NY casino deal “evolving”

January 31, 2013 9:47 pm

Gov. Andrew Cuomo and lawmakers continue to meet in secret to hash out details to add more casinos in New York.

The pols say the casino plan is “evolving.” That is code for there is a lot of backroom wheeling and dealing going on by lobbyists and lawmakers in order to cut a deal. Apparently there will be little to no public debate in this Albany democracy. Of course, the public has no idea what deals or promises are being made. If anything, the lawmakers are making up the state’s gambling policy by the seat of their pants.

There is no rhyme or reason to the ever-changing casino plan. That’s because the final outcome is about how to gain enough support to get a casino bill passed, while keeping the casino lobbyists happy. Forget about any thoughtful study regarding the economic and social impact of more gambling. No one is even considering the broader policy implications of funding government operations from individual gambling losses.

Regardless of how many casinos are built and where, the bottom line is this: In order for Cuomo & Co. to win, its citizens have to lose.

NY lawmakers fight over who will handle casino dealing

January 29, 2013 3:53 pm

Lawmakers spend little to no time weighing the social and economic costs of more casinos. Instead, the real political fight is over which lawmakers will get control over whacking up the lucrative gambling pie.

In New York, Gov. Andrew Cuomo wants one of the state agencies he controls to determine where the proposed casinos will be located. But Assembly Speaker Sheldon Silver wants the legislature to have input on selecting the locations. Either way creates the potential for conflicts of interests and backscratching, or worse. That’s because the pols all know that the power that comes with making such a lucrative decision can translate into huge political benefits, including campaign contributions.

Of course, Cuomo or the legislature have yet to conduct an independent cost-benefit analysis to consider the real impact of more gambling. Not to mention, the legislature hasn’t even had a second vote on approving the casinos. And voters have yet to go to the polls to decide if they want to change the state Constitution to allow commercial casinos. But already the lawmakers are salivating over the wheeling and dealing that will take place in the backrooms of Albany over who gets a coveted casino license and where it is located.

Cuomo has proposed three casinos be located somewhere upstate. He did not comment on where the remaining four casinos would go. Cuomo wants to appoint a new commission to determine where the casinos will go. Silver wants the legislature to have input.

New York Post columnist Fredric Dicker ripped Silver for demanding that “politically-chosen lawmakers” decide where the casinos are located. Dicker quotes an unnamed source saying: “This could be worth tens of millions of dollars in fees to lobbyists from gaming interests across the country, and it could make that much more money for many of Shelly’s friends.”

This is no defense of Silver, but i is worth noting that Dicker failed to mention the same thing could be said of allowing Cuomo to control the casino process. In fact, a group with ties to Cuomo received $2 million from gambling interests last year as The New York Times reported. Recall that Cuomo never even mentioned casinos or gambling when he was running for governor. But he suddenly got interested in the idea as the money started flowing in from gambling.

Of course, Dicker failed to mention that he has a deal to write a book with Cuomo’s. So don’t look for Fred to criticize the governor’s handling of the casino dealings that have been going on for the past year – and are just getting started.

Ban lottery tickets for the poor

January 25, 2013 3:40 pm

As New York Gov. Andrew Cuomo pushes to expand lottery sales, a North Carolina lawmaker wants to ban the sale of lottery tickets to people who are on welfare or in bankruptcy.

While the North Carolina lawmaker’s proposal sounds almost impossible to enforce, at least he has the right idea regarding how lottery tickets strip wealth from those who can least afford it. That’s a step in the right direction compared with Cuomo’s plan to sell more Quick Draw tickets in New York. 

Quick Draw is known as “video crack” because it is so addictive. One gambling policy expert said Cuomo’s plan would hurt economic growth in New York by stripping wealth from people already struggling to get by. Indeed, a North Carolina study found lottery ticket sales were concentrated in the poorest counties: According to North Carolina Policy Watch, sales of lottery tickets are concentrated in impoverished counties, and that all but two of the 20 poorest counties have above-average ticket sales per capita.

That is the dirty secret that most elected officials ignore or hide from the general public. Kudos to State Rep. Paul “Skip” Stam of North Carolina for trying to do something about it. But if lawmakers were serious about protecting taxpayers, they would get the government out of the gambling racket.

Cuomo’s gambling expansion plan

January 24, 2013 9:41 am

For a leader who has been so progressive in shaping gun policy, New York Gov. Andrew Cuomo has been equally regressive when it comes to the state’s ever evolving gambling policy.

Last year, Cuomo proposed a flawed plan to change the state’s Constitution to allow seven casinos scattered across the state. Now, Cuomo wants the “first phase” of that plan to be restricted to three casinos located in upstate New York. Cuomo wants lawmakers and voters to approve his casino plan without disclosing where exactly the casinos would be located.

Why the secrecy? Would you vote for a landfill or a nuclear power plant without knowing where it would be located? No. So why should anyone be asked to approve a casino without knowing the location?

Cuomo’s casino plan is just part of his broader expansion of gambling to every corner of New York. If approved, once the three casinos are allowed, more will surely follow. Cuomo’s gambling policy is a vicious cycle that resembles a gambler chasing his loses.

Cuomo also wants to allow as many as 800 smaller corner stores to sell the controversial Quick Draw. The move would open the game to gamblers age 18 or older. Currently, the game is limited to gamblers over 21. The measure would only generate an additional $25 million for the state, but it would be one more way to get young people hooked on gambling.

The problem is the more New York comes to rely on gambling to fill state coffers, the more it will continue to push a wide variety of gambling games, including more casinos and lottery sales. It is all part of race to the bottom that is playing out in more and more states that have become hooked on gambling.

The upshot will be an eventual saturation of gambling that leaves states struggling to figure out how to entice residents to lose more money. That is happening in Indiana, a state that bet on casinos years ago, but is now facing increased competition from neighboring states, as The New York Times detailed.Lawmakers there are scrambling to figure out how to replace an expected drop in gambling revenue. Big surprise: the plan includes adding more gambling. It is getting harder to figure out who is more addicted to gambling: lawmakers or people who sit in front of slot machines for hours on end.

About those casino benefits…

January 21, 2013 3:00 pm

Lawmakers in a number of states are falling in love with casinos as a way to fund government operations. But the benefits often don’t add up.

Take Ohio where casinos have opened in Cleveland, Columbus and Toledo. A fourth casino is expected to open in Cincinnati in the spring. a percentage of the revenues are earmarked for education. (Lawmakers almost always link gambling money to popular causes like education, tax reform and senior citizens.)

But so far the revenue from the Ohio casinos is hardly making a dent in education. In fact, the first round of funding averaged $21 for each student in the state, according to this report. Given the millions of dollars in wealth that was stripped from the pockets of gamblers, not to mention the increased social and economic costs, and the increase in problem gambling, it appears the taxpayers are the real losers in the state’s misguided policy of using casinos to fund government operations.

Cuomo scales back casino plan

January 18, 2013 11:03 am

Last year, Gov. Andrew Cuomo argued that New York should legalize casinos to help create jobs, adding the state is already in the gambling business so why not go all in. His initial proposal called for seven casinos scattered around the state, including New York City. (Recall Cuomo’s plan for a $4 billion convention center in Queens that was going to be built by the major casino operator Genting.)

A year later Cuomo has changed his plan and is now calling for just three casinos located upstate and no casinos in New York City. His new argument is the casinos will lure gamblers from the city and boost tourism. “I believe casinos in upstate New York could be a great magnet to bring the New York City traffic up,” Cuomo said.

Of course, Cuomo’s assertion, just like his initial proposal, offers no supporting evidence to back his claim. Then again casino supporters are famous for making wild promises about the benefits of gambling. The promises are often based on little or no data.

The fact is, outside of Las Vegas, casinos are not major tourist magnates. Is anyone really going to load the kids into the minivan and head to upstate New York for a week to visit the new casino there?

Yes, casinos attract gamblers. But most visitors gamble and then go home. In fact, the casinos do a great job of keeping the gamblers on site, eating, drinking and shopping at the casino. Just ask Atlantic City, where a number of restaurants closed because most gamblers eat at the casinos.

Casinos have also failed to deliver on the economic development promises in other cities. (See this study about the impact of casino in New Orleans and Mississippis, where the casinos hurt existing businesses.) Other studies have found most gamblers come from a 50 mile radius and rarely spend the night, let alone spend any time at other businesses in town. In Illinois, the Chicago Better Government Association conducted a survey of the impact of casinos there are found that: “Out of 785 players interviewed, only one out-of-state visitor, that traveled over 100 miles, reported making a purchase in town. Only 3% of all out-of-state players spent money outside the casino.

“The largest percentage share of gamblers are locals. ‘There is no doubt that Illinois draws their largest share of patrons from their own communities and other nearby communities.’’ Over five-sixths (83%) of the amount of money gambled is not new money brought into the local area. It is money that is already in the community,” the survey found.

If anything, the spread of gambling in recent years has only decreased the need for people to travel far to gamble when there are so many options closer to home. At the end of the day, the upstate casino will be little more than a local convenience casinos that depends mainly on area residents. At least one upstate newspaper in New York is opposed to using gambling as an economic development tool.

More broadly, it is unclear why Cuomo scaled back his casino plan since all of the discussions are held behind closed doors. Is it the lack of public support for so many casinos? If so, is the new plan, which Cuomo called Phase I, just a sneaky way to gain support for changing the state Constitution and then add more casinos later. Either way, Cuomo has yet to produce any evidence to support his ever evolving casino policy.

Bad bet: Outsourcing the lottery

January 16, 2013 9:46 am

It is bad enough that many states fund budgets by pushing the sale of lottery tickets, which is effectively a regressive tax that preys on the most vulnerable residents, many of whom consider the purchase of lottery tickets as a wealth-building strategy.

Now, Pennsylvania Gov. Tom Corbett plans to turn over the lottery operations to a private operator who will be paid hundreds of millions of dollars to get taxpayers to gamble even more. Corbett awarded the lucrative lottery contract to a British firm named Camelot Global Services. The award process was done in secret and offers little transparency. 

In addition, there are many questions and potential problems surrounding the deal. For starters, the details of the contract are murky and unclear. Camelot was the sole bidder, so it is unclear if the state is even getting a good deal. There are also risks. It is also unclear if the revenue is guaranteed to the state if lottery sales come up short.

More broadly, privatizing public assets does not have a great track record and may backfire. One report says the lottery deal may cost senior citizens. Consider the bad deals cities like Chicago have struck to lease parking operations to private firms.

More troubling, the lottery contract includes incentives and bonuses for Camelot if it can boost sales. The only way to do that is to aggressively market the lottery to get new and existing taxpayers to gamble away more money. In effect, the state is betting on its own residents to lose more money. It’s a bad deal all around. The only clear winner is Camelot.

The deal also calls for Camelot to install keno machines in bars and restaurants and sell lottery tickets online, all part of the state’s ever-growing addiction, er, policy, to push gambling at every turn in order to suck more money out of the pockets on residents. The lottery already generates $3.5 billion in sales and more than $1 billion in revenue for the state.

Most of the lottery players are elderly, poor, minority and working class. Studies show that low income residents spend a much higher percentage of their income on lottery tickets. Many are not casual players who buy a $1 ticket when the Powerball pot gets big. Instead, many buy multiple tickets every day on long-shot odds that rarely, if ever, pay off. But when it comes to privatizing the lottery, it is a good bet that this deal will prove to be a costly boondoggle.

Slots for tots X

January 15, 2013 10:25 am

Illinois, like other states, likes to trumpet the benefits of casinos. But one of the dirty little secrets is that the casinos create social and economics costs as well. One of the more disturbing patterns that follow casinos is the number of gamblers who leave kids in cars outside casinos. 

In Illinois, adults have left 85 children unsupervised at casinos across the state over the last two and a half years, according to a report in the Chicago Sun-Times. In one instance, a grandmother left her four grand kids in the car while she went to gamble. The kids, ages eight months, 1, 8 and 11, were not hurt. Grandma was fined. 

There have been a number of incidents of kids left in cars outside of casinos in Pennsylvania and many other states. (This blog has done nine previous posts titled Slots for Tots detailing similar cases.) The incidents underscore the addictive nature of gambling, especially slot machines as detailed in this post. As more casinos open closer to home, more adults are making frequent visits and getting hooked. Some casinos boast that their customers visit an average of four to five times a week. As a result, more kids are getting left in cars as adults swing into the local casinos.

Casino operators and lawmakers downplay the incidents because they are too busy counting the tax revenue that casinos generate. But it is only a matter of time before a child gets injured or dies as a result of a guardian in search of a gambling fix.

Addicted to slot machines

January 14, 2013 9:23 am

Slot machines are the biggest revenue generators for casinos. Among the slot machines, the penny machines are actually the most profitable because gamblers often play the longest, losing the most over time. One reason is the new high-tech slot machines can be very addictive, as a book by M.I.T professor Natash Dow Schüll details.

Unlike the old one-armed bandits, today’s video slot machines are built for speed. Gamblers can place a bet every three seconds (or 1,200 times an hour) pushing electronic buttons and paying with credit cards rather than coins. There is essentially no break between bets, leaving little opportunity to process what has transpired.

Some machines allow gamblers to pick the moment when the reels stop spinning, giving gamblers the illusion that they are partly in control of the outcome. But in reality the slot machines contain random-number generators that pre-determine the outcome regardless of when the gambler pushes the button.

More problematic, most slot machines allow gamblers to place multi-line bets. For example, a gambler can bet on up to 20 different pay lines in a single game. If a player wins on 9 of the 20 lines, the machine gives sound and video effects as if the player won when in fact they lost most of what was wagered. These so-called false wins are misleading. The combination of the rapid play and false wins results in slot machines that are more addictive.

Professor Schüll interviewed gamblers who spoke of getting into a “zone” in which they enter a mindless state and lose all sense of control.

Addiction specialists say the near-wins and false wins can set off the same reward mechanism in the brain that is activated by actually winning a game. Jon E. Grant, a professor of psychiatry at the University of Chicago, says many problem gamblers seeking treatment appear to be more severe than 10 or 15 years ago. The multi-line machines is one of the reasons, he said.

Lawmakers who enable casinos may or may not be aware of the changes in the gambling industry. Most either downplay or ignore the issues. But the reality is many of the gamblers in the local casinos visit an average of 3 to 5 times a week, or as much as 200 times a year. As more casinos open, lawmakers are essentially putting the addictive slot machines on the doorstep for more people, creating easier access and more addiction all in an effort to generate revenues for state coffers.

Atlantic City losing streak: six years and counting

January 11, 2013 9:11 am

Like many of the gamblers who leave Atlantic City with empty pockets, the casinos here are on a serious losing streak.

Total casino revenue was down 8 percent in 2012 in Atlantic City. It was the sixth year in row of revenue declines. Where have all of the gamblers gone? The casinos are struggling from increased competition mainly from Pennsylvania, which legalized casinos in 2004. Delaware, Maryland and Ohio have opened casinos in recent years. Massachusetts legalized casinos but has yet to open any. 

Overall, revenues are down 41 percent from the high 2006. The casinos raked in $3.05 billion last year compared with $5.2 billion in 2006. the addition of the new Revel casino has done little to reverse the fortunes in Atlantic City. In fact, the Revel has struggled to attract gamblers since opening last spring and is teetering on bankruptcy. Hurricane Sandy also hurt the casino, which were forced to close for several days during the storm.

The financial problems in Atlantic City may get worse if New York Gov. Andrew cuomo gets his way and legalizes casinos. About half of the Atlantic City gamblers come from the New York area. At the same time, some lawmakers in North Jersey are pushing to bring a casino to the Meadowlands.

That will leave the Atlantic City casinos like many of its gambling customers: chasing its losses.

Update: The casinos in Nevada are also struggling as the sluggish economy continues to impact gamblers.