Legislators: Vote NO on legalizing internet poker

busted flush

Coalition Against Gambling in New York, the New York State Council of Churches and the national organization Stop Predatory Gambling  say to New York State legislators “Vote NO” on S5302 and “NO”  on A 9049A  .

The two bills to legalize certain internet-based poker games (Omaha Hold ’em and Texas Hold ‘em)  look the same.  Both use the same deceptive role-of-skill argument to say the two games are not gambling, thus evading the prohibition against gambling in the State Constitution.

A thought experiment: five robots are programmed at exactly the same very high skill level to play Texas Hold ‘em.  Each has ample cash.  They are gambling.  Pure chance will rule.  In the first hand, one bot will take all.   After  thousands  of  hands,  however, each will still have  about as much as the others.  This is in  game theory a “fair game.”

Now downgrade the skill levels of four ‘bots so that one scarcely knows the relative values of different hands, while the other three are each in its own stratum of skill between beginner and tournament champion.  After many hands the bottom ‘bot will have been cleaned  out.  After  hundreds  of hands,  the supreme robot will have pocketed much more than the others.  After  thousands  it will have cleaned them out,  too.

In the second scenario disparities in skill skewed the distribution of winnings,  but in both the robots are gambling,   playing the same game by the same rules as in the first scenario.

The only way to consistently make money in poker is to play with people you outclass who don’t know how much better you are.  Gambling in “games” whose outcomes are not  (like slot machines or roulette)  due to pure chance sets the stage for money to flow to  the more skilled from  the less skilled.  This is the stage for hustle and fleecing.

Besides the prevarication that i-poker is not gambling,  the twin bills share a set of supposed safeguards that look good on paper.  Nothing is said about stringency or enforcement.

If internet poker is not gambling, why would licenses be granted only to racinos or class III casinos?

Could the  paradoxical restriction be to avoid opposition to the bill from the bricks and mortar gambling sector?

S5302  and A9049A  are pushed by companies wanting  to make money from New Yorkers  and  to sustain the  sharks who target New York i-poker players.  The  two bills are to sell high-cost hustling licenses that will hurt  New Yorkers.

Permission to reproduce the above in whole or in part is hereby given by the author.  Please cite the permalink above. Illustration by the author.

Generally Recognized as Gambling: Daily Fantasy Sports

Testimony Before the Hearing on Daily Fantasy Sports held by Committees of the New York State Legislature,  8 December 2015

GamblinglosspictureMy name is Stephen Shafer. I chair Coalition Against Gambling in New York, an all-volunteer organization registered in Buffalo since 2007. Our members have different philosophies about gambling. The mainstream holds that not all gambling is bad for society or the individual. A March Madness pool where 100% of entry fees are paid out to winners, a game of cards among true friends, a bet on whether it was Yogi or Casey who made a certain remark – these actions don’t bother us. What does, and deeply, is predatory gambling – gambling in which some party profits predictably over time by preying on others. That party can be “the house” or “sharks” or both.

I think Attorney General Eric Schneiderman  is entirely right that Daily Fantasy Sports of the DraftKings and FanDuel type is gambling under New York State law; payback depends on a future contingent event that the person placing the stake cannot control. That person controls the selection of his fantasy team, but not the actual performances of the component athletes from which the outcome of the contest derives. A horseplayer uses skill to decide which horses to pick at for the trifecta, but where the horses place that day is not in her control. No one denies that is gambling.

Assuming DFS is gambling, it is certainly illegal. The State Constitution bans all gambling in New York State except (by specific amendments allowing regulated parimutuel, charitable gambling, Lottery and (as of 2013) up to seven non-Indian casinos in the future. There is no exception for any kind of betting on sports, either live action or fixed odds. There is no exception for internet gambling.

The business model of i-poker and online FS is similar to that of a casino or a state lottery:

  • Recruit people through their hopes of payoffs far greater than investments.
  • Keep their loyalty with frequent small payouts and tidings of rich payoffs to others.
  • Replace them as they burn out, go broke or jump ship.

Result:  some, far from all, of the internet  “players” become problem gamblers and addicted gamblers. They damage, even wreck, not only their own lives but those of all around them, the hidden victims of predatory gambling – spouses, children, parents, in-laws, siblings, employers, employees, clients, neighbors. With  “land-based” casinos and state lotteries, half the revenue (sometimes more than half) comes from problem and addicted gamblers, maybe 12-15% of customers. Their net losses are drained from someone else by deception or bullying or crime. These gamblers need help; so, in greater measure because there are far more of them, do those they are ripping off. My organization has great respect for clinicians and peers who help problem gamblers day to day. Our focus, however, is to stop expansion of predatory gambling. That’s why we hold that DFS and all forms of so-called i-gaming are illegal and should stay that way. That’s why we support the AG’s stance.

There are differences between the model for i-poker and online DFS on the one hand and that for casinos and government-run lotteries on the other. In the first group, “players” pay real attention to the action.   Some win more consistently than others through preparation (e.g. scripts in DFS) and mental probability calculations as in i-poker. This is called skill, though it can verge on insider trading in DFS. In the second group, no decision-making is needed beyond which card to buy or slot machine to go to.

In i-poker and DFS newcomers have no idea how they will fare. They don’t know how their skills stack up to those of other players, most of whom are strangers; moreover, chance has a big role. The game board changes day to day, hour to hour. They are really less well-informed about their chances of success than slot players who know they can expect long-term about 88-93 cents back for every $ invested.

In i-poker and online DFS there are two types of predator: the house, or operator, which takes a  percentage of the pot (“the rake”) or of pooled wagers (which DFS calls “entry fees”);  and the elite stratum of well-prepared pros or near-pros who pocket most of the money laid out  by everyone. In the typical casino or state Lottery setup – a slot machine – the house is the only predator, setting its expected payout % as it sees fit under regulation.

Operations with player predators (“sharks”) need prey (“ fish”) to contribute to the betting pool or join the poker game. Heavy advertisement with upfront incentives is the way to get new fish. Fish may know a lot about their sports, but few can match the preparations of the sharks.   Some fish will fall into the cycle of chasing losses that spells problem gambling. If there are indeed 500,000 DFS participants in New York State , then it is likely there are, or will be soon, at least 20,000 problem gamblers and addicted gamblers among them.

I surmise that the distribution of players’ net losses and net wins is different from that of a casino or Lottery. In the latter, the small fraction of users who are the most “involved” – that is, invest the most time and money– provide the lion’s share of gamblers’ net losses (= house’s net win). In DFS, the biggest investors are the few sharks, who divide among themselves as their winnings nearly all the pooled bets. The investments of problem gamblers and addicted gamblers are perhaps not as over-represented in the winners’ pot as they are (> = 50%) in the gross gaming revenue of a casino or a state Lottery. In that sense the AG’s action in ordering a shutdown of DFS is consumer protection as well as an effort to prevent the cultivation of problem gamblers.

Why don’t we see many problem gamblers or members of their circles here today?  Why do most complaints voiced to the media re DFS relate to how the player was cheated or had winnings withheld, not how he was suckered into layers of debt and despair?

  • Most problem gamblers and addicted gamblers are in denial at any given moment.
  • The culture of recovery says “Don’t make the casino/game/track or whatever responsible for your gambling problem. You take responsibility.” This keeps current and recovering problem gamblers from taking a public stand against gambling.
  • The many victims of state-sponsored predatory gambling who are not gamblers themselves (collateral casualties) need not be “gambling-neutral,” but are often too ashamed or guilty to speak out against the casino or the operator.

Thus DFS and other longer-established forms of internet gambling not legal in most states, like i-poker, have great potential for harm that reaches beyond the ostensible victims, beyond the problem gamblers themselves. This is why they are illegal.

To legalize illegal activities and “regulate” them is not a solution. It gives government a conflict of interest. Tight regulation lowers profit margins and hence government’s share.

When DFS have been unequivocally recognized in NYS courts as gambling and therefore incontestably illegal, the legislature should not cure these companies by legalization and regulation. Thank you.

Post script: the operations of Fan Duel and Draft Kings in New York State have not ceased since the AG called for that to happen.  They  continue  while the case is on appeal.  A decision appears unlikely before the end of 2016.

Permission is hereby granted to reproduce any part of this piece as long as the permalink above is cited.

Daily Fantasy Sports Is Internet Gambling and Illegal

220px-TheprocessionofthetrojanhorseintroybygiovannidomenicotiepoloOn Nov 10 2015  NYS Attorney General Eric Schneiderman  announced that his had issued  a cease and desist order to  Fan Duel and Draft Kings, the two largest operator of Daily Fantasy Sports.  He gave them five days to voluntarily close, which they did not do. The November 10 order  got  much  notice in the NY papers, with an editorial in the NY Times essentially supporting it,  though talking about “strict regulation.”   The Daily News had a 2-page news article      and an  editorial saying that the AG is correct, plus  an op-ed. The news article had a sidebar by the writer of this post..  The Post had a front page article, though their editorial took issue with  the AG’s action.

The Times article on Nov 11 provoked a flood of comments, most angry at the decision.    Dissenters generally used one or more  of four basic  arguments (1) skill is involved; so, it’s not gambling  (2) the NYS lottery holds a much higher proportion  of users’  losses  than do DFS operators,  yet the AG does not try to enjoin it  (3)  no one is being hurt by participation (4) the AG wants to get money for the state by imposing regulation.

My comments on these comments:

“Skill”  certainly determines success, but relatively  few participants have that skill,  It lets them  exploit the vast majority.  As the AG memo below says, this is still gambling.  Take a few minutes to watch TV satirist John Oliver on this.  A recent lawsuit in Alabama gives a another useful perspective on gambling.

The NYS Lottery is an abomination,  but it is technically legal with enough seniority in that status that even I can’t fault the AG for not now going after every aspect of it.  The floridly illegal aspects, like hybrid table games with physical dice,  I do wish he would challenge.

Full-blown cases of gambling addiction already spawned by DFS are not numerous, are still largely hearsay to my ears. It is still early.  Yet  the exploitation of  “fish”  (less expert participants) by “sharks”  with their computer routines is no less predatory than the behavior of a casino or a state lottery.  It’s just that in DFS there are two types of predator,  not one.  Besides the operator there are the sharks. The ad blitz of the last few months is meant to recruit  millions of fish by deceptive advertising.

To the fourth argument   I would reply that  the AG has not proposed to regulate DFS.  He has said they are illegal and should stop operating in NYS.  Devising regulations to legalize is not his job.  His motivation is to protect New York’s people from being exploited by illegal gambling and to enforce existing regulations.  It is up to  the legislature to regulate.

Daily Fantasy Sports herniated through a loophole in the 2006 Unlawful Internet Gambling Enforcement Act and should be surgically reduced.  It is  a strong bridge to two activities that are at this time illegal in New York State and in most jurisdictions in this country: internet gambling not on sports, such as i-poker or internet casino “games” and betting on sports.  The bridge could reach  further,  to the gambling entrepreneurs’ promised land of legalized internet betting on sports.  DFS should not be “regulated.”  It should stay illegal.

Below is a forwarded message from the AG to the public and press,  a strong summary.

If you read this post, please send a comment to the AG to counter the pickets and telephone chains of complaint his office has been dealing with from DFS partisans.

Click here for a link to the AG’s office

Below is a press release from the AG dated November 17.  On Nov 19 Mr.  Schneiderman had an op-ed in the Daily News that complements the press release.  Either is a great source for writing a letter to the editor of a paper near to you.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
November 17, 2015

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
nyag.pressoffice@ag.ny.gov
Twitter: AGSchneiderman

A.G. SCHNEIDERMAN SEEKS PRELIMINARY INJUNCTION AGAINST FANDUEL AND DRAFTKINGS

NEW YORK—Attorney General Eric Schneiderman filed an enforcement action this morning in New York State Supreme Court in the County of New York, seeking a preliminary injunction against DraftKings and FanDuel.  The Attorney General’s suit details alleged violations of law by DraftKings and FanDuel.

The Attorney General’s memorandum of law and complaint against DraftKings can be found here and here. A copy of the memorandum of law and complaint against FanDuel can be found here and here.

The following are excerpts of the memorandum of law filed by the Office of the Attorney General:

  • The New York State Constitution has prohibited bookmaking and other forms of sports gambling since 1894. Under New York law, a wager constitutes gambling when it depends on either a (1) “future contingent event not under [the bettor’s] control or influence” or (2) “contest of chance.” So-called Daily Fantasy Sports (“DFS”) wagers fit squarely in both these definitions, though by meeting just one of the two definitions DFS would be considered gambling.  DFS is nothing more than a rebranding of sports betting. It is plainly illegal.
  • Yet FanDuel and DraftKings insist that DFS is not gambling because it involves skill. But this argument fails for two clear reasons. First, this view overlooks the explicit prohibition against wagering on future contingent events, a statutory test that requires no judgment of the relative importance of skill and chance—they are irrelevant to the question. Second, the key factor establishing a game of skill is not the presence of skill, but the absence of a material element of chance. Here, chance plays just as much of a role (if not more) than it does in games like poker and blackjack. A few good players in a poker tournament may rise to the top based on their skill; but the game is still gambling.  So is DFS.
  • FanDuel and DraftKings’ current denials about DFS constituting gambling are belied by how the sites depicted themselves in the past and how they portray themselves behind closed doors.  FanDuel’s DFS contests were designed by a veteran of the legal online betting industry in the United Kingdom, Nigel Eccles.  The company admitted to an early investor that its target market is male sports fans who “cannot gamble online legally.”
  • DraftKings depicts itself to investors in a similar fashion. For example, in one investor presentation, DraftKings pitched itself to a prospective investor by noting the “Global opportunity for online betting,” pointing to the massive revenue of the “global online poker market,” and making direct comparisons throughout the presentation to poker and sports wagering.
  • The CEO of DraftKings previously spoke openly about DraftKings as a gambling company.  He called DFS a “mash[-]up between poker and fantasy sports,” suggested that DraftKings operates in the “gambling space,” and  described its revenue model as “identical to a casino.”
  • The rejection of the gambling label by the DFS sites is particularly hard to square with the overt strategy of recruiting gamblers. For FanDuel, this has meant hiring a former top executive from Full Tilt, the online poker company, and affiliating with gambling industry stalwarts like “Vegas Insider” and BetVega, a sports betting and handicapping website. For DraftKings, this has meant aligning itself closely and negotiating sponsorships with other gambling ventures, like the World Series of Poker and the Belmont Stakes.
  • DraftKings has also embedded gambling keywords into the programming code for its website. Some of these keywords include “‘fantasy golf betting,’’ “weekly fantasy basketball betting,” ‘‘weekly fantasy hockey betting,” “weekly fantasy football betting,” “weekly fantasy college football betting,” “weekly fantasy college basketball betting,” “Fantasy College Football Betting,” “daily fantasy basketball betting,” and “Fantasy College Basketball Betting.” This increases the likelihood that search engines, like Google, will send users looking for gambling straight to the DraftKings site.
  • FanDuel’s advertisements commonly showcase testimonials from ostensibly ordinary DFS players (g.,“Zack from Fairfield, California”), and play up the ease of playing and of winning huge cash prizes…The reality is that like poker, blackjack, and horseracing, a small percentage of professional gamblers use research, software, and large bankrolls to extract a disproportionate share of DFS jackpots. With poker and DFS, professional players, known as “sharks,” profit at the expense of casual players, known as “minnows.” The numbers show that the vast majority of players are net losers, losing far more money playing on the sites than they win. DraftKings data show that 89.3% of DFS players had an overall negative return on investment across 2013 and 2014.
  • While irresponsibly denying their status as gambling companies, the DFS Sites pose precisely the same risks to New York residents that New York’s anti-gambling laws were intended to avoid. Experts in gambling addiction and other compulsive behaviors have identified DFS as a serious and growing threat to people at risk for, or already struggling with, gambling-related illnesses.
  • Jeffrey L. Derevensky, Director of the International Centre for Youth Gambling Problems and High-Risk Behavior at McGill University, notes that, among other things, false or misleading representations of the skill involved in DFS “can lead players to a preoccupation with DFS, chasing of losses, and developing symptoms and behaviors associated with a gambling disorder.”

The illustration reproduces  a painting by Tiepolo with a timeless theme.  The opinions expressed in this post, aside from the quote by the AG’s office, are entirely those of the editor, Stephen Q. Shafer and do not necessarily reflect those of any or all other members of Coalition Against Gambling in New York.  Permission to reproduce in full or in part is hereby granted on condition that the permalink above is cited.

 

 

From the Front Lines Against Predatory Gambling

Nelson Acquilano photoA Stop Predatory Gambling National Day of Action in Geneva NY 26 September 2015 was co-sponsored by  CAGNY, Women’s Interfaith Institute, Geneva Assembly of God “Celebrate Recovery,” Phelps Baptist Church, and Concerned Citizens of Seneca County (CCSC).       Nelson Acquilano. LMSW, MPA, MA gave the audience his views on the untrue assertion that making  predatory gambling more convenient benefits the community and the region.  Mr Acquilano (pictured) is on the Board  of Directors of CAGNY.

” My name is Nelson Acquilano. Many of you know me because of the work I have done in the Finger Lakes and because of the many different human service groups and agencies I have worked with over these past 40 years.

We have a terrible problem in New York. Our families, our communities are in great crisis. But this is not an economic problem. No, New York has a Quality of Life Problem… and it is a real crisis for our families and our community.  It will only further decline if we allow it.

New York has a high rate of crime…. a high rate of divorce, high rates of child abuse, academic underachievement, teen pregnancy, and drug abuse.….. our jails are full, our schools are faltering, and our families are failing. Now given this background, the introduction of gambling in New York is contra-indicated.

Given these community problems, to allow a known environmental carcinogen such as gambling into an otherwise delicately balanced community… to take a powerful risk factor, a known risk factor — and allow it to flourish will only further undermine the healthy families and healthy communities we are trying to build and maintain.

Gambling is one of the most destructive dynamics that can be introduced into a community, and when it is – it spreads like a cancer – like an epidemic, leaving broken lives, broken families, and broken communities in its path.

All states that have legalized gambling have found subsequent dramatic increases not only in the incidence of compulsive gamblers, but in crime, family dysfunction, divorce, bankruptcy, and mental illness. But by then it’s too late. Once legalized, communities cannot reverse the trend and control the increase in the gambling addiction and negative consequences.

Compulsive gambling leads to many thousands of personal and family bankruptcies each year. It leads to lost homes, broken families, lost savings accounts, lost college funds, and to a dramatic increase in crime including embezzlement at business. It is strongly correlated with mental illness, and also seriously affects the spouse, children, parents, and friends of the problem gambler.

Some states have reported that divorce tripled after the introduction of casinos. Others reported an explosion in domestic violence.

Other research shows that gambling is indirectly subsidized by the taxpayers. For every dollar that gambling contributes in taxes, it usually costs the taxpayers at least 3 dollars (and higher numbers have been calculated) because of major increases in the welfare system, mental health system, and the criminal justice system. The ultimate cost in broken families and disintegrated communities from gambling never even comes close to justifying it as a means to raise revenue.

Gambling is exploding across America but America is not ready for the consequences.

The National Council on Problem Gambling has found that pathological gamblers have a suicide rate twenty times higher than non-gamblers.

Now if we could stop an epidemic – something that would destroy tens of thousands of families wouldn’t we have an imperative – a compelling moral and ethical responsibility to serve and protect our families?

And that is why I am against gambling anywhere in New York State, but especially in the Finger Lakes. Studies show that the negative consequences impact not just upon the host community, but all communities within a 50 mile radius…. the region I have served for the last 40 years. Gambling is simply the worst strategy for a delicate community.

I would like to leave you with a few final points:

1) It never ceases to amaze me how the moral and ethical implications of gambling are so easily dismissed. When I see casino owners say that the future of gambling is with our youth and we need to have more youth gamble, when I see a casino that comes out and targets women to get more women to gamble, when I see a casino develop a youth program to get more college students to the tables….. then I need to question the morality of that entire industry.

In fact, one college Chaplin told me he is increasingly experiencing college students with a high percent of gambling issues – losing their tuition and room and board monies.

And by the way, a couple of years ago, researcher Natasha Schull who wrote the book “Addiction by Design” was in Rochester. She explained how the gambling industry models psychological experiments on rats for behavior modification techniques on humans, to increase time – and money spent – sitting and playing at slot machines.

She explained extensive studies on Time-on-Device, on algorithms of “Intermittent Positive Reinforcement”, and on how the gambling industry studies the best variance of high-frequency low payout wins and low-frequency high payout wins to keep you gambling. These are some of the strongest shapers of human behavior.

And today’s slot machines are actually learning your preferred method of play….. it hasn’t reached the level of artificial intelligence yet, but according to Natasha… the machines are studying YOU.

There are some 30 organizations opposed to casino gambling in New York, including:- The Institute for American Values

The New Yorkers Family Research Foundation

        and
–   the Roman Catholic Church

– the Episcopal Church

– the United Methodist Church…

– the Baptists….
– the Interfaith Impact of New York State, and

– the New York State Council of Churches!

The Catholics….. Methodists, Baptists and Episcopal Churches are all publicly on record as denouncing the expansion of gambling…..   and I don’t know about you… but I prefer to listen to them for my spiritual health and wellness.

2) Second, the gambling industry follows a business model – that model is all about growth and expansion….. to survive, profits need to grow, which means more and newer ways to gamble… and more and newer ways to get non-gamblers to the table.

At the Senate Hearing one gambling company was asked if they are concerned about the proliferation and saturation of gambling, and their response was “no”, that is not a concern of ours.

Well let me say that it is a concern of ours! And it is already happening. There are all types of efforts to expand gambling throughout New York State. We’ve opened Pandora’s Box.

There is one Italian City, Pavia, that has so much gambling, that it has surpassed most every other city for debt, bankruptcies, depression, domestic violence and broken homes.
It is devastating to the community, and now the people said they have had enough and are trying to pass legislation to curb gambling.

3) And third, if you take a look at the true voting outcome for Proposition I, even with all the manipulation and irregularities to get the voters to vote for it….. Proposition I was voted DOWN in the central Finger Lakes region:

If you include….. Ontario County, Cayuga County, Monroe, Onondaga, Schuyler, Seneca, Wayne and Yates Counties….. 125,031 voted to pass Prop I, but over 126,648 voted against it!

Developers wanted to put a casino in Rochester, but the people defeated it….. they wanted to put a casino in Syracuse, and the people defeated that…. And now they are trying to put one here in the Finger Lakes….

I believe that local citizens groups should be honored, not demonized, for their fight against a proposed casino.

You know, Governor Cuomo accepted some $715,000 from the gambling industry prior to changing the constitution, although he did not include gambling in his pre-election platform. According to Common Cause, over $47 million had been spent on lobbying and campaign contributions to other senators and assemblymen by the gambling industry prior to the changing of the NYS Constitution.

And there have been other discrepancies and irregularities, even with Proposition I itself.

I have reviewed over 100 gambling studies and articles, and I have yet to find one that says that gambling helps to build positive youth development. I have yet to see one that says that gambling supports healthy families. I have yet to see one that says that gambling builds strong communities… in fact, they all say exactly the opposite.

When local groups t recognize the real environmental impact – the human costs, and decide to commit themselves to fight such a devastating dynamic as casinos present, then I applaud their work….. and ask our representatives to remember that the fundamental purpose of public service is for the health, safety and welfare of our residents… and there is nothing about gambling that supports the health, safety and welfare of the people.

Thank you.”

Permission is hereby given to reproduce the words of the above text in whole or part as long as the above permalink is cited and Nelson Acquilano is credited as author.

Bad add

Peering over the Edge Flickr CC

Peering over the Edge
Flickr CC

 

The message below was sent by e-mail on the morning of Jan 5, 2015 to Bradley Fischer, Esq.,  Director of Policy, Development and External Affairs, NYS Gaming Commission.

 

 

 

Coalition Against Gambling in New York (CAGNY) urges the Gaming Commission not to heed the Governor’s request to have its Facilities Location Board amend its recommendations announced Dec 17 and open the door to a second casino site in Region 5.

CAGNY believes that a casino cannot net for any region or sub-region the “benefits” touted by the interests that got “Proposition 1” passed in 2013. We believe that none of the three sites recommended on Dec. 17 will if built be anything but a detriment to the people in its locality and to the state. Thus we see no good reason for a second license in Region 5 or any other region. For that matter, we see no good reason for any license anywhere.

Please convey this message as soon as possible to the Chairman and members of the Gaming Commission.

With best wishes for a healthy 2015 for all,

Stephen Q. Shafer, M.D.. M.A., M.P.H..                                                                  Chairperson, Coalition Against Gambling in New York                                                         cell phone 917 453 7371                                                                                                        e-mail sqs1@columbia.edu or shpcount@earthlink.net

Permission is hereby granted to quote the above in full or in part at long as the permalink above is cited.

 

 

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.

Nowhere

Rainbow's end

Rainbow’s end

Nowhere

Most people assume that the New York State Gaming Commission has to award four new casino licenses in 2014 or 2015.  This assumption has made some individuals and groups in “regions eligible for gaming” hesitant to speak against particular proposals. They worry lest opposition in one place push the site selection to another locale no better suited. Think of the “Far Side” cartoon where a bear in the crosshairs points emphatically at another bear by his side.

It’s not true, however, that the Commission must sign off on four licenses. Coalition Against Gambling in New York (CAGNY) calls the attention of press and public to the fact that the Gaming Commission is not required to award even one casino license now or ever.  The passage of “Prop 1” in 2013 and its enabling legislation, the Upstate New York Gaming Economic Development Act of 2013, authorized the Gaming Commission to award up to four licenses “upstate.”   The law did not mandate a single one.

The law states (Title 1 §1300 ¶ 4) that “The state should authorize four destination resort casinos in upstate New York.”    Note the wording: “should” is used, not “shall,” “will” or “must.”

Further, in Title 2 §1311 the law reads : “The Commission is authorized to award up to four gaming facility licenses . . .”   Again, the language is permissive.

CAGNY observes that if the Gaming Commission has a green light from the legislature for up to four licenses, it also has the prerogative to award fewer. When the built-in drawbacks to casinos, like unchecked problem gambling, are compounded by the current fiscal woes of market saturation and leapfrogging interstate competition, not even one casino is called for. Columnist Fred Lebrun wrote thus of our state’s rush to expand casino gambling: “We’re embracing a corpse.”

Persons who speak against a particular proposal at the hearings on  September 22-24 2014  should make that point loud and clear. If someone asks “Supposing the proposal you’re fighting does not get a license, where should that license go?”   the reply is “Nowhere.”

 

 

Photo image “It’s just an illusion” from FlickrCC  4490566126_9ce7b24272

Permission to use this post  in whole or part is hereby granted  as long as the  permalink above is cited.  The opinions expressed are those of the writer, Stephen Q. Shafer MD MPH,  and are not necessarily shared by any or all members of Coalition Against Gambling in New York.

Caesars at Woodbury: Problem Gambling ? No Problem

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Summary: This is a critique of Attachment IX.A.2.a_A2  in  section  07 – IX.A. Assessment of Local Support and Mitigation Local Impact  of the  application by Caesars Entertainment to the New York State Gaming Facilities Location Board.    Being an epidemiologist and physician familiar with problem gambling as a public health problem,  I found  Attachment IX.A.2.a_A2  extremely biased in downplaying,  to near zero.  the possible health impacts  of a new Woodbury Casino.   The report asserts  as follows:

  • no socio-economic costs of pathological gambling and problem gambling warrant $ consideration, as none can be quantified so that all parties are close to agreement.
  • making casinos more convenient hardly  increases the prevalence of pathological gambling and problem gambling in the surrounding population in the long run.
  • the only population within a 50 mile radius of Woodbury that is  at theoretical  risk of having even a temporary surge in prevalence of pathological gambling and problem gambling  is that of Orange, Dutchess and Putnam Counties.
  • efforts by Caesars elsewhere to address “problem gambling” have been highly successful and will minimize “problem gambling” in southern New York State.

The  report greatly understates the possibility of harm to residents of the region due to a casino in Woodbury to residents of the region.  This essay addresses the first three  points in the above order.  The fourth  I have discussed in an e-mail to the NYS Gaming Commission last April.

 

In reading the Caesars Entertainment Inc application for a Woodbury casino I focused as a physician versed in public health  on the 40- page report   Study of Addiction and Public Health Implications of a Proposed Casino and Resort in Woodbury New York by Bo J. Bernhard Ph.D., Khalil Philander Ph.D., and Brett Abarbanel Ph.D.

The authors are all experienced consultants for gambling-related  enterprises. Two are senior members of the International Gaming Institute (IGI) at University of Nevada at Las Vegas. This is a highly polished presentation by experts who know the field but hide large tracts of it from view.   It  dismisses or never mentions four crucial facets of the ecology of pathological gambling and problem gambling. The report basically concludes that

  • socio-economic costs of pathological gambling and problem gambling don’t warrant consideration, as none can be quantified so that all parties are close to agreement.
  • making casinos more convenient does not much increase the prevalence of pathological gambling and problem gambling in the surrounding population in the medium  run of 2 to 4 years.
  • the only population within a 50 mile radius of Woodbury that is now under-served by racinos or casinos (and hence at theoretical  risk of having even a temporary surge in prevalence of pathological gambling and problem gambling) is that of Orange, Dutchess and Putnam Counties.
  • efforts by Caesars elsewhere to address “problem gambling” have been highly successful and can be relied on to minimize “problem gambling” in southern NY

The report nowhere mentions a statistic often cited by opponents of predatory gambling but never addressed head-on by casino advocates and never refuted: 40-50% of revenue at the average casino comes from pathological and problem gamblers, who comprise perhaps 12-15% of its customers, maybe 4% of all adults. [ http://cagnyinf.org/wp/april-9-2014-central-stat-of-casino-revenues] For the casino lobby to refute the statistic (if it is refutable) they would have to acknowledge that they can spot pathological and problem gamblers among their “visitors” while those persons are still active customers. This means before the person has loudly threatened suicide within an employee’s hearing or left town suddenly or thrown an ugly scene on the “gaming floor” or been arraigned or jumped.

Casinos will not acknowledge they have any  ability to spot problem or pathological gambling signs and symptoms that are not florid and end-stage. Why not? To move in even gently on such persons would risk offending them so they would go elsewhere or sending them to premature recovery before they have been “played to extinction.” [ https://www.youtube.com/watch?v=9C2BPZYLW_U ] .  To recognize the problem gamblers before they are end-stage yet not do anything for them  would reveal how insincere are the “preventive measures.” .

The casino cartel does not deny that its net revenues follow the Pareto principle: most come from a small proportion of gamblers. What casino promoters won’t say is what proportion on the average of that small proportion are pathological gamblers or problem gamblers. The promoters just do not want to know who among their customers is a problem gambler or pathological gambler until the gambler hits bottom or worse.   Promoters and detractors alike recognize that not everyone who loses a lot of money over time at casinos is a problem gambler. Anti-casino activists hold that most are; the American Gaming Association counters that most are affluent people having fun with their disposable income.

Assuming the central statistic is close to truth, casinos are not motivated to sincerely counter problem gambling and pathological gambling.  A successful effort to do so would lower their revenues by 40-50%.  Nor is government motivated; lower casino gross gaming revenues   would reduce  government’s share  by a like amount.

The report prepared for Caesars (in this no different from all the literature on problem gambling) also does not recognize that “unchanging prevalence” of problem and pathological gambling requires the formation of replacement problem gamblers and pathological gamblers to fill the shoes of those who have recovered, died, moved far away or are no longer free-living. What might appear a steady state is built on creating new problem gamblers. The more effective  the casino is at encouraging current problem gamblers and pathological gamblers into lasting recovery before they have fiscally and emotionally wiped out themselves and and ten people around them, the faster it must generate replacement problem and pathological gamblers to keep up its high profit margins.

I will now cover the first three bullet points above in more detail. The fourth bullet point I wrote about in the above-mentioned letter to the Gaming Commission.

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Whose Problem are Problem Gamblers ?

Central Statistic

Graphic by Dave Colavito, 2014 data from Grinols and Omorov 1996-97

On 24 April 2014  I sent to the Director for Policy,  Development and External Affairs of the NYS Gaming Commission the following  e-note with two attachments, one of which was   posted yesterday on the CAGNY web site below a copy of the April 24  cover e-note, repeated here.

Dear Sir,

Attached are two documents I earnestly hope the Chairman and all the Commissioners will read carefully and discuss with the  GFLB.  Both are about “problem gambling,” the subject of the April 9 forum convened by the Gaming Commission. Watching the videotape and reading the transcript (everyone should thank the GC for providing these so fast) I saw  that “problem gambling” was an elusive term.  The extreme importance to the casino economy of net losses from problem gamblers was nowhere mentioned except when the speaker from Caesars deflected  the issue.  Yet around the “central statistic of casino revenues,” on which I have written to the Commission, is the “central dilemma” of regulation: the better the regulation is at preventing problem gambling, the lower is the casinos’ profit margin.

Selected prevalence statistics were presented as if they are the be-all and the end-all of gambling behavior studies.  They are about all we have, but a poor stand-in for what we really want to know about time trends in social impacts, i.e.  incidence and duration.  Under the placid surface of what looks like stable prevalence,  much new damage continues; as problem gamblers recover or die, new ones must be recruited to take their places.

As I have offered before, I’m  [ready]  almost any time to meet with the Commissioners and staff to explain the critiques in more detail and to talk about “the central statistic.”

Thank you for your attention.

Sincerely, etc.

Stephen Q. Shafer, MD, MA,  MPH Chairperson, Coalition Against Gambling in New York 917 453 7371 http://cagnyinf.org  [ Cover note ends here]

 

No surprise,  the Commission has not responded to these  unsolicited comments. Does that mean the Commissioners have all accepted the assurances (see below) of  the Executive from Caesars Entertainment that the organization does not make money from “problem gamblers” and does ” not want them in [their] venues?”  If yes, it is a monumental  mistake.  I cannot speak for Caesars Entertainment in particular, but it would  be unique  if it does not make money from what most people call problem gamblers To  wrongly  assume Ms Shatley’s artful  discounting  of problem gamblers fits all casinos  would be an easy stretch  to make,  even if Caesars is unique. It would be worse yet if the attitude “casinos don’t want problem gamblers” were communicated to the Gaming Facilities Location Board members.  The GFLB is charged to consider plans by applicants to address problem gambling. The Board must understand how important problem gamblers are to the casino exchange.

Below is the text of the second attachment  that was sent to the Gaming Commission  on April 24, slightly revised.  The text of the other attachment sent the same day  was posted yesterday on this web site along with the cover e-note.

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“Replacement problem gamblers”

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On 24 April 2014  I sent to the Director for Policy,  Development and External Affairs of the NYS Gaming Commission the following  e-note with two attachments:

Dear Sir,

Attached are two documents I earnestly hope the Chairman and all the Commissioners will read carefully and discuss with the  GFLB.  Both are about “problem gambling,” the subject of the April 9 forum convened by the Gaming Commission. Watching the videotape and reading the transcript (everyone should thank the GC for providing these so fast) I saw  that “problem gambling” was an elusive term.  The extreme importance to the casino economy of net losses from problem gamblers was nowhere mentioned except when the speaker from Caesars deflected  the issue.  Yet around the “central statistic of casino revenues,” on which I have written to the Commission, is the “central dilemma” of regulation: the better the regulation is at preventing problem gambling, the lower is the casinos’ profit margin.

Selected prevalence statistics were presented as if they are the be-all and the end-all of gambling behavior studies.  They are about all we have, but a poor stand-in for what we really want to know about time trends in social impacts, i.e.  incidence and duration.  Under the placid surface of what looks like stable prevalence,  much new damage continues; as problem gamblers recover or die, new ones must be recruited to take their places.

As I have offered before, I am[ready]  almost any time to meet with the Commissioners and staff to explain the critiques in more detail and to talk about “the central statistic.”

Thank you for your attention.

Sincerely, etc.

Stephen Q. Shafer, MD, MA,  MPH Chairperson, Coalition Against Gambling in New York 917 453 7371 http://cagnyinf.org

To no one’s surprise,  the Commission has not responded to my unsolicited comments. Does that mean the Commissioners have all accepted  the ” adaptation hypothesis” [summarized in the next paragraph]   that  gambling expansion has  little long-term population impact?  If they have, ” this  was a grievous fault,”  but unless NYS media call them out  sharply  on it,  the Commission will not have to answer it grievously. If,  as I hope,  they have not bought it,  one sign will be that  the  Facilities Location Board  questions searchingly all applicants for a casino license on  what they will really do that will really  stop new cases of problem gambling.

Gentlemen of the Gaming Commission, how say you?

[Scientists from the Division on Addictions of the Cambridge Health Alliance have proposed an “adaptation hypothesis,” which acknowledges that new gambling opportunities may lead to a temporary increase in prevalence of problem gambling  for the surrounding population. Then, so goes the hypothesis, novelty fades,  individuals become more “responsible” in their gambling behaviors and  the crest subsides.]

One of the two attachments, slightly revised a month later,  is below. It begins with Summary.   It concerns the public health profile  of “problem gambling.”    The other, related to an operational definition of “problem gamblers”  and to their fiscal significance,  will soon be posted on the CAGNY web site.

Summary: “Problem gambling” is not a fixed uniform term. In his introduction to the April 9 forum on Problem Gambling, Dr. Gearan seems to take it, as I do, to mean both strata of gambling disorder combined, not just the less severe stratum often referred to as “problem gambling.” Statistics on the prevalence of “problem gambling” or its subgroup “pathological gambling” are often used to reassure policy-makers that gambling expansion has not worsened problem or pathological gambling. These statistics can be challenged on several grounds, but even if prevalence as a proportion of the population is truly unchanged in the long term, there are hundreds of thousands of new cases nationally hidden in it, millions of individuals affected. To keep prevalence stable there have to be new pathological gamblers brought on to take the place of those who died or entered recovery. Opponents of big tobacco use the term “replacement smokers.”  We extend this concept to “replacement” problem gamblers.   Tobacco companies need replacement smokers; society does not.  Casinos need replacement problem gamblers; society does not.  Quite the reverse.

Introduction  In the April 9th 2014 Problem Gambling forum hosted by the New York State Gaming Commission two speakers, Dr. Sarah Nelson and Ms Christine Reilly, used lack of change over time in “the prevalence of problem gambling”   to argue that expanded gambling opportunities do not increase endemic harms to public health. I will challenge that premise as an epidemiologist by digging into the population dynamics of “prevalence.”  With problem gambling, as with most chronic conditions, prevalence is more easily measured than the rate at which new cases develop. That does not mean it’s a perfectly valid marker of causation.  It hides new cases, the replacement problem gamblers that predatory gambling must endlessly cultivate to keep profits high.   To speak of the prevalence of “problem gambling” requires first defining the latter term. In the second and third sections of this narrative I will talk about the pitfalls of prevalence to assess “problem gambling” in a population.

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