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Gambling And Tourism

Casinos are cash cows

Dr.Elinor Garely, eTN  May 26, 2011

Games of Chance
Where, when and how gambling started is an unsolved mystery. Official Chinese documents record gambling in 2300 BC; in Europe gambling houses opened in Venice, Italy in 1638. The United States was slow to acknowledge gambling as a way of life, and for many years, games of chance were “additions” to the saloons of New Orleans, St. Louis, San Francisco and Chicago where the primary interests were drinking, dining and companionship. During the early 20th century gambling in the US was illegal and banned by state legislation and social reformers.

Finally, in the mid-20th century (1931) gambling was legalized in Nevada and the modern day casino, with its focus on gaming, found traction and an industry as born. By 1978 New Jersey recognized the positive financial and fiscal impact of gaming on state coffers and Atlantic City, a sleepy, seaside community opened hotels and casino and tourists flocked to the boardwalk lined with shops, glitzy over-the-top hotels, the “kaching” of slots, and the excitement of table games became the “go-to” destination for millions of domestic and international tourists.

Taxed and Regulated
Casinos have become pervasive in the 21st century economy, and governments are reaping the benefits; however, in some parts of the USA, casinos continue to be forbidden. For the states that do permit them to operate they are highly regulated as the large earnings from taxes are used to pay for community infrastructure. Without the casino as a revenue source many states would be hard-pressed to provide employment, education, public safety, historic preservation, economic development, and services for youth and seniors. While taxes vary by state they can range from 6.75 percent of gross gaming revenue for the largest casinos in Nevada, to 55 percent of gross gaming revenue for casinos in Pennsylvania.

Up, Down, Now Up
After two years of revenue decline, commercial casinos in the US experienced a 1 percent increase in gaming revenues, reaching $34.7 billion in 2010 with the largest earnings in Nevada ($10, 405.1 billion), New Jersey ($3, 565.0 billion), Pennsylvania ($2,486.4 billion), and Mississippi ($2,389.8 billion).

States regulate their gambling operations through the Minimum Internal Control Standards (MICS), reviewing the conduct of games, the movement and handling of cash and equivalents, as well as maintain accounting and transaction trails. Casino operations are also regulated at the federal level and laws include the Americans with Disabilities Act (ADA) and The Bank Secrecy Act which requires casinos to report every deposit, withdrawal, exchange of currency, gambling tokens or chips, plus other payments or transfers that are made by, through, or to the casino in amounts in excess of $10,000.

Pennsylvania a Casino Beneficiary
One area of Pennsylvania that has benefited from the legalization of casinos is the 2,400 square mile area of the state known as the Pocono Mountains. Prior to casinos, the area was noted for mountains, waterfalls, woodlands, and rivers. In winter visitors engaged in skiing, snowboarding, and snowshoeing, while summer guests hiked and biked, golfed, fished and rafted their way through the Carbon, Monroe, Pike and Wayne counties, according to Carl Wilgus, President and CEO of the Pocono Mountain Visitors Bureau.

One of the few casinos in Pennsylvania with hotel accommodations is located in this area and the Mt. Airy Casino Resort, located 75 minutes from Manhattan, offers guests the opportunity to dine, play 18-holes of golf, have a massage, and experience live entertainment when not playing craps, roulette, black jack, Pai Gow Poker, three card poker, “Let it Ride,” Seven Card Stud, Texas Hold’em and Omaha.

Pennsylvania Gaming Control Board
For the last three years, Gregory C. Fajt, Esq., has been the Chairman of the Pennsylvania Gaming Control Board. In this state the revenue from casinos offers wage tax reductions and property tax relief for home owners while providing an enhanced tourism product. The money has also funded the Commonwealth’s horse racing industry and established a tax revenue stream for local governments to fund community projects.

According to Fajt many casino visitors are within driving distance of the Pennsylvania properties, and are attracted to the operations because of the new facilities, the safe environment and the sophisticated atmosphere. The safe and secure experience is carefully monitored, and no one under the age of 21 is permitted on the casino floor.

If a person under the age of 21 is found to be gambling the casino can be fined $7,000 to $15,000 per incident. New facial recognition technology and the sharing of information among casinos enable all operators to be aware of underage, gamblers who have placed themselves on the “self exclusion” list, and/or criminal trespassers.

According to Fajt, Pennsylvania has 14 licenses available for the state, with 10 issued to date. Casinos employee over 14,000 people and have generated over $4.7 billion in tax revenue since 2006. One of the licenses is held by the SugarHouse casino in Philadelphia that now holds the title of the largest US city with a casino. The property opened in September 2010 with 1600 slot machines, 40 table games and created 900 jobs.

And the Winner Is
Although Pennsylvania’s table games have been available for less than one year the profitability of the casino operations are racing ahead of Atlantic City. In May 2011, the Atlantic City properties of Borgata, Trump Taj Mahal, and Trump Plaza reported a cutback in staff for blackjack, and other table games.

The state of Pennsylvania currently offers 854 games among 10 casinos and there are plans to add 53 tables in Bensalem at the Parx by the end of June. High profile events are rushing to Pennsylvania, including the World Series of Poker Circuit Event - recently held at Harrah’s Chester Casino and Racetrack. The event included 38 tournament events, with over 75 tables ready for poker and is the single most prestigious gambling event in the world.

An Issue
Problem gambling (ludomania) is an urge to gamble despite harmful negative consequences or a desire to stop. The harm can be to others as well as to the individual gambler. Pathological gambling is considered to be an impulse control disorder and therefore not considered an addiction – as defined by the American Psychological Association.

Research indicates that about 2.5 million adults are pathological gamblers with another 3 million adults considered problem gamblers. If the criteria is expanded and viewed more broadly, 15 million American adults are considered to be at risk for problem gambling, and about 148 American adults are low-risk gamblers

Please Keep Me Out
In recognition of the compulsion to gamble, the Pennsylvania Gaming Control Board has developed a self-exclusion program that allows a person to ask to be kept out of gaming activities and prohibited from collecting any winnings, recovering any losses or accepting complimentary gifts or services or any other thing of value at any licensed facility.

People who have signed on to the self-exclusion list will be refused acceptance of their wagers and may be asked to immediately leave the gaming floor, and may even be arrested for trespass. If the self-excluded person does gamble, he/she may not collect any winnings or recover any losses arising from the gaming activity. Any winnings issued will be remitted to the Gaming Commission and deposited into the Compulsive and Problem Gambling Treatment Fund.

If a casino operator allows individuals on the statewide self-exclusion list to gain access to the gaming floor and place wagers, and/or sends promotional mailings to the individual, the casino operator faces civil penalties that can range from $5,000 - $20,000 per incident.

It is estimated that gamblers currently lose over $5 billion a year. Discussions continue as to whether it is ethical to encourage people into casinos through the lure of entertainment and dancing, when the opportunity to lose is greater than the likelihood of winning.

Adam Smith viewed gamblers as conceited men who believed that their fortune was greater than that of their neighbors and underrated their chance of loss. Scholars find that people gamble for a variety of reasons that include: a) pleasurable excitement, b) an escape from monotony, c) belief that life is full of chance, and they might get lucky, d) increase sublimation of oedipal aggression against one’s father, e) is a substitute for masturbation, and/or, f) a defense against feminine identification and all bettors have an unconscious wish to lose.

It’s the Money
The simplest explanation is that people gamble for money; this is paradoxical because on average they lose. Regardless of the motivation, casinos are not going to disappear as long as state and federal government agencies reap billions in tax dollars. We can also be assured that are there is going to be ever-increasing marketing campaigns encouraging everyone over 21 to place their dollars on a table or in a slot machine at a nearby casino.

Casinos are cash cows
Gregory C. Fajt, Chairman, Pennsylvania Gaming Control Board

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