Below is the testimony of Les Bernal, National Director of Stop Predatory Gambling, before a Georgia Legislature study committee on gambling in October 2019. As part of his presentation, Bernal explains why commercialized gambling is different than any other business. A copy of Bernal’s slides can be found here.
Les BernalWhy Commercialized Gambling is Different Than Any Other Business
Below is the brief video testimony of Les Bernal, National Director of Stop Predatory Gambling, before the U.S. House Judiciary Subcommittee on Crime and Terrorism’s hearing “Post-PASPA: An Examination of Sports Betting in America” on September 27, 2018. Bernal’s written testimony can be found below the video.
Mr. Chairman, Ranking Member, and members of the Subcommittee, thank you for the opportunity to testify on the topic of sports betting in America.
My name is Les Bernal and I am the National Director of Stop Predatory Gambling, a national government reform network of individuals and organizations from across the United States. I’m also a parent and a former high school and college men’s basketball coach.
Stop Predatory Gambling believes in improving the lives of the American people with compassion and fairness.
We believe everyone should have a fair opportunity to get ahead.
We believe every person’s life has worth and no one is expendable.
We believe state government should not depend on commercialized gambling to fund its activities.
Because of what we stand for, we are one of the most politically diverse organizations in the United States, one in which conservatives and progressives work side-by-side to improve the common good. This reality was evidenced by the amicus brief that Stop Predatory Gambling filed in the Murphy case, co-signed by more than thirty different organizations, including some of the most influential liberal and conservative groups in America.[i]
An Urgent National Problem that Only Federal Action Will Address
Leaders of all political stripes agree that improving opportunity and mobility out of poverty is one of the defining challenges of our time. Around 50 percent of the US population has zero or negative net wealth, meaning their debts equal or exceed their assets.[ii] Yet one major contributing factor to this serious situation has been ignored for too long: Americans are expected to lose $118 billion of their personal wealth to government-sanctioned gambling in 2018.[iii]Many of these citizens suffered life-changing financial losses.
If Congress doesn’t take action to address this problem, then the American people are going to lose more than $1 trillion of wealth to government-sanctioned gambling over the next eight years. Sports betting will make these financial losses even worse.
The reason? The almost sole focus of state-sanctioned gambling has been to maximize government revenues, not to promote and protect the public interest.And nothing suggests sports betting will be any different unless there is strong federal action.
Why Gambling is Different Than Every Other Business or Commodity
There is a faulty assumption surrounding commercialized gambling and it has led to very bad outcomes for the American people. It’s the false perception that gambling is just like any other business. What separates commercialized gambling from every other business, including those involving vices like alcohol and tobacco, is gambling is a big con game. Citizens are conned into thinking they can win money on games that are designed, in the end, to get them fleeced. If you pay for a hamburger, a book, or a glass of wine, that’s what you receive in return. In commercialized gambling, what you receive is the lure you are going to win money. But the game is mathematically stacked against you and inevitably, you’ll lose in the end, especially if you keep gambling.
If you do win some money back, in most cases it comes at the expense and misery of many other people. And an ESPN story recently highlighted that in commercial sports betting, if you try to win, the bookmakers don’t let you place bets anymore.[iv] Bookmakers are severely restricting or closing accounts for the very fact that these people are winning!
“Let People Gamble If They Want,” You May Say
We already have the freedom to gamble. Up to now, many Americans participate in office pools for the Super Bowl, NCAA March Madness brackets, or make casual wagers on the golf course with their friends. These informal events are examples of social gambling.
Social gambling stands in contrast to state-sanctioned gambling, or predatory gambling, that—by design—is much less constrained. It happens when state governments partner with powerful corporate gambling interests to operate and market for-profit gambling to citizens and their communities.
In state-sanctioned gambling, there is a “house” skimming a large profit. It’s exempt from truth-in-advertising laws, giving states and gambling corporations wide latitude to market gambling, grossly exaggerate chances of winning and aggressively lure citizens to gamble away bigger sums of their cash. People often borrow money to participate. It goes on all day, every day of the week, year round. And it requires the majority of Americans who rarely gamble to subsidize the scheme with their own cash, footing the bill for the steep social costs and state budget problems it leaves behind.
One can be a libertarian on this, while at the same time, believing that we cross an unacceptable ethical line when we go from allowing individuals to gamble to allowing our government to set up a massive marketing and distribution scheme urging people to do so. Making a bet with a friend, that’s one thing, but if you do it against a sportsbook, you’re going to lose money all the time.
Illegal Gambling Tends to Increase When States Legalize Gambling
The primary source of information for the size and scope of illegal sports gambling in the U.S. has been the American Gaming Association, the national lobbying organization for gambling operators who have a vested financial interest in seeing commercialized gambling metastasize.
When gambling operators call for “regulation,” what they really mean is government granting monopolies and awarding regulatory advantages to favored firms.
Presently in the U.S., no illegal gambling operator is putting liens on the homes of citizens to collect gambling losses, like legal operators do. No illegal operator sends free gambling wagers by direct mail to your house to lure you back to the local casino, like legal operators do. No illegal operator is pushing $50 lottery scratch tickets, seven days a week, in economically-depressed communities, like state lotteries do. No illegal operators are running gambling ads during live broadcasts of sporting events with such intensity that one out of every five ads is to place a bet, which is what some of the legal sports gambling operators maneuvering here in the U.S. do in places like the United Kingdom.[v] No illegal operator is sponsoring pro sports teams, which involves team uniforms emblazoned with the names of gambling companies on them; stadium and arena surfaces where continuous gambling ads surround the game itself; and pre-match and post-match interviews, like the legal operators do in the U.K.[vi]
If the illegal sports gambling operators supposedly cannot be controlled right now, as the big commercial gambling operators claim, then how can you control and regulate the gambling operators you license? If you can’t shut down the illegal sports gambling operators now, how would you possibly shut down licensed operators who don’t follow the rules?
There are a number of other reasons why illegal gambling tends to increase when states sanction gambling. These include:
Untaxed illegal operators can offer better odds and tax avoidance that legal operations cannot.
Once gamblers start betting legally, they become less averse to gambling in unlicensed venues and websites.
Law enforcement in gambling states view illegal gambling as a state revenue issue rather than a criminal activity, making enforcement less of a priority.
Commercialized Sports Betting Severely Harms Kids and Will Radically Change the Way That Kids Consume Sports
Studies show that children in those countries with legal sports gambling are repeatedly exposed to harmful messages and advertisements about sports gambling.[vii] The frequency of sports gambling ads normalizes gambling for kids.[viii] These kids come to see gambling as central to playing and watching sports.[ix] Rather than talking about their favorite team, they talk about the odds of their team winning.
The younger children start gambling, the more likely it is they will become habitual and problem gamblers, regardless whether they are from an urban or a suburban community.[x]
Researchers at Johns Hopkins’ Bloomberg School of Public Health have published nearly a dozen papers on Baltimore youths and gambling.[xi] They found a strong link between gambling and other problems among the city’s youth. Other studies in the Johns Hopkins’ series found that gambling often leads to depression, crime, homelessness and joblessness in young adulthood.[xii]
When you talk about sports gambling in 2018, it means gambling on almost any kind of contest you can imagine:
In-play betting;
Betting on video games or eSports;
Betting on pop culture TV programs like The Bachelor and The Oscars;
And much of it is happening online in the form of online gambling.
Can you imagine allowing young people to gamble on video games? That’s where gambling operators, and their partners in state government, are leading this country unless Congress acts.
For the Majority of Americans Who Don’t Gamble, You Pay Even If You Don’t Play
Gambling lobbyists and some public officials continue to tout government-sanctioned gambling as a way to raise tax revenue. But history has shown repeatedly that this argument is either overstated or wrong. A 2016 national report by The Rockefeller Institute at SUNY-Albany found that while states creating new revenue streams from gambling may see momentary bumps in tax income, “the revenue returns deteriorate—and often quickly.”[xiii]
Beyond its obvious status as a budgetary shell game, government-sanctioned gambling incurs major social costs that end up being footed by all taxpayers. In addition to targeting and exploiting the financially desperate and cultivating addiction,[xiv][xv] government-sanctioned gambling leads to increases in rates of personal bankruptcy and provides new avenues for crime and money laundering.[xvi][xvii] Gambling operators don’t pay for the harms they cause families, businesses, and communities. Taxpayers do.
All the citizens who don’t gamble also pay another way. Government-sanctioned gambling lowers our national standard of living because it’s a sterile transfer of money from millions of ordinary people’s pockets into a small number of other people’s pockets, producing nothing new and nothing of lasting value. Its economic impact is similar to throwing your money on the street so someone else can pick it up – it redistributes wealth without creating it. Because this nonproductive activity nevertheless uses up time and resources, we experience a reduced national standard of living, a consequence that impacts all of us.
CONCLUSION
State governments are often called laboratories of democracy. But over the last 30 years, the record is clear: when it comes to gambling policy, states are laboratories of fraud, exploitation and budgetary shell games.
Without Congressional action, the American people are on a collision course to lose more than $1 trillion of wealth to government-sanctioned gambling over the next eight years. Widespread commercialized sports betting will make these financial losses even worse.
Public officials and opinion leaders who profess a desire to improve opportunity and alleviate poverty often lament how few levers they have to pull. Priority one needs to be to stop turning millions of people who are small earners, who could be small savers, into habitual bettors.
[ii] The Quarterly Journal of Economics, Emmanuel Saez and Gabriel Zucman, Vol. 1, May 2016, Issue 2, Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data, Pg. 554. http://gabriel-zucman.eu/files/SaezZucman2016QJE.pdf
[vii] Hannah Pitt et al., “It’s just everywhere!” Children and parents discuss the marketing of sports wagering in Australia,” Australian and New Zealand Journal of Public Health, 480, 485 (Oct. 2016) https://www.ncbi.nlm.nih.gov/pubmed/27524502
Former Assistant US Attorney Mike Fagan, an expert in online gambling prosecution, wrote the memo below about the ineffectiveness of geolocation technology.
Imagine the legendary chicken business owner Frank Perdue, when asked if he ate the poultry he sold, responded by spitting on the floor and declaring his chicken was “for losers.” What business would ever say that about their product or service? Only one. The gambling business.
When The New York Timesasked a slot machine designer at International Gaming Technology if he ever plays the machines he builds, “he acted as if I had insulted him. ‘Slots are for losers,’ he spat.”
The actions of the IGT employee are not an isolated case. Commercialized gambling is the only business where most of the people who own it and promote it don’t use it and don’t want to live near it.
It’s like the executives of the failed energy giant Enron – infamously known as “The Smartest Guys in the Room”– standing in front of their employees assuring them their retirement funds invested in the company are a good bet while at the same time, they were selling millions of dollars of their own stock because they knew it was a sure loser. The owners and promoters of commercialized gambling are “The Smartest Guys NOT in the Room.”
These hypocrites cause life-changing financial losses for millions of American citizens. People like Sandy Hall, who had the courage to be interviewed as part of a 60 Minutes investigation into slot machines. Her life was reduced to almost nothing because of slots.
Below are the hallowed members of The Hypocrite Hall of Fame who are lobbying to bring even more extreme forms of government-sanctioned gambling into Georgia, including casinos and online gambling. To read more about each Hall of Famer, click on the arrow following the member’s name.
Wynn told Charlie Rose in this 2009 60 Minutes interview:“The only way to win in a casino is to own one.”And he says, even when people are lucky, they usually gamble away their winnings.
“Have you never known in your entire life a gambler who comes here and wins big and…walks away?” Rose asked. “Never,” Wynn replied.
“You know nobody hardly that over the stretch of time is ahead?” Rose asked. “Nope,” Wynn said.
But how likely is this multimillionaire to lose his own money gambling? The New York Times reported in this December 24, 2006 story: “Murren doesn’t play the tables or slot machines.”
In this June 2011 story by Casino Enterprise Management, Adelson, the casino billionaire, says he gambles only on vacation when he is on an island and takes only $500 with him – a far cry from those local citizens who are now gambling at his Bethlehem (PA) Sands Casino between 150 to 200 times a year.
As the head of Genting, Lim has helped to drive well-financed, relentless lobbying efforts to allow casinos in several states including New York, Florida and Massachusetts. Worth close to a billion dollars, does Lim regularly lose any of his personal fortune on his own “service?”
According to The Business Times Singapore on December 2, 2006, Lim said: ” Life is full of gambles but I’m not a hard-core gambler.”
Bluhm owns many casinos in the US. Does this billionaire lose any of his fortune gambling inside casinos? According to this excerpt taken from The Chicago Tribune:
“As Neil Bluhm walked through the sophisticated high-roller lounge of his newest casino Thursday, I asked him, ‘Do you ever gamble?’ ‘No,’ he said, prompting his gaming chief to remind the Chicago billionaire about a trip to Las Vegas last fall. So Bluhm supplied a different answer. ‘I gamble putting one of these deals together,’ he said with zeal. ‘I spent millions of dollars not knowing whether we were going to have a casino. So do I gamble? Yes.'”
Penn National has been an influential player across the country in lobbying for small regional casinos that extract hundreds of millions of dollars of wealth from ordinary Americans. Their profit model is based on getting people to gamble away their money at least 4-5 times per week.
Carlino has been at the helm as Penn National metastasized across the US in recent years. Does he gamble away any of his own wealth? Carlino confessed to a Boston Globe reporter in September 2013: “I’m not a gambler.”
Loveman, the man who was paid $40 million in one year for encouraging millions of Americans to lose their money during this severe financial crisis, does not gamble. As Wall Street Journal Christina Binkley reported in her book “Winner Takes All” (Pg. 177):
“There was a fundamental disconnect between Loveman and his customers. The professor believed that people were gambling for recreation, so he didn’t expect them to feel so upset about losing their money. He believed gambling was games. Loveman isn’t a gambler and has never been a gambler. He can analyze customers’ behavior but he doesn’t get them deep in his belly.”
Yet in this Baltimore Sun Magazinearticle, Cordish reveals he is barely a gambler himself. If all his casino patrons gambled like he does, his casino would be out of business: “When I go to gamble, I take $100. When the $100 is gone, it’s gone. If I get ahead, at some point I quit. I think that’s how 99 percent of the world gambles. [Gambling] is just a form of recreation.”
The late Si Redd, the man known as “the King of Slots” for designing the modern slot machine, did not even play the machines he invented according to this excerpt in The Las Vegas Sun from June 25, 2001:
“Si Redd says he listens intently to, and reads reports of, the gaming device that has become known as the “crack cocaine of gambling” because of its highly addictive nature.
‘Of course it hurts me when such things are said, I guess because it is kind of the truth,’ Redd said. ‘I never intended it to become that way, and I never could have dreamed of how successful the video poker machine would become.’
Although he is a member of the Gaming Hall of Fame, Redd today has little to do with gaming. He sold his interest in IGT as an octogenarian and opened a rival company, International Technical Systems Inc., which is no longer in business.
He does not even play the machines he invented.
Redd’s concept of the 99 percent payout on dollar slots drew millions of people who otherwise never would have put a coin into the one-armed bandits.
All the while, Redd had to overcome his knowledge that his mother did not approve of the fortune he was making off customers of the gaming industry. ‘I kept sending her more and more money, yet she would just give it away to people as poor as she was,’ Redd said.”
”It’s the slot machine that drives the industry today,” Fahrenkopf said in this 2004 New York Times story. Yet despite being the lead spokesman for the predatory gambling operators of America, here is what he had to say later in the same story about his trade’s primary money maker:
“Fahrenkopf is reportedly paid in seven figures to praise all things casino, but he can’t seem to help taking a poke at the slot machine. He views the transition from table games to slots as symptomatic of the dumbing down of American life. Playing craps means learning a complex set of rules. Blackjack may be easy to learn, but it still requires skill and concentration, and it’s not uncommon for the novice player to feel stupid in front of strangers. ‘I don’t know if it’s the education system, or maybe it’s that we as a society have gotten intellectually lazy,’ says Fahrenkopf, who headed the Republican National Committee under Ronald Reagan. ‘But people would rather just sit there and push a button.'”
Perhaps this is one of the reasons why Fahrenkopf, the one-time head of the casino lobby, shockingly said he would oppose a casino near where he lives in Virginia.
“Most of the people I met inside I.G.T. told me they never played slot machines on their own time… Even one corporate P.R. staff member couldn’t resist shaking her head in disbelief as she described scenes of people lining up to play a new machine. ”It was unfathomable to me,” she told me. When I asked one I.G.T. artist if he ever plays, he acted as if I had insulted him. “Slots are for losers,” he spat, and then, coming to his senses, begged me to consider that an off-the-record comment.
From a column written by The Providence Journal’s M. Charles Bakst, May 13, 2004:
Former Las Vegas Mayor Jan Jones, a top aide at Harrah’s Entertainment, the Narragansetts’ partner, said yesterday that she’s offended by the notion that casinos are filled with “unhappy, depressed, sort of hypnotically drugged people.”
Jones said, “Sometime I’ll take you to the movies in Las Vegas. I want you to look at the people sitting in there. And, you know, some of them are grossly overweight and a lot of them don’t look that happy and some of them aren’t as attractive and well dressed as they should be. But should I make assumptions about all moviegoers because some of them aren’t what you would expect?”
Jones said she doesn’t gamble. “I’d rather spend my money on shoes. And houses.” (She has three homes.) So she wants you to gamble, but she’s too smart and thinks you’re stupid? Jones laughed, “That’s like saying I like to go out and buy Manolo Blahnik shoes but you don’t. Does that make you stupid or does that mean you just aren’t into shoes?”
Despite their efforts to get millions of young people hooked on sports gambling, are the founders of DraftKings hardcore gamblers themselves?
One of the founders of DraftKings confessed to The Boston Globe that “I had never even stepped foot in a casino. The three of us have computer science degrees. We’re a bunch of dorks that wanted to build something cool.”
Reilly is a key leader of the NCRG, a wing of the casinos’ main trade group, the American Gaming Association, that funds most of the scientific research on gambling addiction in the United States. The NCRG has helped casinos gain a legal foothold across the country — and covered up the ways casinos profit from gambling addiction.
Does Reilly lose any of her casino-funded salary using slot machines? According to this story that appeared in Salon on June 16, 2008, Reilly said: “I play a slot machine for ten minutes and I’m so bored I want to shoot myself.”
Pallone is the biggest advocate for sports gambling operators in Congress. But does he waste any of his taxpayer-funded salary on government-sanctioned gambling games? Will he bet and lose his own cash if sports gambling is permitted?
Pallone confessed to USA TODAY Sports on Nov. 28, 2017: “I don’t bet. People think I’m a gambler because all of this, but I’m not.”
Silver has been the champion for widespread sports gambling among the professional sports commissioners.
During a speech in Las Vegas in July 2014, five months before he published an op-ed piece in The New York Times where he announced his endorsement of government-sanctioned sports betting, Silver declared: “I personally enjoy being here, although I don’t gamble as the Commissioner of the NBA for the record.”
Les BernalThe Georgia Edition of the Hypocrite Hall of Fame
Wynn told Charlie Rose in this 2009
At MGM Grand, Murren leads one of the world’s largest casino operations. He is also 
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Bluhm owns many casinos in the US. Does this billionaire lose any of his fortune gambling inside casinos? According to this excerpt taken from 
Penn National has been an influential player across the country in lobbying for small regional casinos that extract hundreds of millions of dollars of wealth from ordinary Americans. Their profit model is based on getting people to gamble away their money at least 4-5 times per week.
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DraftKings and other “daily fantasy sports” companies are really online gambling operators.
Reilly is a key leader of the NCRG, a wing of the casinos’ main trade group, the American Gaming Association, that funds most of the scientific research on gambling addiction in the United States. The NCRG has helped casinos gain a legal foothold across the country — and covered up the ways casinos profit from gambling addiction.
Pallone is the biggest advocate for sports gambling operators in Congress. But does he waste any of his taxpayer-funded salary on government-sanctioned gambling games? Will he bet and lose his own cash if sports gambling is permitted?
Silver has been the champion for widespread sports gambling among the professional sports commissioners.