SPG Research Center
Casinos and state lotteries are the most predatory business in America and their windfall is coming at your expense.
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Skill Based Slots
The next wave of slots will have an element of skill involved, which will slightly increase the player’s chance of winning. The goal is to entice younger players who largely shun regular slot machines. The difficulty is to provide for the skilled player while still having odds that favor the house.
Such games are currently under development by some smaller slot manufacturers. Small sections of the casino floor will be devoted to the machines. One thing that will slow adoption is that where a regular slot machine plays every five seconds, the skill games take about 20 to 60 seconds per play. The casinos hope that capturing more young players will help make up for the roughly 17% drop in slots play since 2007, whereas table games have dropped only 3%.
While some executives are content to wait for women to grow into 51 year old slots players, others are looking for different answers. It took casinos ten years to adopt tickets or credit card play at the slots, and it is expected that it will take 10 years or more to adopt smart slots. Casino owners also worry that the new machines will cannibalize older slots, and reduce the 77% average that casinos receive from slot machines. Casino owners hope that addicted players will be drawn to the skill machines and lose their money more slowly, but that is also a gamble.
May the woes of casinos grow.
Alexandra Berzon, “Are Slot Machines About to Get Smart?” The Wall Street Journal, June 15,2016.
New gambling for kids
Now we have a “weird” new $2.3 billion gambling game involving garish virtual assault rifles. The latest scandal involves “video game weapon skins” available to any age including kids using parents credit cards. The video gaming world based on “Counter-Strike: Global Offensive”(CS:GO) is huge and complicated. There are various levels of play and games going on around the world that include pro leagues and involve 380,000 players at any one time.
Players form teams of terrorists and counter-insurgents who shoot at each other, which is a thoroughly edifying and character building activity. A tournament in early April sold out the Nationwide Arena in Columbus, Ohio and had 71 million online viewers over a four day period. The game was not particularly successful until the originator Valve introduced a new gimmick called skins. The skins were virtual decorated weapons that could be bought during the game, and then sold, hopefully at a profit, more frequently at a loss.
Video gaming is not a sport, but in common with soccer, football, basketball and baseball, people like to gamble on the outcome. So you can gamble on the games or on the on-line trade in virtual weapons, a black market without the danger of being mugged. Most of the skins markets are run by operators other than Valve. There is no consumer protection. Games have been fixed, insider information has led to huge bets, seven players have been banned, and teenagers are being turned into addicted gamblers. The online games are banned in only four states.
A comprehensive introduction to this new phenomena is by Joshua Brusten and Eben Novy-Williams, “Virtual Weapons are turning teen gamers into serious gamblers,” http://www.blomberg.com/features//2016-virtual-guns-counterstrike-gambling/ July15, 2016.
Electronic Gaming Machines and Domestic Violence
For several years the relation between various gambling venues and domestic violence has been established in several studies. This particular study investigates the relation between electronic gambling machines and domestic violence reports by postal codes in Australia.
The study used police recorded domestic violence reports per 10,000 population in relation to electronic gaming machines per 10,000 by postal code. The researchers found that postal codes with no EMGs had 20% fewer family incidents per 10,000 and 30% fewer assaults. Around the world approximately 30% of women suffer domestic abuse during their lifetime. Gambling is an under-researched factor in domestic violence. For those researching domestic violence, gambling is a “hidden” factor.
What it says for all of us is that the presence of a casino is as important as the presence of good schools for the well-being and social health of our families, especially if a member of the family is a gambler.
Francis Markham, Bruce Doran, and Martin Young, “The relationship between electronic gaming machine accessibility and police-recorded domestic violence: A spatio-temporal analysis of 654 postcodes in Victoria, Australia, 2005-2014,” http://www.sciencedirect.com/science/article/ June 22, 2016.
U.S. Senator John Thune, a Republican from South Dakota, has sent a letter demanding a hearing to the leaders of the Multi-state Lottery Association. He claims the lottery association has done little to assure that the theft cannot occur again.
Eddie Ray Tipton was convicted last year while director of security for MUSLA of rigging a multi-million dollar jackpot in the Iowa Lottery. He faces trial this month for other rigged lotteries in Kansas, Colorado, Oklahoma and Wisconsin.
The MUSLA fired Tipton, discontinued use of his computer, and has cooperated with the police. Senator Thune is not sure that is enough to prevent other riggings.
Chris Francescani, Senator Demands Answers on Lottery, NBC News, June 29, 2016, Available at http://www.nbcnews.com/news/us-news/
Battle of kottery game suppliers
In a display of just how competitive and nasty the lottery business can be an employee of Scientific Games in Alpharetta, Georgia downloaded thousands of computer files, which included intellectual property, trade secrets, contracts, marketing and sales plans and data files. He then accepted a position with International Game Technology.
Scientific Games filed suit in Federal Court in Gainesville, Georgia. Scientific Games claimed that the files contained a “roadmap for stealing away business” by underbidding. A total of 13,800 items were downloaded to external hard drives. Scientific Games asked for a temporary restraining order to prevent the release of the files. Just how effective that will be without also accusing the former employee of theft remains to be seen. This is the most massive theft among gambling companies of which I am aware.
Associated Press, “Lottery firm says its ‘most prized’ secrets have been stolen,” http://wate.com/2016/06/26/
Once again Massachusetts tops the lottery sales charts with sales over $5 billion last year. The individual sales average was $740 per capita, with 50 communities (lower incomes) topping $1000 per capita. A total of $3.6 billion was paid out in prizes, regressively of course, with a few big winners and thousands of free tickets which were mostly losers. $985.8 million was returned to the towns and cities as unrestricted aid,
Sadly, the distribution system is inherently unfair. The distribution is based on population and median home values, and not on lottery ticket sales. The poorest communities that sell the most tickets per capita may be far down the list of recipients. Little goes to meet the needs of those who are addicted to the Lottery.
Lotteries are the vilest, most predatory of all gambling venues, As Les Bernal was quoted, “The $30 dollar scratch ticket is a Hail Mary investment strategy for poor people that seldom works out.”
Kentucky Poverty Rankings: a simple analysis you can do
The following data comes from www.statehealthfacts.kff.org. This is the Henry J, Kaiser Family Foundation website which contains a variety of health facts for the states. For context there are several demographic comparisons as well. I have selected some that reveal Kentucky’s status as a midsize state that is mired in poverty.
Kentucky’s population is 4,115,700 which ranked 23rd, up two places since 2007 when it was 25th. The gross state product has been increasing to $183,273,000,000 which ranks 27th, which despite increasing has slipped down one place. This is quite good for a state that has sizable numbers living in poverty.
The percentage living in poverty is 20% with only four states ranking lower: Louisiana, Arizona, Mississippi and West Virginia. This continues Kentucky’ slide: from 34th in 2000 to 40th in 2007 to 46th currently. The percentage below twice the poverty level, called low income, is 19% which when combines leads to 39% with low income or living in poverty, ranking ahead of only Arizona, Arkansas, Louisiana, Mississippi, New Mexico and West Virginia. As would be expected the number in poverty and low income leads to a median household income of $42,786 above only four states. The division between the wealthy and the poor is greater than in nearly all the other states.
A good percentage of Kentuckians are employed (only 5% not employed), high enough to rank 22nd, but at lower wages. Less favorably, the state budget shortfall of $37,000,000 in 2013 also ranked as 22nd highest. Another symptom of poverty was that the amount spent on healthcare, despite low wages, was $28,948,000,000 which ranked 26th and was up $6 billion since 2007, and was more than the state budget. Total enrollment in Medicaid and CHIP programs was 606,805, down 237,000 since 2007, and which ranked 27th highest. This would be considered good news since Kentucky was 23rd highest in 2007.
You can do the same analysis for your state with the www.statehealthfacts.kff.org website. I did have the benefit of doing this in 2007 and could thus compare and see the change. The most basic change in the Kentucky picture is the introduction of three casinos operating with Instant Racing Machines. The courts have let the case against their legality roll on for five years removing hundreds of millions from the functioning economy and placing it is the hands of the tracks and wealthy horse owners.
Legalized sports gambling is playing a large role in corrupting popular sports
This editorial by The Nation declares legalized sports gambling operators play an equal if not greater role in corrupting popular sports than illegal, underground gambling.