6. "Addicts keep us in business."
Does the gaming industry target addicts? "It's like asking, Does the vodka industry target alcoholics?" says Henry Lesieur, head of the Institute for Problem Gambling. "Well, they target heavy drinkers, and a certain percentage are alcoholics."
Duke professors Charles Clotfelter and Phillip Cook did a study that found that 10% of lottery players account for 68% of lottery purchases. Similarly, Illinois professor Grinols estimates that one-third to one-half of casino revenue comes from problem or pathological gamblers. "After a while [some casinos] don't want compulsive gamblers because they overrun their credit," Lesieur says. "But by then they've already made a lot of money off of them."
Perhaps more disturbing are cases where casinos allow known addicts to continue betting. After losing a million dollars, Houston businessman Joe McNeely sent a letter to several Louisiana casinos asking that they not allow him to gamble. But that didn't prevent him from losing another $2 million. McNeely then sued five casinos, claiming they continued to market to him aggressively even after they were aware of his addiction. Representatives of one casino, he says, even showed up at his mother's funeral and invited him to stop by. Though the casinos pointed out that McNeely hadn't registered with the state police, which has a self-banning system in place for addicts, they settled the suit last fall for an undisclosed amount.
7. "We target your children..."
More kids today gamble than are involved with drugs, smoking or drinking, according to Jeff Derevensky, a psychology professor at McGill University in Montreal. One reason: They're growing up with a message that wagering is acceptable. "Today's 10-year-old will spend their entire life in a world in which gambling is sanctioned and owned by the government," he says. To make matters worse, Derevensky has found that the addiction rate among youths is two to four times that of the population at large.
Though it's illegal to play the lottery if you're under 18, studies show that a high share of adolescents buy tickets — 32% in Louisiana, 34% in Texas and 35% in Connecticut. How? In some states, ticket sales aren't always monitored. Twenty-nine states use automated machines in public places such as airports and stores as one way of dispensing instant-game tickets. "You'll see that [the industry is] trying to appeal to younger people," says Laura Letson, executive director of the New York Council on Problem Gambling. Last year, for example, the council flagged the New York lottery for its marketing tie-in with Warner Bros." "Wild Wild West" — a movie rated PG-13.
It's not just lotteries that are accused of catering to kids. Pete Earley, author of "Super Casino", points to the new family-friendly atmosphere promoted in Las Vegas. (MGM Grand now has the second-largest theme park in the country.) "It's calculated," he says. "You're encouraging future generations to come there, and reinforcing that gambling is OK."
8. "...and your parents."
Five years ago an elderly woman was brought by her adult children to a geriatric clinic in Omaha. Caring for their mother after she had a stroke, the children discovered that she had rung up $35,000 on credit cards at casinos in nearby Council Bluffs, Iowa. It was the first of many similar cases for Dennis McNeilly, a psychologist at that clinic.
He began studying the effects of gambling on seniors and found that casinos tailor their marketing to attract an older crowd. The Station Casino in St. Charles, Mo., for instance, has a Golden Opportunities Club for people 55-plus, in which they can earn credits toward meals and gambling chips. The casino also offers free valet parking and $1 lunches to seniors, and some of its slot machines are based on detective stories from the '40s. Some casinos run shuttle buses from retirement homes. McNeilly found one casino that featured former stars of Lawrence Welk's TV show. The industry even has a term, "third-of-the-month club," to describe gamblers whose casino trips coincide with the arrival of Social Security checks.
"The senior population is getting destroyed by gambling," says Ed Looney, executive director of the Council on Compulsive Gambling of New Jersey. He cites the fact that in 1997, gamblers 60 and older accounted for 65% of the $3.7 billion Atlantic City took in. "You have a right to market your product, but there's a line you need to draw," Looney says. He points out research that shows seniors get to the crisis stage of gambling faster, and don't have the time to rebuild their finances when they get in trouble. "There's no way they can recover," he says.
9. "We have your legislators in our pocket."
At an investors' conference in June, MGM Grand Chief Financial Officer James Murren was asked about the status of the company's new temporary casino in Detroit. He acknowledged that MGM couldn't complete a permanent facility in four years, as it had promised the city. Still, he added, "There's no way in the world they're going to shut us down. We pay our gaming taxes daily."
His comments reflect just how reliant policy makers have become on casino money. And it's not just in the form of taxes. In 1998 congressional and presidential candidates received $5.7 million from the gaming industry, up from $1.1 million in 1992. Soft-money contributions jumped from $400,000 to $3.8 million.
From 1997 through 1999, the gaming industry spent $22.5 million lobbying federal lawmakers, more than such powerful contingents as alcohol and gun groups, according to political watchdog Common Cause. With that kind of spending, it would be tough to pass antigaming legislation, says William Thompson, a professor of public administration at the University of Nevada at Las Vegas. "They've got the bucks, and the opposition doesn't. The casinos make contributions to every viable candidate." Adds Robert Goodman, head of the U.S.Gambling Research Institute: "Government is moving toward relationships that are problematic."
10. "Our regulation is full of loopholes."
Gaming industry officials like to say that their business is tightly regulated. But the truth is, regulators often have their hands tied. Take Indian casinos. Though they have to cooperate with the states to some extent, often tribes are left to regulate themselves. A new compact in California, for instance, leaves it unclear whether the state has the power to audit the tribes' books or inspect their slot machines.
Keeping tabs on Internet gambling is even tougher. Congress is discussing possible measures, but for now regulators can do little about the 850 foreign sites that cater to U.S. gamblers. In some countries, all that's necessary to get a license is to register. "They don't have anything like regulation," says Sue Schneider, chair of the Interactive Gaming Council.
Then there are the "cruises to nowhere," boats that depart from coastal U.S. cities and head into international water, where they offer gambling in an unregulated environment. "In a lot of cases, we aren't even sure who the entities are operating these games," says Kent Perez, Florida assistant attorney general.
http://www.smartmoney.com/consumer/index.cfm?story=gaming
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