HOW THE GAMBLING INDUSTRY REALLY WORKS
The gambling industry and it's supporters would like you to believe that casinos are just another business - another form of entertainment - but that is far from the truth. Unlike other Bay State businesses, casinos:
THE TRUTH ABOUT SLOT MACHINES
According to Dr. Natasha Dow Schüll, Associate professor at MIT, expert on the science of slot machines and author of the book Addiction by Design:
"It's important for voters to understand how these machines work. Every feature of a slot machine -- its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics -- is calibrated to increase a gambler's "time on device" and to encourage "play to extinction," which is industry jargon for playing until all your money is gone. The machines have evolved from handles and reels to buttons and screens, from coins to credit cards, from a few games a minute to hundreds."
Dr. Hans Breiter, MD, director of the Laboratory for Neuroimaging and Genetics at Mass. General Hospital:
"gamblers at slot machines show increased blood flow in the same brain areas where cocaine produces a surge in dopamine - the transmitter that carries neural messages relating to pleasure and pain".
Slot machines are highly addictive, much more addictive than any other form of gambling.
Slot machines also generate the majority of casino revenue. According to Casino Operations Management, a textbook written by Jim Kilby, Jim Fox and Anthony Lucas, a typical large casino receives 60-70% of their profits from slots and only 15-20% from table games.
And slot machine technology is getting better at extracting those profits. According to Nevada Gaming Control Board statistics, from 1997 to 2007 the number of slot machines in Las Vegas increased just 2.5% - but the amount they won from gamblers jumped a whopping 72.9%.Today's slots are actually meticulously designed computers, generating precise profits, deliberately creating a false sense of near wins and regular small payoffs that create an illusion of sporting chance. They take credit cards, not coins, and are designed so players can make hundreds of bets per minute.
The goal of modern slot machine design has become getting gamblers to play longer, faster, more intensively,encouraging players to spend until they have nothing left, to lose track of time and money.
DECEPTIVE AND PREDATORY PRACTICES EMPLOYED BY THE CASINO INDUSTRY
Experts from MIT and Harvard have testified repeatedly at legislative gambling hearings about the potential for addiction engineered into today's slot machines - but the gambling industry employs other predatory practices the to separate slot players from their money.
(Keep in mind that slot machines account for about two-thirds of casino revenue.)
Like many other industries, the gambling industry collects information about their existing and potential customers to increase sales, encourage customer loyalty, develop marketing strategy etc. However, because casinos are 'financial institutions', they have access to all of an individual's financial information. They leverage this specialized status and "loyalty programs" to gain specific knowledge about how much cash and credit a patron has access to, when they use their credit cards in the casinos. The industry calls this Total Cash Availability.
Additionally, they will also be able to find out how much equity a patron has in their home, car and other assets; this is called Global Cash Availability. These can and will be taken as equity in exchange for credit. Casinos will also extend that amount to payday loans at high interest rates. These will be offered to patrons who are under the influence of alcohol, alcohol, that the casinos will be able to offer free of charge.
The casino industry uses all of this information along with real-time game-play data to make targeted offers to specific people. They are also able to alter the payout rate and the "near-misses" seen by each person to increase their rate of play and the amount per play.
In short, the methodology is as follows:
While it's convenient to dismiss gambling as a mostly harmless form of entertainment, effecting only a small percentage of people, the fact is, the gambling industry is increasingly engaging in furtive, predatory practices that can quickly deplete an individuals or an entire family's financial resources, for substantial profit - a large chunk of which it will turn over to the State. When it comes to slot machines, the only 'gaming' involved is the State-sanctioned shell game that casino billionaires are allowed to play with our bank accounts.
HOW THE CASINO INDUSTRY TRICKS US INTO BELIEVING THAT GAMBLING ADDICTION IS ONLY A MINOR PROBLEM
Frank Fahrenkopf, the founding president of the American Gaming Association (AGA) the lobbying arm of the gambling industry, was concerned that his industry would run into the same problems as the Tobacco industry on the issue of addiction.
"I had seen the problems his industry had run into by denying the harmful effects of smoking. We knew that problem gambling was something we had to handle, and it was the subject matter of our first board meeting."
The result was the creation of the National Center for Responsible Gaming (NCRG), created in 1996 to fund research on gambling addiction and influence the findings of the federally funded National Gambling Impact Study.
The NCRG is now the largest and only private source of funding for science based research on gambling and health in the U.S. over the past century. Now State and local gambling studies use the research to downplay the severity of addiction caused by casino gambling. It is funding $950,000 in research grants in 2013, including multiyear funding for Centers of Excellence in Gambling Research at Yale, the University of Minnesota, and the University of Chicago. The industry funding devoted to research is, of course, a miniscule amount compared to the profits the industry rakes in.
The NCRG states that it funds peer-reviewed, independent research on gambling addiction. However, its research funding and agenda is largely devoted to scientific investigations into the biology of pathological gambling, including its diagnosis and treatment. Of the 200 peer-reviewed studies it has funded, not a single one investigates the interplay between gamblers and the gambling machines; the addictive nature of modern gambling machines; or the industry's own research into designing more addictive machines.
To minimize the issue of addiction, the industry claims the percentage of the general population affected by gambling addiction is relatively low - about 2 - 3 %. But the more revealing and accurate statistic would focus on the percentage of problem and pathological gamblers there are within the gambling population which is approximately 20% - and how much casino revenue are these gamblers generating. Research has shown this to be upwards of 60%.
Research on gambling funded by the gambling industry focuses overwhelmingly on the individual pathology and pharmacology of gambling addiction while avoiding research into machine design, player profiling, and other industry practices and technological innovations that foster gambling addiction.
THE CASINO INDUSTRY RECEIVES COMPETITIVE BUSINESS ADVANTAGES
All businesses need to attract customers. But under the Massachusetts gambling bill, some business are more equal than others.
Unlike other businesses, casinos can offer indoor smoking. This clearly gives a casino an advantage over other Massachusetts businesses such as restaurants and taverns that are required to remain smoke-free. But casinos know that allowing customers to smoke increases the number of customers, which in turn increases profits. And the State, now a stakeholder in the industry, knows it too. And because the state lacks a high stake in the profits of non-casino businesses, it puts the health concerns of employees and customers ahead of revenue.
Another competitive advantage casinos receive is the ability to offer free drinks. Once again, it's all about the profits. Alcohol impairs judgment, which is helpful when the goal is getting people to part with their money despite poor odds of winning, and taking financial risks they otherwise wouldn't. Which is probably why the gambling law only allows free alcoholic beverages to be served on the 'gaming floor', and not in restaurants or hotels within the casino.
Casinos can also operate 24/7 and serve alcohol between the generous hours of 8am and 2am (Although this restriction will undoubtedly be "revisited" as soon as revenues dip as it has in other states.)
In 2011, during legislative deliberations on the gambling law, an amendment was sponsored that would reinstate the "Happy Hour" - banned in 1984 after a woman was killed in Braintree by a drunk driver who had consumed seven alcoholic beverages in one hour. The intent of the amendment was to allow restaurants and bars to serve lower-priced or free drinks in order to stay competitive with casinos.Treasurer Steve Grossman, who oversees the Alcoholic Beverage Control Commission, believes that the Happy Hour ban has saved lives.
“I think it has served us well, and I think it is a very important public safety issue,”
Apparently this "very important public safety issue" is of much less importance to Mr. Grossman, who supports the gambling law, if the drunk drivers are getting their free drinks at casinos. The promise of casino revenue is infamous for its ability to twist political perception away from what's good for the public toward what's good for State coffers.
In the end, the amendment to reinstate Happy Hour didn't pass - but only because the restaurant industry realized that even if it did, they still wouldn't be able to compete with casinos.
CASINOS DEVELOP LONG, LUCRATIVE PARTNERSHIPS WITH STATE GOVERNMENT
After his release from prison, former lobbyist Jack Abramoff was asked what he thought about the prospect of casinos in Massachusetts.
He replied, "They will own your state."
And so, perhaps the most onerous negative impact of legalizing casinos and slots parlors is that Massachusetts will become a powerful, de facto partner of the gambling industry.
With a budgetary dependence on casino revenue, our state now becomes a stakeholder in the gambling industry, obligated by necessity and self-interest to ensure and maintain casino revenues above a certain threshold - and in these days of market saturation those revenues are dropping fast. State governments react predictably:
In Delaware, New Jersey and Rhode Island the tables have already turned, and now, instead of providing unlimited revenue, casinos have received taxpayer breaks, bailouts, and concessions to stay afloat. In Connecticut, the casinos have been laying off employees. On-line gambling is expected to take another big chunk out of the gambling market.
In pursuit of more revenue, New Jersey also repealed a smoking ban that had put in place to protect casino workers. In California they lowered the gambling age to 18. Midwest riverboat casinos, originally intended to float down the river and return patrons after a set time to keep losses low, quickly became 'boats in a moat' – full-fledged permanently-docked casinos sitting in a foot of water. States have also abandoned formerly imposed wagering or loss limits. In Iowa and Illinois measures like these resulted in existing gamblers losing more money as opposed to increasing the number of gamblers.
Rhode Island's Twin River slots parlor was supposed to save racing, but when it still couldn't make enough money, it filed for bankruptcy, was allowed to jettison the track, extended its hours to 24/7 and added table games to become a full-fledged casino. A push by lawmakers looking to help solve Connecticut's multibillion-dollar deficit by extending casino liquor hours was cut short only after a patron leaving Mohegan Sun plowed into a van full of college students, killing one of them.
Recently, Maryland lawmakers diverted $3 Million in community mitigation money from a casino earmarked for neighborhood projects and job placement services for the unemployed to pay for a repair to an underground steam pipe system - so that the casino could open on time and the State start receiving revenue.
Anyone who thinks it will be different here in Massachusetts, in ever-tighter gambling market made tighter by the addition of three casinos and a slots parlor are fooling themselves. The State will do whatever it needs to keep revenue at sufficient levels. That's what a good stakeholder does.
And there are other incentives. Between 2007 and 2013, gambling interests spent $16.5 million on lobbying for casinos and slots parlors.
Even attempts to curb the gambling industry's political influence seemed destined to fail.
In 2012, in an effort to control the deep-pocketed gambling industry's influence in government, Maryland made it illegal for casino owners to donate to political candidates, but they still found a way. One donor contributed as much as $86,000 to candidates through separate companies and family members since the ban took effect.
New York Governor Andrew Cuomo attached a on ban political contributions from casino interests to his casino legislation, stating that:
“unlike most other regulated industries, gaming is especially susceptible to corruption,”
But by the time the final bill was passed, the provision had been conveniently removed.
And the party need not stop after an elected official leaves office. An attempt to create a five year ban on government officials from working in the gambling industry drew harsh criticism from State Senator Stan Rosenberg, (D-Amherst) who argued that:
"passing such a no-revolving-door amendment would actually contribute to public cynicism about lawmakers by creating the impression that such a restriction was necessary to protect the public trust and ensure integrity.”
After convening that discussion behind closed doors, the Senate decided to drop the ban from five years to one.
Still not satisfied with a one-year delay in the leap from Beacon Hill to casino road, Joseph Wagner (D-Chicopee) stated that:
“It’s my sense that this matter is so important that we should not preclude the best and the brightest from being eligible even if those people would be in government presently,”
Obviously, Rep. Wagner has a high opinion of himself.
CASINOS OFFER INTEREST-FREE LINES OF CREDIT AND USE PREDATORY COLLECTION METHODS TO GET IT BACK
As with most of it's predatory practices, the gambling industry puts a positive spin on offering interest free lines of credit - often for tens of thousands of dollars - to its players. Apparently it's a "convenience" for players who don't want to carry around large amounts of cash.
But to players who are under the influence of alcohol, and possibly chasing a loss at the gambling tables, a line of credit, also called a marker, can be dangerous. Some have had billion-dollar casinos place liens against their homes to get the money back.
“It’s extremely hard-core predatory behavior,” said Tom Coates, who runs Iowa’s largest credit counseling service and works with problem gamblers.
When a player applies for a line of credit, the casino checks their bank record and credit history, and if approved, a line of credit is extended. Players often request lines of credit when they have already lost the amount of money they had budgeted to lose. If they continue losing, they will owe the casino the amount of the credit line, which accrues 12% interest a year.
“Basically they set you up for failure: you get the money from them, you lose it back to them and then you still owe them the money.”
Recently it was revealed that dozens of Rhode Island and Massachusetts homeowners had liens placed against their homes - for debts as little as $100 - by Foxwoods and Mohegan Sun casinos in Connecticut.
One Massachusetts blackjack player said Foxwoods, which is now seeking to build a casino in Fall River, originally approved him for just a few thousand dollars in credit, but raised the limit when he asked for more.
These liens create hardships for the homeowners because they can prevent the owner from selling or refinancing their home. Ultimately, if a debt is not repaid, the home can be sold at auction.
In response to articles about the aggressive practice of placing casino liens on Massachusetts homes, Attorney General Martha Coakley recommended that gambling regulators prohibit the practice here. But one wonders why Coakley, the state's top public advocate was unaware of the practice at all.
“This is a shining example of the many facets the Legislature overlooked [in legalizing casino gambling], but which can’t be ignored or swept under the rug, even at this late date in the process,” wrote representatives of the Repeal the Casino Deal campaign, including former Massachusetts attorney general Scott Harshbarger.
"I don't think the industry is sitting around saying, 'How do we addict people?' It just has to do with the bottom line. They're going to do everything in their power to get people to play longer, faster and more intensively ... That's their ideal customer, and that customer, it seems to me, overlaps uncomfortably with someone we call an addict. If we all did what the industry wants us to, we'd all be called addicts."
- Dr. Natasha Dow Schüll, Associate professor at MIT, expert on science of slot machines and author of the book Addiction by Design