Frequently Asked Questions

Predatory gambling is when state governments partner with powerful corporate gambling interests to use gambling to exploit and defraud citizens and their communities across the United States.

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest. It’s exempt from truth-in-advertising laws, giving gambling corporations wide latitude to market gambling, grossly exaggerate chances of winning and aggressively lure citizens to lose their money.

Let people gamble if they want, you may say. But we already have the freedom to gamble. Up to now, many Americans participate in office pools for the Super Bowl, NCAA March Madness brackets, or make casual wagers on the golf course with their friends. 

These informal events are examples of social gambling. There is no “house” skimming a large profit, guaranteeing the participant will inevitably lose over the long-term. No one is wagering continuously at rapid speeds of every five seconds, for hour after hour. Very few people feel an intense “buzz” or high from the experience. There’s no aggressive and deceptive marketing to get people to gamble more often with bigger sums of money. No one is lending or borrowing cash to participate or ends up losing their entire pay check. It doesn’t go on all day, every day of the week, year round. And ​it doesn’t require the majority of Americans who rarely gamble to subsidize it with any of their own money.

Without the legal, administrative, regulatory, and promotional privileges provided by state governments, lotteries, regional casinos and other commercialized gambling operators would not be spreading into mainstream American life as they are today. They would likely still exist only on the fringes of the society.

The most revealing truth about the fraud behind government-sanctioned gambling is that nearly all of the people who profit from regional casinos and lotteries and the public officials who lobby to bring them in, don’t gamble themselves. (See the FAQ list below.)

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest. This drive for profits explain why lotteries are exempt from truth-in-advertising laws, giving gambling corporations wide latitude to market gambling, grossly exaggerate chances of winning and aggressively lure citizens to lose their money.

The most profitable form of government-sanctioned gambling, slot machines, are designed mathematically so users are certain to lose their money the longer they play. At the same time, the machines are literally designed so citizens cannot stop using them, exploiting aspects of human psychology and inducing irrational behavior.[i] Every feature of a slot machine – its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics – is designed to increase a player’s “time on device” – which means how long a person plays.

[i] Natasha Dow Schull, PhD, Addiction By Design, Machine Gambling in Las Vegas, (2012), available at http://press.princeton.edu/titles/9156.html

New Jersey congressman Cornelius Gallagher wrote in 1969 that if the Garden State enacted a lottery “we could abandon all taxation in New Jersey and increase every service in our state four times over.”

Today, New Jersey has a state lottery, several casinos and online casino gambling. Yet the state is the worst fiscal condition, ranking 50th in the nation in George Mason University Mercatus Center’s report on the fiscal condition of states.

NJ exemplifies how government-sanctioned gambling has been a spectacular failure as a revenue source. It’s THE biggest budget gimmick and the calling card of anti-reform politicians across the U.S.

According to the Rockefeller Institute of Government at State University of New York-Albany, the organization doing the best independent research on public revenues from gambling: “In the long-run, the growth in state revenues from gambling activities slows or even reverses and declines.”

That’s because income from government-sanctioned gambling does not grow over time like general tax revenue. In addition, expenditures on education and other programs will grow more rapidly than gambling revenue. Thus, new gambling operations that are intended to pay for normal increases in state spending add to, rather than ease, long-term budget imbalances.

Also troubling for taxpayers, gambling operators are not allowed to fail by the state. For example, when casinos come up short, states usually provide new infusions of money, reduced taxes, reduced funding for gambling addiction measures, or other concessions such as lifting smoking bans and loss limits, in order to sustain revenues and profitability. Rhode Island, Delaware, and New Jersey, to just name a few, have all taken special steps within the last few years to help casinos that might otherwise fail. Public tax dollars too often prop up gambling operators.

The way we raise money to pay for our government says as much about our democratic principles and values as the way we spend it.

There is no debate among scholars that those who are financially desperate look to government-sanctioned gambling as a way to improve their lives and help them escape their financial condition.

It’s become a Hail Mary investment strategy, one that dooms them to inevitable failure. This is a critical issue because around 50 percent of the US population has zero net wealth. Their debts, effectively, equal their assets. Commercialized gambling represents the total opposite of asset-building.

States are marketing $50 lottery scratch tickets to low-income families, SEVEN TIMES HIGHER THAN THE STATE’S MINIMUM WAGE.

The almost sole focus of state-sanctioned gambling has been to maximize profits, not protect the public interest.

The business model for state lotteries and regional casinos depends on blatantly exploiting the financially desperate and the addicted. It cannot survive without these citizens.

The New York Times reported that state lotteries extract between 70%-80% of their profits from just 10% of the players.

Electronic gambling machines are the most lucrative form of gambling marketed by regional casinos and some state lotteries.

Every feature of a slot machine – its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics – is designed to increase a player’s “time on device” – which means how long a person plays. Gambling operators found their profits were not about the size of the gamblers’ stakes but the volume of their play.

“If you provide them with the right time-on-device, they will stay and play,’” one slot designer said. “If you take it too quickly and they lose, they’re going to leave.’”

The goal is to get every user “to play to extinction’’ — until all their money is gone. “I want to keep you there as long as humanly possible,” said another slot operator. “That’s the whole trick, that’s what makes you lose.”

The slot machine is designed to be so effective at extracting money from people it is “a product that, for all intents and purposes, approaches every player as a potential addict …someone who won’t stop playing until their means are depleted.”

The effectiveness of this design is undeniable: over the last decade there are 11 different independent studies that show 40%-60% of electronic gambling machine profits are taken from citizens who can’t stop using them.

“No taxation without representation” was one of America’s founding principles. After 45 years of state governments using lotteries and regional casinos to exploit and defraud their own citizens to extract as much money as possible, the time has come to add the principle of “no taxation by exploitation” beneath it.

To all the non-gamblers out there, “You Pay Even If You Don’t Play.” Here are a few of the ways you pay:

  • For the two-thirds of citizens who never gamble, you end up paying higher taxes for less services and worse state budget problems over the long term. You foot the bill for the inevitable budget deficits produced by state-sanctioned gambling.
  • You pay in another damaging way. Government-sanctioned gambling lowers our national standard of living because it’s a sterile transfer of money from millions of ordinary people’s pockets into a small number of other people’s pockets, producing nothing new and nothing of lasting value. Its economic impact is similar to throwing your money on the street so someone else can pick it up – it redistributes wealth without creating it. Because this nonproductive activity nevertheless uses up time and resources, we experience a reduced national standard of living, a consequence that impacts all of us.
  • You also pay in at least one other way. The nation’s corporate and political elite have transformed gambling from a private and local activity into the public voice of American government, such that ever-increasing appeals to gamble, and ever-expanding opportunities to gamble, now constitute the main ways that our government communicates with us on a daily basis. Nothing else comes even close.

While there may be risk associated with buying shares in the traditional stock market, that is where the analogy ends.

The gambling operators know it. With the zeal of a teetotaler, nearly all of the people who profit from regional casinos and lotteries, and the public officials who lobby to bring them in, don’t gamble themselves. Yet they put their money into assets like stocks and real estate. Why?

Because it’s a statistical certainty that the vast majority of people will lose money gambling at regional casinos and on state lotteries. The longer and more frequently you wager against the house, the more you’re going to lose. It’s a sure thing.

In sharp contrast, the Annualized Dow Jones Industrial Average Return (DJIA) including dividends reinvested was 11.02% between 1950 and 2016, for an astounding 66 year total DJIA return of 116,125%. While the DJIA can and has gone down in some of those years, and that people can and do lose money speculating and trying to time the market, the record of steady, conservative stock market investing is excellent.

In addition, commercialized gambling operators hire the brightest people they can find (e.g. odds-makers, computer programming whizzes, sophisticated marketers) for the specific purpose of taking as much money as possible from customers. On the other hand, the investment industry hires the smartest and best-performing analysts it can find in order to help make money for customers. It’s about as different as it can get.

Watch Warren Buffett, one of the world’s greatest stock market investors, describe why government-sanctioned gambling should be phased out.

No American jurisdiction has EVER documented a decline in illegal gambling after states began sponsoring gambling, regardless whether it’s lotteries, casinos or internet gambling.

In reality, the state lottery system seems purpose-built for organized crime. For those running a human sex trafficking ring or selling heroin in a community, they take their illicit profits, buy a share in a winning lottery ticket, get someone to redeem it, and then they end up with clean cash.

There are a number of other reasons why Illegal gambling tends to increase when states sanction gambling:

  • Untaxed illegal operators can offer better odds and tax avoidance that legal operations cannot.
  • Once gamblers start betting legally, they become less averse to gambling in unlicensed venues
  • Law enforcement in gambling states view illegal gambling as a state revenue issue rather than a criminal activity, making enforcement less of a priority.

It’s inevitable that the amount of illegal gambling will only increase if commercial gambling is authorized:

  • If the illegal gambling operators supposedly cannot be controlled, as the big commercial gambling operators cry,  then how can you control and regulate the gambling operators you license?
  • If you can’t shut down the illegal operators now, how would you possibly shut down licensed operators who don’t follow the rules?
  • When gambling operators call for “regulation,” what they really mean is government granting monopolies and awarding regulatory advantages to favored firms.

The criminalization of for-profit lotteries and casino-style gambling was successfully practiced for a large portion of American history. This does not mean illegal gambling was absent from society, but public institutions did their best to contain it. They did not incentivize citizens to lose their money gambling.

No group has suffered more because of government-sanctioned gambling than America’s youth.

  • Millions of kids are growing up in families who are financially desperate due in large part to adult family members gambling away their paychecks, household savings and government-subsidy checks.
  • Many kids now spend countless hours at home by themselves while one or both parents gamble regularly at the nearby casino or on the gambling machines at the local tavern.
  • Millions of American kids grow up to get hooked on government-sanctioned gambling.
  • Many kids make local headlines for being found left locked in the car alone in casino parking lots while their parent or grandparent chases their losses inside the casino.

With the zeal of a teetotaler, there is one truth that most commercialized gambling operators and the public officials they partner with all have in common: they don’t gamble.

Here’s just one of dozens of jaw-dropping examples:

“Most of the people I met inside I.G.T. told me they never played slot machines on their own time. When I asked one I.G.T. artist if he ever plays, he acted as if I had insulted him.” Slots are for losers,” he spat, and then, coming to his senses, begged me to consider that an off-the-record comment.”

This is an excerpt taken from a New York Times Sunday Magazine cover story on slots which included a visit to the headquarters of International Gaming Technology (I.G.T.), America’s biggest maker of electronic slot machines.

Watch “The Smartest Guys NOT in the Room.”

Let people gamble if they want, you may say. But we already have the freedom to gamble. Many Americans participate in office pools for the Super Bowl, NCAA March Madness brackets, a Friday night poker game, or make casual wagers on the golf course with their friends.

Government is not simply permitting private, consensual behavior as some public officials who support state-sanctioned gambling attempt to argue. If it was their true intent, then this purpose could be achieved by allowing small, unlicensed games and keeping gambling private and local. Such an approach would be in line with the most effective and appropriate state stance toward gambling which is not encouragement, but rather containment.

This is a big government program that actively advertises more and more extreme forms of gambling at higher and higher wagering amounts in our communities. It also grants monopolies and awards regulatory advantages to favored firms.

State government shouldn’t be telling people how to live by encouraging them to gamble on state lotteries or at regional casinos, especially on games they are guaranteed statistically to get fleeced.

And in the process, they are violating the rights and freedoms of the two-thirds of the public who almost never gamble yet are being forced to foot the bill for the lower standard of living and budget deficits that state-sanctioned gambling leaves behind.

One can be a libertarian on this, while at the same time, believing that we cross an unacceptable ethical line when we go from allowing individuals to gamble to allowing our government to set up a massive marketing and distribution scheme urging people to do so.

Commercialized gambling is a naked money grab disguised as economic development.

Let’s contrast it with any other business that sells a product or a service. Take a blanket-selling business, for example. If you go out to buy a blanket for you or your family, other people don’t have to give up their blankets for you to get one. But imagine a blanket-selling business where in order for a few people to get a blanket, mostly everyone else had to turn in their own blankets and go without.

The primary winner in a blanket-selling business such as this are the people who operate the blanket redistribution scheme. It’s an exchange where, over a period of time, they are guaranteed statistically to end up with all the blankets.

Despite the inherent predatory and dishonest nature of the scheme, it escapes from being shut down because the blanket sellers provide state governments a percentage of their bounty. In fact, only those who partner with states are allowed to run the scheme and they’re usually handed regional monopolies to do it.

Those who never buy a blanket also lose. They end up paying extra for those who gave up their blankets and now need help. They also have to subsidize the state budget problems that result when the gimmick revenues inevitably dry up.

This is the essence of the government-sanctioned gambling scheme.

The analogy underscores how the economic impact of commercialized gambling is similar to throwing your money on the street so that someone else can pick it up — it’s redistributing wealth without creating it.

The casino lobby feeds on the job insecurity of Americans because people, whether gambling or seeking employment, have fewer viable ways to make good money.

By relying on slot machines and other forms of gambling as its primary revenue source, a casino may employ some citizens but it doesn’t produce economic growth.

Any activity the state puts money into will stimulate the economy. Government can stimulate the economy with good things, things that help people build wealth.

We are told one of the primary rationales for state-sanctioned casinos is to “create jobs” but facts show that casinos leave behind far more gambling addicts than jobs. According to the most recent numbers made available by the Illinois Gambling Board, the total enrollment of citizens in the state’s voluntary Self-Exclusion Program was 11,119 and the total number of full and part-time casino jobs was 7,137 – almost 35% higher. Thousands more gambling addicts have banned themselves from the state’s casinos because their lives have been ruined than there are people who work inside the state’s casinos.

But that figure is literally the tip of the iceberg. The actual amount of gambling addicts created by state-sanctioned casinos is far greater than the number of citizens who have self-excluded. That’s because only about 10% of people experiencing problems with gambling seek help from problem gambling services- 90% never even come forward for help.

State-sanctioned casinos also create unfairness for other businesses. When casino lobbyists call for a “limited number of casinos” to be allowed into a state, what they are really doing is attempting to rig the system to hand out special privileges to a few powerful political insiders at the expense of everyone else. Government, in this case, is not merely permitting private, consensual behavior. It is granting monopolies and awarding regulatory advantages to favored firms.

Government-sanctioned gambling preys on desperation, not hope.

Those who are financially desperate look to government-sanctioned gambling as a way to improve their lives and help them escape their financial condition. It’s become a Hail Mary investment strategy, one that dooms them to inevitable failure.

 

What separates predatory gambling from alcohol, tobacco and other activities is predatory gambling is a big con game. Citizens are being conned into thinking they can win money on games they are guaranteed to get fleeced. And all of the non-gamblers are being ripped off because they’re footing the bill for the public budget problems and the lower standard of living that government-sanctioned gambling leaves behind..

Government-sanctioned gambling is THE signature issue of anti-reform politicians from both political parties across the United States.

Instead of providing solutions to their state’s problems, these politicians placed the interests of powerful corporate gambling operators over the interests of ordinary citizens.

They passed the buck on difficult fiscal choices by promoting the biggest public budget gimmick there is: government-sponsored gambling.

But just as importantly, it is also political reformers from both parties who are the ones calling for predatory gambling to be phased out.

This explains why Stop Predatory Gambling is one of the most diverse organizations in the United States, one in which progressives work side-by-side with conservatives to improve the lives of the American people.

Government-sanctioned gambling should disturb the libertarian right for a number of reasons:

  • Government, in this case, is not merely permitting private, consensual behavior. It is granting monopolies and awarding regulatory advantages to favored firms.
  • States sometimes conduct casino border wars, positioning new facilities to poach revenue from their neighbors. This has little to do with limited government. It is the active, predatory state.
  • State-sanctioned gambling is used as a tax and a revenue source for the civil government. Fundamentally, if a believer in limited government is true to their beliefs, they should oppose state-sanctioned gambling for this reason alone.
  • What about the costs to regulate gambling- whether it be casinos or lotteries? Not only are we talking about more government spending, but the actual size of the civil government must grow significantly in order to operate its gambling program. These costs are added public expenditures which limited government advocates declare themselves to be against.

Early American lotteries:

  • Were public-spirited and progressive, unlike current state lotteries.
  • A typical colonial lottery was instituted to finance specific public works projects, such as bridges or roads, and participation was seen more as a charitable contribution (like today’s raffle) than a form of gambling.

Present-day lotteries:

  • Have become a permanent revenue source for the states, and in the process, turned citizens into permanent habitual gamblers.
  • Their operations are contracted out to professional gambling firms
  • Their economic burden is regressive rather than progressive
  • Their customers are largely indifferent to their objectives
  • Political approval for modern lotteries was secured by promising to earmark funds for things like education and care for the elderly yet the actual use of lottery revenues has rarely, if ever, been so constrained.

 

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