Defining a Dark Allure in Vegas Seven

In this week’s Vegas Seven, I consider the bigger impact of the attention focused on problem gambling due to the case of Maureen O’Connor:

The recent revelation that former San Diego Mayor Maureen O’Connor had reportedly embezzled more than $2 million from a charitable foundation to feed her gambling addiction has focused attention on pathological gambling.

via Defining a Dark Allure | Vegas Seven.

I’ve also got a wrap-up of the 2012 Nevada gaming revenue picture, which highlights a few of the big trends.

And if you want to get really creative, try to guess which of the Great Nights Out I anonymously contributed. Fun story.

60 Minutes hits slots

The 60 Minutes hit piece on slot machines finally came out. I’ve been hearing about this for a while, and it was actually about what I expected:

We Americans spend more money on slots than on movies, baseball and theme parks combined.

But with the modern slot machines, there is a greater potential for a dangerous side effect: gambling addiction, as more people are addicted to slots than any other form of gambling.

via Slot Machines: The Big Gamble – 60 Minutes – CBS News.

The most disturbing thing about the piece, as journalism, is that it takes on faith the claim that “modern” slot machines are more addictive than older ones, but tries to run Dr. Shaffer through the wringer when he says that slot machines aren’t inherently addictive, and that its more a function of the personality than the machine.

And of course there’s the dig that “the gambling industry loves to quote” him, which might be because he’s a recognized expert on addictions. His is the Director of the Harvard Medical School’s Division on them, who I’m guessing has worked in greater breadth and depth with addictions and addicts than the anthropologist who seems to be the hero of the story.

Then you’ve got the selective use of statistics and cherry-picked personal stories that, while heart-breaking, don’t reflect the majority of slot players.

It’s just bad journalism.

As I’ve suggested before, the casino industry could be more proactive about getting better information into the public arena about slot machines. It has a goldmine of data about slot play: why not allow outside researchers to access a database that’s been stripped of all personally-identifying information? That would let them determine how long the average player plays for, and what the patterns of play over time are. The researchers could prove or disprove the hypothesis that “modern” machines cause more addictions quite easily.

There are some logistical challenges there, but it’s nothing that couldn’t be overcome. The more data that’s out in the public domain, the better idea everyone will have of the real nature and extent of problem gambling, and might lead to those who have problems getting diagnosed earlier.

Stuff I didn’t say yesterday

If you missed my brief appearance on Issues with Jane Velez-Mitchell last night, I’ll give you a quick recap. I was part of a panel that talked about the Terence Watanabe case, which was news because his attorney talked to Good Morning America.

I’d prepared some factoids about a previous high-profile attempt to use “the intoxication defense” to get out of paying a marker, the Leonard Tose case. You can follow the link to read his obituary which has what I think is the most germane element of the case to this discussion–he lost.

I also reviewed my research into the proportion of bad credit decisions that casinos make. I’ll excerpt the appropriate blog post here:

For fiscal year 2008, gamblers wagered about $232.4 billion dollars in Nevada casinos. For the sake of argument, let’s assume that the correct credit number is ten percent of all money wagered in Nevada casinos. In that case, we can say that Nevada casinos extended about $23.2 billion in credit during fiscal year 2008.

According to the Nevada Gaming Abstract, in that year casinos statewide reported a total of $132.1 million as “bad debt expense,” i.e., uncollected markers. That seems like a lot of money, and it is. Compared to annual gaming revenues of about $12 billion for that period, though, it doesn’t look so big (”only” 1.1 percent). Next to the estimated total credit play, $23.2 billion, it’s tiny: 0.56 percent. Just over one-half of one percent of casino markers end up as bad debts…. Only a small percentage of markers end up unpaid, and it seems that casinos do a pretty good job of due diligence before letting players sign markers. Of course, a few high-profile cases gives a much different impression.

I thought I was prepared to offer an intelligent contribution to the discussion. As it turns out, the conversation was more about feelings that facts. I got the first word–Jane asked me what I thought of the case. After acknowledging that problem gambling was a serious issue for many people, I offered that in this case, because of the amount of money lost and the length of time over which it was squandered, there was an element of personal responsibility involved.

I’d barely gotten the words out of my mouth when one of the other guests interjected, “I don’t agree with that at all! The casinos were pouring him booze! He was an addict!” and continued an emotional tirade. Then someone interrupted him with a screed for personal responsibility, while Jane chimed in that we’re “a nation of addicts.” It was more about expressing our emotions and a priori assumptions than talking about the legal merit of the case or the bigger economic and social questions it raises. There were a few good callers, though, including one who asked a sensible question: if Watanabe had won, would he have given the money back since he wasn’t responsible for his actions?

Anyway, I’m glad that the Internet provides a forum where someone like me who doesn’t like to argue can just put some research out there and let people use it as they see fit. I’d really like to see that bad debt estimate become more widely known, because it puts the whole issue into perspective. Unfortunately, we only hear about the most sensational cases, and usually without any context.

The intoxication defense

A high-roller who lost an incredible amount of money gambling in Las Vegas casinos is seeking to avoid paying some of his markers, claiming that he was too drunk to know what he was doing. From the LV Sun:

High-rolling Nebraska philanthropist Terrance K. Watanabe is mounting an unusual defense to charges he failed to pay $14.7 million in Strip gambling debts.

He is accusing Caesars Palace and the Rio, both owned by Harrah’s Entertainment, of providing him with a steady flow of alcohol and — in the case of Caesars Palace — prescription painkillers as his losses increased.

His Las Vegas attorney, David Chesnoff, lays out the defense in a letter to prosecutors, claiming that casino employees will testify that the resorts kept the prolific gambler in a constant state of intoxication in the latter months of 2007 in violation of state gaming regulations.

Gambler who lost millions claims he was plied with alcohol, drugs – Las Vegas Sun.

Some interesting points: Watanabe reportedly lost $112 million at Harrah’s casinos in 2007. The $14.7 million in bad markers is about 13 percent of the total. Was it worth it to go after these markers? Some would say no, citing customer service, while others would say that if Watanabe had won, he’d have gotten paid, so it’s only fair that he pay every marker.

In 2009, $112 million is almost enough to buy a Las Vegas casino–at least a small one. According to David McKee, it would be enough to buy the Slots a Fun and have plenty left over for renovation and expansion–or pay for Criss Angel’s Believe.

Try to wrap your head around that: this guy could have starred in his own Cirque show, complete with a custom theater, with the money that he lost. It’s staggering.

While nothing is impossible, Watanabe probably is facing an uphill battle: the same argument didn’t work for Leonard Tose back in the early 1990s. This seems to be a similar case.

If Watanabe does win, we’d probably see a major re-evaluation of how casinos do business. Could blackjack tables be fitted with breathalyzers? Probably nothing that extreme, but you’d see a lot less complimentary alcohol.

This may be neither here nor there, but I know several people who come to Las Vegas who’d like nothing more than to be kept in a constant state of intoxication. Isn’t that one of the big sales points?

Of rats and machine players

Can people control their behavior? Or, as the Smashing Pumpkins might say, in spite of all our rage, we’re still just rats in a cage? This piece in the Columbian gives a shot at figuring it out, and even quotes your illustrious blogger:

Gambling is an example of variable or intermittent reinforcement. A gambler learns that an action, making a bet, can result in a desired outcome, winning. The variable aspect of winning — a gambler might win three bets in a row before losing the next 10 — makes it all the more difficult to get up and walk away.

But David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas, isn’t ready to apply scientific research done by Skinner and others to all aspects of gambling.

“I’ve got some problems with that,” he said. “Because people really aren’t rats.”

The allure of gambling –

I stand by that observation–if you’re going to try to construct a theory of why people gamble, it needs to be much more sophisticated than “variable reinforcement.” I’m sure the casino marketing people wish it were that easy, but it’s not.

In any event, my reinforcement schedule was way out of whack yesterday, since I finished 13th out of 14th in the Run-Good Challenge II. After a promising start (i.e., not going out first overall), I made a spectacular exit. By spectacular I mean “making decisions that are more about hunches than pot odds.”

Fake kidnapping, real slots

We had a big kidnapping case here in Las Vegas a few weeks ago that had nothing to do with casinos and everything to do with the standard “drug deal gone wrong.” So I found this story from the Sun Daily quite interesting:

A Chinese man faked his own kidnapping as well as that of his 14-month-old grandson, before demanding a ransom from the toddler's parents to fund his gambling addiction, Spanish police said Thursday.

The toddler's father, who runs a food shop in Madrid, went to a police station in the early hours of Oct 28 to report that his son and the child's 53-year-old grandfather had been kidnapped, police said in a statement.

The man said a woman had called another family member to demand 50,000 euros (65,000 dollars) for their safe return.

In a second call made several hours later, the supposed kidnapper put the toddler's grandfather, identified only as Yimei L, on the line.

"He said he was being coerced by the kidnappers, who demanded the money," the police statement said.

Yimei then made a third call to his family where he said he had escaped but urgently needed money to secure the release of his grandson who was threatened with death.

Police located him shortly afterwards and took him in for questioning. Yimei soon admitted the story was not true. His 48-year-old accomplice, Jiantuan Y was also detained after she abandoned the baby inside a supermarket trolley.

"The woman said that her companion was the brains behind the operation and the motive was to frighten the family and get money for playing slot machines," the police statement said.

The pair will now face charges over the incident

Chinese man fakes kidnapping to fund gambling addiction.

Do you think that guy has a gambling problem? And what does it say when the “brains” of your operation is just looking for more cash for the slots?

State of the state of gambling

Like me, you’ve probably got town hall fatigue from this grueling election season. But here is a town hall-type meeting you might want to attend:

A panel discussion on the ins and outs of the gambling industry will be held October 14, from 10 a.m. to noon, at UNLVs Paradise Campus. Admission is free.

Mark Clayton of the Nevada State Gaming Control Board, Carol OHare of the Nevada Council on Gaming Addiction, and Alan Feldman from MGM-MIRAGE will discuss the states economic reliance on gaming, how the state controls the gaming industry, and the impact of gambling addiction. Jon Ralston will be the moderator.

At 851 East Tropicana Avenue, room 133. Hosted by the Osher Lifelong Learning Institute in the Division of Educational Outreach at UNLV. For more information call 895-3394.

News 88.9 KNPR – Nevada Public Radio – Public Service Announcements.

I did a talk for OLLI today about gambling history and casino security (sort of a blend of my interests) and judging from the questions it should be a lively panel.

Gambling study makes provocative claim

A psychological study unveiled at the convention of the American Psychological Association makes a bold claim: that 2 percent of all gamblers account for nearly 25 percent of all casino wins and losses. From Science Daily:

In another study, psychologist Arch G. Woodside, PhD, of Boston College, and Ralph Perfetto, PhD, of the University of Rhode Island, found that while most people do not gamble, the majority who do gamble, do so most weeks of the year. They have moderate incomes and are at the highest risk for financial and psychological trouble.

Using data from the annual DDB Needham Life Style Survey, Woodside and Perfetto looked at casino gambling patterns among 20,568 adults from 1993 to 1998. They found that less than 2 percent of all casino gamblers are responsible for nearly 25 percent of all casino gambling wins and losses – referred to as the extreme or X-gamblers. The authors identified three sub-types of X-gamblers. "Whales," are mostly white, middle-aged men with high incomes who go to casinos most weeks of the year. They spend the most money. "Jumbo shrimp" are mostly older white females with very low incomes and visit casinos most weeks of the year. Finally, "big fish" are very frequent gamblers with moderate incomes and make up more than half the X-gamblers. Most middle-income X-gamblers come from mixed demographic backgrounds. X-gamblers visited casinos 25 times or more a year.

"Understanding the demographics and the different influences that play into gambling can help psychologists tailor their interventions for people who get into trouble," said Woodside. "Moderate-income X-gamblers – big fish – are at the most risk for losing the most money and suffering the most overwhelming financial and psychological consequences. The whales can afford to lose money and the jumbo shrimps don’t have much money to lose."

Americans Spending, Gambling, Saving: Who’s Happiest, Who’s Most At Risk?.

I’m going to try to get a copy of this study to examine the methodology. I’d like to see how they calculated what percentage of customers are responsible for what percentage of casino revenue. I always thought that you couldn’t do that with any certainty unless you had 100% of all players using player-tracking cards and, of course, access to the data.

I also threw up a little when I read the phrase “extreme or X-gamblers.” Well, not literally, but I did in my mind. It just sounds like radical dudes slamming Mountain Dew, skating down to their local casino, doing a wicked railslide down the handicapped entrance, and taking keno to the Xtreme. And the whole gambler food chain–whales, big fish, jumbo shrimp–seems a bit simplistic as well. I’m all for presenting your material so that it’s accessible to the masses, but come on.

I’ve emailed one of the authors to get a copy. If I do, I’ll follow up with a more comprehensive critique.

Seriously–I know people who think that “disordered gaming” is a euphemism. I think that “pathological gambling” sounds too pop psychology-ish (like “pathological liar’), so I’ve always preferred “problem gambling.” But “extreme gambling” just sounds like people with bad tattoos and ill-advised piercings hitting “max bet.”

Ontario problems

That could mean that you’re driving up to Vegas from LA and ran out of gas before you got too far. But in this case, it’s about a group of thousands of admitted problem gamblers who’ve filed a class action lawsuit against the government corporation that owns Ontario (Canada) casinos. From the CBC:

A $3.5-billion proposed class-action lawsuit has been launched on behalf of thousands of addicted gamblers who allege they asked to be barred from Ontario’s casinos, but were still allowed in.

The suit was filed against the Ontario Lottery and Gaming Corporation on Tuesday in Toronto, claiming that the corporation did not do enough for those who signed up for “self-exclusion,” a program that allows people to have themselves banned from casinos so that they can curb their ruinous gambling habits.

None of the allegations has been proven in court and a statement of defence has not yet been filed.

Those who sign up for the program are photographed and registered, and their information is stored in binders at every provincial casino. If they are caught trying to enter a casino, they can be arrested for trespassing.

But gamblers who spoke with CBC News on condition of anonymity said the program doesn’t work. One woman said she registered for the program, but her gambling addiction led her back to a casino soon after.

“I walked through, no one looked at me,” she said. “I kept gambling for the next couple of years.”

Lawyers say the OLG should be using high-tech systems to catch self-banned gamblers. In the Netherlands, gamblers present photo identification at casinos, and their identification is checked against a computer database, lawyers say.

Problem gamblers hit Ontario casinos with $3.5B lawsuit

There seems to be some precedent here, since the OLGC has settled 9 individual suits pertaining to self-exclusion out of court. But this might be going too far.

From the casino’s perspective, self-exclusion has some problems (pardon the pun). As card-counters wearing disguises, etc, prove, if someone is dead set on gambling in a casino, even if they are on a watch list, it’s very hard to exclude them. Of course, if they do something that raises their profile, like win a jackpot over the tax threshold, they’ll be discovered when they have to show ID.

One way to make sure that no one who’s gambling has excluded themselves is to make sure everyone who enters a casino has a player’s card, as is done in Missouri. But these are gambling barges with relatively low capacities and, by their nature, one or two entrances.

This system couldn’t work in Nevada casinos without extensive retrofits, since thousands of people who don’t gamble pass through the casino en route to restaurants, shows, convention space, or their rooms. The millions of gamblers who don’t have a problem would also view it as excessively intrusive. Getting carded every time you walk through a casino stops being fun a few months after you turn 21 and can legally enter.

If there are thousands of people on self-exclusion lists, it ludicrous to ask casino employees to bear the responsibility of actively seeking them out and barring them. Until we invent the Matrix-type system where you can download knowledge without all that tedious studying, I don’t think you could find a way to have employees do this.

Responsible gaming monitors redux

I’ve got a more in-depth look at the Canadian responsible gaming monitors in the LVBP. Here’s a snippet:

Recently, the British Columbia government announced plans to hire nine “responsible gambling information officers.” These new deputies of safe gaming will spend their working hours hanging out in casinos throughout the Canadian province, looking for “distressed gamblers” with whom they will discuss gambling.

Like many Las Vegans, you may not be quite sure what to make of this news. Is this a case of our Canadian brethren (or at least their elected officials) having a more finely developed social conscience than us hardscrabble, self-reliant Nevadans, or just the nanny state run amok?

Canada sends problem-gambling monitors to casinos

Strangely, what I thought was the most uncontroversial part of the piece: that “The industry has an obligation to ensure that all of the games are actually as they are advertised,” and that players have the right to learn about game odds, was reprinted below the column under the header “Sounding Off.” I don’t know if this means that I was sounding off when I said this, or that readers are welcome to write in defending the right of Nevada casinos to surreptitiously alter the odds of the game. I’d like to see someone write in to say that if a casino wants to take all of the tens out of their blackjack shoes without saying so, it’s totally cool with them as a player. It might be fun, just to see someone’s head explode with fury over at the Las Vegas Advisor.