The Central Statistic of Casino Profits

The_Goose_That_Laid_the_Golden_Eggs_-_Project_Gutenberg_etext_19994.jpg  from Wiki

The_Goose_That_Laid_the_Golden_Eggs_-_Project_Gutenberg_etext_19994.jpg from Wiki

When Governor Cuomo in 2012  proposed  new commercial casinos he said they would need regulation.  Casino promoters can’t dismiss the concept,  which  has several aims.  One specific to casinos is to mitigate gambling addiction and problem gambling.*  Promoters don’t deny these  can be outcomes of   “gaming.”  Another goal of regulation, applied also to the banking or securities industries, is to protect investors and tax-collecting entities against in-house predatory practices, organized crime and tax dodges.

Casino owners want regulation of how they handle consumers and accounting about as much as do big banks or brokerages: the least possible.   In any business, regulation hurts profits by constraining practices (say, payday loans) and limiting externalities.  For example, a company no longer free to discharge waste into a waterway faces new costs; raising prices may lose it business if competitors don’t raise theirs too.   Casinos are uniquely  intent on profit for its own sake. For them, that’s the be-all and the end-all.   Typical  industries, even those as controversial as “Big Pharma” or “Big Oil” make a product of real use to someone.  The casino business has only one tangible product,  in which it cannot take pride:  addicted and problem gamblers.  That product fuels it.

The central  statistic  of  casinos:  a  large proportion  (Grinols and Omorow** estimated 35-50%)  of  the  gross returns after winnings are paid out comes from compulsive and  problem gamblers — about 4% of the adult population — who comprise maybe 12.5%  of casino users.  Most of that 35-50% is from addicted gamblers.   From this statistic comes

The central dilemma :  if  casino owners  acted effectively to steer  into lasting recovery all pathological and problem gamblers in their sphere and  to prevent the creation of new ones,  profits would  drop by at least 35%.  How would that play on the bottom line?  Not well at all.

Resolution: publicly express concern on problem gambling but make it go on  under a façade of “prevention”  methods structured to fail.   Accede to customized and toothless “regulation” that won’t interfere with the real business.

Recall the goose that laid the golden eggs.  Casinos do not lay the golden eggs their promoters claim; they are gilded base metal.  Whether the bird’s owner knows this or not,  whether  he stores or markets the eggs,  the owner (assuming  he has more common sense than the yokel in the story, who killed it) will cosset the bird.  He won’t let  anyone  change her diet or re-house her.  To an owner eager for  eggs that look golden, regulation threatens the health of  the goose,  jeopardizing  her output.

Legislators weighing the proposed amendment in New York State to legalize new casinos must ask three questions. “Would those casinos knock themselves out  to profit 35%-50% less than many others do?” That’s obvious: No

“Do I really believe NYS can and will properly regulate casinos if they don’t want it?”    Someone very credulous might say so.  No one else will.

“Is it fair to NYS residents to commend to them, by an “Aye” on second passage,  a sham I don’t believe in.”  The response to that should be a third NO.

*These two categories of  “disordered gambling behavior”  are distinct.  About 1% of North American adults are past-year pathological (addicted)  gamblers, another 3% or so past-year problem gamblers. Sometimes for brevity (not clarity) the two categories are lumped into “Problem Gambling.”

** Grinols, Earl L. and J.D. Omorow (1997) “Development or Dreamfield Delusions? Assessing Casino Gambling’s Costs and Benefits.”   Journal of Law and Commerce 16, 1, 49-87.

The opinions are those of the writer, Stephen Q. Shafer and do not necessarily reflect those of all members of Coalition Against Gambling in New York.  Permission is granted to quote from this post at any length or to reproduce the entire post as long as the source is cited using the permalink above.

 

 

 

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Under New Management: Business as Usual

Melencolia (A. Durer 1514) file from Wikipedia

Melencolia (A. Durer 1514) file from Wikipedia

A press release dated 20 Feb 2013 announces the formation of  “The Responsible Play Partnership”  to bring together the newly formed NYS Gaming Commission, OASAS (Office of Alcoholism and Substance Abuse Services) and NYS Council on Problem Gambling.   The full text may be seen at  http://www.gaming.ny.gov/pdf/press_022013.pdf    I have excerpted one  line and five paragraphs from it, making no changes within the excerpts, which  are in italics.  I have added commentary at the top,  among the paragraphs and at the bottom.

None of the proposed actions is itself a bad idea.  The total package, however,  is wholly inadequate to deal with compulsive and problem gambling in the state now.   Moreover, it takes no account of  new gamblers moving into these two categories  if, as the Governor wants,  seven new casinos are eventually licensed.  Casinos are hardly mentioned.

 … The Responsible Play Partnership will include the following components:

 Swift enforcement of age restriction laws: New York law prohibits gambling under the age of 18 at all OTBs, horse racing facilities and casinos. The current legal purchase age for Lottery tickets is 18 and 21 in establishments that sell alcoholic beverages. Similar to state enforcement efforts that prevent alcoholic beverage sales to underage buyers, the Responsible Play Partnership will help to enforce the age restriction laws for gambling:

  • The Council on Problem Gambling is coordinating with various alcohol and substance abuse councils across the State to carry out underage compliance checks at various locales, with Gaming Commission staff accompanying them. Underage volunteers will attempt to place bets, purchase tickets and/or engage in gambling activities at lottery retailers, Quick Draw locales, off-track betting and E-Z Bet locations, race tracks and video lottery terminal facilities across the state.
  • When violations occur and where possible, Gaming Commission personnel on-hand will issue an immediate notice to the venue outlining the violation and any applicable disciplinary action.
  • Violations could result in fines, suspensions or revocation of an entity’s license to participate or provide such services in New York.

 Comments: 

  • Stiff  barriers  to underage gambling are good.  There is no mention, however,  of  how intensive or extensive  the micro-sting operations will be.  Penalties do not seem stiff —  violations “could”   result in  fines  etc.  
  • I expect the  RPP has no authority over  tribal casinos; thus, no mention here of  including   them.   If  non-tribal casinos are introduced, would the RPP be sending its underage undercover agents into those?
  • Is the RPP going to say anything now about the proposal mentioned in New York Times (21 Feb 2013 pp A19 and A22)  to allow  persons under 21 to play Quick Draw in bars?   If  truly responsible, the RPP should not merely accede to checking on compliance with changes in law that deliberately  increase exposure to gambling.  It should contest such changes.

 Proper resources at facilities to identify and address problem gambling: The Gaming Commission will mandate that VLT locations, off-track betting facilities and race tracks in the State  submit a report indicating how they currently handle individuals showing signs of  being problem gamblers. The Commission will evaluate these measures with OASAS, the Council on Problem Gambling and future partners to issue improved consistent policies to all facility operators.

 Comment:  This empty rule will probably get some token compliance hardly worth the paper it’s written on.   It is impossible  that  any of the listed types of facility will look in good faith for  “signs of being problem gamblers.”  For one thing, they don’t have the staff  in settings (e.g. racinos)  which  improve profit margin by mechanization and depersonalization.  Moreover, they have a fiscal reason to be blind to problems unless they anticipate  frequent  inspection and a harsh penalty for failure.   This brings us  to the central statistic  of predatory gambling:  a large proportion of  the  gross returns after winnings are paid out  comes from the small proportion of the gamblers who are compulsive or problem gamblers.  Grinols and Omorow* estimated 35-50% at the average casino, from about 4% of the adult population.   No  sensible gambling  locale will risk offending its best customers and driving them to a competitor by confronting them with the always-denied suggestion that there might be a problem.    No floor manager wants to be fired for remonstrating, even gently,  with  a  longtime customer  who is sure to deny what is felt as an accusation.

Casinos know a great deal about customers, but can always claim that if someone has left $40,000 on their tables in the last year they have no responsibility to know where that money came from.  Is it chump change to a wealthy heir or is it a spouse’s I.R.A.?   Casinos are off-limits to state regulators now in NYS (as NY casinos are all tribal)  but if non-tribal ones are legalized as the Governor wants,  they would theoretically be very important  in identifying problem gamblers.   A major part of the Governor’s idea for new commercial casinos was to regulate (as well as tax) them in a way that tribal casinos are not regulated or taxed.  It is odd  that the RPP omits casinos in their announcement.

 For that matter, lottery ticket sellers and Quick Draw locales (admittedly thousands of times more numerous than the other settings and harder to monitor) are also exempted from  watching for “signs.”  A small-town convenience store is probably better able to know which neighbor-customer  has a gambling problem than a busy racino, but certainly disinclined to report a worry.  The ticket-seller can always hope that tonight’s pick will at last be the lucky one.

The only persons really motivated to confront and point towards recovery an addicted or problem gambler are those around the gambler who are being exploited and hurt by him or her AND KNOW IT.   All too often these people have been deceived outright or bamboozled by co-dependency and fear into doing nothing effective.  One measure that could help those who are actually deceived by a casino-gambler (as opposed to paralyzed)  is that a monthly statement of wins and losses be mailed to each customer’s home address.  Such laws have been proposed in states with non-tribal casinos, but  never pass.  If  New York gets non-tribal casinos our state should have such a law.

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Forgotten collateral damage from government-in-gambling

from Flickr CC

from Flickr CC

What do the fourteen vignettes below have in common?  Can you guess  without the links?

1)      A 42 year old man in Michigan came home, fatally shot his pregnant wife and  their  three  children, then  himself.  http://abcnews.go.com/US/story?id=94936&page=1

2)      A father of two in VA gunned  down wife and son, shot his 11 year old daughter in the head, then killed himself .   Daughter described events (“bad dream” ),  died 3 days later .  http://www.highbeam.com/doc/1P2-671609.html from Washington Post

3)      Father  in NV  left  7 year old daughter  in arcade under eye of her 14 year old brother.  She was raped and strangled in a bathroom by an 18 year old male. http://articles.latimes.com/2000/jul/07/local/me-48999

4)      An Iowa man just-divorced stabbed to death his ex-wife,  an executive at Arthur Anderson in Chicago.  He then drove off  with  their 7 year old daughter (seat-belted), swerved into oncoming truck.  Both were killed.  http://preview.tinyurl.com/bah4e8r

5)      In St Louis, a woman in her  late 20s was not at home when her 11 children died in a house fire.  http://preview.tinyurl.com/afjjftg

6)      Illinois woman reported death of 7-week old daughter due to SIDS, claimed $200,000 life insurance she had taken out on baby.  Fifteen months earlier another daughter had died at age 17 days.   Mother  had stated  SIDS.   http://articles.chicagotribune.com/1998-03-07/news/9803070058_1_insurance-fraud-dina-abdelhaq-sids

7)      Middle-aged Mississippi woman in good neighborhood shot to death husband and her mother while they slept.   http://articles.chicagotribune.com/2002-04-07/business/0204070020_1_neighbors-home-murder

8)      A  natural gas explosion in a house in Indiana when its occupants were out of town killed the couple next door and blew up five houses. tinyurl.com/cztdo5u

9)      A Rochester NY man strangled his fiancée when they quarreled the day before her bridal shower.   http://www.highbeam.com/doc/1G1-157155335.html

10)   A 7 year old boy drowned in backyard  swimming pool at a day care facility.  The operator was off  the premises. http://articles.philly.com/2013-02-15/news/37102173_1_day-care-center-day-care-staff-members-day-care-office

11)   A Philadelphia grandmother was fatally stabbed and her 10-month old grand-daughter smothered by a 26 year old computer whiz who lived in same apt building.  http://articles.philly.com/2012-11-01/news/34838466_1_ransom-note-indian-expats-ransom-payment

12) A 28 year old man in CA was convicted in 2011 of having bludgeoned his parents to death with a bat in 2008 http://preview.tinyurl.com/bfnxy54

13) 92 year old woman in PA stabbed to death in 2011 by neighbor who had probably burgled her house several times before. http://preview.tinyurl.com/b6p4f3r 

14) added October 10 2014.  A 14 year old boy was left to baby-sit his 6-year sister while father went out with his lady friend,  came home much later  to find both unconscious from CO poisoning.  Little girl died in hospital, brother recovering.

The common threads  are gambling addiction and its  peri-gambler victims.  Gambling addiction and  peri-gambler victims are a predictable outcome, not a side effect,  of governmental policy described with much restraint by one notable critic as “failed.”  He might say “ rapacious and uncaring.”  This policy makes gambling legal not primarily to protect people by strict regulation from something harmful,  but to get government a piece of the action,  then grow the action “to support education.”  Thousands of   lives are hurt and dozens lost in this country each year under this policy. The gambling establishment and  compliant governments get away with it by misrepresenting the econometric costs and benefits and at the same time hiding the toll of unquantifiable human misery that is the direct consequence of this policy.

A frequent gambit by supporters of  government-sanctioned gambling is to say that revenue government gets from its sponsorship or “regulation” of gambling is a “sin tax,”  like  revenue from tax on tobacco or on liquor.   Some persons less moralistic, if more arrogant,  call it a “stupidity tax” or a “tax on ignorance.”  Two huge errors in this argument:

First, taxes on tobacco and alcohol are pigovian, meant as much to dampen consumption as to provide revenue.  The government actually spends money to discourage smoking.  It does not advertise that adults should drink more alcohol to get a shot at a better life and “fund education.”   Contrast this with the approach the NYS Lottery has taken in its nine-figure  advertising outlay of recent years.  Contrast it with Gov, Cuomo’s putting  up-front payments from three (?) new casinos in the proposed budget for 2016  before they  have been made legal.  Governments pretend legalized gambling is overall a beneficent enterprise.  They don’t want to impose tough restrictions or regulations ; those would decrease the flow or kill the goose that lays the golden eggs.

Second,  revenues to government from the sale of cigarettes and alcohol are not extracted from the bank accounts and home furnishings of  the  heavy smoker’s or the alcoholic’s family and friends.  Revenues from gambling are.  Smoking and drinking cause dreadful harm in many ways to non-smokers and non-drinkers.  An alcohol abuser can certainly make bad decisions resulting in injury, death  or  financial loss to someone else.  One cannot say, however, that the government set the stage for  the alcohol abuse, nor that government will get revenue if  an alcoholic in a fog sells his house for half its worth.  Another contrast here:   for most addicted and problem gamblers in the USA,  their loss is the direct gain of   the gambling exchange,  which passes a share to government.  The more they drop, the more the government gets.

Someone may still think of the problem gambler or pathological gambler as stupid or ignorant or sinful, deserving to pay a penalty for those defects.  No one with a heart, however, can think of the gambler’s young children or non-gambling spouse or unsuspecting   business partner  as deserving a penalty.  Yet these others are made to pay it, forward, backward and sideways.  It is paid in dollars, in anguish, and sometimes in death.  It is levied on six eight or ten persons for every problem gambler or addicted gambler.  They are forgotten, made expendable.

Who are the victims of predatory gambling?  Some observers see addicted and problem gamblers as victims themselves; others, as undeserving of pity. I consider problem gamblers victims and sufferers, but focus this essay on the peri-gambler victims.   They are always forgotten by legislative analysts.    Much more numerous than addicted and problem gamblers, they suffer more in the aggregate than the latter.

The  lurid stories above, all involving murder or negligence leading to death,  are among the most horrifying from the United States.  Click on the links it you are strong.  For each one like this, however, there are hundreds more that encompass other types of victimization related to the gambling market driven by government calls for more revenue (invariably “for education”) with “no new taxes.”  For example:

Not everyone who kills himself over gambling met the definition of       current  problem  gambler the day before the act. In the story here, from India in 2009, a 24 year old neophyte gambler  lost the meager savings he had set aside for his wife’s next childbirth http://preview.tinyurl.com/d92wfnt .  A near- suicide is  http://readingeagle.com/article.aspx?id=230336.  The gambler used his mother’s credit card to lose $10,000 on-line.  He was 9.

 

In short, government policy to make legalized gambling an ever-growing fount of revenues to itself exploits not only the gamblers, for whom not everyone has much sympathy, but also, in far greater numbers, many people around them for whom everyone must feel compassion.  Sympathy won’t come,  however, until their existence is acknowledged.  The gambling establishment and its supporters in government want to keep it a secret. Groups  like CAGNY and Stop Predatory Gambling have the challenge to shout about it.

“Mercy has a human heart and Pity a human face”   William  Blake, Songs of Innocence

The opinions in this essay are those of the writer, Stephen Q. Shafer MD MPH and do not necessarily reflect those of other members of CAGNY.  This post may be reproduced in part or in its entirety.  Please acknowledge the source using the permalink.

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“Treatment” and “Prevention” of Problem Gambling: 2 little, 2 late

4376727123_8fc3fb172dfrom flickr cc

4376727123_8fc3fb172dfrom flickr cc

photo retitled                                               “Contemplation”

Letter  to the Editor of Legislative Gazette, Albany NY,  published Feb 12 

To the Editor:                                                                             Feb 6 2013

Members of the Coalition Against Gambling in New York came to Albany on Feb 5 to express our views to legislators against amending the State Constitution to legalize “no more than seven casinos.”   We were heartened to see in the “Other Voice”  section  an article from the Syracuse Post-Standard  headed “Social cost of gambling outweighs revenue gained.”  It treats the proposed expansion of Quick Draw, but the header applies as well to the Governor’s proposal  for more casinos.  We hope it will resound in the corridors of power.

Page 8 has an article by the Gazette’s Josefa Velasquez about the efforts  of  Assemblymember Cymbrowitz to “address the potential dangers”  of  “increase[d ] gambling opportunities “ by “investment of resources”   “in programs  … effective… in reducing  … problem gambling, as well as evidence-based prevention programs that aim to reduce the risk of individuals engaging in addictive behavior.”  Mr. Cymbrowitz  is sincere in his desire to help, but we believe on the wrong track.  In Kansas, where for a population a tenth the size of New York’s the state allocates more than twice as much funding to  treatment and prevention of problem gambling,  a recent report concluded  that only 0.5 % of the estimated 24,000 pathological gamblers in the state were in a state-funded treatment program.   I note that  the 24,000 figure actually underestimates the prevalence  of  pathological and problem gambling combined.

Mr.  Cymbrowitz, in a hearing he convened 20 December 2012, stated that there are close to a million NYS residents with a gambling problem.  A witness at the hearing estimated that only 5000 individuals in NYS are in state-funded treatment currently.   5,000/1,000,000 = 0.5%.  If  treatment  in KS, with twenty times the per capita  allocation,  does not  penetrate deeper  than  it does in NY,  a responsible society cannot depend  on treatment of problem gambling , no matter how effective  it can be for individuals.  We must rely much more on an environmental strategy for primary prevention:  don’t expand gambling “opportunities.”   Our state has more than enough now. 

s/ Stephen Q. Shafer MD MPH Chairperson Coalition Against Gambling in NY

PG Tx Enrollments FY12KansasStudy Kansas report

12-20-12 Alcohol and Drugs Transcript Assembly Hearing Trasncript

 

Betting on Sports: not Victimless by a Long Shot

futbol from flickr cc4138211812_9c2f66efbd

futbol from flickr cc
4138211812_9c2f66efbd

 

Comment on a column by James Surowecki  in the New Yorker Feb 11 and 18 2013. I wrote to the magazine on Feb 9.  They have not run it. 

James Surowiecki (Feb 11 and 18) argues that governments should get a piece of the action from betting on sports, now a “crime” with no “real victims.”  In truth there are millions of  victims.   Nine million adults in the U.S. are pathological or problem gamblers.  If  10%  are primarily involved in sports betting,  that makes 900,000 such.  Around each are (say) eight family members or close associates victimized by the gambler’s behaviors.  Some have had their savings diverted; some have had their deepest needs neglected or their bodies abused.  Some have been murdered,  or had their lives torn up by the suicide of a gambling parent or spouse.  Not even counting the gamblers,  then, there are millions of victims.  It is woeful  that sophisticated commentators ignore them.

When government “regulates” gambling to take  the cut that used to go to bookies and bagmen, it is the boss of  a once-illegal exchange that still gets half its profits from hurting innocent (if sometimes co-dependent) people while  it exploits loose-cannon gamblers.  Worse:  always needing revenue, government must grow that now-“legal” exchange.  It must foster new pathological and problem gamblers to boost revenue or at least maintain it by replacing those now out of  the  life.

Proponents of Government-in-Gambling note  that tobacco and alcohol are regulated, Pigovian taxes collected.  “How is ‘regulated’ gambling different?” they ask.  This way: Most governments do not encourage smoking on the grounds it will make the government richer.  They do not urge more alcohol consumption to spare the virtuous a tax increase.   They do not advise parking by hydrants or driving 90 mph to raise more funds.

They do push big-time predatory gambling, hard.  That’s the  difference,  and it is a social injustice.

 

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CAGNY’s Message to Legislators on One Page

 

Goya: El Sueno de Razon

Goya: El Sueno de Razon

      When CAGNY members visit legislators in Albany on Feb 5, here is what we will say about the Governor’s proposal  to amend the state constitution (Article I sec 9 and allow up to seven new commercial casinos: 

     Half  the revenue of casinos and large lotteries is from pathological ( addicted) and problem gamblers.  They  seldom own what they drop.  It has usually been diverted from someone else (e.g. spouse) who has equal or better right to it (e.g. mortgage payment).  These are  “abused dollars.”  Some of the money lost by these gamblers comes from outright crime, a later recourse for many pathological gamblers beyond taking from intimates or dependents  who might not prosecute.

    Thus half the revenue government gets from gambling is passed to it from gamblers’ losses,  staked by deceitful diversion or outright thefts from someone other than the gambler.  The multiplier for “other”  is 8-fold.  For every pathological or problem gambler, 8 other people, often  children,  are deprived of something valuable, not limited to money.

    When government facilitates or sponsors gambling to balance the budget,  it exploits not only the dis-control of  some  gamblers but the miserable situation of their families and close associates.  For government to overlook  this  injury to persons —including children— around the gambler treats  them as expendable.

    Even if someone thinks gambling addicts deserve to live damaged lives or to self-end them, he or she cannot wish the same fate on the gambler’s near and once-dear.  More than dollars are abused.  Domestic violence, physical, and emotional injury are common in the circles of gambling addicts and problem gamblers.  Suicide harms, not one person, but many.

    Fear, distance, abstraction can make other humans expendable to the best of us.  The story should be different, however, when the people to be made expendable are not remote and when the people doing the expending are in our state government.  We who oppose the constitutional amendment  say “No  New Yorker is expendable.”  

                                               VOTE  NAY  ON SECOND PASSAGE

    The text of the amendment of Art I §9 that would go to referendum must be the same as S 6734.  Implementing language must be approved by the legislature, though who will draft it and when is not clear.  A vote for second passage gives no security to a legislator or to the voters at referendum on these key points, any or all of which could be changed in a later session:

  • Timetable of building the “no more than seven” casinos
  • Locations and size  Could a new casino double its gambling floorspace three years later?
  • “Home Rule” What level of social organization (e.g. village, town, county, state) will make decisions about same or different levels close by (e.g. village inside a town).  Who speaks, who votes?
  • Rate for property tax and for tax on casino income payable  to state and sub-state levels.
  • Funding for “prevention and treatment.”  

    The sleep of reason brings forth nightmares:  a worst case scenario could put five or six big casinos in or very near the Greater Metropolitan Area, leading to eighty thousand new gambling addicts  and 200,000 new problem gamblers.  Or, think of this:  Would it be socially just,  if all the town boards in a county but one voted against a casino,   to  put one in the lone holdout township? 

                                         VOTE  NAY  ON SECOND  PASSAGE