Writing about gambling

Based on a discussion in my Gambling and the Media class, I wrote a little essay about how gambling’s depicted in film and literature. Now it’s a Las Vegas Business Press column:

Looking at how gambling is depicted in books, films, and television says a lot about how people perceive the pastime, but it often says more about the author’;s mood or his or her plot needs.

The general rule is that the more important gambling to the plot of the story, the less positive the portrayal of gambling. Take, for example, Fyodor Dostoyevsky’s classic, The Gambler. In it, the title character loses his soul to roulette. And the casino itself is decidedly unglamorous. “There is no splendor whatsoever in those sordid rooms,”; Dostoyevsky writes, “and as to gold, not only is it not piled on the tables, but one scarcely ever catches sight of it.”

via Las Vegas Business Press :: David G. Schwartz : When writers feel desperate, gaming depictions turn dour.

So if you’re looking for a positive, or even neutral, view of gambling, search out a movie or book where gambling isn’t the focus. The one exception is books about how to win at gambling, curiously enough.

Gamblers & vulture brains

This might be the nuttiest gambling story of the year. You’ve got to read it to believe it. From the Independent Online:

Traditional beliefs about the clairvoyant powers of vultures could spell trouble for the birds as gamblers look for a sure bet during the World Cup.

According to muti tradition, eating the brains of a vulture or wearing a newly decapitated vulture head can grant one the ability to see into the future and predict the results of a soccer match.

The South African vulture population has plunged to an alarmingly low level and conservationists have blamed gamblers and lotto players for the recent decline in numbers.

via News – Environment: Gamblers prey on vultures.

So gamblers are the natural predators of vultures? What does that say about their place on the food chain?

Andy Rooney takes on gambling

Part-time economist and full-time curmudgeon Andy Rooney trashed the gambling business in a recent 60 Minutes piece:

The thing that bothers me most about gambling is that people fritter away money so they don’t get to spend it on things that someone else has been paid to produce. Gambling produces nothing.

There’s only so much money in the world and if it’;s lost at a gambling table, it’s money that isn’t spent on things America makes. I mean who’s best for this country – a machinist at an automobile plant in Detroit or a blackjack dealer in Las Vegas?

The gambling casinos keep something like 20 percent of everything bet for themselves, so there’s no chance of anyone but the casinos winning over a period of time. They make billions – and where do the billions come from? They come from all of us because we’re the losers. I mean, suckers is what we are.

via Andy Rooney and the Gambling Business – 60 Minutes – CBS News.

The whole thing is weak; I’d like to see a debate between Rooney and, say Peter Collins on the subject. I thought I’d refute the three paragraphs I quoted just for fun, and to set the record straight.

1. “…people fritter away money so they don’t get to spend it on things that someone else has been paid to produce. Gambling produces nothing.”
Ever heard of a post-industrial economy? Since at least the 1960s, less and less “stuff” is being made in America as the country, for better or worse, shifts towards a service-based economy. More than two-thirds of the United States’ gross domestic product (67.8%) is produced by services; less than 20% comes from “things that someone else has been paid to produce.” Gambling “produces” as much as a movie theater or dog-walking service–Rooney, I assume, has no problem with either of those. The funny thing is that Rooney’s worked in television for decades, providing a service to millions of Sunday viewers. Does he think his life has been wasted because he wasn’t hammering steel ingots?

2. “There’s only so much money in the world and if it’s lost at a gambling table, it’s money that isn’t spent on things America makes. I mean who’s best for this country – a machinist at an automobile plant in Detroit or a blackjack dealer in Las Vegas?”
See point (1), with the added point that most of the “stuff” we buy isn’t made in America. By attracting about 5 million foreign tourists to Las Vegas, who left more than $840 million in gambling losses here (estimate based on 2009 LVCVA stats; probably lower than real number), I’d say that gambling is doing its part to lessen the trade deficit.

Rooney suggesting that a Detroit machinist is intrinsically better for America than a Las Vegas blackjack dealer is curious. Why does he think this? Is there something morally superior in making cars?

3. “The gambling casinos keep something like 20 percent of everything bet for themselves, so there’s no chance of anyone but the casinos winning over a period of time.”

Second half of the statement is true, but the first is wrong: casinos keep, on average, nowhere near 20 percent. If Rooney has a research staff, he should fire them, because they could have gotten the right number from the Center for Gaming Research’s website’s 2009 Nevada Gaming Win Summary.

The real totals for Nevada’s casinos in 2009 were:
Slot Machines: $6.8 billion revenue, with casinos keeping 6.10% of all money bet.
Table Games: $3.4 billion revenue, with casinos keeping 12.04% of all money bet.
Total gambling win was $10.3 billion, with casinos keeping 7.37% of all money bet.

Nevada casinos actually kept less than eight percent of everything bet, less than half of Rooney’s estimate.

I don’t have the data to back this up, but I’d suggest that Americans lost more than eight percent of what they’d “invested” in their financial portfolio’s last year. I can definitively say that if you took the money you paid for an investment property in Las Vegas in 2006 and put into video poker instead, you’d probably have done much better.

So there’s more emotion than reason in this outburst from Rooney. Not that you’d expect more from a guy who makes his living complaining about Lady Gaga and the decline in the quality of the funny papers, but like I said on Friday, if you don’t point out the real facts, bad facts become accepted as the truth.

Gambling tips from the IRS

Here are some reminders from the IRS about what to do with your gambling winnings and losses:

# Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.

# Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.

# The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ. This rule applies regardless of the amount and regardless of whether you receive a Form W-2G or any other reporting form.

# If you itemize deductions, you can deduct your gambling losses for the year on line 28 of Schedule A, Form 1040.

# You cannot deduct gambling losses that are more than your winnings.

# It is important to keep an accurate diary or similar record of your gambling winnings and losses.

# To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

via Gambling Winnings Are Always Taxable Income.

There you have it. As fate would have it, I was asked a question about gambling and taxes yesterday afternoon, and decided to look this up. I thought it might be of interest to others.

Gambling Goes Mainstream | Global Gaming Business Magazine

At the “opening ceremonies” for Aria, U.S. Green Buildings Council CEO Rick Fedrizzi said that Aria was an example of what architecture should be, and that schoolchildren should be brought in to see the building for itself as an example of what the future would be.

“Wow,” I thought, “Bringing kids to a casino to to be inspired. That’s something I haven’t heard before.” So I thought that maybe this was evidence that gambling was becoming even more mainstream in American culture.

Around that time, NBA commissioner David Stern said that his league was now willing to talk about supporting legal sports betting. Again, this seemed like a historic shift in attitudes.

With a little editorial suggestion, I put these and a few other ideas together, did some additional research, and the result was a featured story in the March 2010 Global Gaming Business magazine:

If you're reading Global Gaming Business, odds are you're pretty comfortable with the idea of gambling as an acceptable leisure pastime for adults. You're not alone, and you haven't been for a long time: Since the past decade, about one in five Americans has visited a casino at least once a year. With legal casinos breaking out of Nevada in 1978 and spreading steadily across the nation, there has clearly been a tolerance-at first often grudging-for casinos.

Yet the past few months have given the impression that gambling has now reached unprecedented levels of public sanction that goes beyond toleration and reaches toward outright approval, a historic change in attitudes.

via Gambling Goes Mainstream | Global Gaming Business Magazine.

I’d say this is evidence that we’ll see more, not less, gambling soon, and I wouldn’t be surprised to see online poker be the next big domino to fall. There is a vague public support for it and a smaller group of devoted players who would be grateful to any politicians who voted for it, but more importantly there are well-funded parts of the industry now in favor. I’m not enough of a political scientist to say whether the current partisan politics will make any specific bill more or less likely, but looking at it from a general cultural and historical perspective it seems that in retrospect no one will be surprised when this happens.

Playing Casino War with the universe

With all of the problems the Large Hadron Collider has had, a pair of physicists are mulling the possibility that nature itself is conspiring against it. It’s possible, they say, that the potential creation of a Higgs boson particle is so abhorrent that “ripples through time” are preventing the machine from operating as it’s supposed to. The test, they suggest, might be a game of chance. From the NY Times:

Dr. Nielsen and Dr. Ninomiya have proposed a kind of test: that CERN engage in a game of chance, a “card-drawing” exercise using perhaps a random-number generator, in order to discern bad luck from the future. If the outcome was sufficiently unlikely, say drawing the one spade in a deck with 100 million hearts, the machine would either not run at all, or only at low energies unlikely to find the Higgs.Sure, it’s crazy, and CERN should not and is not about to mortgage its investment to a coin toss. The theory was greeted on some blogs with comparisons to Harry Potter. But craziness has a fine history in a physics that talks routinely about cats being dead and alive at the same time and about anti-gravity puffing out the universe.

As Niels Bohr, Dr. Nielsen’s late countryman and one of the founders of quantum theory, once told a colleague: “We are all agreed that your theory is crazy. The question that divides us is whether it is crazy enough to have a chance of being correct.”

via Essay – The Collider, the Particle and a Theory About Fate – NYTimes.com.

This doesn’t have anything at all to do with casinos, but it does remind us of the integral role that chance plays in the universe. What Neilsen and Ninomiya have proposed is the intellectual equivalent of getting several bad beats, then wondering if the game is rigged. Using a game of chance to test this theory sounds absurd, but at the quantum level our ideas of “common sense” are anything but.

Gambling can save your marriage!

A columnist in the St. Augustine Record has a prescription for women who are dreading the return of football season: gambling!

You can bridge this gap with one of the greatest relationship problem solvers I know: gambling.

Thats right. A few interesting wagers can easily return your family from football fan and widow to weekend playmates.

Heres one: Each of you pick five games a week. College, pro, whatever. Five games, five winners. Doesnt even have to be the same games. Whoever picks the most winners each week is the champ.

Ive seen couples do this and make all kinds of wild bets. Some bet chores. Guys, wouldnt it be awesome to have a beer and watch your wife mow the lawn? Some bets get a little more creative. Girls, how nice does a foot rub from your man sound? Some even involve the bedroom. Use your imagination — this is a family column, people.

The great thing about football is that even the dorkiest expert cant accurately predict every game. So even if you dont know Peyton Manning from the Publix checkout dude, you really still have a shot.

So take heart, football widows, you have hope. Summer might be drawing nigh, but you dont have to be the big loser. In fact, this year you might even come out a few foot rubs and dinners ahead.

via staugustine.com: the oldest city’s home on the Net.

I like that this considers gambling in a broader cultural context. I wonder, though, if the NFL will try to penalize people wagering foot rubs and dinners on the outcome of games. After all, the league has taken a firm stance against betting on games.

The funny thing is that if you consider the foot rubs a service, then technically this is illegal in most states: you are exchanging something of value. Otherwise, you could avoid prosecution for bookmaking by switching from a cash to a barter system. It doesn’t seem practical to me, but I’m sure there’s some financial whiz who could make it work.

New podcast lecture up

We were lucky to host an outstanding Gaming Research Colloquium talk today: Dr. Nicholas Tosney spoke about some parallels between early modern British gambling and 20th century Las Vegas gambling. Great stuff that I highly recommend.

Nick Tosney: Commercialization, Crime, and Casinos – Center for Gaming Research.

Subscribe to the UNLV Gaming Podcast in iTunes, or just listen to the mp3 yourself here.

Room rates, 2009, and the future

Because we can’t wait for the future, everyone wants to know what’s going to happen. Spectrum Gaming has a 21-point list of what to expect, but I’ll give you my own views, focusing mostly on Las Vegas.

This is all with the caveat that, as I often say, “my work is not predictive.” That’s just a fancy way of saying I can’t tell the future, and a more polite one, too.

With energy prices and room rates down, I can see a rebound in business, but depressed room rates (relatively speaking) might reverse the steady trend of gaming revenue’s decline as a portion of total revenues.

That’s wordy–let me put it plainer: in 1984, Strip casinos made more than 58% of their total revenues from gaming. That number held fairly steady until 1994, when it began an unprecedented slide. In 1999, the figure dipped to 48.1% percent, and from 2005-7 it hovered between 40 and 41%.

With room rates down and consumers spending less freely on shows, expensive meals, that number may start to move in the other direction. If gaming revenues decline proportionally to room rates, we are in trouble. Year to year, they were down more than 14% in October, and occupancy was down more than 6%. That means a 20% total drop in room revenues. If gaming revenues fell by one-fifth for the year, the state’s budget would probably implode.

So, to borrow a phrase from Mr. Mom, somebody better figure out a way to get people gambling in Las Vegas pretty fast.

Slashing room rates and offering generous comps may do the trick, but what will the consequences be?

When analysts pencil out expected return on investment for future properties, they’ll note the trend of falling room rates. So builders won’t be able to borrow as much money to build higher-end rooms, since you can’t justify spending the same on a room that’s going to earn $110 a night as one that will pull down $160. The next wave of casinos might be a step down in terms of detailed finishes from what we’ve been seeing.

With casinos making more money, proportionally, there will be a greater drive to maximize revenues, which in the end will mean more labor-saving devices, fewer employees with their pesky wages and benefits, and, in the end, greater control over comps. It might be easier to give away a $90 room than a $250 one, but I think casino departments will have their feet held to the fire to maximize their revenues. In the long run, this might not be the same as optimizing them.

Since gas prices have fallen quicker than airlines have added capacity, I see a quicker rebound in drive-in traffic than fly-ins, which means generally stronger results for companies sensitive to value shoppers. The question is, once people have $250 a night to spend on a room, will they be willing to do so if they’ve just spent $90 a night? Or will they feel gouged?

While 2009 will see some great deals for people coming to Vegas, I think that everyone should be aware of the unexpected consequences of cheaper rooms. It may change the face of Vegas in ways that will please some, but not others.