The casino debate’s Achilles’ heel
"Problem gamblers" account for a disproportionate share of casino revenues
September 15, 2011
Richard McGowan, a
professor at Boston College’s Carroll School of Management and a leading researcher on gambling, has called compulsive gambling the “Achilles’ heel” of the casino industry. He’s right, of course, so the industry and its allies in government -- which now include Beacon Hill’s three top powerbrokers -- do their best to keep that painful foot well wrapped and taped, at least long enough for a casino bill to hobble over the goal line and be signed into law.
Problem gamblers, those who lose the mortgage money or the car keys or who leave their family otherwise strapped because they can’t put the brakes on their losses, are always treated by the industry and its army of lobbyists as more of an annoying distraction in the casino debate than the significant part of the gambling landscape they seem to represent. Gaming -- the sanitized term favored by the gambling companies and political allies -- is an entertainment industry, proponents insist, a place where the dashing men and shapely, party-dress adorned women seen in Foxwoods television ads enjoy an elegant night out, soaking in “the wonder of it all.”
To support that view, proponents invariably point to studies suggesting that just 1 or 2 percent of the adult population suffers from some degree of compulsive gambling. Other research says the figure could be somewhat higher, as much as 4 or 5 percent. But regardless of the exact number, it’s not actually the figure that should be of concern. Whatever the prevalence of compulsive gamblers in the general population, they obviously account for a much larger share of those who actually visit casinos and a disproportionate share of casino revenues.
Just how much of the revenue casinos bring in is from the losses of those with gambling problems? One of the most thorough studies of this issue was done in 2004 in Ontario, where researchers had a sample of residents maintain diaries logging their gambling expenditures. The study, prepared for the government-supported Ontario Problem Gambling Research Centre, estimated that 35 percent of Ontario casino revenues were derived from moderate to severe problem gamblers. Such gamblers accounted for 30 percent of revenue from casino table games and a whopping 62 percent of revenue from slot machines.
“It’s a huge cost borne by a small proportion of the population,” says Earl Grinols, a Baylor University economics professor who has done extensive research on the casino industry.
The research suggests problem gamblers are an integral part of the industry’s revenue model, not an unfortunate byproduct of the intoxicating hold casinos have on some people. Understandably, that is a tough pill for casino proponents to swallow.
Gov. Deval Patrick, when asked Wednesday morning following a speech to a Boston business convention whether the idea that such a large share of casino revenue comes from problem gamblers gives him pause, said, “Well, it’s given me some pause. Of course, we have $1.5 billion worth of Massachusetts gamblers today who spend that money just in Connecticut,” he said. “What we get from the casino bill is some dedicated funds, and more of those funds, to try to address the issue of problem gambling,” he said, referring to provisions in the legislation that would direct money from casinos to fund compulsive gambling assistance programs and research.
But Patrick nonetheless seemed to reframe the issue in terms of the overall low prevalence of problem gambling, not the share of casino revenue it accounts for, saying most studies “point to the very small proportion of people for whom this is not just harmless entertainment.”
Speaker Robert DeLeo, who is championing the casino bill that passed the House Wednesday night, scoffed at the idea that problem gamblers account for a sizable chunk of casino revenue when asked about it following a speech last year to the Greater Boston Chamber of Commerce.
State Rep. Kathi-Anne Reinstein, whose Revere district shares with DeLeo’s Winthrop-based district the Suffolk Downs and Wonderland racetracks, has been impassioned in her call for expanded gambling as a job generator for desperate constituents who have been hit hard by the recession. “This is a jobs bill,” she says. “It is something that my district literally is praying for.”
But when asked whether she is concerned about a third of casino revenue potentially coming from the pockets of problem gamblers, Reinstein simply refused to accept the premise. “I don’t agree with that research,” she said. “I don’t think that’s a reality.”
It may be an uncomfortable reality, says Grinols, the Baylor economist, but it is a reliable estimate that’s been well established at this point. Grinols says the casino industry could probably still be profitable without money from problem gamblers. Of course that would throw off all the projections about jobs and revenue to state coffers, figures that are already pretty shaky. He says it would also require imposing limits on casino hours (the pending bill authorizes casinos to operate 24 hours a day), banning ATMs from gambling facilities, and other measures the industry is loath to accept.
Without such aggressive steps, Grinols said in a 2005 CommonWealth story, states are turning the traditional role of government on its head. “This is an industry, like it or not, that is making its money off the sickness of its clients,” he said. “Government is supposed to be the protector and guardian of the community, not the predator.”