I did a post last week on Michael Sokolove’s excellent cover story in The New York Times Magazine detailing the rise and fall of the Foxwoods casino in Connecticut. Now comes an interesting Q&A with Sokolove that offers some insight in the story behind the story.
Sokolove offers a great analogy of his personal interest in gambling, which equates with bowling: something to do about once a year. Sokolove is a terrific reporter and his treatment of Foxwoods was even handed but very revealing. But I take issue with his one statement that said most people in casinos are NOT problem gamblers.
The studies vary, but a number of them indicate that casinos do in fact get a large chunk of revenue from problem gamblers. The industry and lawmakers play down this fact or ignore it because who wants to admit they are in a business that thrives from addicts. But it is a hard reality that needs to be confronted as more states expand legalized gambling. (Don’t be fooled when gambling backers say 1 to 3 percent of the population has a gambling problem. That figure is misleading since that is measured against the entire population. The question to ask is this: how many regular casino customers have a gambling problem?)
Here are a couple of links worth reading here and here. Some highlights: Economist Earl Grinols calculated that 52 percent of casino revenues come from active problem and pathological gamblers. University of Minnesota researchers calculated that 2 percent of gamblers account for 63 percent of the money legally wagered in the state.
A thorough 2004 study by the Ontario Problem Gambling Research Centre asked participants to maintain a diary logging their gambling expenditures. The study estimated that 35 percent of Ontario casino revenues were derived from moderate to severe problem gamblers. Those gamblers accounted for 30 percent of revenue from table games and a whopping 62 percent of revenue from slot machines.
In other words, the business model for casinos depends on problem gamblers.
Tags: casino, Foxwoods, Michael Sokolove, New York Times Magazine, problem gambling
Michael Sokolove has a great piece in The New York Times Magazine about the financial struggles facing the Foxwoods casino in Connecticut.
The sprawling casino on an Indian reservation printed money for years, giving members of the tribe annual checks of $100,000. But Foxwoods grew too big too fast and took on a pile of debt to grow some more just before the economy tanked. That and increased competition from other states that are using gambling as a way to finance government operations has cut into Foxwoods’ bottom line. (Just wait until Massachusetts and New York open commercial casinos. The two Indian casinos in Connecticut could be in real peril then.)
The piece does a fine job of capturing the state of the gambling industry these days and how lawmakers and casino operators view the gambling public. Scott Butera, the new head of Foxwoods who was brought in to turn around the casino, is honest about how lawmakers view gambling.
“Few governors or senators or House members want to say, ‘I absolutely love having casinos in my market,’ ” he said. “It’s more like: ‘We can manage this. And here’s what we’ll do. We’ll put it in the right place, it won’t impact our society too much and we’ll make some money.’ ”
Butera also explains how casinos suck gamblers in and almost always win over time.
“The more hands a player is dealt, the better it is for us,” he said. Butera, who has an M.B.A. from N.Y.U., invoked a gambling term — “vig,” short for “vigorish,” meaning the house’s cut of the action. “The math is the math,” he said. “Over time, we’ll make our vig.”
Meanwhile, casino operators know that slot machines are even better bet for the house.
As Sokolove writes: “The difference between table games and slot machines is that slots are entirely predictable. They’re like A.T.M.’s, but in reverse — programmed to take money from players, usually about 9 cents of every dollar wagered, while producing frequent near misses, the illusion that a big jackpot was at hand if only, say, just one more overstuffed burger had landed on the pay line. The lower the house’s hold on a slot machine — and the higher the number of small payouts — the longer a player’s T.O.D. (time on device). It’s a fine balance. Casinos want customers to lose their money, but not so rapidly that they’ll feel the whole experience was a bummer and not want to return.”
Tags: casino, competition, Connecticut, debt, financial troubles, Foxwoods, Michael Sokolove, New York Times Magazine