Gambling on the Potomac

May 30, 2012 8:32 pm

The debate over whether to build a casino on the Potomac River in Maryland underscores the hypocrisy of the gambling debate. Just consider some of the arguments put forth in this story:

First there is County Executive Rushern Baker. He doesn’t like casinos but thinks a casino overlooking the river near an upscale suburban development in Prince George’s County is the best location on the East Coast. ”On the East Coast, this would be the best site,” Baker said. In other words, he was against casinos before he was for them. What logic.

Then there is Jon Peterson, the developer of the neighboring upscale commercial project known as National Harbor. Peterson thinks a casino overlooking the Potomac would attract gamblers from around the world. Yeah, right. No doubt families in Germany, China and Brazil are packing their bags now for a trip to Prince George’s County to see a casino near the suburban version of Baltimore’s Inner Harbor. Puh-leeze. That may be true if the world stopped at Virginia.

Then there is the loyal opposition. That is coming from a developer of the soon-to-open Maryland Live! Casino in nearby Arundel Mills. He argues that another casino would saturate the market. Joe Weinberg, president of Cordish Cos.’s gaming and resort division says it would be “insane” to add another casino in Maryland. Weinberg’s opposition is not based on any economic or social data regarding the costs of data. In other words, he just wants to preserve his local gambling monopoly.

Sadly, all of these lame arguments are emblematic for what often passes as substantive debate regarding the impact of opening casinos. A real debate would include the fact that casinos strip wealth from communities and have little economic spin off. The casinos create social and economic costs that outweigh the benefits. But that’s not a discussion lawmakers and business leaders (or often, even the media) want to have.

Casino tax fight

May 29, 2012 10:03 am

One of the big reasons governments legalize casinos to collect the hefty taxes that pour into state coffers. But as competition for gambling dollars has intensified, a number of casino operators are looking for ways to lower their tax bills.

Casinos in Nevada are fighting $200 million in state taxes due on past complimentary meals given to casino patrons and employees. In 2008, casinos fought and won attempts by the state to tax free meals. But the Nevada Supreme Court left unresolved the question of whether such meals are subject to sales tax.

Since then casinos around the state have petitioned for refunds of those use taxes totaling hundreds of millions of dollars. Boyd Gaming appealed and was denied a $21 million refund. Caesars was likewise denied a $31 million refund.

In Atlantic City. casinos have fought to have their property taxes lowered, claiming the value of the properties has decreased. Casinos in Delaware are lobbying for tax breaks to offset the drop in revenues brought on by increased competition from surrounding states like Pennsylvania and Maryland.

The irony is rich. States turn to gambling to generate tax revenue. Once in the door, the casinos fight to lower their tax bills on a variety of fronts. In the end, the states end up with less and less tax revenue and more addicted gamblers. The problem gamblers cost taxpayers through increased social costs such as crime, bankruptcy, divorce and suicide. In the end, everyone loses except the casino owners.

Casinos and homelessness are linked

May 24, 2012 3:04 pm

“Well I got a job and tried to put my money away
But I got debts that no honest man can pay
So I drew what I had from the Central Trust
And I bought us two tickets on that Coast City bus”
- Bruce Springsteen, Atlantic City

In the wake of a random double murder in Atlantic City allegedly by a troubled woman from Philadelphia, The Inquirer attempts to examine why so many homeless and unstable people roam the struggling seaside town.

The piece never nails down the exact reason but quotes the head of an Atlantic City shelter claiming that surrounding agencies regularly “dump” people in Atlantic City without referrals or treatment plans, or county reimbursements. William Southrey, president of the Atlantic City Rescue Mission, said social service agencies funnel folks on buses to Atlantic City’s shelters, soup kitchens, and recovery programs. He quipped that it is “Greyhound therapy.” (Southrey gave the same quip last year in this piece about the homeless.)

That may be true, but it is not the full story. Studies show the presence of casinos play a role in the increase in homelessness. The Inquirer piece does not delve into this area. But several of the homeless people quoted talk about gambling, including one who claims to have won $8,000 in a casino. Brenda Spencer, 54, another homeless person made it clear why she was in Atlantic City: “I came here to gamble.”

What the story fails to report is that a large chunk of the homeless in Atlantic City are problem gamblers. This 1985 AP report references a study that found half of Atlantic City’s homeless came to town after the casinos opened seeking to get rich quick. A 2003 survey of 120 homeless living in Southrey’s Rescue Mission found that 20 percent listed gambling as a contributing factor to their plight. Indeed, the Mission’s own website says the arrival of casinos led to an increase in homeless in Atlantic City.

The 1999 National Gambling Impact Study Commission, considered the definitive national study on gambling in America, found that “individuals with gambling problems seem to constitute a higher percentage of the homeless population.” The commission said the Atlantic City Rescue Mission reported that 22 percent of its clients are homeless due to a gambling problem. In a survey of 1,100 clients at Rescue Missions nationwide, 18 percent cited gambling as a cause of their homelessness. Interviews with more than 7,000 homeless individuals in Las Vegas revealed that 20 percent reported a gambling problem.

So clearly, there is a direct link to casinos and homelessness. That seems like a detail other communities and lawmakers should keep in mind when considering whether or not to legalize casinos. In short, some of today’s gamblers lining state coffers eventually end up on the street, costing taxpayers money in long-term care and feeding later.

Illinois tries again for casinos

May 24, 2012 12:40 pm

Despite previous failed attempts, many Illinois lawmakers remain hooked on gambling. Fortunately, for Illinois taxpayers, Gov. Pat Quinn continues to stand tall against legalizing casinos.

The Illinois House passed a scaled back casino bill, but Quinn has threatened to veto the measure. Quinn said it was ironic the House would pass a measure with “ethical shortcomings” on the day when respected U.S. Attorney Patrick Fitzgerald announced plans to step down.

Quinn said the bill doesn’t prohibit campaign contributions from the gambling industry, provides insufficient time for the Illinois Gaming Board to make necessary regulatory decisions and lacks proper oversight of purchasing or of a separate body that would monitor the Chicago casino, according to the Associated Press.

“As long as I’m governor, I will not support a gambling bill that falls well short of protecting the people of Illinois,” Quinn said in a statement. “It is clear that this gaming bill still needs significant improvement.”

Unfortunately, Quinn has not completely shut the door to casinos. But his desire to protect citizens and guard against corruption while allow gambling is an inherent conflict that is virtually impossible to achieve.

Casino saturation?

May 24, 2012 11:38 am

The casinos in Massachusetts have yet to open and already some fear the market is becoming tapped out. Boston Globe columnist Joan Vennochi asks if casinos have become a risky bet.

Vennochi points to the increased competition plaguing the Foxwoods casino in nearby Connecticut and wonders if the market can support more casinos in Massachusetts. “Are there really enough gambling addicts, bored oldsters, and people in general who think it’s fun to watch their money melt away, to support multiple facilities?” Vennochi writes.

Las Vegas casino mogul Sheldon Adelson passed on opening a casino in Massachusetts. Fellow Vegas mogul Steve Wynn left town after residents in Foxborough made it clear that they didn’t want a casino in their town. (So much for Gov. Deval Patrick’s “jackpot.”)

Meanwhile, Foxwoods is scrambling to offer new gimmicks to lure gamblers to its Connecticut casino. One scheme includes offering cheap gas to induce gamblers to drive further and bypass their local convenience casino. Another is a wellness center, a move that drips with irony considering casinos are one of the few indoor public spaces in the country that still allow smokers.

Guess desperate times call for desperate measure.

Murders shine light on Atlantic City

May 23, 2012 9:18 am

The daylight stabbing death of two tourists in the shadow of a casino in Atlantic City has underscored the 30-year failure of gambling to revitalize the struggling Jersey Shore town.

No doubt the stabbings were random and appear to have been done by a homeless woman with mental problems. But the murders have brought into sharp focus the undeniable fact that gambling in Atlantic City has failed to improve the quality of life for many there.

Despite the billions of dollars that have flowed through the casinos over the years, Atlantic City remains a poor, corrupt and dysfunctional city. Outside the gleaming casinos, the desolate streets are littered with homeless, drug addicts and prostitutes.

Pawn shops, pay day lenders and soup kitchens abound, save for a couple block stretch of attractive retail outlets. The real estate boom that has lifted the surrounding Jersey Shore points has largely skipped past Atlantic City. (The only reason, really, to go to Atlantic City is for a hoagie at the White House Sub Shop.)

Jen A. Miller wrote a strong column highlighting the failure of Atlantic City. Meanwhile, the Press of Atlantic City rightly took exception to the over-the-top headline in the Philadelphia Daily News that called AC a Tourist Death Trap. The Daily News headline was especially off point considering the alleged killer is from Philadelphia.

But the heinous murders do highlight the larger point regarding the failure of casinos to transform Atlantic City. That’s because gambling generates little wealth for communities and even less economic spin off. Instead, it strips wealth from those who can least afford it. (See here and here for studies and stories detailing the negative economic impact of casinos.) Indeed, the 30-year failure of Atlantic City is something other towns should consider before making a bad bet on casinos.

Facebook: future home of casinos

May 22, 2012 4:20 pm

A number of companies are scrambling to launch casino-style games on Facebook, a move that is expected to eventually attract more and younger gamblers.

RocketFrog, a Los Angeles-based company backed by Brody Jenner, stepbrother to Kim Kardashian and son of Olympic decathlete Bruce Jenner, is latest to offer free casino games on Facebook. Unlike the other gambling games, RocketFrog allows players to win a variety of prizes, ranging from movie tickets to music, food and more.

Other companies are scrambling to launch online gambling games as well, including IGT, Zynga and Caesars Interactive. The moves are fueled by the Department of Justice reversal in its stance on the Wire Act of 1961. Under the new ruling that was quietly issued just before Christmas last year, the Justice Department now view the act as only outlawing sports betting. That shift in policy will enable states to pass legislation regarding online gambling, opening the door for just about anyone to get into the gambling rackets.

The upshot will be an explosion in online gambling that is likely to attract many new gamblers as well younger gamblers. It will also people to gamble around the clock from the comfort of their home or mobile phone. That will strip more welath from communities and lead to even more economic and social costs.

Two tourists stabbed in Atlantic City

May 22, 2012 1:05 pm

Two tourists were stabbed to death by a woman on a busy street corner in the morning near the Bally’s Casino in Atlantic City. Antoinette E. Pelzer, 44, apparently tried to rob the two Canadian women, ages 47 and 80, around 10 a.m. on Monday at the intersection of Michigan and Pacific avenues. She was arrested by a police office who was patrolling just steps away.

The murders in broad daylight underscore how the Atlantic City casinos exist in the middle of a mostly poor and dangerous city that has seen little improvement in the more than 30 years since gambling was legalized. Except for a couple of blocks of retail outlet, the streets outside the casinos are populated by pawn shops, soup kitchens, budget stores, bail bondsmen and other low-end retailers and sandwich shops. Most gamblers are bused in and out of the casinos and spend little time walking on the mostly empty streets. The streets are scattered with many poor, homeless, drug dealers, prostitutes addicts and beggars.

The murders come as Atlantic City is hoping to lure gamblers back to town with the recent opening of a new $2.4 billion casino and a new advertising campaign. The AC casinos have struggled from increased competition from Pennsylvania and other states that have legalized gambling. The access to local convenience casinos gives gamblers little reason to travel to Atlantic City. Murders in broad daylight certainly won’t help.

UPDATE: A court hearing regarding the double murder indicates the two Canadian tourists were a mother and daughter and of Asian decent, while alleged killer appears mentally ill.

Whitney Houston’s daughter shines light on underage gambling

May 22, 2012 11:42 am

The daughter of the late signer Whitney Houston was caught on tape gambling at the MGM Resort and Casino in Las Vegas over the weekend. One Problem: Houston’s daughter, Bobbi Kristina Brown, is only 19 years old. Casino gamblers must be 21.

MGM is launching an investigation. Don’t expect much to come from that. Casinos do a lousy job of policing underage gamblers, and instead just view any fines as a cost of doing business. A Pittsburgh casino was fined $150,000 for repeated violations, involving underag gamblers. Other Pennsylvania casinos have been fined as well. An Atlantic City casino was fined for allowing a 14-year-old boy to gamble.

These may seem like isolated incidents but the number of underage kids who gamble is a serious and growing problem. As more states legalize casinos and push on line One study found one out of every five young people has a serious gambling-related problem, up from one out of every ten in 1988. The study was completed by Durand F. Jacobs, a clinical professor of medicine at Loma Linda University Medical School in California, and can be found here.

Other more recent studies have found similar problems among teen gamblers, especially males, including one here by Johns Hopkins University. Gambling is also a problem on college campuses. A study of college students in Florida found 66 percent of students said they gambled at least once in the past year. Another study found the percentage of college study with gambling problems was double the national average.

The problem is likely to grow as more states and the federal government look get into online gambling. One study found this could have the most dramatic effect on Internet-savvy underage gamblers. “The potential for future problems among youth is high, especially among a generation of young people who have grown up with videogames, computers, and the Internet,” the study found.

Gambling commissioner busted for DUI

May 21, 2012 11:57 am

A gambling commissioner in Iowa was arrested for drunk driving after police observed his car swerving on the highway in De Moines.

Jeff Lamberti, a former Republican Senate Leader who is vice chairman of the state’s gambling commission, first told police he was texting while driving. Then he said he had two beers. Later he said he had four beers, then said he had six beers.

Police found a large bottle of nearly empty Jack Daniels inside a cloth bag that also contained a piece of clothing and several condoms, according to the police report. Lamberti later said he made a stupid mistake and would take responsibility for his actions.

Lamberti’s troubles with the law is just the latest controversy dogging a state gambling commissioner. In Massachusetts, the governor’s pick for the fledgling gambling commission there was accused of child sex abuse. New York’s racing association is ensared in a controversey surrounding overcharging bettors millions of dollars.

In Pennsylvania, the gambling commission has been a rotating group of insiders who cycle off the board only to go represent the casino firms they regulated. Former Gov. Ed Rendell’s first pick to head the gambling board stepped down after it was disclosed that he testified on behalf of a boxing promoter with alleged mob ties.

The legal troubles of commission members and insider politics underscores how the agencies charged with regulating gambling are often part of the problem, nit part of the solution.