Feature Article |
Gaming the System
By Matthew Teague
IN APRIL 2003, during Governor Rendell’s first and more public push for slots in Pennsylvania, an economist from the University of Illinois (he has since moved to Baylor) testified before the State Senate and House finance committees. Earl Grinols is sought around the world for his independent gambling research, and he says he has no moral feelings about gambling: It’s just numbers.
And the numbers, he says, don’t add up. The problem is that casinos don’t generate new money; they shuffle money around. Tourists might bring in some new cash, but the typical gambler, according to Jim Dougherty of Foxwoods, comes in from “a 25-to-50-mile radius, tops.” And as the casino shuffles around that local money, it takes a profit without manufacturing a product.
But wait, some might say. The casinos produce entertainment. Grinols acknowledges that yes, some people may gamble only for the recreation, for the drinks and the music, and the excitement of the bells and lights. Those people, theoretically, feed money into slots with no expectation of seeing it again. But realistically, most people put money into a slot machine because they hope it will spit out more — that’s the whole idea of a slot machine. Economists call this behavior “directly unproductive profit seeking.” Most people call it money for nothing.
On a community scale, casinos are just larger versions of a slot machine: They’re calibrated to take in more from a community than they give out. They give out a certain amount for jobs, entertainment, free perks, charitable donations, community improvements — but they always draw out that amount plus a profit. Otherwise, they couldn’t survive.
If player losses were the only cost, one could say casinos only cost the suckers — like a movie theater that charges 10 bucks for five bucks’ worth of bad movies — so hey, it’s capitalism. But Grinols says the true costs are much, much higher.
Some of the costs are obvious, because they happen on the street: the cost of crimes like traffic violations, burglary and prostitution, which create a need for more police. But the economist says casinos make 30 to 50 percent of their money on losses by “problem gamblers,” and problem gamblers create deeper, more expensive problems, like increases in divorce, bankruptcy, suicide, white-collar crime and lost work time. “There’s a rise in stress-related sickness, anxiety and depression,” Grinols says. “The cost is enormous.”
In the end, he says, for every dollar of benefits casinos bring to Philadelphia, they will cost us more than three.
THE GAMING CONTROL Board — the seven-member body now chaired by a Rendell appointee named Tad Decker — published local impact reports on the five proposed casino sites on March 10th of last year.
In accordance with Act 71, the public had 21 business days to sift through and interpret the enormous proposals — hundreds of pages including financial reports, traffic schemes, architectural blueprints, floor plans and more. At the end of this review period, the board heard three days of public comments, allowing three minutes per individual. (Legislative groups and community organizations were allotted more time.)
No citizen could have sorted out and responded to the plans in the time allowed — or even hired lawyers to do so — and the board’s aggressive stance angered people in the proposed neighborhoods. Resistance groups started to form, the largest of which is Casino-Free Philadelphia, which received a $10,000 grant from Philadelphia Foundation, a charity. More officially, Philadelphia’s City Council passed a resolution requesting more time for public comments. The request was denied.
Through last summer, well after the public’s chance to examine the proposals ended, the casino operators changed and added to their proposals. TrumpStreet, for instance, went so far as to add 12 acres to its proposal. Neighborhood groups requested a chance to review the new versions, and were denied.
In October of last year, Casino-Free Philadelphia faxed a threat to the Gaming Control Board and Governor Rendell: If the board didn’t release the new casino plans by noon on December 1st, activists would execute what they called a “citizens’ document search.”
The nature of Act 71 — the bait-and-switch, hidden from public scrutiny — had finally collided with the public’s desire to know what on earth its government was up to. And on December 11th, the group acted on its threat.
Meredith Warner started it. She’s a resident of Fishtown, SugarHouse’s proposed neighborhood. She and other members of Casino-Free Philadelphia had packed into the lobby of the Gaming Control Board’s building in Harrisburg. Warner and another neighborhood resident, Jethro Heiko, stood holding what they called search warrants.
“On behalf of citizens across the state,” Warner read, “we are here to demand the casino planning documents from the Pennsylvania Gaming Control Board.”
Heiko read next: “We have consistently said transparency rests on two rights — the right for public information, and the right to give meaningful input.”
Having announced their intentions, Warner and Heiko walked toward the board’s offices. A number of employees stepped in to block them, while others shut a pair of glass doors. The crowd started to chant: “Let them through! Let them through!”
Before long, the Harrisburg police showed up, and the Reverend Jesse Brown of Philadelphia stepped forward in his dark suit and high collar. “We wanted to see what the gaming officials are,” he said to the officers. “We came to talk to them.” Brown and 13 other group members were promptly arrested and charged with disorderly conduct.
In January, the “Philadelphia 14” came before Harrisburg district judge Joseph Solomon. He swiftly pronounced them not guilty, and further, he smacked the Gaming Control Board from his bench for “not working for the citizens of the Commonwealth.”
I called Solomon to ask about his reasoning. “The law says they can’t disrupt the public for an illegitimate reason,” the judge said. “I found they had a legitimate reason. Those were public documents.”
And the numbers, he says, don’t add up. The problem is that casinos don’t generate new money; they shuffle money around. Tourists might bring in some new cash, but the typical gambler, according to Jim Dougherty of Foxwoods, comes in from “a 25-to-50-mile radius, tops.” And as the casino shuffles around that local money, it takes a profit without manufacturing a product.
But wait, some might say. The casinos produce entertainment. Grinols acknowledges that yes, some people may gamble only for the recreation, for the drinks and the music, and the excitement of the bells and lights. Those people, theoretically, feed money into slots with no expectation of seeing it again. But realistically, most people put money into a slot machine because they hope it will spit out more — that’s the whole idea of a slot machine. Economists call this behavior “directly unproductive profit seeking.” Most people call it money for nothing.
On a community scale, casinos are just larger versions of a slot machine: They’re calibrated to take in more from a community than they give out. They give out a certain amount for jobs, entertainment, free perks, charitable donations, community improvements — but they always draw out that amount plus a profit. Otherwise, they couldn’t survive.
If player losses were the only cost, one could say casinos only cost the suckers — like a movie theater that charges 10 bucks for five bucks’ worth of bad movies — so hey, it’s capitalism. But Grinols says the true costs are much, much higher.
Some of the costs are obvious, because they happen on the street: the cost of crimes like traffic violations, burglary and prostitution, which create a need for more police. But the economist says casinos make 30 to 50 percent of their money on losses by “problem gamblers,” and problem gamblers create deeper, more expensive problems, like increases in divorce, bankruptcy, suicide, white-collar crime and lost work time. “There’s a rise in stress-related sickness, anxiety and depression,” Grinols says. “The cost is enormous.”
In the end, he says, for every dollar of benefits casinos bring to Philadelphia, they will cost us more than three.
THE GAMING CONTROL Board — the seven-member body now chaired by a Rendell appointee named Tad Decker — published local impact reports on the five proposed casino sites on March 10th of last year.
In accordance with Act 71, the public had 21 business days to sift through and interpret the enormous proposals — hundreds of pages including financial reports, traffic schemes, architectural blueprints, floor plans and more. At the end of this review period, the board heard three days of public comments, allowing three minutes per individual. (Legislative groups and community organizations were allotted more time.)
No citizen could have sorted out and responded to the plans in the time allowed — or even hired lawyers to do so — and the board’s aggressive stance angered people in the proposed neighborhoods. Resistance groups started to form, the largest of which is Casino-Free Philadelphia, which received a $10,000 grant from Philadelphia Foundation, a charity. More officially, Philadelphia’s City Council passed a resolution requesting more time for public comments. The request was denied.
Through last summer, well after the public’s chance to examine the proposals ended, the casino operators changed and added to their proposals. TrumpStreet, for instance, went so far as to add 12 acres to its proposal. Neighborhood groups requested a chance to review the new versions, and were denied.
In October of last year, Casino-Free Philadelphia faxed a threat to the Gaming Control Board and Governor Rendell: If the board didn’t release the new casino plans by noon on December 1st, activists would execute what they called a “citizens’ document search.”
The nature of Act 71 — the bait-and-switch, hidden from public scrutiny — had finally collided with the public’s desire to know what on earth its government was up to. And on December 11th, the group acted on its threat.
Meredith Warner started it. She’s a resident of Fishtown, SugarHouse’s proposed neighborhood. She and other members of Casino-Free Philadelphia had packed into the lobby of the Gaming Control Board’s building in Harrisburg. Warner and another neighborhood resident, Jethro Heiko, stood holding what they called search warrants.
“On behalf of citizens across the state,” Warner read, “we are here to demand the casino planning documents from the Pennsylvania Gaming Control Board.”
Heiko read next: “We have consistently said transparency rests on two rights — the right for public information, and the right to give meaningful input.”
Having announced their intentions, Warner and Heiko walked toward the board’s offices. A number of employees stepped in to block them, while others shut a pair of glass doors. The crowd started to chant: “Let them through! Let them through!”
Before long, the Harrisburg police showed up, and the Reverend Jesse Brown of Philadelphia stepped forward in his dark suit and high collar. “We wanted to see what the gaming officials are,” he said to the officers. “We came to talk to them.” Brown and 13 other group members were promptly arrested and charged with disorderly conduct.
In January, the “Philadelphia 14” came before Harrisburg district judge Joseph Solomon. He swiftly pronounced them not guilty, and further, he smacked the Gaming Control Board from his bench for “not working for the citizens of the Commonwealth.”
I called Solomon to ask about his reasoning. “The law says they can’t disrupt the public for an illegitimate reason,” the judge said. “I found they had a legitimate reason. Those were public documents.”
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