This powerful essay by Elizabeth Winslow McAuliffe in Public Integrity shows how the lottery is a public policy failure by spotlighting two fact-based conclusions: 1) the evidence indicates that the original aims of the state lottery have not been fulfilled; and 2) the lottery cannot be defended as an ethical enterprise for government.
Fraud
The New York Times Magazine Exposes Modern Slot Machines
This must-read New York Times Magazine cover story by Gary Rivlin exposes the slot machine business as predatory and deceptive.
Australian Government Study Reveals the Spectacular Failure of Government-Sanctioned Gambling
This report from the Productivity Commission of Australia (the Australian Government’s independent research and advisory body) provides an in-depth analysis of the effects of the predatory gambling industry on the nation. Gambling, and specifically “pokies” or video slot machines, became pervasive across almost the entire Australian nation by 1995.
Community backlash against slot machines in Switzerland caused the nation to ban slot machines outside of casinos in 2005. Widespread concerns in Russia about gamblers losing their life savings and becoming destitute caused that country to ban all gambling, other than in four highly remote regions. Due to increased problem gambling, Norway banned all video slot machines in 2007 and Internet gambling in 2009. The Norwegian gambling authority is implementing “less aggressive” (slower play, low maximum loss rates) gambling machines in smaller numbers than the banned slots.
The major conclusions from the Australian report are:
* 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.
* 42 to 75 percent of total machine losses are paid by moderate and high risk problem gamblers.
* Gambling machines, as contrasted to other forms of gambling such as lottery or tables games account for around 75–80 percent of ‘problem gamblers’ and are found to pose significant problems for ordinary consumers.
* About 2.5 percent of Australian adults are now problem gamblers.
* 8 to 15 percent of Australian problem gamblers seek treatment. “Internationally, around 6-15 per cent of people experiencing problems with gambling are reported to seek help from problem gambling services…People experiencing problems with their gambling often do not seek professional help until a ‘crisis’ occurs — financial ruin, relationship break down, court charges or attempted suicide — or when they hit ‘rock bottom.’
* Help services for problem gamblers using them have worked well overall, but they relate to people who have already developed major problems and are thus not a substitute for preventative measures.
* The potential for significant harm from some types of gambling is what distinguishes gambling from most other enjoyable recreational activities — and underlines the communities’ ambivalence towards it. While many Australians gamble, they remain skeptical about the overall community benefits. For instance, one survey estimated that around 80 percent of Victorian adults considered that gambling had done more harm than good (with little difference between the views of gamblers and non-gamblers). Looking at all Australian surveys, roughly 80 percent of the public wants to see video slot machines removed or their numbers reduced.
* Many people who do not fit the strict criteria for problem gambling are found to experience significant harms. For example, of those people who said that gambling had affected their job performance, some 60 percent were not categorized as ‘problem gamblers.’
* 39 percent of high risk problem gamblers suffered adverse effects on workplace performance.
* Had there been full knowledge at the time about the harmful effects of substantially increasing accessibility to gaming machines in the 1990s, a different model of liberalization, with less widespread accessibility, may well have been seen as appropriate. Western Australia did not follow the approach of other jurisdictions and appears to have far fewer gambling problems.
* The effect of widespread gambling machine availability on the economy can be seen in Australia, where gambling losses reached 3.1 percent of household consumption, 6.3 percent in Northern Australia.
* Beyond the powerful example provided by the early liberalization experiences of Australia, there is a broad range of evidence suggesting a link between proximity and harm.
* 60 percent of Australian teens gamble on video slot machines by the time they are 18 years of age. Over 60 percent of Aussie teens have gambled in some form before they reached 18 years.
* Increased knowledge of gambling in children may have the unintended consequence of intensifying harmful behavior, a risk that should be considered in the design (or even in considering the introduction) of school-based programs. Nevertheless, several insights emerge from the drug, alcohol and driver education literature that may increase the effectiveness of any school-based gambling education programs and potentially reduce the risks of adverse behavioral responses: a school-based education program may be more effective if accompanied by a corresponding change in societal attitudes and a media campaign. For instance, the relatively greater success of school-based tobacco programs (compared with alcohol) is attributed to the fact that these were accompanied by consistent anti–smoking messages in the general media and to the emergence of a strong anti–smoking social movement.
* Australian gamblers are estimated to lose A$790 million per year, about 4 percent of the size of legal gambling, in illegal online gambling and Internet casinos.
* The report found that slot machines are between 6 and 18 times more risky than lotteries
* Around 50 per cent of gaming machine gamblers have false beliefs about how gaming machines work, which pose risks to them…’Faulty cognition’ about slot machine design is strongly associated with problem gambling. 33 percent of high-risk problem gamblers, 20 percent of moderate risk, and 5 percent of recreational gamblers believe that a gambler is more likely to win on a slot machine after losing many times in a row. Some groups of consumers — such as people with intellectual or mental health disabilities, poor English skills, and those who are emotionally fragile (say due to grief) — may be particularly vulnerable to problems when gambling.
Slot Machines Near Misses Are Perfectly Tuned to Stoke the Addiction
The Discover Magazine blog helps explain the allure of slot machines and the difficulty that some gamblers have in walking away by highlighting that, to a gambler’s brain, a near miss provides almost the same high as a win.
Slot Machines Near Misses Are Perfectly Tuned to Stoke the Addiction
The Software and Design of Slot Machines
University of Waterloo (Canada) computer game design researcher Kevin Harrigan, whose research has made headlines around the world, recently testified before the New Hampshire Gambling Study Commission to explain the software and design features of slot machines. Through Canada’s Freedom of Information Act, Dr. Harrigan obtained slot machine design documents, called PAR Sheets. Slot machine manufacturers commissioned an army of lawyers but failed to block Dr. Harrigan’s access to this information. Without losses disguised as wins and frequent near win displays, slot machines would not be profitable.
Government’s Predatory Gambling Program Surpasses the Predatory Subprime Lending Business
Prior to the massive crash of the highly-predatory subprime lending business which nearly every state Attorney General sued for their predatory practices, former Harrah’s top executive Rich Mirman boasted to Wall Street Journal reporter Christina Binkley: “I worked in the subprime lending industry. At least casinos are open about what they do.”
The infamous subprime lender Countrywide Mortgage made a lot of money and employed a lot of people by selling bad loans to citizens who could never afford to pay them back. Countrywide’s “success” was phony prosperity and it caused major damage to our economy which all of us are still paying for today. Presently, our state governments across the U.S. are full partners with corporate gambling operators whose business practices go far beyond failed subprime lenders like Countrywide.
Behind Electronic Gambling Machines
Drawing on research conducted in Las Vegas among game developers and gamblers, MIT Professor Natasha Schull provides an in-depth analysis behind the design and technology of electronic gambling machines.
Lottery Advertising: The Pathology of Hope
Respected gambling researcher Robert Goodman has called lottery advertising “the pathology of hope” and state lotteries, because of their exemption from truth-in-advertising laws, fully exploit this pathology.
Most industries and companies are subject to truth-in-advertising laws enforced by the Federal Trade Commission. According to these laws, advertising must be truthful and non-deceptive, advertisers must have evidence to back up their claims, and advertisements cannot be unfair. Since 1974, the U.S. Congress has exempted state-run lotteries from these laws. Because of this, governments and lotteries have wide latitude in how they can promote their product, exaggerate chances of winning, and encourage more of our fellow citizens to lose their money instead of saving or investing. All federal laws relative to the lottery can be found in Title 18 of the U.S. Code, Sections 1301 to 1307. The final section, 1307, outlines the lottery’s exemption from truth-in-advertising laws.
These predatory and deceptive practices can be found in the media plans of the lotteries. Ohio’s Super Lotto media plan, for example, stated that lottery promotions should be timed to coincide with the receipt of government benefits, payroll and Social Security payments.
Meet Your New Neighbor: How Slot Machines are Secretly Designed to Seduce and Destroy You, and How the Government Is In On It
MUST-READ. Here’s what may be the best investigative news story about electronic gambling machines and the partnership between the predatory gambling trade and our government written to date. The reporter was Isaiah Thompson of the Philadelphia City Paper and it appeared in January 2009.
Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling
In this paper, Harrigan and Dixon examine how the same slot machine games with different payback percentages may affect the player’s behavior. Interestingly, slot machines with higher payback percentages (offering a perceived air of fairness for the player: 98% vs. a lower payback of 85%), were more likely to impose the most risk for ensuing gambling problems. In their findings, they argue for the regulations of lower payback percentages (85%), as the higher ones appear to be far more addictive.