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CNHI News Service Originals

Gambling begets millions of neglected addicts

Hooked on Gambling: First of three-part series

Denise Jewell
CNHI News Service
Published: May 21, 2006

Bryant Northern had the world at his fingertips three years ago as a walk-on guard who won a full scholarship at basketball power house University of Louisville.

He dreamed of deadeye jump shots, March Madness, even a pro career.

But the 6-foot-tall Northern also had a hidden problem: an addiction to gambling. Caesars Indiana, the riverboat casino across the Ohio from Louisville, had been his happy hangout since high school - and his scourge. A run of lousy luck found him short of money and in trouble with the police.

Now 23 and a college dropout, Northern was sentenced on March 6 to five years probation for trying to cash stolen checks in Kentucky to pay for his gambling habit. He still faces burglary charges in Indiana, and a possible prison term.

Jim Chesser, 55, a former Louisville bus driver, jokes that he was "born on a card table, raised on a racetrack" because of his parents' love of bingo halls and horses. So when Casino Aztar opened in Evansville, Ind., in 1995, it was only natural he'd be a frequent patron.

"That's when my recreational gambling crossed that invisible line to irresponsible, uncontrolled, compulsive gambling," Chesser said.

The dependency got so bad, he recalled, that he once stole $50 from his 16-year-old stepdaughter and blamed it on his 14-year-old stepson.

"When we're gambling, we will lie, we will cheat, we will steal from everybody," he said. "It will take you places you never thought you would go" - places that caused him to quit cold turkey eight years ago to save his fourth marriage.

Bryant Northern and Jim Chesser do not stand alone. Their stories are commonplace in a nation where legal gambling has spread from just three states 25 years ago to every state in the union, save Utah and Hawaii, as an engine of economic development.

The promise of easy, new money to create jobs, build schools, pay teachers, pave roads and finance other public services has triggered an explosion of casinos, racinos - race tracks with slot machines - and lottery games. The gambling industry has quickly become one of the biggest, and politically most powerful, special interests in the country.

There's no doubt America is sold on gambling, with a payoff of $20.9 billion per year to state governments. What's been overlooked in a nation of high rollers is the unintended human cost: the large and growing class of people addicted to gambling and whose lives often end up in ruin.

They are called pathological gamblers and critics of gambling say they get little attention or treatment because government and the gambling industry depend on habitual players to drive revenue.

"I don't think it is conspiratorial in nature," said state Sen. Susan C. Tucker, a Massachusetts Democrat who opposes a plan for racinos in her state. "It's more that most government leaders understand the truth and simply close their eyes and look away. As for the gambling industry, it is in its self-interest to keep up the gambling."

An indepth study by CNHI News Service into the cost, causes and consequences of problem gambling and what's being done about it determined that:

-- Legal gambling in the United States is a $135.9 billion per year business, based on revenue figures provided by the states that allow it. That's more than double the combined revenues of $50 billion annually from box office movies, recorded music, spectator sports, and live entertainment. And it does not include online betting, which is in legal limbo.

-- About 70 percent of gambling profits come from 30 percent of the people who gamble, according to research by Prof. Earl Grinols, an economist at Baylor University. Frequency, Grinols found, is a crucial characteristic of profit.

-- Poor people are disproportionately addicted to gambling, a study by the National Institute of Mental Health concluded. They are pulled by the lure to get rich quick. They are also the people who can least afford to lose money.

-- Gambling addiction has swelled the homeless rolls in America. One in five street people say they ended up homeless because of money problems tied to compulsive gambling, homeless shelter officials say.

-- The federal government, which spends liberally on public health studies and treatment programs for alcohol and drug addiction, has a passive approach toward problem gambling. Federal officials say it is the responsibility of the states even though addicts move freely between states and add to the cost of federal health-care programs.

-- Compulsive gambling is not one of the several mental diseases defined in the Americans with Disabilities Act and thus treatment for addiction does not qualify for health insurance coverage. Alcoholism and drug abuse are covered.

-- Social costs of problem gambling across the nation are estimated at a minimum of $5 billion per year, according to a federal study commission. The annual cost to society of each pathological gambler was pegged at $13,200.

-- A pittance, or $35.5 million per year, of the gambling revenue is spent by government and the industry to educate people about the trapdoors of gambling and treat problem gamblers. Residential rehabilitation centers for gambling addicts are rare.

No government study has documented the precise prevalence of problem gamblers in the United States. Academic studies project the figure at anywhere from 2 percent to 5 percent of adults exposed to gambling, and higher for adolescents and teenagers.

By almost any measure, however, the numbers are in the millions and multiplying fast with the expansion of legalized gambling from state to state since the 1980s.

Dr. Howard Shaffer, director of Harvard Medical School's Division on Addictions, said three primary forces stimulated the growth of gambling: the need of states for new sources of revenue, development of resort entertainment and leisure destinations, and new technologies and forms of gambling such as electronic slot machines, video poker and multi-state lotteries.

The most recent study of the psycho-economics of gambling showed a significant increase in adult gambling in every demographic group, including women, in the past 20 years, according to Shaffer.

“It’s everywhere, and it’s only going to get worse," said Chesser, who said he's overcome his addiction and now helps others recover through Gamblers Anonymous. "That's because of the politicians. All they see is generating dollars from gambling dollars. They don't care who it hurts."

Casino companies, lottery commissions and public officials say they do care, and point to warnings and hotline numbers on the back of lottery tickets, TV ads that urge "responsible gaming," and Web pages that feature addiction tests and educational information to help gamblers detect problems and deal with them.

"We've done what the experts have told us to do, what seems to work for alcohol and tobacco and other addictive issues," said Judy Patterson, executive director of the American Gaming Association, the industry's lobbying arm. "But we haven't had any certainty that what we do as an industry has really met any kind of scientific test as to whether it works or not."

Democratic Gov. Brad Henry of Oklahoma, an ordained deacon in the Baptist Church, said his state - with casinos, racinos and a lottery - has become mindful of its obligation to deal with problem gambling. His office said last year, for the first time, Oklahoma allocated funds for prevention and treatment, with $500,000 coming from the new lottery law and a similar sum from the slot machine fees at racinos.

"Governor Henry recognizes that most people who take part in the lottery and other legal gambling activities do so in a responsible manner," said Paul Sund, the governor's communications director. "But he also recognizes there will always be a group of people who become addicted and that they need help. To say we don't care about them because we like their money flies in the face of good government and good sense."

But advocates for problem gamblers contend even well-intentioned efforts to prevent and treat addiction suffer from lack of sufficient money. They also criticize the cozy relationship between politicians and the gambling industry, and the millions of dollars appropriated for advertising state-sanctioned gambling.

"State government is the promoter, the regulator and the beneficiary all in one," said Tucker, the lawmaker from Massachusetts. "It's like putting Dracula in charge of the blood bank."

Frank Wolf

U.S. Rep. Frank Wolf, R-Va., a longtime opponent of gambling, said that "20 years ago, no politician at any level wanted to be seen with the gambling industry people. Now, we go out and hold fundraisers with them."

Or, in some instances, accept largess from them, as witnessed by the admissions of Jack Abramoff, the disgraced gambling lobbyist.

Still, Wolf, Tucker and others maintain, the problem of gambling addiction goes largely unnoticed and untreated.

Statistics bear them out. While 48 states have some form of legalized gambling, 26 of those appropriate money for treatment, a CNHI News Service survey showed. And those that do spend only a tiny fraction of the revenue they get from gamblers on programs to help them. Yet most states spend millions on slick advertising and promotion campaigns to entice people to gamble.

A national gambling study financed by Congress in the late 1990s estimated that states spend about one-tenth of one percent of their gambling revenues on treatment and education programs for addicts.

"This is out of whack, inadequate and wrongheaded," said Tucker. "The very people who can't afford treatment are the same people contributing heavily to gambling revenues. They should get something in return."

That's also why, she said, paying for government with gambling dollars is bad economics and bad public policy.

“For the states to get their few hundred million, their constituents have to lose a few billion,” Tucker said. “It comes right from their pockets. This isn’t magic money that falls from the sky.”

Casinos and racinos are the fastest growing segment of the gambling industry. They boast row after row of slot machines, which Tucker calls the "crack cocaine" of gambling. State regulators report there are more than 700,000 slot machines in the United States and another 200,000 or so video poker, keno and other impulse games.

Sen. Susan Tucker

State lotteries offer their own opiate. It is called scratch-off tickets, and Massachusetts, with a variety of such games, is the national leader. It takes in $4.5 billion a year in lottery sales, with 70 percent of that from scratch tickets. Another 15 percent comes from keno, the fast-play numbers game.

But state lotteries, which got their modern-day start in New Hampshire in 1963 and now raise money in 40 states, were only a Trojan horse for casinos. Today there are 445 commercial casinos in 11 states, and 405 Indian casinos in 28 states on land owned by Native American tribes. On the plus side, they have helped revive several economically depressed communities, providing jobs and contributing to local taxes.

How did legal gambling as a way to increase government revenue get its impetus in America? Congressional approval of the Indian Gaming Regulatory Act in 1988 set off the gold rush. The law was born of a U.S. Supreme Court decision forcing California to negotiate with Native American tribes to establish casinos on tribal lands.

As Indian casinos proliferated, a handful of states joined Nevada and New Jersey in allowing commercial casinos. The payoff came from high license fees and contracts that included a handsome bite of the gambling pie. That caused other states too timid for full-fledged casinos to expand their lottery games, add video poker parlors and install slot machines at racetracks.

It didn't take long for gambling to move up the nation's business leader board.

Harrah’s Entertainment is the country's biggest gambling company. It recently merged with Caesars Entertainment and now owns 39 casinos in the United States, with revenues of $8.76 billion a year, more than the annual budget of most states.

Harrah's advantage is its customer knowledge. It maintains a database of gamblers through a "Total Rewards" program that's like a credit card system. Players earn one point for every $5 spent on slot machines, and other points for frequent playing of table games. They can use the points for free meals, show tickets, iPods, high-definition televisions and other gifts. The idea is to keep gamblers happy and active.

But Joe Barrett, a vice president at Caesars Indiana, said the company also monitors its customer database to ensure that patrons don't get carried away.

“We look at gaming as a form of recreation and a place for people to have fun,” said Barrett. “We understand the responsible gaming part of it, and we take it very seriously, and we always have.”

Joe Barrett

Yet Caesars Indiana was recently fined $38,500 by the Indiana Gaming Commission for sending marketing materials to nine addicts who had asked to be banned from gambling. The casino was fined $80,000 last year for similar violations. And other casinos in other states also have been fined for targeting gamblers who have admitted the problem and want to quit.

“There will be, I’m sure, in any system, those occasional slip ups, because it’s humans putting the information in,” said Judy Hess, a Caesars Indiana spokeswoman. “But we try very, very, very hard to have it just absolutely 100 percent correct. There’s no upside to marketing to people who shouldn’t be gaming."

That's not the way Wolf, Tucker and other critics of gambling see it. They claim the industry thrives on seducing gamblers of all means to return again and again.

Tucker said gambling companies are masterful at using public relations to show concern for compulsive gambling while masking its devastating social effects.

She said it is also a clever way to avoid the type of grief the tobacco industry faced from public health regulators in the 1980s and 1990s. They accused cigarette companies of not caring about the medical implications of smoking, resulting in endless lawsuits by individuals and states.

"The gambling industry has shrewdly learned from the experiences of the tobacco industry," Tucker said. "It was the public health community that drove the anti-smoking movement. The gambling interests want to head off a similar experience."

What's more, the Massachusetts lawmaker added, they are succeeding.

“Their PR is brilliant," said Tucker. "That was clear when they got people to talk about gaming instead of gambling. They have changed the nomenclature.”

Denise Jewell is a CNHI News Service Elite Reporting Program fellow. She writes for the Niagara Gazette in Niagara Falls, N.Y.

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