The Crying of Prop. 1, 2013

The Crying of Prop. 1

Stephen Q. Shafer, M.D., M.A. , M.P.H.

Chairperson, Coalition Against Gambling in New York

 

8561188366_eda5d758cf_mbuckets

 

 

 

 

 

Summary Social costs due to  increased  problem gambling after  “up to seven” new casinos open in New York State will almost certainly exceed revenues from the State’s taxing new casinos.  These costs are real but externalized,  thus easily hidden or denied.  Just a 10% increase in the statewide prevalence of problem gambling would almost wipe out the gains in revenue to the State treasury and create thousands more gambling addicts than “permanent good jobs.”   A  25%  increase would nearly negate the entire sum ($1.2 billion)  targeted for recovery via in-state casinos.  In their quest for revenue without increases in conventional taxes,  state officials implied by silence  that  the number of  new problem gamblers anticipated either cannot be estimated or need not be. It is a nullity, off  the board.

No public policy can be evaluated properly without considering costs. Yet that’s what happened in the legislature and on the campaign trail.  This paper gives a public health physician’s   viewpoint of  the dishonesty in marketing “Proposal 1” right into the polling booth.

Introduction  The victorious campaign to legalize casinos in New York State  played up  hoped-for benefits and  played down  likely costs.  While conceding when pressed that problem gambling is a problem, promoters never  acknowledged  the flip side to making casinos more convenient to New Yorkers.  This step, to become law on January 1,  will (not might, will) create new addicted gamblers and new problem gamblers as well as service current ones.  Costs quite possibly in the hundreds of millions of dollars per year  will extend  to society from this sector.

Neither government nor business interests have made public any consideration whatsoever of   these costs.  The deliberate silence moved me, as a physician trained in public health, to compare these costs to the much-publicized  benefits.  I focused on a narrow question:  will the inflow of casino money to the State Treasury equal or outweigh the costs of the new casinos, externalized to New York’s people?  This is only one type of benefit, only one category of costs.

Analysis   What inflow is expected?    Proposal 1 promoters  have repeatedly said that gamblers from  NY  “spend”  $ 1.2 billion / yr  at  casinos in adjoining states and Canada.  [1]   The basis for this figure is not known to me.  In 2012 patrons from NY left behind at the two Indian casinos in Connecticut $259 million. [2]   Presumably the other billion was left behind in Pennsylvania, New Jersey, and Canada.  If this amount were lost in NYS  instead of elsewhere,  taxing it at the rates in Table 1  would yield to the State treasury the following amounts:.

 

                                                       Abbreviations used in the textNYS     New York StateQSEC   Quantifiable Socio-Economic Costs

 

Table 1.  Division of  $1.2 billion  “spent”  in out-of –NYS  casinos between State Treasury and  casino  ownership if all  $1.2 billion were kept in NYS.

Tax rate     State Treasury                Owners

$ millions               $ millions

20%                   240                            960

25%                   300                            900

30%                   360                            840

35%                   420                            780

40%                   480                            720

45%                   540                            660

At  30%  (reasonable guesstimate for NYS non-tribal casinos with 70% slots 30% other), the State Treasury would gain $360 million.  This is not the only possible benefit to the state, but is the most easily measured and the most talked-about, as in  “educating our children,” “property tax relief.”

Now to costs:   the principal (but far from the only) cost of “up to seven” casinos is the creation of new addicted and problem gamblers through a “distance  effect. ”     For a brief review of the literature, see pages 2-4 of a Dec 2012 paper which looked at the hypothetical scenario of five new casinos in New York City   [3]

The entry of  new gamblers during a specified time (incidence) into a category like “addicted”  is not well  measured by the prevalence (proportion active at a given time) [4].  This is because individuals leave the active prevalence pool over time through recovery, death, imprisonment, totally disabling illness or out-migration.  As hard as it is to measure the  prevalence of problem gambling,  it is far harder to measure incidence. Thus prevalence, fraught with methodological problems,  is the usual benchmark.

To assess costs of new addicted gamblers and problem gamblers we need  head counts and  per-head figures for cost.  The cost figures cited most often are from Earl L. Grinols, Distinguished Professor of Economics at Baylor. His book shows clearly how he came to them. [5]   I call these Quantifiable Socioeconomic Costs  (abbrev. QSEC), though Grinols does not use that term.  In  2012 dollars  QSEC  are $13787 / yr  per pathological (addicted ) gambler; those per problem Gambler are $3600 /yr .  Note well:  QSEC do not include suicide, divorce,  mental anguish, family disruption.  The costs of   these calamities are un-quantifiable; no monetary values can be assigned.  Thus they are even easier to disregard than QSEC.

Regarding the head count: the number of active addicted gamblers in NYS can be estimated by applying to a rounded-off figure of 15 million adults statistics for prevalence among adults of addicted (1.14%) and of problem gamblers (2.8%).  These are not recent but are well-established from a meta-analysis. [6]   In a national sample reported in 2004 [7] the prevalence of pathological and problem gamblers combined was 3.5% .

If at baseline there are 171,000 active addicted gamblers (15 million * 1.14%) and prevalence goes  up  by 5%, NYS  has  at least 9,000 new addicts.  Table 2 shows the number of new cases for a given increment in prevalence,  and the QSEC attached.  Table 3 works the same way for problem gamblers.  Table 4 combines the QSEC  for both types, arrayed by % increase.

Table 2.  Number of  new addicted  gamblers in NYS and Quantifiable Socioeconomic Costs of new addicted gamblers, by increase in prevalence  over baseline.  e.g. 9,000 * $13,787 /yr = $ 124 million/yr

Increase                       New addicted  gamblers   QSEC of increase in $ millions/yr

5%                                             9,000                         124

10%                                         17,000                         234

15%                                         26,000                         358

20%                                         34,000                         469

25%                                         43,000                         593

30%                                         51,000                         703

Table 3.  Number of new problem gamblers in NYS and Quantifiable Socioeconomic Costs of new problem gamblers, by increase in prevalence  over baseline. e.g. 21,000 * $3,600 /yr = $ 76 million/yr

Increase                       New  problem  gamblers   QSEC of increase in $ millions/yr

5%                                           21,000                         76

10%                                         42,000                         151

15%                                         63,000                         227

20%                                         84,000                         302

25%                                       105,000                         378

30%                                       126,000                         454

Table 4.  Quantifiable Socioeconomic Costs of new addicted  gamblers + new problem gamblers by increase in prevalence  over baseline.  e.g. for 5% increase in both,  total is $124 + $76 = $200 million/year.

Increase                       QSEC of increase, in $ millions/yr

5%                                           200

10%                                         385

15%                                         585

20%                                         771

25%                                         971

30%                                       1157

From Table 4 we see that if prevalence of addictive gambling and of problem gambling both  rise by only 10%, the QSEC attached to that rise are more than the $360 million the State would recover by taxing 1.2 billion at 30%.

We must consider, though, that persons who became gamblers because of the convenient casinos (some addicted,  some  problem gamblers, most in neither type) will also lose money there  that can be taxed.  How much might that add to State treasury  revenue?  Would that be enough to “cover” the QSEC springing from new casinos?  To answer that we need an estimate for  losses by type of gambler.

Grinols and Omorov in a 1996 paper [7]  estimated annual losses to casinos by persons living within 35 miles of  Las Vegas or Atlantic City  at $14,200/year (1992 dollars)  per one hundred  persons.    This includes people who do not go to a casino from one year to the next.  Converting to 2012 dollars gives   $ 23, 400 per 100 persons.  This figure was used in my Dec 2012 paper to reckon that losses to casinos by the 8 million residents of Greater New York came to $1.87 billion/year. I assumed that all losses were to casinos outside the reach of NYS taxation.   If  $23, 400 were applied to the entire NYS population it would mean that losses to casinos come to  $3.5 billion /year,  three times higher that of the commonly-cited  estimate of 1.2 billion /year.  Assuming that  $ 1.2 billion for the whole state is correct, a likely explanation is that since no resident of Greater NY  lives within 35 miles of a full-service casino,   the $23,400/100 persons/yr  figure was high; the longer distance lowers willingness to travel then spend.

$1.2 billion lost at out of state casinos by residents of NYS means that the average loss per year is $1.2 billion/15 million, or $8000/100 persons/year.  I took liberties with the famous table in Grinols and Omorow [8] , keeping the ratios of annual loss per gambler between types very much like those in the original but lowering the values so that the annual loss / 100 persons comes out to $8000, not $23,400.  The results in dollars of 1992 are in Table 5.

Table 5.  Hypothetical structure of casino revenues in 1992 dollars, by type of gambler   This table is formatted like the one in Grinols and Omorov [ref 8]  but the input values  in columns 1 and 3 have been altered, producing figures in column 4 very  different from those in the original.  Percentages in column 5 are similar to those in the original.

Prevalence in population

Type of gambler

Annual loss per gambler

Annual loss per 100 adults

Cumulative % of casino gross

1.14%

Addicted

1480

1687

35

2.8%

Problem

250

700

49

6.06%

Heavy bettor

118

715

64

50%

Light bettor

35

1750

100

40%

Non-bettor

0

0

100

100%

All types

 

4852

 

 

Converting  $4852 dollars of 1992 to $8006 dollars of 2012 gives the amount lost last year out of state /100 persons in population. For a population of 15 million the annual out of state loss is reckoned at $1.2 billion.  If new casinos caused no rise in prevalence of problem gambling AND stopped 100% of leakage,  this table could also represent the gamblers’ losses ( ~ = “gaming revenue”)  at casinos in New York after new casinos are at full steam.  Of this $1.2 billion the State Treasury gets  $360 million at 30% tax rate.

Leaving the baseline of  Table 5, consider the changes in  losses at casinos by gamblers after new casinos open in state,  assuming a 10% rise in prevalences of gambling addiction and problem gambling.  In Table 6,  note  new figures in column 1, same figures in column 3.  The annual loss to casinos rises, as does the revenue to the state treasury.

Table 6.  Hypothetical structure of casino revenues in 1992 dollars, by type of gambler, reflecting changes in relative frequencies of type in population due to new casinos    Assumption: compared to baseline there is a 10 % increase in prevalence of all types of gambler and a decrease in proportion of non-bettors from 40% at baseline to 34%.

Prevalence in population

Type of gambler

Annual loss per gambler

Annual loss per 100 adults

Cumulative % of casino gross

1.25%

Addicted

1480

1850

35

3.08%

Problem

250

770

49

6.7%

Heavy bettor

118

791

64

55%

Light bettor

35

1925

100

34%

Non-bettor

0

0

100

100%

All types

 

5336

 

 

 

Converting $5336 to dollars of 2012 gives $8804 / 100 adults/yr .  This, multiplied by 15 million adults,    yields $1.32 billion as the amount that would be lost by gamblers from New York at casinos in  New York after new casinos are built.  In this scenario the non-tribal New York casinos realize from the losses of  new gamblers an extra $120 million  ( = $1.32B – $1.2B) of which the State gets by taxation 30 % , or $ 36 million.

If  the prevalences of addicted gambling and problem gambling rise by 25% with new casinos, not just by 10%, the annual loss to casinos rises in proportion.  See Table 7.

Table 7.  Hypothetical structure of casino revenues in 1992 dollars, by type of gambler, reflecting changes in relative frequencies of type in population due to new casinos   Assumption: compared to baseline there is a 25% increase in prevalence of  all types of gambler  and a decrease in proportion of non-bettors from 40% at baseline to 29%.

Prevalence in population

Type of gambler

Annual loss per gambler

Annual loss per 100 adults

Cumulative % of casino gross

1.43%

Addicted

1480

2116

36

3.5%

Problem

250

875

51

7.8%

Heavy bettor

118

920

64

62.5%

Light bettor

35

2188

100

25%

Non-bettor

0

0

100

100%

All types

 

6099

 

Converting $6099 to dollars of 2012 gives $10063 / 100 adults/yr. This figure, multiplied by  15 million adults,  yields $1.51 billion as the amount that would be lost at New York casinos by New Yorkers.  Casinos take  in $310 million above baseline (=$1.51B – $1.2B) from the new gamblers, of  which  the State Treasury collects 30%  or $93 million above the baseline intake of $360 million.

Discussion The QSEC to New York society associated with generating 17,000 new addicted gamblers and 42,000 new problem gamblers (10% increase in prevalence of both) are  $385 million, very nearly as much as the revenue to the state ($396 M) from taxing the losses by established and new gamblers at its new casinos.    If the State attended to costs, not just to revenues,  it would see this barely breaks even. The QSEC to New York society associated with generating 43,000 new addicted gamblers and 105,000 new problem gamblers (25% increase in prevalence of both)  are  $971 million, more than twice as much  as much as the revenue to the state ($450 million) from taxing the losses by established and new gamblers at its new casinos. If the State paid attention to costs,  it would see a fiasco.  This $971 million quantifiable cost almost equals the total of  $1.2 billion supposedly at stake.

The advertisements run by NY JOBS NOW implied that every dollar of the 1.2 billion that is lost to a casino in New York rather than across a border will benefit New York.    One ostensible benefit,  outweighed by QSEC,  is tax revenue to be disbursed  back to the populace as “aid to education” or  “property tax relief.”  Another,  not touted so loudly,  might be  to keep the rest of the money within the state where  it will go to overhead and profits of businesses with structures in NYS..  Much of that overhead will, we presume, pass to persons now living in the state as wages and as property tax paid to municipalities (if no abatements).  This would be a benefit to the state.  In fairness and transparency, however,  it  must still be weighed against QSEC, which in the 25% increase scenario may equal or exceed it.   That leaves profit.  Is this a benefit to NYS?    The casino buildings  will be in our state.  Where will the profit-takers be?

It  is too early to know if any of the owners will be NY companies.  Front-running candidates as of  Nov 18  include  Foxwoods, a Connecticut company;  Claremont Partners, “ a partnership of  mostly offshore investors based in the  Isle of Man;”  EPR Properties, based in Kansas City;  Empire Resorts, based in Kuala Lumpur; Concord Associates, New York; Muss Development, New York City; and Jeff  Gural, who lives in New York City.  RH Land Development has its New York State location in Rochester.  Traditions at the Glen Resort has one location, in Johnson City.    Vista Hospitality has its American offices in Binghamton. Caesar’s Entertainment, Las Vegas, is reported to be interested after having been dismissed in Massachusetts.  Rumor says the Stockbridge-Munsee Tribe of Wisconsin is interested. A list like this will change week-to-week.

Conclusion It is sad indeed that voters were sold the amendment by being shown none of the debits, only the income.  In place of a cost-benefit analysis,  the electorate got the travesty of a benefit-only analysis.  New York State’s leaders and legislative followers sought  revenue at any cost, as long as the latter was out of sight.

Most of the debit side of the ledger springs from the formation of new gambling addicts and problem gamblers, creating a public health problem never recognized as such.  In a progressive state such as New York has been and should be, this would have been addressed by Health in All Policy.  HiAP is a fairly new concept, not the law of the land but gaining ground in North America (e.g. California and Ontario).  It came out of a 1998 resolution by the World Health Organization .  Basically, it requires that large – scale governmental policy have a health impact assessment before adoption.  New York State deliberately bypassed the responsibility to offer voters a traditional cost-benefit analysis of policy.  Just as deliberately the state passed up the challenge of  applying innovative HiAP.

It is impossible to predict exactly how many new problem gamblers will develop in the “up to seven casinos” future.  It is also impossible  that there will not be more of  them as our state gets more convenient casinos. Legislators hinted at the threat by putting some funding for treatment and prevention into the Upstate Gaming and Economic Development Act passed last June.  Then they withdrew attention.  No one in Albany made any estimate of the scope of the problem, thus zeroing it away.  If it has no size, it’s nothing.

200px-A-dressing_the_White_Queen

“Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”     Lewis Carroll,   Through the Looking Glass

 

 

Afterword on prevalence Even if the prevalences of  addiction  and  problem gambling could be shown by a crystal ball to be absolutely stable over (say) four years following the introduction  of casinos, that first phase has created  new disordered gamblers.   Every year, some gambling addicts and problem gamblers leave the “active prevalence” pool  through  recovery, death,  imprisonment, disabling illness or out-migration. Suppose this rate is truly 10% a year;  after  four years,  prevalence of active addiction  that began at (say)  1.14% should be down to 0.75%.  If  it is not, “replacement addicts” have entered the pool,   Some are in-migrants, some relapses, many newly-minted.

 

Studies that purport to find no statistically significant increase in the prevalence of (say) problem gambling over time after exposure rises may also be underpowered.  A study to detect with reasonable statistical power a near-doubling of  prevalence from 1.14% to a prevalence of 2.17% would require 2000 interviews at each point.  This is impossibly expensive for a public agency to do.  A study to detect a 25% increase from 0.0114 to 0.0142 would require 20,000 interviews at each point.  The increase seems less than minuscule, yet in a population of 15 million it represents 43,000 new addicts.  No wonder the gambling promoters have no fear of someone’s proving an increase in the prevalence of addiction and thus no fear of being held responsible for any ominous trends.

References

  1. From the Home Page of  NY Jobs Now http://www.nyjobsnow.com/index.php#benefits

NEW JOBS. MONEY FOR SCHOOLS. LOWER PROPERTY TAXES.

New Yorkers currently spend more than $1.2 billion a year at destination casinos in neighboring states. Allowing casinos in New York will keep a lot of that money right here in New York where it belongs — helping to generate economic activity, fund our schools, and provide tax relief.

On the ballot this November, Proposal 1 will ask voters to approve the casino plan passed by Governor Andrew Cuomo and the State Legislature this spring.

2. Center for  Policy Analysis, University of Massachusetts at Dartmouth: New England Casino    Gaming Update 2013.  Economic Development series no. 74

3. Shafer, Stephen Q. New Commercial Casinos Will Mean Thousands of New Gambling Addicts  Dec. 2012  http://cagnyinf.org/wp/new-casinos-equal-1000s-of-gambling-addicts/

4. Shafer, Stephen Q.  Measure Something: Prevalence of Pathological and of Problem Gamblers. http://cagnyinf.org/wp/9_nov_2013_measure_prevalence/

5. Earl L. Grinols. Gambling in America Cambridge University Press 2004 pp. 171-174.

6. Shaffer HJ, Hall MN, Vander Bilt J. Estimated Disordered Gambling Behavior in the United States and Canada Report to National Gambling Impact Study Final Report 1999  https://divisiononaddictions.org/html/publications/meta.pdf

7.  Welte JW et al. The Relationship of Ecological and Geographic Factors to Gambling Behavior.  J. Gambling Studies ( 2004) 20: 405-442

8. Grinols EL and  Omorov  JD.  Development or Dreamfield Delusions? Assessing Casino Gambling’s Costs and Benefits.  J. Law and Commerce 1996-97, vol 16 p 59

The drawing is captured from Wikipedia.  Original by John Tenniel for  Through the Looking Glass and What Alice Found There, by Lewis Carroll

photograph of buckets is by Kevin Krebs from clickr.com photos 8561188366_eda5d758cf_

The author retired in 2010 as Clinical Professor of Neurology at Harlem Hospital Center, Columbia University. He has an M.P.H. in Epidemiology and an M.A. in Political Science gained while (1976-78) a Robert Wood Johnson Clinical Scholar in the Department of Medicine,  Columbia College of Physicians and Surgeons.  He is Chairperson of Coalition Against Gambling in New York,  a non-profit  registered in Buffalo.

Permission is hereby given to reproduce this post in whole or part as long as the permalink above is cited.

NYS Council of Churches: No on Prop. 1

Statement of the  Rev. Dr. Paula Gravelle, Executive Director, New York State Council of Churches    Oct 28, 2013

The New York State Council of Churches has long opposed casino gambling, and we stand in opposition to Proposal 1.  The stated purposes of this amendment are to promote job growth, increase funding to schools, and permit local governments to lower property taxes.  However, in places where casino gambling has been introduced, any actual gains have come at the high cost of addiction, family disintegration, and deepening poverty.  There are no quick fixes to the challenges of struggling cities and towns, and we call on our elected officials instead to focus on the kind of investment and hard work that will build sound, long-term economic health and self-sufficiency for New York’s communities.

transmitted by e-mail from the Rev. Dr. Gravelle to Coalition Against Gambling in New York.   The address of NYSCOC is 1880 Central Avenue Albany, NY, 12205                     518 436 9319                             nyscoc@aol.com

New York State is Addicted

Despair

New York State is addicted to revenues from gambling.  This is not just a figure of speech. Below are hallmarks obvious in the state’s behavior over the 47 years since its Constitution was amended to allow a lottery with periodic drawings and paper tickets.  In November another amendment, to permit “up to seven” casinos, will be on the ballot statewide. Intervention is needed.

  • craving
  • upping the dose
  • seeking short-term rewards e.g. “aid to education” without an uptick in personal or business tax rates.
  • discounting adverse effects  Problem gambling in New York drains from society  more than 3.5 billion dollars a year in quantifiable socio-economic costs like judicial administration, lowered productivity, and abused dollars.  This amount excludes suicide, proceeds of crime and psychosocial harm to the dozen or so individuals who are betrayed by every problem gambler in “the chase.”  No state official ever acknowledges the size of this problem.  The econometrics are in Gambling in America (Cambridge University Press, 2004) by Earl L. Grinols, Distinguished Professor of Economics at Baylor.
  • denying long term liabilities (e.g. spectre of fiscal flop with saturation, need for bailout à la NJ or DE, future inroads by internet gambling)
  • scoffing at the diagnosis “There’s nothing wrong with me!”
  • dismissing prospects of recovery  
  • cheating (e.g. allowing as if they are video lottery terminals (VLTs) hybrid electronic table games with outcomes not under the control of Lottery’s central processing unit.  See New York Daily News May 5 and 12, 2013. Another more recent example: rewriting the text of the amendment   to be on November ballot to make it an advertisement for a yes vote and boosting the proposal from the sixth slot where it belongs by date of passage into the “number one” slot.
  • deceiving e.g. pretending  increased regional cash throughput is “economic development”  Another example: saying that government regulation of commercial casinos will prevent the creation and exploitation of problem gamblers. In fact, government wants tough regulation to protect itself from being cheated, not to end problem gambling.   Half of casino revenues flow from the 4% of adults who are problem gamblers.  The casino owners don’t want to stop mining this mother lode, nor would tax-collectors like a 50% drop in revenues to the state. Even the most credulous person will realize that “regulation” in this situation is  programmed to fall far short of stated intentions.
  • scheming and manipulating  item, conceding money due to the state, localities and private citizens to deflect Indian opposition to potential competitors; item, promising a piece of commercial casino revenues not to “education” nor to “local property tax relief” but to horse-breeding and tracks if legalized casinos “cannibalize” racino gambling
  • conniving “If a law is in your way, get rid of it.”
  • dealing in a desperate and dishonorable way to keep “the connection.”  The Upstate NY Gaming Economic Development Act of 2013 authorized additional video gaming establishments under Lottery if the casino amendment does not pass.  A spokesperson for the Governor (see Wall Street Journal June 15) offered ball-park figures: three to four “upstate” facilities with up to 5000 machines each.  This would more than double the state’s current battery.  The same bill enacted, regardless of the amendment’s outcome, additional VLT facilities “downstate.” Curious, for a bill denoted “Upstate.”

New York State is not addicted in the sense that its whole government is preoccupied each day with raising revenue from gambling. Nor is a large proportion of total revenue to the state from that source.  It’s less than 3%. That the state is a high-functioning addict still able to multi-task does not excuse its being addicted nor give assurance that its dependence will not get worse.

New York is not alone.  Many states and Canadian provinces are addicted too.  All show typical denial. Nowhere but in NY, however, do voters statewide have the chance in 2013 to call the addiction just that and say “Let’s start to ‘Recover New York.’”

Most people, even if they have never been in one, know what an intervention is, how it can launch recovery before catastrophe has struck.   New York needs an intervention now. Rejecting the proposed amendment at the General Election is a good start. Sad to say that’s all it can be.  The intervenors have no leverage here. The addict has a big stash locked in the garage and no intention of handing it over or entering treatment.

I personally regret NYS has the “casino referendum” because opponents may be outspent >1000 to 1 as is happening in Massachusetts and the public bamboozled.  Now that the Governor and his legislature have brought us the referendum, though, we can and must use it to confront our government, challenge it to lead recovery from gambling addiction the way it leads on recovery from natural disaster,

Photo image “Despair” from flickr creative commons 3503412461_815c19b748

Opinions in this piece are those of the writer, Stephen Shafer,  and do not necessarily reflect the views of any or all other members of CAGNY.  Permission to reproduce in whole or part is hereby granted as long as the permalink above is cited.

Assets for Sale

Peering over the Edge Flickr CC

Peering over the Edge
Flickr CC

Governor Cuomo  spoke in his press conference on May 9, 2013 (at  minute 46:16)   about setting tax rates on the new casinos he wants to see and the competition he expects among bidders.  He continued  “I think we have an asset to sell.”

He did not say what the asset is. It must be something big casino companies want. 

Greek yogurt production capability?

Deep shale natural gas?

Apple production capability?

Olympic-quality winter sports settings?

Maple sugar production capability?

Nanotechnology infrastructure?

 None of the above.

What else could that asset be other than a population to be trawled for customers?    New York’s people are on the block.

Casinos depend for half their “gross gaming revenue” on the small minority of their customers who are pathological or problem gamblers.*  These categories make up a very small fraction (about 4%) of the adult population.  To reward owners richly,  the casinos must maintain this small sector AND  replace each person in it as he or she recovers, dies, goes to prison, gets deathly ill or moves out of range.  The asset that’s really up for grabs, the mother lode, is current and future pathological and problem gamblers

Yet this is not all that’s for sale.   Each of these gambling addicts or problem gamblers has hidden assets that can be tapped through him or her.  Those are the fiscal and emotional resources of many non-gamblers who enable the addiction while the gambler betrays their love or trust .

The casino companies don’t just buy the opportunity to capture or create compulsive gamblers,  They buy a network of pipelines through each one of those afflicted gamblers to drain six, eight or a dozen other people.   Lesieur* put the number at  seventeen.

This is the asset for sale.  What are we bid?

 Grinols, Earl L. and  J.D. Omorow.  J Law and Commerce (1996-97) 16: 49-87

Lesieur, Henry   The Chase, 1976

The above text was distributed by hand to the offices of all legislators on June 4 and read at a press conference held by CAGNY that morning in the legislative office building.  It does not necessarily represent  the opinion of all CAGNY members.  Permission is granted by the author, Stephen Q. Shafer, to reproduce in whole or in part as long as the permalink above is cited.

“Sorry, So Sorry”

quickDraw_playcard 

 

 

 

 A real-life narrative about Quick Draw

 

 

 

 

 

 

In describing certain measures the  nascent  Responsible Play Partnership proposes to police gambling by under-age persons, the RPP states  tamely “violations could result in fines, suspensions or revocation of an entity’s license.”  The verb is “could,” not even “may,”  much less “will.”   The url for the press release about the RPP is shown below. http://www.gaming.ny.gov/pdf/press_022013.pdf 

     The following true story instances  a  shocking lack of  oversight  circa 2002-2008 of the  lucrative New York State Lottery “game” Quick Draw in one small city.  It could be entitled “ ‘Regulation’  In Action;”   alternatively,  “Regulation  Inaction.”  Considering that legislation is pending as of March 2013 to relax rules about Quick Draw,  more stories like this – if not quite as infamous – may be expected unless regulatory policy can get out of the conditional mood.

 

Summary: a Quick Draw addict with unfettered access to his stepdaughter’s earned fortune gambled away a large part of it “playing” at a favorite bar.  The local  newspaper  investigated how the bar’s owner  could have permitted this abuse of trust to run  for years. The owner then  surrendered the QD license. This ended official enquiry.   Three years later he told the Lottery Licensing authorities that the newspaper had maligned him for political purposes.  The license was restored without investigation.

 

      From mid-1998 well into 2002 the Speak Easy Bar at 557 Pearl St. Watertown NY had an habitué who played Quick Draw there  over and over and over – and over.  A real estate agent, he was locally famous as the stepfather of a high-paid supermodel who had grown up in Watertown.  Not everyone in town, however,  knew he had induced her in 1998 to have him replace the outside financial manager she had recently taken on.  

     In 2002, after four years of near-daily multi-hour “play” the Quick Draw aficionado started to bounce checks.  According to the local  newspaper, instead of warning him to stop playing or (within their rights) prosecuting him, the owners of the Speak Easy Bar and of other Quick Draw locales in town borrowed money from their friends to let him keep “playing”  until he could cover the bad checks. They of course were profiting from his losses.  In fact the owner of the Speak Easy had received a “Top Agent Award”  from Lottery in 2001.

     In January 2003 the Quick Draw addict told his stepdaughter that he had been using her money to “play” and had lost a lot of it.   He was prosecuted for writing bad checks.  When he pled guilty to that charge and others in October 2004, his stepdaughter’s  losses 1998-2002 were estimated in documents submitted to the court at 7 million dollars, nearly all of her assets.  In early 2005 the  stepfather was sentenced to prison. After the newspaper ran a story on the bar-owner’s role in enabling the stepfather’s addiction and consequent abuse of entrusted funds, the bar owner “opted to surrender” his Quick Draw license as of March 2005.  This ended  investigation by Lottery. 

     In May 2005, the model brought suit against her stepfather and the bar owner.  After more than a year, the latter was removed as a party.  Later, he changed the name of the bar  and applied to get the Quick Draw license back.

     Writing in  2007  to the Licensing Director of the NY Lottery, the owner of the Speak Easy Bar said that all published charges of his enabling the  gambler’s addiction after bad checks began were false.   His letter, published in the Watertown Daily Times of May 18 stated  “I cut him off  [from Quick Draw at the Speak Easy].”  He did add a sort of apology (quoted below) which implies in the passive voice that someone had failed in a duty to “cut off service.”   This contradicts his assertion that he had refused to allow the habitué to continue Quick Draw at his establishment.

 “Clearly there is a lot to be learned from such an incident, including the need to impose restraint on customers in the same way we would cut off service of alcohol to the obviously compulsive drinker.  There is also a need for those who sell tickets not to get caught up in playing such games.  I understand that. “ 

After no investigation Quick Draw was re-installed at 557 Pearl Street  in early May 2008.  Just ask in town for “The Mayor’s Bar.”

Notes: For a description of keno (the generic name of  Quick Draw) go to http://preview.tinyurl.com/awf3yvb

The opinions in this post are those of the writer, Stephen Q. Shafer MD MPH, and are not necessariy shared by any or all other members of CAGNY.  Permission is given here to quote from this piece at any length as long as the source is made clear using the permalink address above. 

 

“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

 

New Commercial Casinos Will Mean Thousands of New Gambling Addicts

Adverse Impact of New In-state Casinos on Prevalence of Pathological and Problem Gamblers in New York State

by
Stephen Q. Shafer, M.D., M.A., M.P.H.

Summary: Up to seven new commercial casinos would be allowed by a proposed amendment to the State Constitution, risking the creation of eighty thousand new gambling addicts and two hundred thousand new problem gamblers in New York State. The quantifiable costs related just to these new out-of-control gamblers would far outweigh the tax revenues New York State would see from “recapturing” gamblers who  had been crossing state lines and also taxing new in-state casinos on their take from new gamblers. The number of pathological (addicted) gamblers and problem gamblers created would exceed the number of new hires at the casinos by a factor of ten or more.

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