Wednesday, July 15, 2009

Six Degrees of Suffolk Downs

A Non-Lobbyist Spends a Day at the Races
Observing the Spilka Hearings on Expanding Gambling in Massachusetts


On Friday, June 26th, less than a month after the State Democratic Party decided to oppose predatory gambling, a mere week after Massachusetts passed an ethics bill, and three days before a much anticipated informational hearing on expanded gambling, Senator Karen Spilka's (D - Ashland) office, finally announced the time, place and list of speakers for that hearing.

With all that time on my hands, I leisurely conducted some research on the 10 people hand-selected to speak and discovered that, for a hearing described as “informational” - the deck appeared pretty well stacked in favor of the 'gaming' industry.

And so I called Senator Spilka's office, as did virtually every other anti-predatory gambling activist in the State, to register my concern and express my displeasure with this stilted panel, and spoke with a nice young man who calmly explained to me that this hearing was purely to gather information about expanded 'gaming' for the senators on the Economic Development and Emerging Technologies Committee.

“But..." I replied, "wouldn't you agree that the senator should be gathering unbiased information from various sides of the debate? You know... not just the one?

He repeated that the Senator was simply gathering information at this point.

And I repeated my previous statement.

And he repeated his.

So the two of us went 'round and 'round like that until it became clear that I should accept the fact that, in this instance, the commonly accepted practice of forming decisions based on the impartial and balanced testimony of a well-rounded panel of experts from all sides of a debate, was being momentarily suspended for reasons I needn't trouble myself with.

And they're off!

Before we all knew it, (which of course was the point) it was Monday morning.

At the Statehouse. And way too early.

Uncomfortable flashbacks to the Spring of 2008 and Gardner Auditorium, with it's tortuous tier of blue carpeted bleachers along the back wall, and where I (sort of) experienced democracy in action (13 long hours of it, in fact) at last year's casino hearings, which convinced me to get there early and beat the union throng to a good seat.

But turns out there was no need. The union throng had stayed home. Instead, while I sucked down a bagel and coffee, the room filled slowly and steadily with well-groomed, professional-looking people, virtually none of whom I recognized - but all of whom seemed to recognize each other. Lobbyists, I presume?

At 10:15 or so, Senator Spilka kicked off the hearing by announcing that it was intended only to gather information for the senators...

Then why isn't the panel balanced!?!?

...and that it was not about job creation...

...which explained lack of union presence and ample available seating....

The Front Runner

First up to the microphone is Michael Pollock from Spectrum Gaming Group – the same company which compiled Governor Patrick's 300 page, $189,000 casino study last year. The same study which suggested the Bay State could benefit from three casinos – mimicking what perennial casino cheerleader-for-hire and UMass. Dartmouth Professor Clyde Barrows (also appearing on the panel today!) had been saying.

But Spectrum's report differed from Barrows in at least one major respect. While Barrows was recommending three commercial casinos, Spectrum had determined that two commercial casinos and one tribal casino would be the perfect mix.

And I'm certain this could have had nothing to do with the fact that Sol Kerzner, the South African billionaire casino investor behind both Rhode Island's Twin Rivers and Connecticut's Mohegan Sun, and one of the men who wanted to put the Mashpee Wampanoag casino on the map, was a client.

Spectrum, in fact, once proudly listed Kerzner International as a client on the front page of their web site though, for some reason, this year, it's no where to be found.

However, they do provide you with an easy link to Spectrum's own magazine, named after it's publisher and today's Spilka-panel featured speaker (you guessed it) Michael Pollock.


I don't know how much the State paid Spectrum to be here today, but Pollock confirms pretty much something we all know already – that people are saving their money these days – not blowing it at the casino, and also admits that this is a good thing (though certainly not for the "gaming industry").

Another informed tidbit that doesn't come as a surprise – the 'gaming' industry tends to cause an arms race wherever it goes. For example, in response to Pennsylvania legalizing a whopping 60,000 slot machines, Delaware and West Virginia legalized table games.

And furthermore, size matters. It's not a matter of having too many casinos, it's how big they are that counts.

After Pollock finishes up, Senator Tucker (D - Andover) brings up the fact that 90% of the profits from casinos comes from 10% of the players – and that the industry's business model subsequently requires that they need to find, and market to, the out-of-control gambler.

“Therefore," she inquires, "how can we regulate an industry that relies on addicted gamblers for it's profits?”

He mumbles something I can't really hear about affluent families and free bus rides.

Senator Tucker responds that affluent families are not getting free bus rides.

And neither it seems, is Mr. Pollock.

Exacta


Up next are Jim Klocke from the Boston Chamber and Carl Jenkins of UHY Advisors.

Last year this tag team also did a study - one which suggested that “three large destination-style casinos in various regions of the State” would create roughly a bazillion jobs and several gazillion in annual revenue.

By the way, I realize this hearing isn't supposed to be about 'job creation', but nevertheless, we always hear about the temporary and permanent jobs that come with casinos.

For the record, when we talk about the temporary jobs, we are reffering to the ones that are construction related – and would be associated with the establishment of most other industries requiring construction. And the permanent jobs, well they're the types you typically find on the annual Forbes list of worst paying jobs – including 'gaming dealer' - a profession you'll find a lot of people mistakenly believe is a one of the better jobs at a casino.

Incidentally, in their study, Jim and Carl also failed to break out their calculators to account for certain costs – like how casinos would effect existing businesses or tourism, or how Massachusetts would be impacted by gambling expansion in other States - which the Spectrum guy just told us always happens.

And while the report admitted that certain 'societal impacts' such as "gambling addictions, crime, and personal bankruptcy rates would almost certainly increase" - they did attempt to turn that frown upside down by stating that there would still be the "Potential for individuals' improved physical & mental health due to increased employment and employment-based health care ".

(You know - just like they would have in other new industries that don't come with additional addiction, crime and bankruptcy.)

However, Jim and Carl also agree with Mike that less people are gambling – and so this might not be the greatest time to put licenses up for bid.

But in the meantime, Senator Tucker wants to know how it is that New Jersey, with all it's thousands upon thousands of slot machines, has higher taxes than we do.

The answer is, well, that the industry isn't a “panacea”. It won't solve all our tax problems.

And that's funny - because isn't a "panacea" exactly what it's supposed to be? I mean - it's being marketed to the public as a "panacea". And I hear all the time how this industry will create all sorts of wonderful jobs, fund education, repair roads, save towns, shore up the budget, revive the racetracks and cure gambling addiction all at the same time.

But before Senator Tucker can point this out - the room is suddenly abuzz.

The Favorite



State Attorney General Martha Coakley, an actual political celebrity, has arrived.

To my relief, she brings up another cost everyone seems to forget – regulating the industry.

Yup, just another way in which the 'gaming industry' differs from a normal business is the amount of coin needed to protect us all from it.

There must be an in-place regulatory and enforcement structure, Coakley says, and the process must be transparent...

(Rut-ro!)

...and the public must be made aware of what interests are involved in trying to bring this industry to Massachusetts...

(Oh yeah, that'll happen.)

...there would need to be be hundreds and hundreds of employees dedicated to gaming regulation and monitoring...

(hey - those Turnpike Authority jobs have to go somewhere)

...monitoring, auditing, consumer protection, debt collection, privacy...

(just think of all those pensions!)

And then, unexpectedly, Coakley admits that the possibility of Indian Gaming is effectively over in Massachusetts.

(You heard it here, first, ladies and gentlemen...)

For those of us who got their first taste of the 'gaming industry' two years ago when we were told repeatedly that a Middleboro casino was an inevitable done deal - and that try as we might we could do nothing about it - this is something of a defining moment.

Sadly, it is a nuance no doubt lost on the majority of this committee.

When the Attorney General is finished with her formal presentation, Senator Spilka thanks her for bringing these “myriad” issues forward, to which Martha responds that it's an issue of resources. In fact, the State still needs an enterprise crime bill to combat drugs and guns in places like Medford, Boston and Worcester.

And there I was, suddenly hit with the realization that there are a lot of people in this room delighted to bring an industry to my home state that will not only offer a lot of low-paying jobs, cause a plethora of 'societal impacts', not lower taxes and require “myriad” regulatory adjustments, but that it's very enforcement would require the same type of bill we could really use now to combat drugs and guns.

Drugs and guns....

In my mind's eye, I am riding a horse along a sandy picturesque beach when I suddenly happen upon the Statue of Liberty, half buried in the surf.

“You damn dirty apes! You blew it up! You blew it all to hell!”


How can anyone think bringing this industry to Massachusetts is a good idea?

Back in the Gardner Auditorium, Sue Tucker comments that, of all the various industries the Bay State has been courting in the past few years – biotec and green technologies for example - she can think of none that have required numerous hearings like this one.

The Senator is being ironic. She knows full well that biotech and green are 21st century forward-thinking industries which create good paying jobs, have long futures, and don't come with a documented history of corruption, addiction, increased crime, foreclosures, bankruptcy, child abuse and neglect and suicide.

Among other things.

Additionally, the senator remarks that she always hears how 'we can put these facilities up in six months...' and wants to know exactly what that would mean for Ms. Coakley's office.

Martha utters a single word.

Expensive.

The Gelding


Next is another sort of celeb - a notorious one to those of us with two years of 'gaming' industry propaganda under our belts. UMass Dartmouth Professor Clyde Barrows. The man who turned counting license plates in Connecticut into a lilfe-sustaining career.

Clyde Barrows, who is quoted in the media at least once a month, is to the gambling industry what Silas was to Opus Dei in the Da Vinci Code.

But this morning it's not license plates he's here to talk about. No, today, he begins by referenceing the North American Industrial Classification System (NAICS) - which apparently is the “statistical classification standard underlying all establishment-based economic statistics in the U.S. Canada, & Mexico.”

Not only that, boys and girls, but the “NAICS classifies business establishments into twenty different Sectors and assigns each business establishment in North America a six-digit code.”

And guess what? Under NAICS Major Sector Code 71, otherwise known as Arts, Entertainment & Recreation, following subsector 711 (Performing Arts, Spectator Sports and Related Industries) and right after subsector 712 (Museum, Historical Sites & Similar Institutions) is none other than subsector 713 (Amusement, Gambling & Recreation)

It's official. Deval was right. Gambling really is entertainment!

Because if the NAICS says it - then it must be true.

Clyde, nevertheless, fails to mention this would also imply that Cockfighting falls under subsector 711 (spectator sports) while Brothels and Crack Houses (Amusement and Recreation) would share subsector 713 with Gambling.

But the message is clear. Gambling is just another legitimate pastime, like going to a Celtics game or visiting Plymouth Plantation. You can feel good about it.

Oh, and another thing. Gambling is pretty.

In his Power Point presentation and handout, Clyde uses some really slick pictures of Foxwoods casino. This is one of them:


Sexy, huh? This is the kind of photo you use of a casino when you really want to sell it.

This is a less flattering angle.


Mohegan Sun actually wants to deposit something like this less than a mile from downtown Palmer, Massachusetts. (Hey - is that Clyde down there in the parking lot!)

Barrows, who co-authored a paper titled, The Persistence of Pseudo-Facts in the U.S. Casino Debate: The Case of Massachusetts, in which he insists that you can trust him because he's a policy analyst while everyone else is merely part of "the chattering class", doesn't want you to see what Foxwoods really looks like. He would like us to be reassured by comforting advertising photos of luminous Cinderella castles rising from enchanted forests.

Clyde would prefer the Senators not see the many homes in the area for sale, the proximity of elementary schools to the casino, the lack of local businesses, the neighboring single family homes used for "hot bunking" multitudes of low-wage casino workers, the road trash or the ever present exhaust-belching tour buses which idle in the parking lots for hours on cold days. In fact, that would be downright counter-productive to that whole “entertainment” theme he's got going on today.

If Clyde Barrows is a 'policy analyst', then I'm not really an 'activist blogger' - I'm a 'non-lobbyist.'

Because Clyde is a salesman, and everyone knows it - even the Senators and even the 'gaming' industry. And right now he's trying to sell us a vacuum cleaner. One that will suck the money out of our pockets while promising us an easier, better life.

When Clyde's sales pitch presentation is finally over, but before he can manage to slither off, Senator Tucker asks, “as someone who is quoted on this subject more than anyone else, can you tell us, how are you compensated?"

He is paid, he explains, by the UMass Center for Policy Analysis, though... once or twice there may have been that thing for the Rhode Island Building Trades Council, and then there was that other thing for the Rhode Island Senate something or other and way back in '97 he picked up a little work for the Wampanoags.

What he doesn't mention is that those 'things' were part of efforts to build casinos.
And he fails entirely to mention a job he took just this past November for the Las Vegas-based Olympia Group, to sell a casino to Oxford County Maine.

Poor Clyde. He's conflicted between his desire to be a respected policy analyst with a valuable opinion, and his need to continue in his role as an assiduous paid shill for the gambling industry.

Martha wasn't kidding when she said the public needs to know more about the people who want to put casinos in our backyards.

Trifecta

Speaking of which... next up is some guy named Charles A. Baker, Esq. who is a partner at some place called DLA Piper. I'm not sure what he's supposed to be here for today, but his corporate bio tells us that
“He advises a wide variety of clients, including major hotel corporations, real estate developers, communication companies, and a thoroughbred racetrack.”
(Well of course he is. You'd be hard pressed to score an invite to this hearing if you didn't have some sort of connection to a thoroughbred racetrack)
But wait! In addition to his responsibilities at Piper, Baker is also a member of the Dewey Square Group. (In fact, he's a founder!) And according to his corporate bio there,
“since the firm’s beginning in 1993, Baker has focused on the development of public strategies, the building of successful grassroots coalitions and the analysis of public law/policy issues.”
And you'll never guess - one of the those “grassroots coalitions” appears to be none other than the New England Horsemen’s Benevolent & Protective Association, Inc. which sent a letter to it's membership last year informing them that,
“The New England HBPA has been working with representatives of the Dewey Square Group to put together a grassroots campaign to further the cause of horsemen and thoroughbred racing during the upcoming legislative debates. Dewey Square Group and they are helping Suffolk Downs with grassroots activities.”
And ...
“a recent report by gaming expert Clyde Barrow from UMASS Dartmouth has suggested Suffolk Downs as a site for resort-style gaming. As a dedicated participant in thoroughbred racing with an interest in the track’s success, we want to let you know how the new Suffolk Downs’ ownership team has told us that it envisions its future.”
And according to this 2008 article in the Boston Globe:
Baker is also a longtime lawyer for Suffolk Downs and has helped lead their bid for a casino license, hoping the Legislature approves the proposal by Governor Deval Patrick to allow up to three casinos in Massachusetts. Baker was part of Suffolk's four-member team that presented their casino plans to Patrick administration officials in July.
So let me see if I've got this straight. While working at DLA Piper, Baker advised a “thoroughbred racetrack”, while his other company, Dewey Square Group, was representing the track workers who were busy quoting the infamously quotable Clyde Barrows, and incidentally he is the longtime lawyer for Suffolk Downs who apparently was helping Deval make up his mind about casinos last year.

And check out what I found at Baker's BizJournal page!

Baker's ties to the thoroughbred racing world are so incestuous that if he married a horse – their kids would have three eyes.

And yet today, according to the agenda provided by Spilka's office, Baker, who ironically once authored a publication called, “The Conflict of Interest and Lobbying Laws" is prepared to give the good senators a “Regulation Models Overview”.

But thanks to Gardner's dim acoustics and the people behind me who won't shut up - all I can make out from his presentation was that New Jersey and Nevada have the 'gold standard' of gaming regulation models. And that both are “very expensive”.

Hey maybe Therese Murray will offer to pay for ours.
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The Back Straight

In the meantime, the media is fleeing, and therefore will conveniently miss (and fail to report upon) upcoming presentations by two experts in what everyone likes to call the “social impacts” of gambling.

The first of whom is Hans Breiter, MD, director of the Laboratory for Neuroimaging and Genetics at Mass. General Hospital.

He is the brain scan guy.

Breiter's research has “demonstrated that gamblers at slot machines show increased blood flow in the same brain areas where cocaine produces a surge in dopamine-the transmitter that carries neural messages relating to pleasure and pain”. He's also been part of studies to find a drug that will “diminish the urge for gambling.”

But I'm keeping my eye on him.

Earlier this decade Breiter participated in a study to determine “how the human brain responds to the anticipation and reward of money” which was funded by “National Center for Responsible Gaming” (NCRG) to the tune of $175,000

Holy craps, Batman!

Just so you know, whenever you read or hear someone use the term “gaming” you know they're part of “the industry.”

Doctors like Breiter, social services folks, and anyone else who's seen a life destroyed by 'gaming' knows there's nothing fun about it. If you lose a game of tennis to your neighbor, they're not going to come take away your house.

And so, it disturbs me today is that most of these legislators, including Spilka, are referring to it as 'gaming'.

(Because whenever a legislator stops calling it “gambling” and starts referring to it as “gaming” - somewhere out there, a casino lobbyist gets his wings.)

According to it's website,
“the NCRG is the American Gaming Association’s (AGA) affiliated charity”
and that
“more than $22 million has been committed to the NCRG, through contributions from the casino gaming industry, equipment manufacturers, vendors, related organizations and individuals. Research funding is distributed through the Institute for Research on Gambling Disorders.”
Senator Morrisey (D – Quincy) gets up leaves while Breiter is speaking. It's lunch time and brains can wait.

I have absolutely no idea how people are chosen for the Economic Development and Emerging Technologies Committee, but Morrisey, a fervent gambling proponent perhaps better known for his bill to ban male circumcision, is an incomprehensible choice - unless it was solely to plant him there so that he could rubber stamp a gambling bill. Which it may well have been.

And that should be a crime. Here's a committee which could help dig our State out of a hole and guide it toward a brighter future. It should be packed with visionaries. Or at least smart people.

At a Nov. 2008 union-packed casino debate in New Bedford, Morrisey spoke with absolute authority about the 'inevitability' of both Indian casinos in Middleboro and Massachusetts - revealing he hadn't done a lick of research on the subject. Oh and surprise – he was wrong.

But back to Breiter, who is saying something interesting: Say a guy walks down one side of the street and finds a $1 dollar bill. He's going to feel good. But say another guy, walking down the other side of the street finds a $20 dollar bill. They both 'won' – but the guy holding the buck feels gypped.

That's one of the things that keeps a gambler playing. He thinks – jeez if he'd just done something different he could have had the big payoff. So he starts to “chase” the big payoff he knows must be out there.

Breiter goes on to show scans of brains of “normal” people, along with scans of people addicted to various substances and activities such as cocaine and slot machines. And sure enough – the coke scans match up with the slot scans. Breiter says he can't tell the difference between them. He also refers to it “cocaine expectancy” and “monetary expectancy”. He talks about the creation of structural abnormalities in the brain. Some that can be fixed and some that can't.

He talks for a long time, about a lot of things like risk factors and free will and slippery slopes. But in the end, insists his presentation is about 'models' and that to the brain, the 'gaming' model is basically the same as the drug mode.

Senator Tucker asks him if he knows about Dr. Natasha Schull of MIT, who has done a lot of research on slot machines, and found that they are designed to make players play as long and as fast as possible – in fact – to “play to extinction”. An actual industry term.

Well of course Breiter has heard of Dr. Schull!

He doesn't say it, so I will - Schull's omission on this panel is a red flag. Her research connects the dots which prove that by getting involved with gaming, States are sponsoring (and encouraging) addiction.

Breiter then launches into a discussion about how a lot of development occurs in the brain between the ages of 12 and 25, and how actually this group is a very susceptible population. Further, he reveals that as a teenager he was personally in favor of legalizing marijuana – but that as an adult doing research on those who take drugs, he discovered how drugs thin the cortex and effect the part of the brain which controls planning. And apparently this is a bad thing.

Trying to draw an accruate correlation for the committee Breiter then offers what becomes the bombshell statement of the day:
“If you're thinking about legalizing gambling...you may as well think about legalizing drugs.”
(But only if they also plan on collecting revenue from it, Doctor.)

The Steeplechase


Next up is Dr. Robert Goodman, who says he's taught Public Policy, Economic Development and Environmental Design at Hampshire College and is author of “The Luck Game”, though his Hampshire College bio says he is a professor of Environmental Design - so I don't know. Maybe he should update that.

There are three arguments, Goodman says right off, in favor of legalizing gambling in Massachusetts:

1.) We're losing money to Connecticut
2.) The revenue will boost our economy
3.) It's just another form of entertainment.

But according to his book
“The luck business is a business where PhD's write about treating neurophysical disorders of addicted gamblers, while others research behavior modification techniques that will encourage more people to gamble. It is backed by state-of-the-art marketing and ever-fresh enticements – where mathematicians develop new games, “themeing” consultants develop mythical dream worlds and demographic experts develop segmentation surveys to target the socioeconomic profiles of potential players.”
He'll get no argument from me. These are exactly the wacky things I've learned about the 'gaming' industry since nearly becoming a victim of it.

As for #1 on his list – yes, legalizing gambling in our state would “re-capture” that revenue, but will also increase pathological gambling and the amount of gambling.

For example, when Pennsylvania introduced casinos, slot parlors and racinos, pathological gambling increased – plus it created more competition for consumers between the surrounding states.

Hey look... Morrisey's back from lunch.

Goodman also reveals that States are reluctant to do Before and After studies regarding the effects of casinos. However, one State – Iowa – one of the first states to legalize gambling, did. Before the casinos, 1.7% of the population were problem gamblers. Three and a half years later, that figure had more than tripled to 5.4%.

Louisiana, one of the most gambling-saturated states in the nation, has ten casinos as well as slots at the racetracks, bars and truck stops. Not surprisingly, the governor who introduced legalized gambling to the state was later convicted on 17 of 26 counts, including racketeering, extortion, money laundering, mail fraud, and wire fraud. In Louisiana today, 7% of the population are problem gamblers.

Goodman speaks about some of the things that come along with problem gambling, like bankruptcy, foreclosure, suicide... and while he does I abscently glance across the auditorium – only to witness a blonde woman in a smart pastel suit - smiling.

I make a quick sketch of her in my notebook, adding a pair of horns, pitchfork and a bifurcated tail.

Meanwhile Goodman is getting in dig in at Barrows and the term 'gaming'.

“By the way..." he mentions, "not to many people kill themselves over the Red Sox. That's a game.”

He tells us that not only is the cost per problem gambler to the State is $13,000, but if we have casinos in Massachusetts, more people will gamble here – not just the ones who travel now to Connecticut – and so that's discretionary income that would likely have been spent on other things at Massachusetts businesses. In fact, most business owners don't want casinos.

There are costs to the gambler, costs to the State, costs to local in-State businesses. Even costs to the lottery.

And apparently there are costs to democracy, too. Goodman describes how more money was spent lobbying for casinos in Pennsylvania than on anything else in it's history. As a direct result, demands by the public for a casino referendum vote in Philadelphia were refused. So much for the voice of the people.
Goodman, who admits here to being a gambler – a casino goer and a fan of card games - concludes his presentation by stating that gambling doesn't solve problems, but it does cause a lot of problems.

But wait, says Morrisey – don't we already have these problems now, thanks to Connecticut? We have to pay for them already, don't we? But... if we have a new revenue stream, we can pay for it!

There follows a very pregnant pause as Goodman struggles to comprehend, as many of us have, how this guy actually got on this committee. Rock, paper, scissors?

“Yeah, but we'll have more addiction too!”

But it's no use. To people like Morrissey, gambling addiction may as well be athlete's foot. Got a problem? Just go down to CVS and pick something up for it.
While his heart may go out to Bay State infants and their endangered foreskins, Morrissey's empathy stops at the door for those gambling addicts generated for public profit, whose lives will be torn apart, bank accounts emptied, families broken, children hurt, trust destroyed, and hope taken.

Senator Stanley Rosenberg, hand-picked by Senate President Therese "Ka-ching" Murray to head up the whole expanded 'gaming' issue
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asks Goodman, how it is possible that, if there are 37 States with some form of gambling, how can the national addiction rate be 1.4%?

Goodman responds that less than 1% of the US population has a drug problem – but that 1% causes a lot of problems. That drug addiction also costs the taxpayers a lot of money.

But I'm chugging away on this because it's an interesting question, so I'll try to answer it, too. A possible explanation might be that fresh national statistics aren't yet available for States with newer gambling legislation – like Pennsylvania and Maryland, and that a lot of casinos – especially tribal ones - are located in remote locations with lower populations.

Additionally, those 37 states all have some form of gambling - such as resort casinos, riverboat casinos, racinos, slot parlors, or a combination thereof - but not all of those 37 states have the same number of gambling outlets.

A few States, like New Jersey, Nevada, California and Michigan have many thousands of slot machines (not to mention higher taxes) while other States have many fewer. The entire State of Texas, for example, has only one casino- a tribal one – and it only features class II slots. And, at least 13 States have none.

(But hey, Senator, with your help, I have no doubt that the densely populated State of Massachusetts can kick that percentage right up!)

Goodman ends by making a point which has been made here before. When you switch from being a regulator to a promoter – exactly who is doing the regulation? All previous legislation regulating “gaming”, he says, goes out the window when the State isn't making enough revenue.

Yes, it does.

In pursuit of more revenue, New Jersey repealed a smoking ban that had put in place to protect casino workers. In California they lowered the gambling age to 18. Midwest riverboat casinos, originally intended to float down the river and return patrons after a set time, became 'boats in a moat' – full-fledged permanently-docked casinos sitting in a foot of water. States have also abandoned formerly imposed wagering or loss limits. In Iowa and Illinois measures like these have “partly resulted in existing gamblers losing more money as opposed to increasing the number of gamblers.” A push by “officials looking to help solve Connecticut's multibillion-dollar deficit” to extend liquor hours to 24/7 in Connecticut was cut short only after a patron leaving Mohegan Sun plowed into a van full of college students, killing one of them.

Now
wait just one minute...
Doesn't Connecticut host two of the World's largest casinos? And isn't that where all of our State's gambling dollars - the one's we're supposed to re-capture with expanding gambling - are supposedly ending up? So ok, maybe Senator Rosenberg can explain how the State of Connecticut could possibly be in such a hole with all that money that that they'd actually consider legalizing 24/7 drinking at two of the world's largest casinos?

And does that mean Massachusetts would go down that road too?

And where, exactly, does that road end?

The Home Stretch

Goodman exits and is replaced with none other than the smiling she-devil in the smart pastel suit. Her name is Jennifer Lendler and seriously, when I was looking on-line for a picture of her, this is the first one that came up.

And that's just the way she likes it. Unlike Barrows, Lendler has no issue revealing her chosen profession or her actual employers.

First thing out of the gate, she tells us that she's got 17 years in the 'gaming' industry - having been personally recruited for this singular honor by Harrahs Entertainment. But then, perhaps smiling at the misfortune of others was a dead give away that Jennifer had the right stuff for the 'gaming industry'.

She is Vice President of Gaming Operations for Coastal Development, which according to it's website,
strives to create full service, family friendly entertainment venues and casino gaming properties.

Since its inception, Coastal Development projects have included the co-development of the Hard Rock Seminole Casinos with locations in both Tampa and Hollywood. The Hard Rock Seminole Casino Resorts, which opened in early 2004, are among the most successful in North America.

In addition, Coastal is currently working to revitalize New England's only thoroughbred race track, Suffolk Downs.
(Heck, who isn't?)

Last year Coastal's big project was rebranding an Atlantic City casino as "Margaritaville at the Marina".

(I don't know about you, but I wouldn't take my family - which includes children - to any of these places.)

And, in addition to revitalizing it, they have an actual tab (a tab!) on their website dedicated to Suffolk Downs. When you click it, you will read that
In Spring 2007, a Coastal Development affiliate, became the largest shareholder in Sterling Suffolk Downs, a historic thoroughbred racetrack in Boston, Massachusetts.

Whoa, Nelly!

But wait... I noticed a picture of little children dressed in Santa's hats on the website's front page and another page entitled "giving" to let you know that they are affiliated with the Fields Foundation - which donates lots of money to all sorts of good causes,

(wait for it...)

and which is run by none other than CEO and chairman of Coastal Development, Richard Fields!
In Spring 2007, Richard Fields, through an affiliate, became the largest shareholder of Sterling Suffolk Downs
(That's it. Color me cynical.)

Back at the microphone, Jen assures us that there are now 20 years worth of case studies to rely on for accurate information about the 'industry'. In fact, she beams, there are, right now, 375,000 employees working in non-tribal casinos.

Actually, according to the Mothership, (the 2009 American Gaming Association Survey of Casino Entertainment) those employees actually number 357,314, and that 202,200 of them are in Nevada, that another 38,600 of them are in New Jersey (down 5.4% from the previous year), with 29,000 in Mississippi (down 6% and the poorest state in the U.S.) and 17,000 in Louisiana (down 4.1% with a 7% gambling addiction rate to boot!)

But no matter, Gambling, oh wait, 'Gaming' is just the same as any industry. And they need to do the same things as other companies need to do to succeed. These are:
  • Drive visitation
  • Create a product
  • Serve the customer well and hope they return
  • Provide multiple product offerings
And that's why Jennifer likes casinos better than slot parlors. They employ more people, she says, because they have more labor intensive jobs – like table dealers.

Which Jennifer won't tell you is one of the lowest paid jobs in America.

But she does make clear is that the casino tax rate drives capital! And casinos which offer table games are more popular with the consumer than ones without!

And then Jennifer admits that “the local customer is your target customer”, and that current trends point to a market slow down – but only because people have to fly to Nevada. She is quick to assure us that Atlantic City is doing OK.

(Obviously. Which is why casino employment is down 5.4% and they reversed the smoking ban to bring in more customers.)

And Rhode Island? Well, naturally Twin Rivers failed for one reason – it's tax rate was too high.

Don't believe her? Just look at Maryland - with a 67% tax rate on casino revenue they can't find enough bidders to reach their golden goal of 15,000 slot machines.

Therefore, boys and girls, the moral of the story is to make your tax rate LOW so that casinos and slot parlors can thrive and serve you better!

That's right. Turns out that those big fat tax rates waved like big juicy carrots to voters and legislators while they're trying to weigh the costs and benefits of legalizing slots in their respective states, are too high.

Tax rate effects capital investment, which drives everything including job creation!

Apparently, the table game bone is connected to the tax rate bone which is connected to the capital investment bone which is connected to the job creation bone - which the 'gaming' lobbyist tosses to the labor unions and legislatures whenever the greed bone wants to build a new casino.

And, in case we still have trouble understanding this complicated relationship, she very clearly states that Casinos are the best!

(You know - like Harrahs Entertainment!)

And that Low Tax Rates are the best!
And seriously, the 'industry' loves big strong regulation - as long as they have that low tax rate.

Don't forget about the low tax rate. Did you forget? Let me remind you – LOW TAX RATE!!!!!!!!!!!!!!!

Oh and by the way, what we really need are CREDIT FRIENDLY MARKETS.

(What? Like the ones that created the need for a bailouts and stimulus packages?)

So don't forget - LOW TAX RATE, BIG STRONG REGULATION, and CREDIT FRIENDLY MARKETS!!!!

My head hurts. I feel like I've just been taken on a new ride at Disney called the Rotating Roulette Wheel of Casino Influence.

The Closer

Thankfully this ends the ride presentation, and Jennifer's chair is filled by a bankerish gent whose presentation I've been awaiting as one would a third ghost on Christmas Eve.

So no, I don't have a graphic.

For, though my preliminary research on John Grogan, Managing Director of Corporate Finance Advisors revealed that he apparently “has a broad range of experience in corporate finance and an extensive network of contacts in the capital markets”, in fact, it would appear that Corporate Finance Advisors is the something of the Men in Black of the finance world.

I had to hunt around for a while just for a web site, which turned out to be oddly vague, then a week later, I couldn't find the site at all – just a Go Daddy “under construction page” registered to Grogan - though an 'about us' wiki page tells us that “CFA is a middle market investment banking firm, specializing in transaction sizes of $5 to $50 million in the areas of mergers and acquisitions, private placements, leveraged buyouts, financial advisory assignments and valuations”

As of this writing, the website is still missing.

So how'd Spilka's office find this guy? And why is he here while no one from an anti-slots group was even invited?

And come to think of it - why does it seem practically everyone has some connection to Suffolk Downs?? Maybe this Grogan guy is actually Bob DeLeo's accountant or dry cleaner or something...

Shortly into Grogan's presentation it becomes evident that he is merely a less blonde and perky version of Jennifer Lendler because like her, they both weave a story about how we, the State of Massachusetts can help the 'gaming industry' help us.

In capital markets, ultimately, risk is measured in time while performance is measured in reality. But the recession reduced expectations and capital markets became risk averse.

“The Commonwealth will become the biggest stakeholder in the 'gaming' business.”

And, as a stakeholder you will be asked to solve problems as they arise.

Another non-lobbyist and I share an eye roll across the aisle.

A chart pops up on the screen which shows steadily increasing revenue from 'gaming' from 1994 to 2008. And then, in 2009, we see a slight drop. It looks something like this:


But according to Grogan, that dip is only a flesh wound. The recession isn't effecting the racinos and we are overreacting to this drop in revenue and that the industry is actually very resilient.

Wait a minute... resilient? Twin Rivers management wants to jettison it's racing component altogether, have the State significantly reduce it's tax rate, and stay open 24 hours a day. Sounds more like a complete, good old, Madonna-quality 'reinvention' to me.

How then, Grogan asks, does a company like Twin Rivers go bankrupt? Why, because it's largest stakeholder, THE STATE, did not help solve it's problems.

Honestly, how can this guy can sleep on his 600 thread count sheets at night?

So there you have it, folks. The State of Rhode Island, it's voters, it's legislators, decided the cost of expanding 'gaming' would be “X”, and the industry agreed to pay it. Then, the second there was a dip in the revenue to 2007 levels – not even a big dip - the industry went looking for a bailout.

Now it says, “X” is too much. What they really need is “Y”, preferably “Z”. And if they don't get it - they and the revenue stream they rode in on - the same one that RI has since become dependent on - are out of there.

And it's all the State's fault. It's a bad Stakeholder.

Bad, naughty stakeholder.


Finish Line

I cannot believe the same State which is home to both Harvard and MIT is even considering opening the door to this vampire of an industry.

But then, you don't have to be smart to be a legislator.

When you hear that there's enough votes to pass 'gaming' right now, you know what that really means? That means there's enough stupid greedy legislators in office all set to grab our State by the throat and pull it down with them into their stupid little greed holes.

Expanded gambling doesn't make sense to anyone who really cares about our State and the people who live there. Not financially and not socially. It's a suckers bet and always has been. It doesn't solve financial problems, but it does create crime and social problems. It's expensive to regulate and it puts too much control in the hands of casino investors.

In ancient Rome the depraved emperor Caligula put a toga on his favorite horse and threatened to make him a Senator. In modern day Massachusetts, Senators threaten us with slot machines and listen to horse racing interests instead of doctors.

The day wraps up with promises of even more literal dog and pony shows informational hearings yet to come – which will no doubt all be held at actual thoroughbred racetracks.

(Blinders optional.)

So don't forget to bring a carrot or a sugar cube, ladies and gentlemen, and in the meantime - watch your step - the horse manure is really piling up.

17 comments:

Anonymous said...

Glays, Fantastic read! Thanks for keeping us informed. I can't believe the jokers we have elected in this state. Time to throw the bums OUT!!

Mary Lou said...

Brilliant job, Gladys!

Anonymous said...

This comitee has such impresive abilities we should have put them in charge of the Big Dig! They would have doubled the cost, increased the number of accidents and it still wouldn't be finished.
Nice to know patronage, privelege and paybacks arent dead on Beacon Hill! "Just nod your heads in the right places, boys and girls!"

Anonymous said...

I'm new to the issue and cant see that it makes any sense just doing the math. You wrote a great blog that explained the issues and I find myself longing for horse manure.
Meredith

Anonymous said...

This is the kind of stuff that needs to be brodcast because it shows how slanted the input is.

Gladys Kravitz said...

Dear Readers,

One thing that you can do right now is to contact Karen Spilka's office and send her the link to this blog.

Also tell her that you, as a citizen of the Commonwealth, are disappointed in her choice of a panel, and that you would like to see another hearing, at which all the Senators (including Senator Rosenberg) are present throughout.

Spilka's office knew that there would be bloggers at the hearing and my blog in particular would be reporting on it.

Our legislators need to know that we expect them to research this issue thoroughly. If a blogger can do it - so can they.

This is a quote from Statehouse News:

"“This is not a full hearing on the gaming bills and the gaming proposals,” said Sen. Karen Spilka (D-Ashland), co-chair of the Committee on Economic Development and Emerging technologies. “The Senate felt this was very important to engage the public early on in the process.”

For something they think is so important, they don't seem to be terribly committed to it.

Gladys

Spilka's contact information:

Tel. (617) 722-1640
Fax. (617) 722-1077
Karen.E.Spilka (at) state.ma.us

Smoking Owl said...

Gladys,
Once again, an excellent blog!
You've referenced the "Twilight Zone" numerous times in other blogs, but reading about these proceedings really makes me feel like we're living in some Sci-fi alternate reality.

Senator Morrisey's statement about having money from gambling revenues to pay for increased gambling addiction makes me wonder if he's related to Hal Brown. He must certainly read Hal's blog. I just don't understand that way of thinking. In my mind it's no different than opening more barrooms to fight alcoholism or promoting state sponsored crack houses to fight drug addicition.

I had no idea the part of Charles A. Baker Esq. was being played by comedic actor Martin Mull!

Gladys Kravitz said...

Smoking Owl,

Actually Martin Mull is much taller and imposing than the real Charles A. Baker Esq. Though, he did seem very personable and friendly from where I was sitting. Had a nice smile for everyone. Looked very excited to be there.

Yee Ha! Ka-ching!

Gladys

Anonymous said...

I think the Guv paid $180K of our money for the Spectrum report that he coulda gotten better information about if he spent $300 (that's dollars not hundreds of thousands) on Kindt's books. But no one wants factual information. Just pays yu bucks and Rod Serling finds the likes of Clyde.
Good idea about contacting Spilka. Could try the rest of the comitee.

Anonymous said...

FYI -- This is the Senate Membership of the Committee (it's a joint committee)--

Karen.E.Spilka@state.ma.us
Anthony.Petruccelli@state.ma.us
Benjamin.Downing@state.ma.us
James.Timilty@state.ma.us
Susan.Tucker@state.ma.us
Michael.W.Morrissey@state.ma.us
Bruce.Tarr@state.ma.us

If anyone's interested, here's the membership --
THE JOINT COMMITTEE ON ECONOMIC DEVELOPMENT AND EMERGING TECHNOLOGIES
http://www.mass.gov/legis/comm/j12.htm

Gladys Kravitz said...

Thank you so much Anon. 4:42!

And let's not forget Therese Murray's point person on the issue - formerly a no casino guy but now - who knows - Stanley Rosenberg:

Stan.Rosenberg@state.ma.us

Anonymous said...

Gladys,

My God!

Too much information crammed in one blog to digest in one sitting!

I need to reread! Great stuff. By all means we need to forward to our reps

Ann Marie

earl said...

Like other states, it sounds like the Cha Ching Cheerleaders who haven't done their research are gonna cram this onto small towns that can't absorb the impacts.

Anonymous said...

I wonder if Democratic office holders think wholesale abandonement of the platform will be ignored.

Anonymous said...

With a new ethics bill this action has an aroma!
One of the issues the AG included was the "revolving door."
I'm not making any suggestion or accusation, but if elected officials are so willingly led by lobbyists after high profile indictments and convictions, are they just stupid? Hmmmmm

Marilyn Estabrooks said...

I just caught this on BMG and had to post here. This is brilliant! You're a truly talented lady that others recognize.

Anonymous said...

My first time on this website...A lovely, informative, and hysterical description of the 'hearing'. I love your sense of humor.

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