“Fair Game,” “Fair Game” “Fair Game” and Daily Fantasy Sports

Super Bowl 50

Super Bowl 50

What is “a fair game?”  According to game theory,   it’s one in which all participants have an equal chance to win whatever is at stake.  A classical lottery is a fair game in that sense.     Any game of pure chance, even when the house gets a cut on every round, is a “fair game”  among  the wagering  participants  if there’s no cheating.

There is another meaning to “a fair game,”  this  one  from sports: a contest that follows explicit rules agreed to by all participants and does not allow cheating.  No pretense in this kind of fair game that all contenders have an equal chance to win.  Skill, that is getting and holding an advantage over the opponent(s),  is paramount. Strength, stamina, strategy, practice, motivation and innate talent are some elements of athletic skill.    Pitting an Olympic volleyball team all out against the junior varsity of a 300-student high school is “fair”  in this sense  if  the rules of volleyball  are followed, yet everyone who hears about such a “contest”  knows it’s “not fair.”  Even if the rules are strictly followed, the HS team has absolutely no control over the objective  outcome, i.e. who wins.   By contrast, a big urban marathon is “fair”  in the sports sense and in the ethical sense.  Everyone is aware that among 5000 female entrants the first-place finisher will be one of twenty women identified days before.  The other runners have no thought of winning.  Who places first is not under their control.  They do, however,  have control over other outcomes such as logging a personal best or completing their third marathon of the year or  simply finishing.   These events (accomplishments) have subjective, not objective,   value.

Live poker has a different skill set than athletics.  A trained memory, long attention span, ability to mentally reckon probabilities and a knack for reading other people’s body language are some of the requisites.

What is “fair” in the sports sense becomes unfair in playing for a money prize or for public honor when disparities in the multiple dimensions of skill  are overwhelming.    The facade of fairness can also warp into actual unfairness  when  the supposedly explicit rules are vague,  deliberately obscure or pliable or not enforced.  This leads down a slippery slope through “gamesmanship” to outright cheating.  Both situations – disparities in skill or bendable rules – mean that some of the participants  have no control over an objective outcome like winning money or  public accolades.

Now drop the “a” and take the phrase “fair game.”  This today  usually means someone whom circumstances (e.g. elected public office,  past history) have made a subject of  criticism or ridicule.  The original meaning came from field sports: quarry taken under established rules such as “don’t shoot sitting ducks.”   Such rules are not to bring parity in survival chances between hunter and hunted. They are just codes against cheating.   Examples of  this kind of “fair game”  are birds shot on the fly or, to some,   rats penned with a terrier.

Learned counsel for Daily Fantasy Sports distance their clients from the “fair game”  model of gambling, declaring that a small fraction of participants take home 90%  of the prize money.

Learned counsel argue that this handful are more skilled than the others, which no one denies.

Learned counsel argue that for the elite handful the outcome (cumulative money won over time )  is under their control; therefore, “it’s not gambling.”    Perhaps it isn’t  for the handful, but it is for everyone else who has no control over the outcome once they are “swimming with the sharks.”

Learned counsel want courts to consider DFS a fair game in the second sense: people enter of  their own free will,  aware  of  rules.  In that sense it is as fair, or as unfair, as the volleyball matchup above.  All persons who enter become “fair game”  for the elite handful whose skill is in sourcing or building  computerized routines to select their players.

If a group of people unfamiliar with  National Football League players were invited to  play a few weeks of  DFS,  90% of the winnings would not follow 10% of the players.  One week’s big winner would flop the next.  If the group is then joined by a friendly stranger who uses customized computer programs to pick his team, that f.s. might fare badly in one week, but would be sure to win more money over time than anyone  else.  Among  players of equally low skill, chance rules completely,  as it nearly does among those  who are all at the same high level.  The effect of skill on outcome emerges when skill levels vary across the players.  Throw in one player much better than all others and the role of chance goes down for him with respect to the rest. He may be so well-informed that he is doing prudent investing, not gambling.    Everyone else is gambling.

DFS is a hustle.  It is not a “fair game” in the game theory sense.  It is not fair in the sports sense because too many matchups are patently not fair, but rather the equivalent of the volleyball game  above.  The only “fair game”  in the story  is the group of new players who jump in thinking they can win big,   not knowing what they are up against.

The prizes come from “entry fees.” which DFS partisans say are not wagers.  If the guaranteed prize pool is $100,000  the companies say entries are closed at  a fixed pre-specified ceiling above  $100,000 such as $112,000.   If  $112,000  of entry fees came in and $100,000  is paid out to winners, the company pockets $12,000 for its trouble in enabling the “competition.”  If only $90,000 of entry fees came in the company has to pony up the other $10,000 to meet the purse money.  DFS is thus “house-banked.”   This gives a very strong incentive to fill every round.  Thus the advertising blitz to recruit new entrants and retain previous ones with accounts of fabulous winnings by smart neophytes.   A house-banked game is different from an office March madness pool where the amount going to the winners is determined by how many people have entered at the start.  If each entry costs a dollar, and twenty enter, then twenty dollars is divided.  If a hundred enter, the pool is $100.

DFS is  a house-banked hustle.  That’s gambling.

Permission is granted to reproduce this essay in whole or part as long as the permalink is cited.  The opinions are those of the author, Stephen Q. Shafer and are not necessarily shared by any or all members of Coalition Against Gambling in New York .  The photo image is from Flickr Creative Commons 24805517021_3fc6989ef3

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.

 

 

The Central Statistic of Casino Revenues

Central Statistic

The central statistic of  casino revenues gives the lie to assurances from casino promoters that they do not want, or need,   problem gamblers. In one line:

52 % of revenue at the average casino is the net losses of  “problem gamblers.”

The term “Problem gamblers”  as used above combines gamblers in two categories: what is now called “disordered gambling” (formerly called “pathological” or “addicted” or level 3); and those in what was formerly called “problem” or “subclinical pathological” or level 2).  There is no universally accepted name and unambiguous term for the combination, which was in the past termed by some “disordered gambling,”   by others “problem gambling.”  The combination  category is about  4 % of the adult population,   perhaps  10 to 15 %  of  casino users.  We recommend that “problem gambling” be kept as the portmanteau term for the combination.  We recommend that  persons whose lives are adversely affected by gambling but who do not meet  criteria for “disordered gambling” be called “at risk for disordered gambling.”

Nearly all the quantifiable socio-economic costs of legalized gambling,  more than $60 billion/year nationally ,2  move through this same 4 %  of adults who are “disordered”   or “at-risk-for-disordered” gamblers.   A program that reduced to zero the number of active disordered and at-risk gamblers and totally prevented formation of new ones would almost wipe away  the huge quantifiable socio-economic costs of legalized gambling, estimated at  $266 per year/capita adult  in the USA. 3

But,  that program would also reduce casino revenues by close on half.  Government’s share, based on taxing the total net losses of gamblers (“gross gaming revenue”), would drop by the same proportion.

The casino exchange exists only for profits.  Do you really think it would support in good faith a prevention and treatment program designed to cut its profit margin by half ?

Do you honestly think the state government would support in good faith a program whose complete success would mean a 50%  decrease in a budgeted revenue line?

Or, do you think the casino exchange and  government agencies would rather cooperate  to showcase  worthy  aims for “regulation” and “prevention  and treatment”  that might just fall short in practice ?

References

1.  Grinols, Earl L. and Omorow  J.D.  16  J. Law and Commerce 1996-97  p. 59 .  Details in appendix below.

2. The figure $60 billion comes from making low-side cost of living adjustments to convert 2003 dollars into those of 2012 and adjusting for population growth between 2003 and 2012.  The 2003 figures are on page 176-177 of Gambling in America by Earl L. Grinols (Cambridge University Press, 2004). This works out to about one-third the annual cost of illicit drug use.    https://www.drugfree.org/join-together/drugs/new-report-estimates-illicit-drug-use-costs-u-s-economy-more-than-193-billion-annually

3. http://cagnyinf.org/wp/gambling-economics-statistical-summary-by-prof-earl-grinols

Appendix:  What Proportion of Gamblers’ Net Losses to Casinos come from Problem Gamblers?  Brief  Review of  Five  Major Reports from the Last Twenty Years

Estimates of what proportion of casino gross gaming revenues derive from the approximately 4% of adults whose lives are adversely affected to varying degrees (“problem gamblers”) by gambling are not many.  The one most directly applicable to the average American casino is that of Grinols and Omorov.  Observations of  types of gambling other than physical casinos accord with Grinols and  Omorov in that  gamblers’ total net losses to a casino (also termed “gross gaming revenues”) have, like many other human activities, a Pareto distribution: the bulk of the output or the uptake   (e.g. consumption, volunteer work done) comes from a relative minority of the participants.

The casino exchange is wont to say that all such problem gambler statistics are wrong, that the biggest chunk of casino revenue is from wealthy “whales”  who  are not problem gamblers, just persons with a lot of discretionary spending money. That is all the rebuttal the exchange offers.

While “whales”  do exist, they do not frequent most casinos or racinos.  Casinos certainly have the information technology to respond with data to the above charges by opponents of predatory gambling, yet they do not.  To weigh in on this they would have to  acknowledge that they can identify all or most of the problem gamblers in their clientele.  This would open them to well-deserved criticism that they are not acting responsibly towards those persons.

Below, we review five documents related to the question of  % gambling revenues from problem gamblers, one each from United States, Alberta, Nova Scotia, Great Britain and Western Europe.

The next section, to the asterisks, is a continuous quote from page 59 of the article by E.L. Grinols and J.D. Omorov “Development or Dreamfield Delusions?: Assessing Casino Gambling’s Costs and Benefits.”  J. Law and Commerce vol. 16 (1996-1997) pp. 49-87.  The table has been re-formatted and footnotes removed.

“Table 1 provides a hypothetical profile of gambling revenues by type of gambler.

                           [table below]

Applying the terms “pathological” and “problem gambling” as

used by the psychology profession to the two groups losing the most to

casinos, we call those who have not gambled in a casino in the past year

“nonbettors,” and divide the remaining gamblers into “heavy” and

“light” bettor categories. Based on prevalence studies, we assume that

1.38 percent of the adults will be pathological gamblers  who lose an

average of $4,01328 and that problem gamblers lose one-seventh the

amount that pathological gamblers lose. This implies that 52 percent of

casino revenues come from the 4.11 percent of the population who are

pathological and problem gamblers.  In this respect, casino gambling resembles

alcohol of which 6.7 percent of the population consumes 50 percent

of all alcohol consumed. Allowing for the average adult to lose as

much as $200 annually to casinos in some areas would still mean that

more than 35 percent of casino revenues in those areas come from problem

and pathological gamblers.

 

The fact that the gambling industry is dependent on problem and

pathological gamblers for a large share of its revenues casts doubt on the

feasibility of treating pathological gamblers using industry tax revenues

to prophylactically prevent the externality costs of gambling addiction.

The treatment cost to the industry would be high, and these costs would

be in addition to existing taxes on gambling gross revenues that are already

high in many cases. Further, if treatment were successful in

preventing gambling by problem and pathological gamblers, it would significantly

reduce industry revenues. It is probably safe to conclude that

not everyone in the casino industry would willingly forego 35 percent or

more of their revenues.”  [emphasis added]

TABLE 1: Representative Distribution of Gambling Revenues by Type of Gambler

% of pop. designation annual loss annual loss cumul % of
per bettor $ per 100 adults $ casino gross
1.38 pathol. gambler 4013 5538 39
2.73 problem gambler 669 1826 52
5.89 heavy bettor 317 1866 65
50 light bettor 99 4970 100
40 non-bettor 0 0 0
100 total 14200 100

 

***********************************************************************

Figures in the table were computed by the authors  using information from  a 1992 report prepared by Deloitte  & Touche for the  City of  Chicago Gaming Commission:  ECONOMIC AND OTHER IMPACTS OF A PROPOSED GAMING. ENTERTAINMENT AND HOTEL FACILITY 137, 146, 147, 162

The Alberta study ( Williams et al)   two direct quotes

“ In 2008/2009 it is estimated that problem gamblers in Alberta account for 50% of all reported gambling expenditures, with that ratio being even higher for VLTs, slot machine and casino table games .”  Williams Robert J,  Belanger Yale, and Harris Jennifer N.  Gaming in Alberta  Final Report to the Alberta Gaming Research Institute 2011 p. 259

 

“A much more serious concern is that 75% of reported gambling expenditure comes from roughly 6% of the population. The most distinguishing feature of these individuals is the fact that 40.6% of them are problem gamblers. Overall, problem gamblers in 2008/2009 in Alberta appear to account for roughly 50% of all reported expenditure, a percentage that is even higher than previous Canadian estimates of between 23% – 36% (Williams & Wood, 2004; 2007). It is ethically problematic for governments and charity organizations to be drawing such a significant percentage of their revenue from a vulnerable segment of the population.”  [emphasis added]  Williams et al   op cit   Final Report to the Alberta Gaming Research Institute 2011 page 280

 

The Bwin study (Planzer, Gray and Howard Shaffer)

A study in Europe on internet gambling with casino type “games” authorized by the internet gaming company Bwin was reported on in an October 2013 article in the Wall Street Journal by Mark Maremont and Alexandra Berzon.   The investigators were Planzer,  Gray  and Howard Shaffer; their report is not yet published.  IThe WSJ article says that  3% of the 4222 customers tracked provided “half  the casino’s take.”  The  WSJ article did not say what proportion of the adult population the 3%  of the 4222 customers were.  Certainly it would be less than 3%, since only a minority of the adults do internet gambling.   The  article did not identify how many of the 3% were problem gamblers.  Safe guess it’s at least half.

Nova Scotia Video Lottery  (report by Focal Research)

A 470 page report on the Nova Scotia Lottery done by Focal Research [Schellink and Schrans principal authors] concluded that

“in 1997/98  5.7% of adults in Nova Scotia (approximately 38,750 adults) did most of the video lottery activity in the province and are contributing approximately $113,236,800, or approximately 96%, of the annual net revenue for video lottery gambling in the province.  Therefore, it can be assumed that VL   play behaviour differs significantly among those who are Casual VL Players and those who play on a regular, continuous basis and that these distinctions have significant implications, in terms of profiling VL gambling within the population at large.”

The Nova Scotia report (pages 3-42, 3-43) found that 55% of VL revenues were from “problem VL players,” who were about one-sixth  of the 5.75% of adults classed as “regular players” [defined as once a month or more].  Problem VL players thus comprised about .92% of adults.

The authors observe “It is obvious that success in helping Problem Players to reduce their expenditures will have a substantial impact on the total revenue Nova Scotia derives from VL play. If  Problem Players’ expenditure was similar to that noted for Frequent Players, there would be a reduction in total revenues from VL gambling of approximately 35% to 40%.

Using  the 2010 British Gambling Prevalence Survey, James Orford (Univ Birmingham), Heather Wardle and Mark Griffiths derived a lower figure for % of gamblers’ net losses coming from problem gamblers: 23% at FOBTs [Fixed Odds Betting Terminals].  We note, however, that the prevalence of current problem gambling in this survey (0.9% by DSM –IV and 0.7% by PGSI criteria)  was much lower than the 2-4% figures from elsewhere.  This difference is more likely to be due to methods than to Britons’ being less vulnerable.  In this study, then,  23% of the FOBT revenues come from less than 1% of the adult population.  This ratio is even more skewed than what what Grinols and Omorov reported for “the average casino” (52% from 4%) .

The opinions expressed above are those of the writer,  Stephen Q. Shafer  MD, MPH, MA retired Clinical Professor of Neurology at Harlem Hospital Center, Columbia University , New York City.  He is Chairperson of Coalition Against Gambling in New York, a non-profit registered in Buffalo  http://cagnyinf.org    Permission is hereby given to quote in whole or in part as long as the permalink is cited and all citations to other work are correctly conveyed.

The graphic is by Dave Colavito.  He places no restrictions on use  but please attribute work to him.

Fraud, Deceit and Corruption in the Gambling Industry

Real Economics of Gambling

             FRAUD, DECEIT AND CORRUPTION IN THE GAMBLING INDUSTRY

                            by Nelson Acquilano, LMSW, CASAC, CPP, MPA

     There has been more fraud, corruption and deceit with gambling than with any other social problem.  It is inherent is the nature of gambling and the extreme greed and money associated with gambling.  The OTB and several New York racetracks were notorious for their fraud and corruption, showing that gambling and ethical corporate practice are incompatible partners.

     Governor Cuomo prides himself on running an ethical government, yet the fraud, corruption and deceit with this gambling issue has been anything but ethical.

  • Common Cause reported in 2012 that since 2005 gambling interests had spent $47 million on lobbying ($40 M) and  donations to political campaigns ($7.1 M)  in NYS http://www.commoncause.org/site/apps/nlnet/content2.aspx?c=dkLNK1MQIwG&b=5287775&ct=12188661 These outlays  included $2M  to the Committee to Save New York (a short-lived business-backed group closely aligned with Gov. Cuomo); Andrew Cuomo received $715,000; Eliot Spitzer $594,000; David Paterson $204,000; $3.9 million went to the candidates and committees of the State Legislature; and to other State Senators and Assemblyman and candidates. 

 

  • The Seneca Nation soundly voted DOWN a Gambling Compact on May 11, 1994, when Members of the Seneca Nation of Indians rejected a proposal to get into high-stakes casino gambling in an advisory referendum.  The casino proposal was defeated by a vote of 714-444; the nation’s leaders brought it back again and imposed it as “the will of the people” and it later passed on May 15th, 2002 because of passivity – not because it was the will of the people. 

 

  • Racinos now term themselves “casinos,” against the law, to increase crowds and profits; downstate racinos have now put in electronic table games in which the outcome is not determined by the Lottery’s central computer in Schenectady.  This violates the definition of lottery implicit in the opinion of the court in Dalton v. Pataki 2005 .   Deceit or fraud? http://www.nydailynews.com/opinion/doubling-casinos-article-1.1340994

 

  • The gambling syndicate tells you that gamblers generated $5.4 billion in revenue in New York State in 2010, rather than telling you that New York residents and visitors LOST $5.4 billion that year.  They also do not tell you that much of that money was not “disposable income,” but monies taken and lost from family savings and family support, from child support, money borrowed against life insurance policies or college funds, monies lost from social security or welfare support, or monies embezzled from businesses and industry.

 

  • Spokespersons for “gaming” won’t tell you that as according to a 2006 NYS OASAS (Office of Alcoholism and Substance Abuse Services)  study,  there were already 668,000 problem gamblers in New York State; and that 10% of adolescents meet DSM-IV criteria for problem gambling; and another 10% of youth are at-risk of developing a gambling problem. 

 

  • Proponents of more casinos won’t tell you that adding  seven  new casinos to  New
    York State  could (depending on siting)  create up  to 82,000 new pathological gamblers (a 47% increase), and  202,000 new problem gamblers.  They also “neglect” to say that quantifiable socioeconomic costs  related  to  ONLY new gambling addicts and problem gamblers are more than double than the tax revenues due to the state from licensing up to seven new casinos and taxing them (at 20% overall) on the take from all users. http://cagnyinf.org/wp/new-casinos-equal-1000s-of-gambling-addicts/

 

  • Slot machines are illegal under the NYS Constitution, thus, soon after 2001 they were re-termed VLTs (Video Lottery Terminals) in the courts to get around the law !

 

 

  • The May – June 2013 arrangements  re tribal casinos and exclusivity zones are expedient, intended  to  head off  opposition by the operators of tribal casinos to the proposed constitutional amendment that would legalize non-tribal casinos.  The pact with  the Oneida Nation of Indians is going to litigation,   with the towns of Verona and Vernon as plaintiffs.     Days after the Oneida agreement, Gov. Cuomo’s administration  forgave  the Senecas $209 million dollars  that the State had previously held were due  it under a compact that the Seneca Nation of Indians viewed as having been violated when VLTs came to racetracks in western New York State.  

 

  •  The very fact that the casino amendment was rushed through on the last day of teh legislative seesion without either a Health Impact Study or a formal cost-benefit study is a deceitful practice!

     Permission is hereby given by Cagnyeditor to reproduce this post by Nelson Acquilano in whole or in part as long as the permalink above is cited.  Photomontage by Nelson Acquilano

 

 

 

 

 

 

 

 

 

 

Crapping Out in New York: For Education

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By Dave Colavito.  first published in Huffington Post July 12 

Whether NY voters consent to amend the state constitution to expand gambling is something that will likely be decided in November. What’s certain is “Gambling for Education” will remain a trusted brand for Governor Cuomo and his handlers. The problem is the subtext: Gambling is Good for the Kids — unlike adequate nutrition, adolescent problem gambling won’t help build strong bodies or healthy minds.

Most adults appreciate the invaluable service carnival barking provides in the service of Albany’s gambling policies — how else do you keep convincing losers they’ll win, so long as they keep losing? But when it comes to educating the kids, voters know the importance of leading by example. So before heading to the polls in November, it’s worth considering whether more of the Albany example is really in their best interest.

State-sponsored gambling is already here, as are other permitted activities. But a proposal for the state-sponsored expansion of say, cigarette smoking or sugary junk food in schools would be roundly rejected and hailed as a public policy victory. Why — not everyone eating such junk food becomes diabetic, and its marketing surely contributes to the state’s economy and creates jobs? The answer assuredly has to do with education. And though Albany is a partner in educating children, it’s a deeply conflicted partner by virtue of its promotion of gambling.

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“Poison pill” in Upstate Gaming Act of 2013

5329333422_f79c211100_m alien            Surrender ! Resistance is futile !

The upcoming referendum on whether to amend the NYS constitution and allow “up to seven casinos as prescribed by the legislature” has been subverted by  Governor Cuomo, turned into  an  ultimatum  to all who oppose the  amendment for its expansion of  predatory gambling.  ” Heads I win, tails you lose.”    New Yorkers, even those who favor the amendment,  should be  horrified.  This behavior  belongs to a despot or a cartoon  alien invading the planet, not to a Governor who proclaimed he wants  the people to say yes or no to amending the constitution.  What  happened ?  

Simply put, if the amendment fails, Lottery gets carte blanche to expand instead.   The “Upstate New York Gaming Economic Development Act of 2013,”  passed on 21 June as S 5883 (same as  A 8101), provides in section 32 a. (3)  that if the amendment does not pass referendum, Lottery is authorized to operate  an unspecified number of new Video Lottery Terminal (VLT)   facilities of unspecified size,  not necessarily at race tracks.  The VLT facilities provided for in this  hedge plan would go into the three “regions” of “zone 2” that are not excluded by compacts with Indians, viz. Catskills + Hudson Valley,   Eastern Southern Tier and  Capital Region.  An article originating with AP in Albany  http://online.wsj.com/article/APbabc9a4fefdc488cb8a30eb9ec800e12.html    cites possible numbers (three or four upstate) and possible sizes (up to five thousand VLTs each).  These numbers are not in the bill, but were softly confirmed by a spokesperson for the Governor on June 19. 

Thus a successful  fight against  the amendment would be punished by the imposition of a gambling system probably no better  for New York’s people than  “up to seven” casinos.  [There is no reason to think Lottery would stop at four new slot barns; that was a trial balloon on one day in June.]

The hedge plan unveiled in June was probably  mostly  a “poison pill” for two readily identifiable groups to which  the amendment could bring damaging competition.  One was the Seneca Nation, which as of June 12 was  not yet  “in good standing.”  The next day, however,  the Nation  moved into that status. http://www.indianz.com/IndianGaming/2013/026500.asp    Now assured of no new competition in their territory,  they would cease to  threaten  the amendment.  The  pill was no longer toxic to them.  The other group, the  New York Gaming Association (the racino lobby)   had come out on June 10th  against the Governor’s Program Bill, as it was then called.  [To see that press release, which on the web site is undated,  go to their web site and click on press releases .  http://www.newyorkgaming.org/Home.aspx    ]  NYGA  voiced fears that new casinos would take away 85% of their action.  They  were quickly placated with changes ensuring that the horse industry would not take a loss in  the large (> $200 million last year) income stream it counts  on from racino  VLTs.   Any new casinos  would have to pitch in to keep parity.  Not long before June 21, the NYGA reversed its stand in a second press release [also on their web site, undated].

The “poison pill,”  in Section 32 was made by developments around mid-June less baneful  to the two richest groups that want predatory gambling in NYS but not competition.  It still  had   had potency as of voting day, June 21.  It could  deter opposition to the  amendment  that might spring up if any of the May-June agreements with Indian casino operators fell through before Election Day.  On out-of-state casino interests, however, it would probably have little effect.    Though expected by many to work [under false flags]  against the amendment, these groups  would would not see section 32 as virulent to them.   They  would surely prefer that if NYS must  boost its  predatory gambling it go with slot barns, not  full-scale casinos. 

The constituency to which the poison pill is most bitter and potentially paralyzing is opponents of predatory gambling.  We are perhaps collateral casualties of the Governor’s tactics  to neutralize, or actually turn,  rich profit-seeking opponents of the amendment . Or (this may be  folie de grandeur)  the Governor  sees us as a threat to his objective, a threat that needs to be squashed.   We don’t need to know.   In either case,  the Governor and those who craft his bills  have done  their utmost to make the referendum meaningless.      Instead of a plebiscite on whether to amend the constitution it has become a double bind: casinos or  VLT barns.    See the New York Post http://www.nypost.com/p/news/opinion/editorials/gambling_man_FRWmSBGiGVE5KXK1w58IcM

The  VLT  barn  hedge plan has been latent since September  2001, when the legislature  at the urging of Gov. Pataki  authorized   thousands of  VLTs  at racetracks as  “racinos.”  In the words of Gov. Cuomo (May 9 press conference)  “The racinos were created to get around,  frankly, the existing state law and they were in many ways created as a loophole, but for all intents and purposes they are a casino.”     Why VLT proliferation was not Gov. Cuomo’s plan  A  for gambling expansion is for speculation.  Let’s suppose that in early 2012 he truly  believed  (unlike us) that casinos bring “economic development”  that VLT barns would not.  Let’s credit him with a desire to play by the rules and respect the Constitution,  as long as he looks like winning. This wish foundered in June 2013 when polls showed his approval rating going down and no clear margin of victory for a future amendment.   Time for the ace in the hole.  

Coalition Against Gambling in New York will oppose the amendment even if the hedge plan in section 32  forces  an odious alternative to casinos.  If the amendment fails as it deserves to, we and other groups allied against predatory gambling will seek legislation  to amend  section 32 and defang it.

The opinions expressed herein are those of the writer, Stephen Q. Shafer and do not necessarily reflect opinions of all members of CAGNY.  Permission  is granted to reproduce this text in whole or part as long as the permalink attached is cited.

Negative Expected Value

 

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Negative Expected Value:   The Ultimate Triumph of Loss.

Summary: Though  only one form of predatory gambling,  lottery  illustrates how and why predatory gambling drains not only the gambler  but also everyone around each gambler from whom he or she can winkle or steal a dollar to pursue “the chase.”   Using a simple model of lottery, this essay distinguishes “wins” from net gain, showing that unless a compulsive  gambler quits, “extinction” is inevitable.  Every rational person knows this. Sad to say,  however, most people deny  how badly  trusting persons around the gambler will be hurt as the gambler fends off   the inevitable.  “The gambler’s ruin” is not confined to  him or her.   This is the central evil of predatory gambling.

Adam  Smith wrote about  lottery  “That the chance of gain is naturally overvalued we may learn from the universal success of lotteries.  The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it . . .  There is not, however, a more certain proposition in mathematics than that the more tickets you adventure upon, the more likely you are to be a loser.  Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer you approach to that certainty.”   Wealth of Nations book I Chapter 10 p 153

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Two Downstate Racinos Are Downstate Casinos Now

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        For  practical purposes, there are at least two non-tribal full-service casinos operating today in New York State. If that surprises you, read on.   The facilities at Aqueduct  and at Yonkers call themselves casinos yet pose as “racinos.”  In my opinion they are real casinos, cleverly disguised as “racinos.”   They don’t have human croupiers or dealers, but offer table games in which the outcome of a play is governed by the same  laws of physics that determine the outcome of a throw or spin  by a human being.  Such table games are billed as part of lottery.  I say  they are illegal.  What’s your opinion?   

     An editorial in the New York Daily News May 5 showed that at Resorts World Casino (Aqueduct Racino) “electronic table games” of craps, Bo-Sic, roulette,  and baccarat are bringing in a good part of the “video gaming” revenues. 

http://www.nydailynews.com/opinion/playing-games-law-article-1.1334713

     I am not a lawyer, but was persuaded by the carefully-researched editorial and by my own reading of the opinion of the Appeals Court in 2005 that these games are not permitted under the present New York State Constitution.  Though operated by NYS Lottery, they do not meet the definition of “lottery” in the same way as do video lottery terminals (VLTs).

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Robbing Peter to pay Paul

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St Paul’s             flickr 5172661797_d7003e47a8_m

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St Peter’s ,  photo from Flickr

 

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

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

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

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

The Albany Gambling Diet

albanydiet  The Albany Gambling Diet

Thoughts on Healthier Eating

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David Colavito

 

 

 

     When you consider how injurious the socioeconomic consequences of state-sponsored gambling are, compared to its benefits, you have to ask why Governor Cuomo is promoting the expansion of casino gambling, let alone as economic development.  Sure, “gambling is already here” and “New York needs jobs” – neither is in dispute.  And used as they are to promote the Governor’s plan, they’re certainly appealing.  That’s the sweet side of half-truths many of us prefer to our vegetables.  But if Albany isn’t serving a balanced meal, it’s in our interests to understand why.  I’m suggesting it’s a failure of imagination. 

    The thesis has been with me for some time and came into sharper focus recently while reading False Idyll, an essay by J.B. MacKinnon.  Dealing with an unrelated topic, MacKinnon’s words struck me as eerily apropos to the social injustice inherent to the casino economy – “…  the way you see the world determines much about the world you are willing to live in …“ 

    And because I choose to be generous in spirit, I choose to believe Governor Cuomo’s promotion of the casino economy is rooted more in how he sees the world rather than in the belief he can make it better.  It’s an unfortunate conclusion, considering what life would still be like if others before him had constrained their own imaginations when confronted with the same choice on important public policy matters: emancipation and suffrage to name just two.

    And though you might argue Mr. Cuomo’s recent policy commitments to gun control and gay marriage render my thesis flawed, I’d respond by saying perhaps you’re correct, but unlike for example integration in the south, I don’t think either would have occurred without strong political winds blowing at Mr. Cuomo’s back.  Regardless, what really matters is the facts of the casino economy, their implications for social injustice, and Mr. Cuomo’s refusal to acknowledge either in his pursuit to fill state coffers.  All of which is also to say, his fixation on the gambling economy is apt subject material for an as-yet conceived book to be titled after MacKinnon’s essay.

    So, what might we imagine if enough people in Albany saw the world more through the lens of what it could be rather than the way it is?   Given that the majority of casino gambling revenue dollars come from the minority of gamblers with serious gambling disorders, would lawmakers continue to endorse expanding that predatory business model to increase state revenues?  And given the well-established relationship that increased opportunity to gamble produces more people with serious gambling disorders, would they continue promoting state policies that cultivate making people sick to balance budgets?  Or, might they instead work to formulate policies that mitigate the interstate impacts of gambling so often used to conscript state residents in a race-to-the-bottom casino economy?  I think we know what they’d choose.  And there’s also recent precedence for pursing equally important objectives.  Consider, for example, NYC Mayor Michael Bloomberg.  Regardless of where you come down on the 2nd amendment debate, Mayor Bloomberg doesn’t just believe in the need for federal gun policies that don’t undermine those of states; he’s a fierce advocate for them in Washington.

    Still shooting for the stars you say?  How about then just punting for the moon?  Albany could acknowledge a false premise it uses to pursue expanding the failed policy of state-sponsored gambling, though I suspect it isn’t spoken aloud there often.  It’s the keystone for the arch of my thesis – “we’re desperate; what else can we do if we don’t promote gambling?”

    The answer is, plenty. 

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