Quick-takes: The month's trends in a glance – March 2006

Investors will wake up the day after Valentine's day this week and start what will likely be a multi-year fling with a new man: Ben S. Bernanke. The new chairman of the U.S. Federal Reserve Board delivers his first report on the economy and fed policy this Wednesday, after formally replacing Alan Greenspan at a swearing-in ceremony last week. Omar El Akkad, Globe and Mail Update

Gaming revenues looked good in January. The weather was generally better than in January of 2004, making comparisons easier. Even Louisiana beat last year, and in Biloxi, three casinos did about three-quarters of the revenue that nine casinos did in 2004. Baring any major disasters, 2006 appears to be on the way to nice solid results for the gaming industry in general, although there will be individual jurisdictions and companies that certainly will suffer in 2006 from increased competition and the continuing maturation of the industry.

Atlantic City January gaming revenue rose 11.6% to $406.3 million. Reuters, 2-10-06

Colorado January casino revenue rose to $63.9 million, up 6.4 percent from 2005. Rocky Mountain News, 2-17-06

Detroit January revenues rose 3.7% to $104.3 million. Robert Ankeny, Crain's Detroit Business, 2-16-06

Illinois Gaming revenue rose 15.6% to $161.4 million in January.. Alan R. Woinski, Gaming Industry Weekly Report, 2-13-06

Indiana January gaming win rose 18% to $211.2 million. Alan R. Woinski, Gaming Industry Weekly Report, 2-27-06

Iowa revenue was up 13.3% to $93.9 million. Racetrack revenues were up 14.7% and riverboats were up 12.6%. . Alan R. Woinski, Gaming Industry Weekly Report, 2-13-06

Louisiana's casinos won $203.7 million compared with $184.5 million in January 2005. Associated Press, New Orleans Times-Picayune, 2-21-06

Macau December gaming revenue was up about 15% to $500 million. Alan R. Woinski, Gaming Industry Weekly Report, 1-16-06

Mississippi January gaming revenues declined 15% to $223.8 million. Alan R. Woinski, Gaming Industry Weekly Report, 2-20-06

Missouri's 11 casinos logged $135 million in gaming revenue in January - a 9 percent gain from 2005. Edward Husar, Quincy Herald-Whig, 2-13-06

Nevada's December casino win was $907.4 million, up 6.5 percent from $852.1 million. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 2-11-06

The lobbying scandal in Washington promises to have an impact across a broad spectrum of issues. We can expect changes in laws governing Indian gaming, Indian political donations, lobbying, political donations, and gift giving and receiving for elected officials. The changes will not be limited to federal legislation; already many states are considering legislation in one of those areas. In February a story broke that should be very wide reaching also, not as much as Abramoff, but wide reaching nevertheless; it is the "Tocchet" affair. Rick Tocchet, a former NHL player and current coach for the Phoenix Coyotes of the NHL was indicted for running a sports betting network - dubbed "ring' by the press.

New Jersey authorities said Tuesday they had busted a nationwide sports gambling ring financed by an NHL coach and run in part by a state police trooper. Phoenix Coyotes associate coach Rick Tocchet was served with a criminal complaint…over a 40-day period an investigation into the New Jersey-based ring discovered the processing of more than 1,000 wagers, exceeding $1.7 million, on professional and collegiate sports, mostly football and baseball. About a dozen current NHL players placed wagers… state police Trooper James J. Harney and Tocchet were partners in the operation, with the former NHL forward providing the financing. MSNBC, 2-7-06

As in the lobbying case, names are beginning to leak out - people reputed (at this point by rumor and innuendo in the press) to have known about the ring, bet with the ring or helped finance or in other ways further the nefarious activities. Of course no hockey story would be complete without the "Great One" Wayne Gretsky being involved, but he is not alone and there will be more as the story develops. There will be, as there has been with Pete Rose, endless discussions about where and when the bets were placed and whether they affected the integrity of hockey. And I suppose we can expect to see congressional hearings and possibly even federal legislation on sports wagering. That is in the future. Today we are just dealing with more local events, busting small time operations and in New Jersey a move to legalize sports wagering; and from on high - Terry Lanni calling for a broader legalization of Internet wagering. And this is only round one - ain't we got fun?

The gambling charges against a former hockey star and a New Jersey state trooper strengthen the case for legalizing sports betting in Atlantic City, a local state legislator says. "To pretend that gambling is not taking place is foolhardy," said Assemblyman Louis Greenwald, D-Voorhees, a sponsor of legislation to legalize sports betting. "Hundreds of millions is being wagered and the taxpayer is getting no benefit." Richard Pearsall, Cherry Hill Courier-Post, 2-9-06

Like millions of Americans, Tim Holden invested in a football pool on Super Bowl Sunday. The Schuylkill County congressman said he had no idea of any possibly illegal gambling activity at the Frackville Elks Lodge, where state liquor control agents and state police seized more than $34,000 in cash…"I paid for a Super Bowl party and a Super Bowl pool just like I've done every year since college. Brett Lieberman/ Bill Savitsky Jr., Patriot-News, 2-9-06

MGM Mirage Inc. Chairman Terry Lanni told attendees of the fourth quadrennial Racing Congress that gaming companies and racetracks should work together to legalize more forms of Internet gaming…Americans can make a legal wager on a sporting event only in Nevada, where about $94.5-million was bet on this year's Super Bowl compared to an estimated $1-billion offshore. "Party Gaming admits that Americans wager on its site and that a significant portion of its revenue comes from those who shouldn't be using the site," Lanni said. Thoroughbred Times, 2-9-06

The NHL is jumping out ahead of the investigations and hiring their own investigator to pursue the matter; and hey, he is the guy that caught Ted Kaczynski - how could he go wrong?

The NHL has hired the former federal prosecutor who headed the Unabomber case to investigate Rick Tocchet, the Phoenix Coyotes assistant coach accused of financing a U.S. gambling ring that took bets from about a half-dozen current players. Authorities have not said they have any evidence of betting on hockey in the investigation dubbed Operation Slap Shot…Former U.S. attorney Robert Cleary will conduct the NHL's internal investigation. Associated Press, 2-9-06

Slot machines have long been the meat and potatoes of casino operations. It started with the introduction of high frequency payback dollar machines in the late 1970s; each year for the next 20 years or so slots gained market share and left table games as the cash cow of casinos farther behind. Even legislation has recognized the growing importance of slots; when the first - other than Nevada - casino legislation was passed, the debate was mostly about table games and the regulation needed to protect the players and keep the mafia and other "bad guys" out. In recent years there has been very little discussion of those issues - in Pennsylvania and Florida, for example, the discussions are simply focused on the amount of money the state will receive and limiting the number of slot machines. Neither of those states thought table games were even worthy of comment.

As I have said before, there are single news days that seem to tell an almost complete story. February 2nd was one of those days; however, I did find it necessary to supplement the day's news with some other stories that further illustrate the tale of slot machines in the United States in February 2006. The slot story across the country is about regulation and licensing. Pennsylvania and Florida are moving forward in the process of developing regulations and granting licenses, albeit slowly. The Florida case has dual issues, getting the slots on the tracks and stopping those who are pushing legal definitions of slot-like devices.

State gambling regulators today ruled that two slot-machine parlor applications did not have the required proof that they could pay a $50 million license fee, effectively ending their bids. The applications to build slots parlors in West Homestead and downtown Lancaster were ruled incomplete and ineligible in unanimous votes by the Pennsylvania Gaming Control Board. Associated Press, Pittsburgh Tribune-Review, 2-2-06

The members of the Jasper City Council have passed an ordinance prohibiting the commercial operation of slot machines within the city limits…Slot machines that involve an element of chance are already illegal in Florida. The ordinance prohibits slot machines that operate by chance as well as those which require the application of skill. Included in the ban are Fruit Paradise, New Cherry, Fruit, Bonus, Triple Jack, Magical Odds, Mystery J&B, Klondike and Reel of Fortune. Suwannee Democrat, 2-2-06

Like the case in Florida and another one in Alabama, knowing exactly what is a slot machine and what is not is not always simple or easy. The lottery in Iowa decided the game TouchPlay was not a slot machine and began spreading them like seeds across the state. The casino association took exception and cried foul, and many state lawmakers agreed and called for a halt to the process.

The director of the Iowa Lottery told lawmakers Thursday that a decision to limit the number of TouchPlay lottery machines in stores around the state is still several weeks away. Ed Stanek went before the Legislature's Oversight Committee to assure lawmakers that lottery officials are policing the operation of the thousands of TouchPlay machines, which critics say are identical to slot machines. Associated Press, Des Moines Register, 2-2-06

That is one side of the slot machine story: the taxes, the legislation and the opportunity for growth in the industry. On the other side of the ledger are investigations, prosecutions and crime related to slot machines. And the illegal stories are not limited to states that outlaw slots; illegal slots are apt be operating in any state. In North Carolina, the story is part of the national lobbying scandal.

The subpoenas were served in advance of next week's formal inquiry by the board into the campaign finances of Black, D-Mecklenburg, former Rep. Michael Decker, R-Forsyth, and political action committees for the video poker industry and North Carolina optometrists…Black has received more campaign money from the video poker industry in recent years than any other legislator. He's also a Charlotte-area optometrist. Associated Press, Winston Salem Journal, 2-2-06

The stories from Ohio and Tennessee show just how widespread illegal slots are, and in a sense how difficult it is to police them.

Three Washington County [Ohio] businesses that recently introduced controversial slot-style video gaming machines that pay out cash prizes have all pulled the games rather than risk having them seized. Maj. John Winstanley of the Washington County Sheriff's Office said letters were sent last week to the bars and clubs seeking voluntary removal of the machines. The games, known as Tic-Tac Fruit, pay out cash prizes of up to $2,000 to winners. Brad Bauer, Marietta Times, 2-2-06

Third Judicial District [Tennessee] Attorney General C. Berkeley Bell Jr., has announced that an investigation into the presence of gambling machines throughout the district has been launched…In a Monday telephone conversation with a Greeneville Sun reporter, a local law enforcement officer who asked not to be identified said machines, which had been in operation in many Greeneville and Greene County businesses, had been removed last week and over the weekend… Bill Jones, Greeneville Sun, 2-2-06

The slots at issue run the gamut from strictly illegal slots, as in Delaware, to all of the games that push legal definitions, as in Alabama.

Slot machines in the Baltimore area that illegally pay out winnings to gamblers may be costing the state at least $15 million a year in lost tax revenue…The new study, released Tuesday by the Baltimore-based Abell Foundation and authored by journalist Joan Jacobson, calculated that there are 3,500 video gambling machines in Baltimore City and Baltimore County…In fiscal 2005, Baltimore City and Baltimore County collected $2.8 million in taxes from amusement machines…in comparison to the $69 million in tax revenue that Delaware collected from the 2,500-slot Dover Downs…report noted that the region "has more illegal gambling machines" than Delaware's Dover Downs has legal slots." Alan Zibel, Baltimore Business Journal, 1-25-06

The Birmingham Race Course's new sweepstakes venture is legal. That's the conclusion of Jefferson County Circuit Judge Scott Vowell in a ruling that is both wholly reasonable and wholly unsatisfying…Most customers play by getting plastic cards that look like credit cards and inserting them into devices that look like slot machines. But rather than machines determining winners, the devices merely "read" whether the cards contain winning entries. It meets the definition of a sweepstakes, in part, because customers get entries when they buy Internet time at the track's new CyberCafe, but they can also get free entries. Birmingham News, 2-3-06

Texas appears to be a case of its own - they don't have slot machines in Texas - they have 8-liners. They look like slot machines, they play like slot machines and are illegal, at least part of the time. Some counties have issued licenses for businesses for the express purpose of operating 8-liners and then busted them afterwards. Limestone County busted an operation - 260 games and 30 players; now that sounds like a casino to me. I wonder how they missed it for months. Apparently busting 8-liner locations is good business and not limited to county sheriffs. Two men in Cameron County found it profitable for them also, that is before they got caught. The Wild West lives!

Crackdown on illegal gambling is now spreading to Limestone County. The 8-liner bust happened Friday afternoon and today we found out just how major that gambling sting really was…Limestone County Sheriff's deputies raided RJ's Gameroom…. Investigators seized weapons, tons of cash and 260 gaming machines… Sheriff Wilson told us the patrons had come to gamble from counties all over central Texas. Authorities are still deciding whether or not to file charges against those gamblers. KXXV, 2-8-06

Prosecutors said they want prison time for two men indicted by a Cameron County grand jury Wednesday and who are accused of impersonating Texas Rangers to steal 24 slot machines from a San Benito video gambling casino…The two men appeared with a large moving truck at the Magic Seven video gambling casino in San Benito on the morning of Dec. 4, according to police…Villalobos said his office plans to ask for prison time for Williams, Bivins or anyone else who impersonates a public servant as part of a new strategy to combat the growing number of "pseudocops" committing crimes. Sergio Chapa, Brownsville Herald, 2-8-06

Maybe the best way to summarize the slot story is with a story from Montana - you mean they have slot machines in Montana? Yes, about 10,000. A bowling alley, while requesting a license for a new bowling alley, makes a business case perfectly: "It would be ludicrous to have a bowling alley without a bar and casino."

The Bigfork Land Use Advisory Committee gave their approval to a proposed bowling alley near the intersection of Highway 82 and 35…The center will replace the existing North Shore Lanes on Grand Avenue...the new bowling center will feature 20 lanes, whereas the current center only has 12…Another concern was the inclusion of a bar and casino in the new center. North Shore currently has both with Keno and Poker machines. Katherine Head, Bigfork Eagle, 2-1-06

One final word on slot machines and their value; only the story isn't just about slot machines, but it still proves the point. If you manage your slot machines correctly, there is a good profit to be made. Sheldon Adelson is going to sell some of his stock - a mere 43 million shares - worth in excess of $2 billion; not a bad day's work you might say.

Las Vegas Sands Corp. Chairman Sheldon Adelson could realize more than $2.2 billion once he sells almost 43 million shares of company stock by the end of March. And, when completed, Adelson will still retain control of more than 63 percent of Las Vegas Sands. Howard Stutz, Gaming Wire, Las Vegas Review-Journal, 2-16-06

Problem gambling and addictive gaming behavior is getting more attention within the industry lately. It has been the foundation of arguments by opponents of gaming for years, but mostly ignored by the industry. Even though Harrah's came out with a policy years ago, it was the exception not the rule. Today however, it is becoming more the rule, if not of individual gaming companies, at least by the associations and spokespeople that speak for them. As indeed it should be. If gaming is to be a sustainable, long-term major industry in the United States (indeed in the world), it must deal effectively with the issue.

Every month there are dozens if not hundreds of stories nationally about the behavior of an addicted gambler who runs afoul of the law as the result of an addiction to gambling. In hundreds of cases of embezzlement, fraud and other white collar crime, the defendants claim the financial pressures caused by gambling had driven them in desperation to commit the deed. Bank presidents, religious leaders, CEOs and clerks have claimed that gambling drove them from an honorable place in society to criminal behavior. I picked one story to illustrate my thoughts this month. My choice was arbitrary - this case isn't the most severe; it is just bizarre enough to make the point - gambling out of control causes people to loss control of rational, socially acceptable thought.

A man staged his own disappearance in the Bighorn Mountains after losing $40,000 on a Super Bowl bet, police said Monday…Search and rescue teams spent two days looking for him in the rugged Bighorn Mountains in north-central Wyoming where he had told his wife he was headed to "clear his head" after losing the money, the sheriff's office said in a statement…On Friday, police received a call from a person identifying herself as Hackworth's daughter, saying she had received a voice mail message from her father saying he was OK, police said. Police traced the call to Chadron, Neb., which is about 200 miles from Gillette, and they found Hackworth…"Hackworth said he knew he had to do something, because he was getting in so deep financially due to gambling losses. If he won on the Super Bowl game, it would have all worked out, but if he lost, he had everything in place now to disappear," Big Horn County Sheriff Dave Mattis told the Northern Wyoming Daily News… Turns out Hackworth had stashed a new pick up truck in the mountains before the Super Bowl in order to "disappear for a while" in case he lost the bet, police said. Casper Star-Tribune, 2-14-06

That is the bad news. The good news is - there is progress on the treatment front. True, no one has found a magic pill or treatment, but they are working on it and have found a couple of pills that offer some promise. Besides the pills, there is progress in other types of treatment, physiologically based treatments not unlike those used for alcohol or drugs.

For the estimated 6 million compulsive gamblers in the U.S., the long odds are on a pill. In the largest clinical study of its kind, researchers at the University of Minnesota found that daily doses of an experimental drug called nalmefene, often used to treat alcoholism, appeared to curb the craving to gamble. The research represents the latest effort to control the biology of misbehavior at a time when celebrity poker, online gambling, lotteries and sports betting have helped to make obsessive wagering a national psychiatric disorder…Almost two-thirds of the patients who were given nalmefene showed "significant" improvement during the four months of treatment, while about one-third of the patients in the placebo group responded favorably, the researchers reported. About a third of the original participants dropped out due to nausea and other side effects. "The study is part of emerging evidence that gambling, once thought to be a problem in moral integrity, is instead a problem in brain biology and can be successfully treated." Robert Lee Hotz, Los Angeles Times, 2-1-06

The major progress is being made, not in pills or twelve step programs, but in prevention. Many states have adopted exclusionary regulations. Gamblers (or in some cases their families) can be placed on a list of excluded persons. People on the list are forbidden to enter a casino within the state. In some states, even if the excluded gambler finds a way to sneak into a casino, he cannot collect his winnings if he wins. Obviously this solution can only work in a regulated industry such as gaming - it would be a good idea for alcoholics, but totally unenforceable. There is a second part to this solution - the technology that is following the regulations that makes it possible not only for the casino to check to see if a player is on the list, but for any regulator and every regulator (in those jurisdictions that require it) to check also.

Facial-recognition technology and leading-edge computer software are now being used to identify and track problem gamblers at two Saskatchewan casinos. The Intelligent Player Care program, otherwise known as iCare, is a joint venture between the Saskatchewan Gaming Corporation (SGC) and an Ontario-based software company, iView Systems, and will be used to target high-risk behavior in casinos. Erin Warner, Leader-Post, 1-25-06

"Risk patterns of play develop over months and years, not over days and weeks," said Davies. "So essentially, I think this gives us a tool that can help manage play on the long term. It's not a crisis-management system." The same software that tracks patrons also monitors who is in the casino and interactions between staff and players. A facial-recognition program used by the system can identify players who have asked not to be allowed in the casino because of a gambling addiction…"As far as we know there's nothing else like this available in the world." Erin Warner, Leader-Post, 1-25-06

From that point on, there are several possibilities. The machine could refuse to allow the player to play; it could call for a member of the staff to escort the person out; it could notify the court in cases of a court imposed exclusion or it could begin some dialogue with the player - it might even initiate treatment. The only limitations now will be on the technology which seems to be poised to deliver whatever is asked of it, and most importantly the commitment of the industry to fund the development of appropriate research and solutions.

On another subject - and another addiction - an addiction to power. For most of the last 15 years - nearly all of the history of legalized gaming in Colorado - one man held more power than any single other person. Charles Lindsey (Chas) wasn't the head of the Division of Gaming, nor a department head; he wasn't even the agent in charge in Cripple Creek where he worked. He was the recognized "naysayer" in the Division. Chas was technically the most sophisticated officer in gaming - the Division used his knowledge and skills in both formal and informal ways to review all new slot technology. His disapproval was the kiss of death to any new slot machine or technology. Probably because of his technical sophistication, the Division placed more credence than was justified in his opinions in all areas of regulation and enforcement. Chas was very quiet and kept out of the direct line of fire in most disputes, but behind the scenes he was known as a tyrant and almost totally arbitrary in some of his decisions. After 15 years it has been revealed that he was more than that - he was an outlaw - a man who lived disrespecting law and government and stealing whatever national and archeological treasures came his way. The state is measuring the cost in the items he stole; the casino industry would measure it in the business opportunities and careers that he stole.

The list of belongings seized from a house on Sundance Street is 12 pages long and reads like a museum catalog: Fish fossils. Potsherds. Petrified wood. Arrowheads. Dinosaur bones and teeth. Earlier this month, National Park Service investigators carried away piece after piece from the home of what they believe is evidence in a case against a former Park County sheriff's deputy and investigator with the Colorado Division of Gaming. Authorities suspect Charles P. Lindsey, 50, of looting artifacts and antiquities from public lands throughout the western United States, according to documents… Lindsey worked from 1982 to 1983 as a deputy for the Summit County Sheriff's Office, then as a deputy for the Park County Sheriff's Office from 1983 to about 1991, when he became an investigator for the Colorado Division of Gaming. He held that job until June… Peggy Lindsey described a number of incidents over a period of years during which she said her husband and his family stole property from public and private lands in several Western states. Deedee Correll Colorado Springs Gazette, 2-16-06

Gaming is a national and a mature industry. The go-go years are pretty much gone in the United States, even as we wait for Pennsylvania and Florida to come on line. There are very few major growth opportunities left, and that makes it even more important that gaming regulation and taxation are stable, reliable and invested with the same integrity that regulators expect from operators, employees and customers. We cannot afford governors, legislators, or individual regulators that treat the industry as their own personal tool or toy to accomplish their own private purposes and agendas.