Casinos across Atlantic City have been even more generous in sending out free slot-play rewards in attempts to lure customers. Statistics released last month show that Atlantic City’s casinos spent an average of about 40 cents of every dollar they won in gambling on promotional allowances and expenses in September.
Atlantic City casinos spend 40% of winnings on comps to compete with other venues
The casino business model is based on patrons who “chase” their losses which means people who continue gambling to try to get back the money they have already lost to the casino. Borrowing money to gamble is one of the most glaring warning signs of problem gambling. One way casinos exploit the mind set of those who chase their losses is by loaning money to gamblers who do not have the cash on hand to continue gambling at the casino. Below is an example of the predatory casinos loan process taken from the Harrah’s Metropolis (IL) Casino website on May 30, 2012.
This New York Times story spotlights how state lotteries are luring citizens to lose more money at a faster clip by offering higher priced scratch-off tickets. Once only a $1, now states like Texas are selling $50 scratch tickets.
Midland, Michigan attorney John Wilson said his lottery-winning client Leroy N. Fick took about a year to blow through $850,000. At Fick’s sentencing on a felony charge of illegal possession of prescription painkiller in Isabella County, Wilson said Fick lives on a fixed income of $1,100 despite having won nearly $2 million in the state’s Make Me Rich! lottery in June 2010. After taxes, Fick received a lump sum of about $850,000. Fick spent $200,000 on the construction of a new home and about $200,000 in annuities, Wilson said. The majority of the remainder was lost in ill-advised investments suggested by Fick’s friends and relatives and fireworks. In 2011 Fick was charged in Bay County with three misdemeanor counts of possession of illegal fireworks. Isabella County Trial Judge Mark H. Duthie sentenced Fick to 45 days in jail.
According to the 2010 Australian Productivity Commission report (their government’s independent research and advisory body) which provides an in-depth analysis of the effects of the predatory gambling business on the nation, predatory gambling now costs Australian society about $4.5 billion dollars per year – the bulk of costs deriving from video slot machines. These costs exceed benefits when “excess” losses by problem gamblers is included. Cost per year per adult translates to $210. $1 U.S. dollar = $1.08 in Australian dollars as of Oct 23, 2009. You can find a longer summary of the report’s findings in the Profits from Gambling Addicts section.
Economists John Jackson and Douglas Walker published an article in Contemporary Economic Policy in early 2011 that showed that the increased revenue that comes from gambling often comes at the expense of sales tax revenue. The two also came to the conclusion that, in general, casinos and greyhound racing tend to decrease state revenues overall.
While government-sanctioned gambling is often trumpeted as a new source of revenue, a 2013 study shows shows the staggering cost of problem gambling. This national Australian report reveals that the social and economic cost of problem gambling could total up to $2.8 billion per year.
Bringing casinos into a region severely hurts other cultural arts organizations. Unlike casinos, which thrive on gamblers, local arts and music theaters must make money on ticket sales. They sell tickets when they host popular shows. But popular musicians and comedians often end up playing at casinos, because casinos can pay them more. Casinos also set radius restrictions that ban performers from going to other nearby venues.
“It’s the fact that we can’t get the performer — that’s the problem,” said James D. O’Brien Jr., chairman of the Hanover Theater in Worcester, Massachusetts.
The Bushnell Center for the Performing Arts in Hartford, Connecticut — a 50-mile drive from Foxwoods and Mohegan Sun — provides a glimpse of what happens to theaters. The Bushnell used to attract dozens of pop and rock shows every year. Now, the theater is lucky to get six.
“When the casinos came, that really put the nail in our coffin,” said David Fay, the theater’s president and chief executive officer. “They absolutely take all of the major pop attractions. Luckily, we have not been challenged with Broadway products.”
The economic recession hit the Bushnell hard, eroding the theater’s endowment and leading to a loss of corporate donors. Those factors, combined with competition from casinos, have left the theater with a deficit of more than $1 million.
With casinos, theaters fear competition for big acts
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In this Reuters piece, David Cay Johnston examines the shift in 11 states that shows, lotteries, the most heavily taxed consumer product in America, generate more revenue than state corporate income taxes. For example, the Rhode Island Lottery netted the state more than $3 for each dollar of state corporate income tax in fiscal 2009. Johnston also spotlights how the increasing trend toward easy reliance on lotteries has not translated to increased revenue for states.
In August 2011, the Reno News and Review publishing the article below detailing how two local Chambers of Commerce in Nevada served as front groups for an influential study that was secretly paid for by the tobacco industry. Since its publication in 1996, the study has been cited repeatedly by the predatory gambling industry in its argument to oppose smoking bans in casinos. It partnered with the tobacco industry to ensure that both would continue to make huge profits of the misfortunes of their customers. This information came to light with the recent publication of the book Casino Women by Susan Chandler and Jill B. Jones.
Smoke and Mirrors – Big Tobacco and Big Casino Sold Nevadans a Bill of Goods
