"Pay no attention to that man behind the curtain!"
--The Wizard of Oz
What You're Not Supposed to Know
While it may appear on the surface that governments choose to expand gambling purely for economic reasons, in reality a great many factors - often unknown even to legislators - are quietly occurring in the background to influence those decisions. Some of these factors include:
The common thread among all these factors is that the gambling industry doesn't want you to know about them. Read on to learn the truth.
The Truth About Lobbyists
The State of Massachusetts is being sold to the highest bidder by some of our officials. There are no verified facts to even suggest that this is the time or the reason to buy into casinos or slots. Or that expanding gaming will create meaningful jobs. Unemployment is high and thus there is no money to gamble the state out of a recession. Nor is there any promise that expanded gambling costs will not impact the taxpayers in any way.
In Pennsylvania, thanks to lax lobbying laws, gambling legislation was passed in the middle of the night on the 4th of July. Massachusetts citizens will also be dismissed as irrelevant if we don't act now to reverse the apparent trend.
The following article states that money is being given by the gambling interests and accepted by some legislators.
Boston - The clash over casino gambling in Massachusetts is drawing a torrent of lobbying dollars to Beacon Hill.
The amount spent by firms, unions and interest groups hoping to influence the gambling debate has grown from more than $800,000 in 2006 to more than $2 million in 2009, according to an Associated Press review of records filed with the secretary of state's office.
The vast majority of the lobbying dollars are being spent by groups hoping to get a piece of the gambling pie if lawmakers ultimately vote to approve an expanded gaming bill.
The surge in lobbying comes as the push for casinos, slot machines or a combination of both nears a critical stage.
The tally: Last year, casino lobbyists contributed about $8,000 to House Speaker Robert DeLeo, $8,100 to Lt. Gov. Tim Murray, $7,800 to Senate President Therese Murray and $4,900 to Gov. Deval Patrick. The surge in lobbying comes as the push for casinos, slot machines or a combination of both nears a critical stage.
The history: In 2006, 19 firms and groups were registered with the state as having hired lobbyists to represent them on casinos and gaming issues.
The present: In 2009, that number had nearly doubled to 34. They include out-of-state firms such as the Las Vegas Sands Corp., which spent $112,500 on lobbyists in Massachusetts last year, and Harrah's Operating Co. Inc., which spent $60,000. Last year, casino lobbyists contributed about $8,000 to House Speaker Robert DeLeo, $8,100 to Lt. Gov. Tim Murray, $7,800 to Senate President Therese Murray and $4,900 to Gov. Deval Patrick.
"There's a reason why people have called our economic crisis 'casino capitalism,'" says Les Bernal, a former State House staffer who now heads Stop Predatory Gambling, a national advocacy group, "It was an economic program based on financial gimmicks and predatory practices, creating the lure of free money to Americans."
--DeLeo goes all in - with a story to tell Commonwealth Magazine, March 4, 2010
The Truth About Gambling Studies
One of the most problematic issues when accessing studies to determine the costs or benefits of expanded gambling is that many of gambling's very real impacts (e.g. bankruptcies, child abuse and neglect, youth gambling, suicide, crime, regulation, cannibalization of local business, and environmental impacts among others) are difficult to quantify, and are therefore omitted from the balance sheet.
But this hardly means these impacts don't exist or that they don't come with a cost, not merely to the taxpayer but also to the community and some of it's most vulnerable citizens. Still, it's rare for a report to attach a dollar amount to these factors, the result of which can seemingly tip the balance sheet in favor of a specific expanded gambling proposal.
Another problem with gambling studies is that few of them are truly independent. Most of the talking points and studies out there on casinos come from biased sources - even those studies that would appear to be unbiased.
Nothing is more illustrative of this fact than UMASS Dartmouth Professor of Public Policy, Dr. Clyde Barrow. He's written more studies on casinos in Massachusetts than possibly anyone and they've been very favorable to the industry, and he's quoted by the media more than any one person, too, but here's the cold, hard facts.
Clyde Barrow works privately for the industry. Clyde's home address in Fall River is the same address of Pyramid Associates. Pyramid Associates was paid a total of $15,000 for an "economic impact study" by Maine's Yes on 2 campaign in 2008, funded in large part through Olympia Gaming, the Las Vegas group that bankrolled Yes on 2. Barrow also, reportedly, appeared at a press conference and public meetings on behalf of the campaign.
Barrows doesn't include his private, industry jobs on his extensive, public resume at his UMASS Dartmouth page, despite their relevance.
Barrow's Center for Policy Analysis studies on gambling, which frequently appear on the industry's own website in Massachusetts, are also compromised financially. As recently as March of 2009, Barrows did a study through his center that was favorable of the industry. Included in that report, for those who actually bother to read it, is the fact that the funding comes from the Center's clients, read: lobbyists.
"The University of Massachusetts Dartmouth Center for Policy Analysis is a multidisciplinary research unit that promotes economic, social, and political development by providing research and technical analysis in the areas of economic development, public management, program evaluation and polling research for government agencies, nonprofit organizations, private businesses and educational institutions.... The Center for Policy Analysis does not pursue a predetermined research agenda, but is a flexible research organization responding on a timely basis to the problems and issues identified by client agencies."
For all of Clyde Barrow's UMASS Dartmouth resources, there's very little accountability. The Center for Policy Analysis's Advisory Board is comprised of a great deal of people who have a bone in this fight: Senators Murray and Pacheco, for example. Not only do these politicians not mind Barrows waging this war by using the University to make himself appear an unbiased observer, but they gain from it and use his studies as justification to support their political agendas. It's smart politics, but the Center is an organization that should exist separate from politics.
Barrows is not alone. The Labor Resource Center at UMASS Boston created a study asking "Can Casinos Bring 'Good Jobs' to the Commonwealth?" The results here, again, are mostly favorable. Yet, the results here, again, are also funded through the industry and biased sources.
The study was funded by The Construction Institute and the The Future of Work in Massachusetts project, which is funded through the UMASS system's President's Office.
While the Construction Institute may indeed be a reputable organization, they still have an obvious stake in this fight. It's an organization that wants to build really big things and expand union labor.
The Future of Work in Massachusetts project, an arm of the UMASS Boston Labor Center, doesn't exist in a vacuum either. The funding comes from the (often politically influenced) President's Office, which comes from the Commonwealth's coffers (to the tune of $1.2 million) -- which means we'll probably never know just who was responsible for that funding. Furthermore, the labor movement appears to be very involved in this project, a movement which has been very biased when it comes to the question of casinos - such as paying 'volunteers' to fill seats at hearings and bussing in union members across the state to local casino debates.
Governor Patrick made two attempts to "study" casinos in Massachusetts. The first was a retread of many the other studies done, bringing in "experts" and using their numbers - which led to the laughable 30,000-person job claim. The second was his Spectrum Gaming Report, perhaps the closest thing to a comprehensive study done in Massachusetts, yet produced by a company that works for the industry.
In fact, at the time the report was published, Spectrum Gaming published their client list, which including Kerzner International, on the front page of their web site. The Chairman of Kerzner International was none other than Sol Kernzer - the same developer behind South Africa's Sun City, Connecticut's Mohegan Sun, Rhode Island's ailing Twin Rivers, and, last but not least, a major investor behind the Mashpee Wampanoag Tribe's attempt to build the world's biggest casino in Middleboro, Massachusetts.
Which might explain why Spectrum's report differed from the advice Prof. Barrows offered Governor Patrick in one major respect - that three Statewide casinos made sense - but only if one of them was an Indian casino.
Disdaining studies altogether, Representative David Flynn (D - Bridgewater)once boasted at a casino hearing that he had never even gone to the Connecticut casinos or a racino in Rhode Island. He actually saw that as a plus in his argument to legalize them in Massachusetts.
Studies shouldn't be dismissed out of hand and there are many people on Beacon Hill who are doing their due diligence, some of whom probably sit on the other side of this issue. However, it's clear that all too many don't have the important facts, in great part because we haven't commissioned a comprehensive, unbiased study to find them. Given that it's undeniable that casinos would have a huge and likely irreversible impact on the state, it's important for legislators to get this decision right. The question has to be if casinos are worth it. As of yet, there's no substantive, unbiased study to show that they are worth it. And without that evidence, legislators should vote no.
The truth about the gambling industry and it's deceptive technology, business model and practices.
Most people have heard the expression "The house always wins", but few understand how the gambling industry really makes its money.
The following ironic play on the industry's overused term "Best Practices" brilliantly exposes the real 'casino capitalism'
The Top 10 "Best Practices" in the Predatory Gambling Trade
(What the gambling industry doesn't want you to know about how it conducts business...)
1. Base your business model on 90% of the gambling profits coming from 10% of the people who use the product, which makes nine out of every ten patrons virtually irrelevant to your revenues.
2. Design slot machines to "approach every player as a potential addict" by making them operate like "loaded dice", all in the name of getting the user "to play to extinction" - until all their money is gone. This recent Washington Post op-ed by a respected MIT professor explains it all.
3. Always make the political argument be about jobs, revenues and "inevitability" instead of the business model, the product and the marketing behind it. Which is why you won't find even one picture of a slot machine on our website.
4. Create the public impression that we are concerned about problem gamblers with a disciplined communications strategy (like "best practices" events). But in reality, aggressively defeat all efforts to meaningfully address the issue like how we roadblocked a bill in PA requiring casinos to mail monthly loss statements to frequent gamblers and how we funded a $15 million campaign in Missouri to repeal the state's $500-in-two-hours loss limit law.
5. Intensively fund the public health research like the tobacco companies did to minimize public outcry about our business model, our product and our marketing. Here are two stories, one by Bloomberg News and the other by The Boston Globe, that describe how we do it.
6. Use state-of-the art consumer loyalty technology as a critical marketing tool to closely monitor a person's wagering and the speed they gamble. The faster a person gambles, the more they lose. When you add in how much they wager each time, we develop a revenue model for each person we call "their predicted lifetime value."
How good is our marketing? Companies like Harrah's can trace more than 75 percent of its gambling revenue back to specific customers and with such state-of-the-art technology, we are vulnerable to the charge that we know who most of the out-of-control gamblers are that make up nearly all of our revenue.
But because our business model relies on 90% of its gambling profits coming from 10% of the people who use the product, we need out-of-control gamblers to survive. The consumer cards are how we identify who has the potential to reach the out-of-control category and then we aggressively market to them using free slot play, free food and lodging, telephone solicitations, direct mail and other marketing techniques to stimulate these people to reach their "potential."
7. Outsource the ownership and management of the ATM machines inside your casino and then buy from the vendor the list of the people who take money out of them. These gamblers are highly valuable because they are the ones most likely to lose control of their spending - they lost the money they arrived with at the casino and then needed to withdraw more of their savings to chase the money they lost earlier. If they did it once, they are likely to do it again. And again. And again.
8. Give as much money upfront to government as you can because our business model only works if our government denies the core democratic principle of equal citizenship to other Americans and traps people in debt. We already know 90% of our profits comes from 10% of the people we target - addicted and heavily indebted people. By definition, someone who is an addict or someone who is in deep financial debt is not free.
In a country where everyone is considered equal, the state is actively promoting a product that renders some of our fellow citizens as expendable. There is no good answer for this truth - so simply go back on message with the jobs, revenues and "inevitability" argument.
9. Whatever you do, don't actually use the product yourself. It's a fact that most of us who own and promote casinos don't use the product, like casino exec Steve Wynn, Harrah's CEO Gary Loveman or Massachusetts Treasurer Tim Cahill, to name a few.
10. Casino capitalism can be very, very lucrative - for a handful of people like us.
"I've worked in subprime-lending marketing. Casinos at least are open about what they do. I'm totally comfortable."
-- Harrah's executive Rich Mirman after being asked by a former firm partner if he's comfortable with the morals of managing casinos: Winner Take All (pg. 192)
The Playbook
How gambling interests try to take your State, your community, and your tax dollars, with your cooperation.
STEP 1: Create a sense of inevitability.
STEP 2: Wave inordinately large amounts of money in front of our most vulnerable citizens - State legislators.
STEP 3: Inflate the numbers.
STEP 4: Employ union "influence".
STEP 5: In the case of tribal casinos, label your more vocal and effective opponents as "racists" which conveniently assists in discouraging and discrediting casino critics at the same time.
STEP 6: Wheel out a dependable and moderately credentialed industry operative such as Prof. Clyde Barrow at least once a month to insist our State pockets are being picked by nearby casinos.
STEP 7: Blow off all casino opposition as bible thumping bleeding hearts without a clue as to how the big boys balance budgets. Employ copious rolling of the eyes.
STEP 8: Avoid mentioning any associated costs. Deny them if necessary.
STEP 9: If step 8 is not possible, with a serious face, insist mitigation will contain any conceivable costs.
STEP 10: In the event that discussing costs does become painfully necessary, try to make such cost sound like a benefit (e.g. the beneficial stimulation effect of slot machine noise on otherwise shut-in seniors.)
STEP 11: Capitalize on the serendipitous predictability of:
The media's reluctance to give equal time to the opposition view or report all the facts about how our industry really works, which contributes to
The public's lack of understanding about a complex issue, which keeps them from putting pressure on
Elected decision makers to educate themselves instead of listening to industry lobbyists.
STEP 12: When studies are required, leave out those pesky "social costs" by insisting they are too difficult or cumbersome to measure, or perhaps even "beyond the scope" of the study. This will give the impression that these costs don't actually exist or are, or, at a minimum, are hard to prove. Better yet, imply "social costs" equate to nothing of great importance to the rest of society.
STEP 13: Keep the public and decision makers positively focused with language easily followed by jaunty explanation points - such as "Jobs!", "Revenue!" and "Stakeholder!" - and they will be less likely to pay attention to potentially persuasive words and phrases like as "child neglect", "suicide" and "ridiculously expensive new government regulatory bureaucracy".
STEP 14: If all these steps fail, return to step 1.
