2007). This argument, in consonance with Holsti's (1996) studies on the state, war, and the state of war, demonstrates how the erosion of state capacity transforms international behaviors. This Page No. 187
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm process leads to a marked increase in inconsistency, unpredictability, and short-term interest orientation in foreign policy behavior (Hudson, 2014; Hill, 2003). The findings of the study demonstrate that gambling economies have now transformed from merely an economic domain of activity into a multilayered security and governance problem extending from states' internal structures to their international behaviors (Buzan & Hansen, 2009; Williams, 2013). This transformation has become more pronounced particularly during the period when globalization processes accelerated and digital platforms proliferated (Castells, 2000; Schneider & Enste, 2000). The comparative case examinations of the research reveal that, beyond the predictions of Waltz's (1979) theory of international politics, intra-state structural decay leads to behavioral changes at the systemic level. The most critical finding revealed by the research is the strong and nonlinear relationship between the size of gambling economies and socio-moral decay indicators (Schneider, 2011; Lambsdorff, 2007). As the share of the gambling sector's registered and unregistered volume within total economic size increases, corruption perception, money laundering risk, tax evasion, and illegal fund flows also rise systematically (Reuter & Truman, 2004; Sharman, 2011). Findlay's (1999) study on the global crime economy explains the structural character of this relationship. This relationship is observed not only in low-income countries but also in middle and high-income countries (Rose-Ackerman & Palifka, 2016; Johnston, 2005). Consequently, the devastation created by gambling economies exhibits a universal pattern independent of the level of economic development (Schneider, 2013; Williams & Schneider, 2016; Rose-Ackerman & Palifka, 2016). The rapid proliferation of online gambling platforms in particular and the increase in cryptocurrency-based transaction volumes have led to the establishment of transboundary financial networks that exceed states' regulatory capacities (Kingma, 2013; Sulkunen et al., 2018). Naylor's (2002) study on wages of crime and the underground economy demonstrates in detail how these transboundary networks operate. This situation causes the dysfunctionalization of traditional fiscal control instruments and the questioning of state authority's legitimacy (Chayes, 2015; Shelley, 2014). The acceleration of digitalization in the post-2020 period has further strengthened this trend and increased the degree of gambling economies' integration with shadow economies (Sulkunen et al., 2018; Simpson, 2023). Shaxson's (2011) treasure islands study demonstrates how gambling revenues are legitimized through tax havens. The effect of gambling economies on socio-moral decay is not limited to economic indicators alone but leads to deep structural changes such as social trust erosion, weakening of normative values, and collapse of institutional ethical standards (Johnston, 2005; Lambsdorff, 2007; Rose-Ackerman & Palifka, 2016). Misztal's (2000) study on informalism and social theory explains how normative structures dissolve. Social norms transform with the legitimization of illegal revenues and the acceptance of gambling-based enrichment; this transformation weakens state-society relations and dysfunctionalizes political elites' accountability mechanisms (Chayes, 2015). This process leads to normative dissolution particularly in the economic expectations of the young population and in the behavioral codes of political elites (Johnston, 2005; Lambsdorff, 2007). Ledeneva's (1998) study on Russia's economy of favors demonstrates how gambling and shadow economies integrate with
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management informal networks. The comparative case examinations of the research reveal that in countries where gambling economies are strong, democracy quality declines, judicial independence weakens, and media freedom is constrained (Rose-Ackerman & Palifka, 2016). Reno's (1998) study on warlord politics and African states demonstrates how shadow economies become dominant in countries where state capacity weakens. These findings demonstrate that gambling and shadow economies are a force that shakes the foundations not only of economic but also of political and social systems (Shelley, 2014; Keen, 2005). The effects on foreign policy behaviors constitute one of the most original contributions of the research (Hudson, 2014; Hill, 2003; Smith, Hadfield & Dunne, 2008). The fiscal dependency created by gambling economies directs political elites toward conjunctural opportunism by distancing their foreign policy decisions from long-term strategic planning (Mearsheimer, 2001). This situation became more pronounced particularly in the post-2008 financial crisis period and led to increased foreign policy inconsistencies in numerous countries (Mearsheimer, 2001; Morgenthau, 1948). Gilpin's (1987) study on the political economy of international relations explains how economic structures shape foreign policy preferences. Political actors fed by shadow economic networks may place their own narrow interests ahead of state interests in the international arena; this process causes increased unpredictability, contradictory alliance preferences, and normative inconsistencies in foreign policy behavior (Hudson, 2014; Carlsnaes, Risse & Simmons, 2002). Jervis's (1976) study on perception and misperception explains how the distorted incentives created by gamblingbased revenues are reflected in foreign policy decisions. The findings of the research demonstrate that international credibility scores of countries with high corruption perception decline and that these countries become ineffective in multilateral platforms (Lambsdorff, 2007; Rose-Ackerman & Palifka, 2016). This situation adversely affects states' soft power capacities and makes their pursuit of international legitimacy difficult (Nye, 2004, 2011; Strange, 1986). Keohane and Nye's (1977) study on power and interdependence provides a valuable framework for understanding how the asymmetric dependencies created by gambling economies constrain foreign policy preferences. From the theoretical perspective, this study demonstrates the necessity of integrating gambling and shadow economies into foreign policy analysis literature (Hudson, 2014; Smith, Hadfield & Dunne, 2008; Dunne, Kurki & Smith, 2013). Traditional foreign policy theories are based on the assumption that states are rational actors and act in accordance with their national interests (Waltz, 1959, 1979; Morgenthau, 1948). As Allison and Zelikow's (1999) decision-making models explain, state behavior differentiates at individual, organizational, and rational actor levels. However, the findings of this study demonstrate that the interest networks created by gambling economies distort state rationality and render decision-making processes rife with internal contradictions (Johnston, 2005; Rose-Ackerman & Palifka, 2016). The integrated use of rational choice theory, institutional economics, state capacity theory, and social capital approaches provides a robust conceptual framework for understanding the multidimensional effects of gambling economies (Hudson, 2014; Finnemore & Sikkink, 1998; Wendt, 1999). The demonstration that the effects of gambling and shadow economies on state behaviors operate at the levels of material capacity, Page No. 189
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm normative legitimacy, and identity formation provides an original theoretical contribution to the international relations discipline (Finnemore, 1996; Risse, Ropp & Sikkink, 2013; Wendt, 1999). This multi-paradigmatic approach strengthens the scientific legitimacy of analytical eclecticism in the social sciences (Carlsnaes, Risse & Simmons, 2002; Jackson & Sørensen, 2016). Linklater's (1998) study on the ethical foundations of the post-Westphalian era provides a valuable perspective for understanding how the normative crisis created by gambling economies affects the structure of international society. In terms of policy recommendations, the findings of this study demonstrate that states must develop multilayered and integrated strategies in combating gambling economies (Schneider, 2011, 2013; Williams, 2013). First, strengthening regulatory capacities at the national level is imperative (Rose-Ackerman & Palifka, 2016). Increasing the transparency of the gambling sector, tightening licensing processes, and activating oversight mechanisms are of critical importance in preventing integration with shadow economies (Kingma, 2013; Sulkunen et al., 2018). The regulation of online gambling platforms in particular requires technological infrastructure investments and international cooperation (Kingma, 2013; Sulkunen et al., 2018). Lo's (2020) study on casino capitalism in China's Macau demonstrates how gambling economies spiral out of control when regulatory capacities prove inadequate. Second, the capacities of institutions combating financial crimes must be increased and regional and global cooperation must be deepened to dismantle money laundering networks (Reuter & Truman, 2004; Sharman, 2011, 2017). As Findlay's (1999) global crime economy analysis suggests, combating financial crimes can only be effective through international coordination. The adoption and effective implementation of Financial Action Task Force standards by all countries will prevent the integration of gambling economies with shadow networks (Sharman, 2011). Third, the closure of tax havens and regulation of offshore financial centers will block the channels through which gambling revenues are legitimized (Shaxson, 2011; Sharman, 2011, 2017). Deneault's (2011) study on offshore finance demonstrates in detail how tax havens combine with gambling economies. At the societal level, the expansion of programs combating gambling addiction and the conduct of social awareness campaigns are important (Orford, 2001, 2011; Schüll, 2012). Reith's (1999) study on the age of chance in Western culture provides a valuable perspective for understanding the historical and cultural origins of gambling behavior. The socio-moral devastation created by gambling economies must be addressed not only through economic policies but also in an integrated manner with education, health, and social policies (Orford, 2011; Sulkunen et al., 2018). The protection of youth in particular against gambling risks and the provision of alternative economic opportunities play a determining role in preventing societal decay (Orford, 2011; Schüll, 2012). Adams's (2008) study on gambling and public hysteria provides important clues regarding how social awareness campaigns should be designed. Fourth, transparency and accountability mechanisms in political systems must be strengthened (Rose-Ackerman & Palifka, 2016; Johnston, 2005). Preventing political elites from obtaining financing from gambling-based revenues, tightening campaign finance regulations, and protecting the independence of anti-corruption institutions are critical steps in preventing socio-moral decay (Lambsdorff, 2007; Johnston, 2005). Fifth, protecting media
Arslan, S. (2025). GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025). GPH-International Journal of Business Management, 8(10), 152-199. https://doi.org/10.5281/zenodo.17812743 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management freedom and supporting investigative journalism will ensure the exposure of corruption networks created by gambling economies to public scrutiny (Rose-Ackerman & Palifka, 2016; Chayes, 2015). Naim's (2005) study on the effect of illegal trade on the global economy demonstrates how critical transparency and accountability are in combating shadow economies. At the international level, strengthening multilateral cooperation mechanisms and recognizing gambling economies as a security threat are important (Buzan & Hansen, 2009; Williams, 2013). As Buzan, Wæver, and de Wilde's (1998) securitization theory suggests, gambling economies must be addressed within the security agenda. The United Nations, the European Union, and regional organizations must develop common standards in combating gambling economies and provide technical support to member states (Keohane, 1984; Nye & Welch, 2013). The allocation of international financial and technical assistance to increase the regulatory capacities of developing countries in particular is a precondition for effective struggle at the global scale (Thomas, 2021; Naim, 2005). Portes, Castells, and Benton's (1989) study on the informal economy demonstrates that shadow economies exhibit different characteristics in developed and less developed countries. Sixth, the regulation of the digital economy and the limitation of technology companies' collaborations with gambling platforms are necessary (Kingma, 2013; Sulkunen et al., 2018). Schüll's (2012) study on machine gambling in Las Vegas demonstrates the role of design in creating addiction. The tightening of cryptocurrency regulations and the use of blockchain technology in a transparencyenhancing manner will contribute to dismantling the transboundary networks of gambling economies (Simpson, 2023). Seventh, the simplification of tax systems and the increase in tax compliance may be effective in breaking the growth tendency of shadow economies (Schneider, 2011, 2013; Williams, 2013). Schneider and Enste's (2000) international research on the shadow economy demonstrates how the complexity of tax systems increases informality. In terms of future research orientations, this study brings numerous new research questions to the agenda (Hudson, 2014; Smith, Hadfield & Dunne, 2008). First, the long-term effects of gambling economies' rapid transformation in the post-pandemic period must be monitored (Sulkunen et al., 2018; Simpson, 2023). The explosion that online gambling platforms experienced with digitalization opens a new research domain (Kingma, 2013). The in-depth examination of how cryptocurrency and blockchain technology in particular integrate with gambling economies will play a critical role in shaping future regulatory policies (Simpson, 2023). Hao's (2015) study on Macau's political economy after 1999 provides a valuable case for understanding the dynamic evolution of gambling centers. Second, the examination of gambling economies' relationship with gender dynamics may provide important findings (Orford, 2001; Aasved, 2003). Aasved's (2003) psychological study on gambling and addiction demonstrates how gender differences affect gambling behaviors. The differences in gambling behaviors between women and men may provide a valuable perspective for understanding the societal reflections of socio-moral decay (Orford, 2001). Third, the relationship of gambling economies with migration movements must be researched (Portes, Castells & Benton, 1989). Castells's (2000) information age study provides a theoretical Page No. 191
GAMBLING AND SHADOW ECONOMIES: SOCIO-MORAL DECAY AND FOREIGN POLICY BEHAVIOR (2001-2025) Volume 8 Issue No 10 (2025) Access: https://gphjournal.org/index.php/bm framework for understanding how the migration and shadow economy relationship operates within global networks. The examination of the structural differences of gambling economies in migration-receiving and migration-sending regions in countries where shadow economies have grown will increase the regional specificity of policy recommendations (Portes, Castells & Benton, 1989). Fourth, research on how artificial intelligence and machine learning technologies are transforming gambling economies will increase the effectiveness of future regulatory policies (Schüll, 2012; Kingma, 2013). The in-depth examination of the social and psychological effects of algorithmic gambling platforms will contribute to the development of addiction combat strategies (Schüll, 2012). Orford's (2001) psychological study on excessive appetites and addiction provides a valuable perspective for understanding the mechanisms through which algorithmic designs create addiction. Fifth, research on the relationship of gambling economies with climate change and environmental sustainability may open a new interdisciplinary research domain. The examination of shadow economies' contribution to environmental devastation and how gambling revenues are transferred to environmental crimes may play an important role in the development of sustainable development policies (Schneider, 2013; Williams, 2013). Sixth, the relationship of gambling economies with social movements and protest dynamics must be researched (Kaldor, 2012). Kaldor's (2012) study on new and old wars demonstrates how organized violence is connected with shadow economies. The in-depth examination of the connections between the increase in social discontent and the proliferation of protest movements in countries where shadow economies have grown may provide valuable findings for understanding the sources of political instability (Reno, 1998; Keen, 2005). Seventh, research on the effects of gambling economies on education systems is important (Orford, 2011; Adams, 2008). The examination of how gambling-based enrichment's adoption as a social role model is reflected in education systems and young people's career choices is of critical importance for understanding the intergenerational transmission of socio-moral decay (Orford, 2001, 2011). Eighth, the calculation of gambling economies' fiscal burden on health systems and the systematic measurement of the social costs of gambling addiction are necessary (Orford, 2001, 2011). Orford's (2011) study "An unsafe bet" discusses the costs that gambling addiction places on health systems. Ninth, research on the effects of gambling economies on local governments and urban planning is important (Lo, 2020; Simpson, 2023). Kokot and colleagues' (2008) study on ethnographic perspectives of port cities as transitional areas provides a valuable framework for understanding how gambling centers are positioned in urban spaces. The examination of the effects of gambling centers on urban transformation and social segregation will contribute to the development of urban policy recommendations (Sergi, 2021). Tenth, the comparative examination of gambling economies' interaction with religious and cultural values may provide a valuable perspective for understanding the transformation of social norms (Reith, 1999; Aasved, 2003). Niebuhr's (1932) study on moral man and immoral society provides a philosophical foundation for understanding the ethical crisis created by gambling economies.
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