Many of us have a certain image of casinos, perhaps borrowed from Hollywood films or borne of our own experiences: opulent, colorful, exciting. “Vegas, baby!”
We might picture high rollers strolling into the pit with rolls of bills, looking like they fell out of an Armani advertisement. We might envision dealers clad in tuxedos, crisply waxed cards laid out on plush, green velvet with a satisfying “thwuck” sound. Perhaps some have a more muted vision of the gaming industry: listless loafers sitting at slot machines tapping buttons like sleepy Bonobo monkeys (no disrespect to the industrious creatures), men in pants that haven’t been washed in some weeks hunched over electronic blackjack screens, women with haircuts from the 1980s scowling at mediocre poker hands while dealers await their wagers with patronizing half-smiles.
Whatever the image, the reality of casinos remains essentially the same the world over: to prey on the poor and enable—if not tacitly encourage—gambling addiction. Meanwhile, the gambling industry consistently downplays the negative consequences of gaming while overplaying the benefits.
Yet hopes abound. Two new small casinos in western Pennsylvania are expected to boost the local economy by providing hundreds of jobs and anchoring economically vulnerable mall complexes burdened by JC Penney and other flagging retailers. Yet with evidence that newly opened casinos in Massachusetts have increased crime, it’s time to look at the casino business model more closely. As Sherry Linkon writes in The Half-Life Of Deindustrialization, suffering cities like Detroit and Youngstown “built casinos in an effort to revitalize the local economy.” And how are Youngstown and Detroit doing today? Not great. Indeed, as of 2017, Youngstown was the most economically distressed small to mid-size city in the country.
Do casinos just magnify existing social and economic fault lines or can they create them? All too often gambling hits exactly those who can’t afford to pay back what they lost and shouldn’t have been wagering any of it in the first place. As John Rosengren writes, “a significant portion of casino revenue now comes from a small percentage of customers, most of them likely addicts.”
“At least nine independent studies,” Rosengren continues, “demonstrate that problem gamblers generate anywhere from 30 to 60 percent of total gambling revenues.” Economically vulnerable people, including students, are often drawn to the allure of quick money and taking a risk. Casinos focus intensely on getting TOD (time-on-device) up, because the longer someone spends at a machine or table, the higher the odds that he catches bad luck or makes an impulsive bet. Even ultra-rich high rollers are susceptible to the trap of chasing losses.
Research consistently shows that gamblers get hooked on “the zone” of potential infinite possibility more so than wins themselves, and that losses result in bigger and more reckless bets. A study from SUNY Buffalo found that casinos focus on getting patrons to wager a number of small bets and spend longer at machines. Slot machines in particular are designed to deceptively display “near wins” that stimulate the brain’s reward center and often prompt further rapid and ill-advised wagers. Winning sounds and lights go off even if the overall result of a play is a loss. The business model is all about wearing people down, giving them a smooth ride to zero interspersed with gains that just feed into the overall loss. In the event of a real win, the hope is that a gambler will be back soon—ready to lose big this time.
There are convincing arguments about the net positives to the economy of gaming and casinos, particularly for employment. It’s also accurate to point out that making gambling illegal just drives gamblers and addicts underground. But a fair analysis must admit that casinos tend to exacerbate and feed on economically unstable regions. Moreover, casino revenues are often used to help fund local and state governments, creating powerful incentives for legislators to relax wagering limits and approve new gaming facilities. Promises that money from Maryland casinos would help fund education have instead seen significant amounts diverted to cover government expenses and side projects. It doesn’t help that gambling lobbyists have enormous influence over state legislatures. Les Bernal of Stop Predatory Gambling says “they are literally going out and buying the political process.”
Casino gambling has only been widely legal for a few decades, since the Indian Gaming Regulatory Act was passed in 1988. It used to be allowed only in Atlantic City and Nevada. Now there are over 1,000 casinos in 40 states. As Casino Journal reports, recently released records show that in 2017, there was “$89.4 billion in casino revenue included $55.7 billion from commercial casinos and $33.7 billion from tribal properties, with 82 percent of the spending derived from gaming and 18 percent from non-gaming such as food and beverage, lodging and entertainment.” In 2017, the industry employed over 727,000 people.
The chief problem with casinos is that their business model often directly targets deindustrialized towns and beleaguered working class regions whose residents do not have expendable income to waste. The well off can also get slammed, such as Justyn Larcombe, who lost 750,000 British pounds, forcing him to move back to his mom’s house at age 43. Larcombe has now paid off all that debt thanks to a lucrative career, but his story is far from typical. Many who lose it all to gambling don’t have the skills or safety net to rebound. Around 4 percent of Americans have a “problematic” or even “pathological” gambling addiction. That’s a lot of addicts, and you can bet good money they are not all wealthy and that the real total is actually much, much higher.
Reputable studies show that up to 80 percent of money lost at American casinos comes from individuals in households earning less than $50,000 per year. Even those without gambling habits who simply bet modest amounts several times per month can end up costing themselves significant percentages of otherwise available income. Just as payday loan shops and subprime credit cards found massively profitable ways to blindside the poor into feudal-style financial serfdom, casinos and gaming have their own clever strategies. And it’s working. As Barbara Whitehead notes in The New York Times, “As casinos have spread into de-industrialized cities, dying resorts and gritty urban areas, the rate of gambling participation has grown among lower-income groups.” Baylor University professor Earl Grinols has estimated that casinos take $3 in “social costs” (unemployment, crime, drug use, gambling addiction) for every $1 they bring into a community (entertainment, employment, etc.).
Although many states have voluntary self-exclusion programs where gamblers can choose to be barred from further gaming (with unimpressive efficacy), the business model of the gaming industry is designed to enable gambling addiction. Psychiatrists have linked addiction to genetic predispositions that hamper impulse control and addictive behaviors, whether with drugs, pornography, gambling, cigarettes, alcohol, or sexual promiscuity. Still, the fact remains that lower income people often gamble simply to try to win money they can use to supplement their low incomes and pay off expenses, hence why gambling is sometimes called a “tax on the poor.” Americans in 2016 lost $116 billion to counting casinos, state lotteries, and regulated online gaming sites. Moreover “the American Gaming Association says that about $150 billion is wagered on sports (the handle) each year in the U.S., with nearly all of it coming through illegal channels.” That’s a serious chunk of change.
As Michael Brendan Dougherty puts it, “almost every economically depressed region in America is begging for a casino salvation,” but the promises of glory invariably fade as “casinos and statehouses prey upon the elderly and poor.” Table games that gave locals jobs start to recede and more slot machines show up. Rather than glistening new upscale destinations, the casinos tend to bring pawn shops, cheap fast food, and increased prostitution.
The UK is in similar straits,with Guardian columnist Helen Pidd warning that “once-great towns can no longer sustain even an M&S and are instead plagued by bookies, pawn shops and stores selling washing machines for ‘just’ £5.50 a week.” Then again, is it all that surprising that gamblers and governments on both sides of the Atlantic would be drawn to the allure of winning it big in an international economic system increasingly characterized by casino capitalism? With nations placing large bets on trade deals and currencies that use their populations as collateral, is it any wonder that citizens are also hankering for a small piece of that pie? And of course, as with the wagers that their leaders make, it’s their livelihoods and assets that are the eventual price.
Paul Brian is a freelance journalist. He has reported for BBC, Reuters, and Foreign Policy, and contributed to The Week, The Federalist, and others. You can follow him on Twitter @paulrbrian or visit his website www.paulrbrian.com.