Lottery winners turned losers

March 30, 2012 10:08 am

Sorry to be the skunk at the lottery garden party. But it is worth noting that scores of people are wasting thier time standing in lines today to buy lottery tickets for the Mega Millions jackpot that has climbed to $540 million. While many are dreaming about what they would do with all of that money, this report says to be careful what you wish for. Some of the biggest lottery winners have seen their lives take a turn for the worse after striking it rich.

Consider Jack Whittaker, a West Virginia businessman who won $315 million in the Powerball lottery in 2002. He was robbed of $545,000 in cash while at a strip club; his granddaughter and daughter were found dead; and he was sued by Caesars Atlantic City casino for bouncing $1.5 million in checks to cover gambling losses.

Billy Bob Harrell, Jr., a preacher and Home Depot clerk struck won $31 million in the Texas lottery in 1997. Just 20 months later, after divorcing his wife and buying a half-dozen homes for relatives, he committed suicide using a shotgun. See other stories here and here.

Other winners probably go on to enjoy the good life. But with the odds of winning at 1 in 176 million, the majority of lottery gamblers won’t have to worry about winning. Lost in the lottery hype is the government’s role in promoting a misguided policy that is essentially a regressive tax that strips wealth from those who can least afford it, by selling them long-shot dreams that – even for some winners – can turn into a nightmare.

New Hampshire nixes gambling

March 29, 2012 11:58 am

When it comes to big policy decisions in many states, the Senate and House leaders often tell their members how to vote. That’s why it was good to see rank-and-file members in the House of Representatives in New Hampshire rise up and vote against a measure to legalize casinos.

The bill had bipartisan support of the legislative leaders, thanks to some major influence peddling by the casino lobbyists. A close vote was expected. But the House rank-and-file handily defeated the measure 195-154.

The House members understood the bill would essentially give a lucrative monopoly to four private businesses without any required investment or time line for when the casinos would be built. State lawmakers also understood that extracting wealth from residents is a bad way to fund the government. Likewise, Gov. John Lynch was rightly opposed to casinos.

To its credit, the majority of New Hampshire lawmakers did not fall for the argument made in so many other states regarding the need to legalize casinos in order to keep residents from traveling across state lines to gambling. The wrongheaded move by Massachusetts to legalize casinos prompted some to say New Hampshire need to do the same.

To its credit, New Hampshire took the time to study the impact of casinos on the state. The state didn’t just weigh the benefits but also looked at the costs. The findings made it clear that casinos were more trouble than they were worth. That’s a win for good government.

More gambling up the Jersey Turnpike?

March 28, 2012 12:55 pm

Atlantic City is banking on the new Revel Casino to help boost its sagging gambling fortunes. But the casino isn’t even open and already some New Jersey lawmakers want to expand gambling to the Meadowlands in Northern Jersey.

Assembly Speaker Sheila Oliver announced plans to hold legislative hearings to bring gambling to the Meadowlands on the same day Gov. Christie toured the $2.4 billion Revel casino in Atalntic City. (Not to boast, but I predicted as much in a recent piece for Philadelphia Magazine.)

The problem is this: the spread of gambling is like an arms race. Each time a state legalizes casinos or adds a new form of gambling, the neighboring states scramble to top that move in order to compete. In Atlantic City, the casinos have been hammered by the expansion of gambling in Pennsylvania. Now, that New York is moving to legalize commerical casinos, many Jersey lawmakers are pushing for casinos in the Meadowlands in order to keep gamblers from going to the Empire State. The same thing is happening in Delaware (see post below).

The idea of casinos in the Meadowlands may be on hold in the short term. That’s because Christie rejected the idea now that he has bet big on Atlantic City through the $261 million taxpayer-financied bailout he gave to Revel and money-saving regulation cuts the state gave the casino industry. Here’s a sure bet: Once the novelty of the Revel wears off, and casinos in New York open, the pressure will build to bring casinos to the Meadowlands.

Delaware rolls over for casinos

March 28, 2012 10:29 am

Delaware Gov. Jack Markell has just set the new high water mark for the dumbest gambling proposal ever.

Markell wants to expand gambling to every corner of the tiny First State so he can give the struggling but influential casinos there a giant tax break.

Markell’s policy is a reverse Robinhood: Take from the poor and give to the rich.

Markell wants to expand keno from the casinos to 100 sites in the state, and allow betting on pro football to 20 sites. He also wants to legalize online gambling so citizens can play the lottery and casino games from the comfort of their home, office, dorm room and mobile phone. In return, Markell plans to give the casinos a massive tax break by eliminating the $4 million in slot machine fees paid to the state and slashing the fees casinos pay the state from table games from $6.75 million to $3 million.

The proposal amounts to a sweetheart deal for the casinos and a regressive tax for the state’s most vulnerable citizens. Elected officials take an oath to protect and serve their citizens, not scheme to make them poorer. But it is plain to see that Markell is really about serving the influential casino lobbyists first.

The scene playing out in Delaware is a preview for what is to come in other states as gambling spreads and caninablizes revenues. Delaware enjoyed steady growth in gambling revenue for years. But competition from Pennsylvania, Maryland and other states has eroded revenues in recent years. To combat the drop in revenue, the influential casino lobbyists have leaned on lawmakers to negotiate more favorable terms in their monopoly gambling compact.

The real problem facing lawmakers in Delaware is that the state is addicted to gambling – and trying to look cool by having a black license plate. Delaware depends on gambling to fund a much larger percentage of its budget than other states. It worked when Delaware didn’t have any competition. But gambling revenues are not sustainable or dependable, especially as more states turn to gambling as a way to balance their budget. It’s a vicious cycle that leads lawmakers to further exploit their citizens by allowing more and more forms of gambling that only strips wealth from workers in order to pay for government services. In the long run, pushing more gambling is a losing proposition for everyone but the house.

Springsteen shouldn’t shill for Christie

March 27, 2012 3:41 pm

Gov. Christie wants Bruce Springsteen to perform a concert at the new Revel Casino at Atlantic City. The governor is a big Springsteen fan, but the Boss should not sing for Christie or the Revel.

After all, the Revel stands for everything Springsteen has spent his career railing against. In particular, Springsteen’s new album – featuring the hit single “We Take Care of Our Own” – was inspired by his outrage at the cozy ties between Washington and Wall Street, and the greed that led to the economic collapse that cost many their homes and jobs.

The Revel Casino is a monument to those cozy ties between government and Wall Street. After all, Christie used $261 million in state tax credits to bail out private investors in the $2.4 billion Revel. Those investors included Morgan Stanley, the Wall Street bank that walked away from the half-built casino but now stands to profit after Christie’s bailout. (No mention of that in Christie’s Tweets encouraging Springsteen to play at the Revel.

At the same time, Revel plans to impose term limits on some employees by requiring them to reapply for their jobs after four to six years. This will keep a cap on salaries and enable Revel to weed out cocktail servers who are not young and sexy enough.

More to the point, the Revel’s business model profits by luring hard working people to gamble away their money against steep odds. Those down on their luck types are the people Springsteen has chronicled over the years. The Boss touched on this in his new song ”Shackled and Drawn” when he sang:

Gambling man rolls the dice

Workingman pays the bill

It’s still fat and easy up on banker’s hill

Up on banker’s hill, the party’s going strong

Down here below we’re shackled and drawn

So while the notion of Springsteen playing Atlantic City is exciting at first blush, the Boss owes Christie and the Revel nothing. If anything, Springsteen should sing for the long lines outside the soup kitchen that one sees as they exit the AC Expressway and enter the long-struggling Jersey Shore town.

Albany greases the gambling skids

March 27, 2012 1:25 pm

New York voters are more than a year away from getting a chance to decide if the state should legalize commercial casinos, but lawmakers are moving forward with a plan to overhaul the gambling commission.

Nothing like putting the cart before the horse.

Never mind the state’s Constitution prohibits gambling. Never mind the General Assembly voted to change the Constitution late at night with little public debate about the downsides of gambling, let alone an independent cost-benefit analysis of allowing more casinos. Never mind the General Assembly must take a second vote to change the Constitution. Never mind that voters must then approve the Constitutional change, even though the public has no idea where the casinos will be located or any other details for that matter. Never mind the entire process is taking place in secret behind closed doors in Albany. And never mind that the proposed gambling board doesn’t measure up to similar boards in other casino states like New Jersey or Nevada.

Details, details. Lawmakers are obviously confident they will wire, er, work out all the issues. But first things first: overhaul the gambling commission in order to grease the skids for all the changes by consolidating most of the power in the hands of Gov. Cuomo. That way the commission will be in position to ram through all the changes to a public policy designed to strip wealth from citizens, while making it appear like there was the pretense of a process.

Spain: The next Vegas?

March 27, 2012 11:58 am

Casino operators have used the recession to spread gambling opportunities across the United States. Now Sheldon Adelson, the billionaire casino operator who has donated millions to Newt Gingrich’s flagging presidential campaign, is using the financial crisis in Spain to tout a plan to build Vegas-style mega casinos.

Adelson wants to build Europe’s first Las Vegas-style resort in either Madrid or Barcelona. Casinos are legal in Spain, but they are small, low-key establishments that cater mainly to the wealthy. Adelson wants to build a huge casino resort that would eclipse either city’s skyline, allow smoking and cater to the masses

As in the U.S., Adelson is using the idea of jobs and tax revenue to sell the casino idea. Casino operators have pounced on the desperation of citizens and lawmakers to promote gambling as a means of economic development. No doubt casinos create jobs. But stripping more wealth from citizens via gambling is not economic development.

Just ask Nobel Prize winning economist Paul Samuelson: “[Gambling] involves simply sterile transfers of money or goods between individuals, creating no new money or goods. Although it creates output, gambling does nevertheless absorb time and resources. When pursued beyond the limits of recreation, where the main purpose after all is to “kill” time, gambling subtracts from the national income.”

Translation: individuals and governments can’t gamble their way to prosperity.

Home alone, while mom gambles

March 27, 2012 9:56 am

After a 4-year-old boy was found alone and naked in a burning house, authorities in Minneapolos went looking for his guardian. They found his mother gambling in a casino.

The boy was treated for minor burns from the fire, which occurred in January. His mother, Yeng Moua, 44, was charged last week with child endangerment, the Minneapolis Star Trubune reported.

Moua told police her four children were asleep when she left for the casino at midnight. In the morning, three of the children went to school, leaving the 4-year-old home alone. She returned home at 3:30 p.m. and discovered there had been a fire. A neighbor rescued her son, when she heard the smoke alarm. His mother told police that the boy liked to start fires.

Any mother who would leave a child alone to gamble underscores the addictive nature of casinos. While it is an extreme case it is not the only one. There have been a series of cases in Pennsylvania where customers have left children locked in cars outside of a casino while they were inside gambling.

A Florida woman was charged in October with leaving her 11-year-old in a car while she played slots at a casino in a strip mall. While she was in the casino, her car was repossessed and towed away. A Louisianna foster mom left two boys, ages 4 and 7, to play in a park next to a lake and a third boy, 9, in her car, while she played blackjack in a casino last Christmas Eve. A woman in Kansas City was charged last week with leaving her three children (ages 9, 8 and six months) in a car while she played slots at a casino.

Gambling videos tell the story

March 26, 2012 3:01 pm

This blog has linked to lots of stories and reports that shine a light on the downsides of gambling. As a change of pace, here are links to three video segments that also help tell the story. The first two links are presentations by two well respected casino gambling researchers. The other is a first person portrait of a problem gambler.

1. MIT professor and anthropologist Natash Schull calls casinos a defining aspect of our culture today.

2. Baylor University professor Earl Grinols explains how the gambling costs outweigh the benefits.

3. A self proclaimed “gambling degenerate” from Pennsylvania explains his addiction and the government’s role in gambling.

Luring in gambling addicts

March 26, 2012 1:32 pm

Casinos market to gambling addicts for the same reason Willie Sutton robbed banks: Because that’s where the money is. A casino outside of Chicago was fined for trying to lure self-proclaimed gambling addicts in to gamble.

The Rivers Casino sent cash advances and rewards cards to gambling addicts who had voluntarily put their names on a list that bans them from casinos. This is like offering free cocaine to recovering drug addicts. The casino said it was an honest mistake. Sure, and their names were probably just randomly picked out of the telephone book.

The fact is this: studies show a large percentage of casino revenue comes from problem gamblers. (See here, here, here and here for just some of the studies.) Without problem gamblers, casinos, especially the local convenience casinos, do not have a viable business model. So casinos do their best to keep problem gamblers coming back until they are broke. Hence the term, “Play to Extinction.” (Check out this video from Stop Predatory Gambling.)