Monthly Archives: April 2012

Latest casino casualties: horses

April 30, 2012 1:15 pm

Former Pennsylvania Gov. Ed Rendell initially used the legalization of slot machines as a way to save the horse racing industry. Instead, the casinos are literally killing horses.

The New York Times has another powerful investigative story that details how casinos have resulted in richer purses for races, prompting some trainers to use pain medication on horses who are then breaking down. The “flood of casino cash has created powerful and dangerous incentives to run sore, tired or otherwise unfit horses in pursuit of that big score,” The Times reports.

The result has been a 100 percent increase in the fatality rate of horses at Aqueduct Racetrack in Queens, where slot machines were recently added. A large chunk of the story focuses on the sharp increase in deaths of horses at the Penn National track near Harrisburg, Pa., home of the Hollywood Casino.

At Penn National, jockeys have refused to ride any horses owned by Michael Gill, who made his fortune in the mortgage brokerage business. Nine of Gill’s horses died in 10 months. The Pennsylvania Racing Commission and Penn National appear unprepared and uninterested in protecting the health of riders or horses. That’s because the influential casinos are all about generating money for the state and the politically-connected operators. As such, the state and the casino industry is willing to look the other way as horses die and the safety of jockeys is at risk.

It is yet another disgraceful example of how the river of casino cash has resulted in the state abdicating its responsibility to protect the safety and welfare of others. If lawmakers don’t care about the destruction of individuals and families at the hands of casinos, how does anyone think they will give a crap about horses or jockeys.

Look for more of the same problems in New York as it moves to legalize commercial casinos across the state. That’s why Gov. Andrew Cuomo is scrambling to do damage control to wallpaper over the problem until the state Constitutional change is rammed through. But when it comes to casinos and the lip service about helping the racing industry, it is clear that state lawmakers put profits before people and horses.

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Latest gimmick: privatize state lotteries

April 30, 2012 11:26 am

As states continue to search for ways to fill budget holes, the latest gimmick is to privatize the lottery.

Illinois became the first state to privatize the lottery. New Jersey, Pennsylvania, Ohio, Washington and other states are all considering proposals to privatize the lottery. The push for short-term revenue gains comes with obvious risks that include opening states up to corruption and creating more problem gamblers.

State lotteries are giant cash machines. Private operators are salivating at the prospect of gaining control to those cash cows. If history is any guide, the backroom jockeying by the private companies must be watched closely. The winning bidders will likely be connected friends and big campaign givers to the governor or other powerful pols. (Those odds are much better than the odds of hitting the Power Ball.)

But even more problematic is the likely result of the sharp rise in problem gamblers that will come with private operators. Here’s why: a private operators will have an incentive to sell as many tickets as possible because that will probably be part of their compensation. As such, the private operator will be more efficient and aggressive when it comes to selling tickets. There will likely be an increase in places where tickets are sold. There will likely be an increase in lottery games to be played. And there will likely be more expensive lottery tickets sold. For example, Texas offers a $50 lottery ticket.

The result will be more people spending more money on lottery tickets. More people getting addicted to lottery tickets. And more people spending a larger percentage of their income on lottery tickets. Studies show that the most vulnerable residents spend a higher percentage of their income playing the lottery. Expanding the lottery through private operators may provide a short-term increase in revenue but will likely lead to more problems down the road.

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Is Ohio casino owner a predatory lender?

April 26, 2012 9:20 am

The new Cleveland and Cincinnati casino owner Dan Gilbert also owns the Cleveland Cavaliers. But he made his money through Quicken Loans, a mortgage lender. Quicken presents itself as a squeaky clean lender, unlike the many other sleazy predatory lenders that helped drive the housing bubble by putting many unsophisticated borrowers into costly mortgages.

But Quicken’s image is at odds with lawsuits brought by employees, alleging high-pressure and abusive sales practices. In one case, a state court judge in West Virginia found that Detroit-based Quicken had committed fraud against a homeowner by misleading her about the details of her loan, charging excessive fees, and using an appraisal that exaggerated the value of her home by nearly 300 percent. The judge called the lender’s conduct “unconscionable,” the Center for Public Integrity reports. The judge ordered Quicken to by $2.7 million.

The company denies any fraud and says its lending practices followed industry standards. The company also said the lawsuits by former employees are meritless. The allegations should give the Ohio gambling commission further pause before issuing a casino license to Gilbert, who the Website Deadspin called the “Whore of Quicken.” The last thing a poor city like Cleveland needs is a predatory lender in the casino business, which also has many predatory practices.

Of course, Gilbert recently came under for fire for his past role running a sports betting ring in college and making a $60,000 loan to the former convicted mayor of Detroit. See earlier post here. That’s quite a few red flags. A casino license is a privilige not a right. At the very least, states should be able to find business owners to run casinos that don’t come with baggage. But then again the casino industry has a long history of attracting operators with dubious histories.

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Indian casinos in court

April 25, 2012 4:19 pm

Two cases involving Indian casinos were in court this week, underscoring a murky part of federal law that has opened the door to hundreds of casinos around the country.

The U.S. Supreme Court heard arguments surrounding an effort to shut down an existing casino because the tribe failed to meet the deadline for federal recognition. David Patchak sued to stop the opening of the casino by the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, also known as the Gun Lake Tribe, near Grand Rapids. Patchak challenged placement of land in a trust for the tribe, saying the move was illegal since the tribe was not recognized by the government in 1934 when the Indian Reorganization Act was passed.

The government and the tribe argued the suit should be dismissed because federal law bars lawsuits attempting to overturn a decision to take title to lands in trust for tribes. “The United States has not waived its sovereign immunity from suits challenging its title to Indian trust lands,” Justice Department lawyer Eric D. Miller said. Some Supreme Court justices seemed troubled by the timing of the case, noting that the casino is already opened.

In South Carolina, Circuit Judge Ernest Kinard ruled against the Catawba Indian Nation in their lawsuit against the state and top law enforcement officials about the tribe’s gaming rights. The Catawba Indian Nation sued South Carolina in January, arguing a 1993 settlement with the state and federal governments allows the reservation to have gambling. But the state said that that gambling can’t begin on the boats until they reach international waters and specifically prohibits any casino-like gambling in areas controlled by South Carolina.

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Funding cuts for gambling addicts

April 24, 2012 9:22 am

Given that Nevada’s economy centers around gambling, elected officials there have a special duty to help the gambling addicts the state has enabled. Instead, Nevada lawmakers have slashed funding in half that is used to treat problem gamblers.

As such, a series of speakers at the recent Nevada State Conference on Problem Gambling adonated their time because the nonprofit agency does not have money to deliver all the needed services. Those speakers included Monsignor Kevin McAuliffe, a Catholic priest who stole $650,000 from a church to feed his gambling addiction; Paula Chung, the Reno woman who, tried to commit suicide after spending her last nickel playing slots; and Douglas Crawford, a Las Vegas attorney who stole almost $400,000 from his clients.

Funding to help problem gamblers came from a fee on slot machines, so it cost taxpayers nothing. But the state wanted the money to fund other services. The cut in funding came as gambling treatment advocates developed a strategic plan to treat addicts that included a way to help addicts pay restitution to victims.

Nevada is not alone in slashing funding to treat problem gamblers. Several states have reduced funding to help problem gamblers in an effort to plug budget shortfalls. Ironically, the cuts come as states push to add more ways to gamble. The lack of treatment is shortsighted since it will ultimately result in higher costs to taxpayers. See an earlier post here.

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Cloud over Cleveland casino owner

April 23, 2012 10:47 am

A casino in downtown Cleveland has yet to open and already the state’s gambling commission has questions about the owner’s past business dealings.

The gambling commission wanted to know about a $60,000 unsecured loan Dan Gilbert made to former Detroit Mayor Kwame Kilpatrick, who pleaded guilty in 2008 to felony charges in a perjury case and resigned from office. Gilbert called the loan poor judgment, but it is unlikely to derail his chances of running a casino.

Gilbert, majority owner of the Cleveland Cavaliers basketball team, is also the majority owner of the Horseshoe Casino Cleveland that is scheduled to open in May in a former department store. Gilbert made the loan to Kilpatrick in 2009. He never faced criminal charges over the loan, and investigators determined it was not part of an extortion or bribery scheme.

Gilbert, a billionaire who lives in Michigan and owns Quicken Loans, said he thought the loan at the time would “provide a pathway” for Kilpatrick to provide for his family. Gilbert was also accused in 1981, as a student at Michigan State University, of running a sports betting operation on campus. The charge was later addressed through a diversion program.

While Gilbert has not been convicted of any crimes, his dealings with a convicted elected official raise a red flag about the dubious dealings that often arise between casino owners and public officials. Indeed, the river of casino money has been shown in other instances to have a corrupting influence on lawmakers.

Other red flags surround some of the potential casino owners. In particular, the manager of the Cleveland casino – Caesars Entertainment – is losing money and struggling under a pile of debt. But analysts don’t think the gaming giant is in danger of imminent default or that its management of the Horseshoe Casino Cleveland will suffer. Gee, sure sounds like the company is in bad shape. To claim that losing money and a pile of debt won’t impact operations seems disingenuous at best. Read more here.

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Are casinos like cocaine for the brain?

April 20, 2012 1:05 pm

Brain-imaging studies performed by neurologist Hans Breiter show that pathological gambling taps into the same neural circuits as cocaine addiction. As more and more states turn to casinos to balance budgets, this research raises interesting public policy questions for lawmakers.

In effect, are state lawmakers that allow casinos acting like drug cartels? Are the efforts by states to raise revenue through gambling, leading to other problems and expenses down the road? Those questions and others will be discussed at an event on April 26 at the Institute for American Values. The event is free and open to the public. See here for more information and to make a reservation.

The key panelist at the event will be Dr. Breiter, who works out of Massachusetts General Hospital and Northwestern University. He says the roots of pathological gambling aren’t all biological. In fact, environmental factors – like quality of life and proximity to casinos – play a role as well. Breiter argues that policy makers should consider the biological and environmental factors involved in pathological gambling when making decisions about whether to allow casinos. Otherwise, says Breiter, “they’re playing with fire, because there’s a slippery slope between normal and addictive behavior.”

For more information about gambling and the brain see here, here, here, and here. Or watch this video, which brings the issue to life.

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Casinos: a bankrupt public policy

April 20, 2012 9:09 am

The debt crisis has left many families and individuals struggling to make ends meet, while the sluggish economy continues to depress home prices and income growth. Such desperate times are driving many individuals to do desperate things, like turn to gambling, Jay Jamison argues in this piece for the Journal Courier in Illinois.

The same could be said about state lawmakers who are turning to casinos as a way to balance budgets. But this desperate short-term thinking by lawmakers creates more problems than it solves. ”The state is deluding itself and taxpayers by thinking they can get out of the mess we’re in, by further impoverishing citizens who lose at gambling,” writes Jamison, who calls the economic growth from casinos a “mirage.”

Jamison quotes Financial Times columnist Edward Luce, who has written a book titled “Time to Start Thinking: America in the Age of Descent.” In an interview with David Rothkopf at foreignpolicy.com, Mr. Luce said, “Part of the reason to talk about these casinos is to use them as a metaphor for the bankruptcy of public policy, particularly urban public policy. Casinos, sports arenas, and convention centers don’t generate income for those who’ve lost jobs. The casino is a particularly apt metaphor for the intellectual bankruptcy of thinking, because if done well, you can generate short-term income and tax revenues. But the costs are pushed back a little bit further, so the balance sheet doesn’t show what it’s really doing to your community.” Read Luce’s complete interview here.

The push by lawmakers to legalize casinos and other forms of gambling is symbolic of the broader breakdown of institutions that have upended the country. That breakdown is detailed in this fine piece by a former AP correspondent that cuts to the heart of the big changes taking place in the country that have left many scared and disillusioned.

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The next, next Vegas

April 19, 2012 1:15 pm

If Macau is the next Las Vegas, then the Philippines is aiming to become the next, next Vegas.

Enrique “Ricky” Razon Jr. is building a $1.2 billion casino in Manila. Two other casino projects are also in the works with the goal to make the Philippines the next gambling hot spot.

But as this piece in The Wall Street Journal points out, the Philippines has to overcome its history of poverty, natural disasters, kidnapping and terrorism. In 2010, a former Manila police officer hijacked a bus and killed eight Hong Kong tourists.

Call Bugsy Siegel, this sounds like a perfect place to build a casino resort.

Journal reporter Kate O’Keeffe raises one other red flag in transforming the Philippines into a gambling mecca: “Analysts say one challenge is the country’s casino regulator, Philippine Amusement & Gaming Corp., which also runs its own casinos. Former top Pagcor executives have been indicted on corruption charges. And even its flagship casino is run down, with out-of-order Nescafé machines and taped-down electrical cords lining the dingy carpet.”

All minor speed bumps in the scheme of things. In fact, corruption and casinos go together like black and jack.

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All hail the hardcore gamblers

April 19, 2012 11:17 am

Casino owners talk a big game about all the high-end amenities and entertainment they offer. Built peel away the hype and the real game is all about attracting and retaining hardcore gamblers.

That’s where the money is. In fact, hose hardcore gamblers are fueling a slight rebound in Las Vegas, as this piece details.

Anthony Lucas, a financial gaming analyst at UNLV, told the Las Vegas Sun that slot machines are the main profit center. He said slots are five times more profitable than table games. Since slots are easier to understand, they attract more gamblers. “The casinos make much more of a profit off slots and hotel rooms than they do off food and beverage combined,” Lucas said.

Most casino operators try gloss over the hardcore gamblers, many of whom are addicted. As the Sun reports: ”They often prefer to downplay profits and where they come from and instead stress the importance of conventions, shows, food and nightclubs as revenue producers. In other words, they generally would rather talk about revenue, which is defined as the money they take in, than profits, or the money they keep.”

But one casino, Arizona Charlie’s, has a new slogan that cuts to chase as to what it’s all about: “Built for the Gambler.” The Vegas casino is pushing its increased reward options for people who spend hours playing mainly at its 1,150 slot machines. “We’re basically a box with slots,” Ron Lurie, executive vice president and general manager of Arizona Charlie’s, told the Sun.

Finally, some truth in advertising.

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