Hidden social costs of predatory gambling

 

Under the rug

Under the rug

Statement of Stephen Q, Shafer MD MPH to the Gaming Facility Location Board of the New York State Gaming Commission at the hearing in Poughkeepsie on Sept 23, 2014

My name is Stephen Shafer. A retired physician who now lives in Saugerties, I am Chairperson of Coalition Against Gambling in New York. I was born and brought up in Dutchess County, where my daughter and her family now reside.

Hudson Valley Casino and Resort has presented an analysis of health impacts as incomplete as an analysis of vehicle traffic limited to trucks. The report finds regional health care facilities ready for a slight increase in physical maladies of visitors and perhaps a slightly larger population. The impact of predatory gambling on society, however, goes far beyond in-casino heart attacks, The report ignores socio-economic impacts of pathological and problem gambling such as lowered productivity at work, administration of the justice system, “abused dollars” and social services. Outside those quantifiable costs are other costs too abstract to have a dollar value. Most are related  to problem and pathological gamblers, who yield about half the revenue of the average casino. These costs include family breakup, psychological hurt, and suicide. Casino promoters are not obliged to tell you about what they call “emotional” costs when they talk money but they should tell you that predatory gambling tolls society in estimatable dollars much more than the trifle Hudson Valley Casino concedes.

The application is mute on how many new problem gamblers and addicted gamblers a casino in Newburgh might generate, It gives not even an order of magnitude figure for the annual cost to society associated with each new problem or pathological gambler.  The only costs acknowledged due to gambling are for treatment and prevention. It is assumed that all foreseeable increases in these costs due to the casino would be covered by present Office of Alcohol and Substance Abuse Services programs plus an annual 1.5 million dollars to be collected by the state for treatment and prevention from 3000 gambling positions @$500/yr. The report writer must think this money would go back to Orange County dollar for dollar. Not so; it would be divvied up across the state.

The applicant is wrong to pretend that 1.5 million dollars would begin to cover the socio-economic costs attendant on a new casino in Newburgh.  Here is one estimate of the quantifiable socio-economic costs, neither best-case nor worst-case:

Within a fifty mile radius of the proposed site live at least 2.5 million adults. At least 1.14% (28,500) of them are pathological gamblers now [ Shaffer et al meta-analysis ref 1 ]. If the allure of a Newburgh casino were to notch up the 1.14% by just 15%, that’s 4275 new pathological gamblers. If the quantifiable socioeconomic cost per year of one pathological gambler is 12,790 dollars ( Grinols ref 2 ) the total cost for new pathological gamblers only (not counting problem gamblers) would be $54.7 million/year.

My attack on this proposal does not mean that I think there’s a proposal in Region 1 or anywhere in the state that has such a better analysis of societal health costs and benefits that it merits a license instead of Hudson Valley Casino.   A cost-benefit analysis that gave due regard to societal health would find that none of the sixteen proposals passes. The Upstate Gaming Act authorized up to four casinos in “upstate;” it did not mandate them. No proposed casino deserves a license.  Thank you.

The opinions expressed  are the speaker’s own and do not necessarily reflect those of any or all members of Coalition Against Gambling in New York .  Permission is granted to reproduce text or image in whole or part as long as the permalink above is cited.

Robbing Peter to pay Paul

St Paul's  from flickr 5172661797_d7003e47a8_m

St Paul’s             flickr 5172661797_d7003e47a8_m

5639243328_ce8f602a7b_mStPeter's

 

 

 

 

St Peter’s ,  photo from Flickr

 

     Some cynic wrote “Whoever robs Peter to pay Paul can always count on Paul’s support.”  Too many people, though they might  hesitate to call gambling robbery, are comfortable with  government’s taking gambling-derived revenues from Peter (the gambler)  and converting them into what looks like a fiscal benefit  to Paul.  Paul here is the citizen whose tax rates were not perceptibly increased when government got revenue another way, from its share of Peter’s losses at legalized gambling.   Paul is expected to be grateful for government’s easing up on him thanks to  Peter’s losses.  To feel that way in good conscience,  though,  he has to think it’s really not “robbery,”  merely  “parting a fool from his money.”

     In NY we are most all Pauls, thanking government for fending off tax rate increases by reaping Lottery money.  There are two things wrong with this state of affairs that should make us change it, hard as that would be.  First, about half the revenue to government from gambling it sanctions is from the losses of addicted and problem gamblers.  To keep “playing,” these people almost always have to take money from others who trust them. Whether predatory gambling literally robs the gambler himself or herself can be disputed.  (See discussion below the “read more”  break.)  That it robs others via the gambler cannot be disputed.  It robs them not only of savings accounts, vehicles, retirement funds, lunch money,  furniture etc., but of reputation, affection and self-esteem.  These others number,  for each affected gambler, as many as 10 to 17 [Politzer et al, 1992 citing Lesieur 1977].

      Then there is robbery going on to keep Paul’s tax rate from rising. Paul can still be comfortable with that, if the identity of the victims is  abstract enough.  He ought also to realize, however, that he is not really benefiting by the apparent flatness of his tax rate.  The money Peter cozened  from his trusting family and associates (referred to as “abused dollars”) are only a piece of the hidden quantifiable socioeconomic costs of gambling.   Counting in all those hidden costs doubles what it costs society to  raise a dollar by tax-on-casino instead of by  stepping up the rate of a conventional distortionary tax like sales tax or income tax. [Earl Grinols (2004), Gambling in America  pp 180-181]

     If Paul feels no compunction about seeming to get a break on his taxes due to revenue  to government from gambling,  still insists  it’s a free lunch,  it’s not.  He gave at the office without knowing it.  Some of his tax money went to criminal justice administration or social services triggered by events in  the gambling exchange.  He is also part of an economy hurt by lost productivity and lost creativity due to gambling.  This is  a touch of rot. Continue reading

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