4) Create the public impression we are concerned about problem gamblers with a disciplined communications strategy (like “best practices” events such as this one). But in reality, aggressively defeat all efforts to meaningfully address the issue like how we roadblocked a bill in PA requiring casinos to mail monthly loss statements to frequent gamblers and how we funded a $15 million campaign in Missouri to repeal the state’s $500-in-two-hours loss limit law.
5) Intensively fund the public health research like the tobacco companies did to minimize public outcry about our business model, our product and our marketing. Here are two stories, one by Bloomberg News and the other by The Boston Globe, that describe how we do it.
6) Use state-of-the art consumer loyalty technology as a critical marketing tool to closely monitor a person’s wagering and the speed they gamble. The faster a person gambles, the more they lose. When you add in how much they wager each time, we develop a revenue model for each person we call “their predicted lifetime value.”
How good is our marketing? Companies like Harrah’s can trace more than 75 percent of its gambling revenue back to specific customers and with such state-of-the-art technology, we are vulnerable to the charge that we know who most of the out-of-control gamblers are that make up nearly all of our revenue.
But because our business model relies on 90% of its gambling profits coming from 10% of the people who use the product, we need out-of-control gamblers to survive. The consumer cards are how we identify who has the potential to reach the out-of-control category and then we aggressively market to them using free slot play, free food and lodging, telephone solicitations, direct mail and other marketing techniques to stimulate these people to reach their “potential.”
7) Outsource the ownership and management of the ATM machines inside your casino and then buy from the vendor the list of the people who take money out of them. These gamblers are highly valuable because they are the ones most likely to lose control of their spending – they lost the money they arrived with at the casino and then needed to withdraw more of their savings to chase the money they lost earlier. If they did it once, they are likely to do it again. And again. And again.
8) Give as much money upfront to government as you can because our business model only works if our government denies the core democratic principle of equal citizenship to other Americans and traps people in debt. We already know 90% of our profits comes from 10% of the people we target – addicted and heavily indebted people. By definition, someone who is an addict or someone who is in deep financial debt is not free.
In a country where everyone is considered equal, where all blood is royal, the state is actively promoting a product that renders some of our fellow citizens as expendable. There is no good answer for this truth so simply go back on message with the jobs, revenues and “inevitability” argument.
9) Whatever you do, don’t actually use the product yourself. It’s a fact that most of us who own and promote casinos don’t use the product, like casino exec Steve Wynn, Harrah’s CEO Gary Loveman or Massachusetts Treasurer Tim Cahill, to name a few.
10) Casino capitalism is very, very lucrative – for a handful of people like us.
These “best practices” belong at the center of every discussion about predatory gambling in the weeks and months ahead.
Les Bernal
Is this REALLY what they said at this meeting or put in a memo, or is this just your interpretation of what they do? You make them sound like the worst manifestations of the tobacco industry, which maybe they are, but I’d still like to see some documentation.
I took this post to be at least partly satirical, in that the author is saying that these are their REAL “best practices.”
Les, as someone who has done her own research on this subject – and was left appalled – I know that everything you’re saying is true! Thanks for attending the ‘best’ (OMG) ‘practices’ conference and for telling it like it really is.
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p>Christopher, Les is being sarcastic but also being totally honest. I’m guilty of this myself:
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p>Six Degrees of Suffolk Downs
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p>And so is the great John Stewart, btw…
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p>viva la sarcasm!
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p>(or is it “le sarcasm”?)
This is always his primary talking point…..
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p>yet he can only link to the book. Every time…
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p>If he really wants to make the point, he could actually type up a few paragraphs of facts taken from the book to back up his statement, and then just cite the old fashioned way.
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p>I am compelled to believe this 90% of profits is coming from 10% of the most wealthy individuals, with huge amounts of disposable income.
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p>As far as the other 90% that he claims are irrelevant, I don’t believe they are irrelevant. I believe those might be the ones who spend $20 on the slots, $50 in the retail stores and $40 on dinner. These consumers would be far from irrelevant. They would be the job creating spenders. Because they are dropping their money in the resort areas of the casino.
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p> Sorry, I don’t have proof or links, just my impression based on common sense.
We have been around this point before. I found research from nationally acclaimed gambling expert Prof. Grinols on this issue and posted it at your request.
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p>Les Bernal posts copious amounts of information on the subject and you debate his work stating,
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p>C’mon.
A very high number indeed, enough to convince me, but not even close to your 90/10 or 80/20.
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p>I’m not sure this is an accurate statement with regard to Grinols work.
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p>According to your post:
The key question is what does “population” mean here? If it means the population of gamblers then the statement is right on, if it means the population of potential gamblers then it mischaracterizes the study. Not having access to the report myself, I don’t know, but I’m guessing that around $73 Billion in revenue was not grossed from 10% of casino customers. It could be, and would be a devastating stat if it was.
Here is the link to the abstract and if you choose to click on my post above you can find more history/threads on this topic.
The 90/10 position just doesn’t smell right and Les’ quote from the book doesn’t convince me either. That book is referencing Harrah’s, which according to the book nets 85% of it’s revenue from gambling compared to 46% of revenue from gambling for MGM (thanks Google Books!)
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p>If that’s true of Harrah’s and MGM doesn’t make significantly higher margins on gambling than Harrah’s, then it can’t be true for MGM and wouldn’t be true of a resort casino with a mall and shows, all of which are now designed to generate profits.
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p>You’ve got a killer stat with the Canadian study – 23% of revenue comes from just 4% of the gambling population, that’s not one company that focuses on riverboats, that’s the entire industry in Canada.
the 90/10 and 80/20. Whether 90% of the profits are coming from 10% of the players, or 80% of the profits are coming from 20%, it’s very, very clear that the vast majority of a casino’s profits come from a small sliver of the people who walk in the door. The bottom line is that the vast majority casinos rely on regular, not wealthy and often poor people from nearby who go to the casino many times every month and spend hours and hours in front of the same two or three slots, until their funds are exhausted. That’s how casinos make their profit margins, everything about them is designed to keep people in, from the science behind the slot machines to where they’re located to the free booze they hand out and cheap food they sell. Just keep people pressing the buttons on their machines (plural) and the casinos keep making bundles of money.
are willing to spend millions of dollars lobbying for the slot machines to grab that $20 instead of just building those retail stores and restaurant. Why do you think that is?
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p>When Foxwoods and the other “Resorts” are on the edge of bankruptcy, to they expand their retail stores or please with legislators to expand slots?
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p>And obviously since their profits are coming from those imaginary wealthy folks, that is who they market too. It explains the regular bus tour to Foxwoods from Weston….
There are a total of thirteen hyperlinks in the post referencing each “Best Practice.” Not sure how that doesn’t far surpass “some documentation.”
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p>I have written up the quote for BMG before, coincidentally five months ago today, but am happy to do it as many times as it takes until the predatory gambling trade explains their business model as well as how electronic gambling machines work and their marketing practices:
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p>The 90%/10% reference can be found in Wall Street Journal reporter Christina Binkley’s book Winner Takes All on Pg. 184. The exact text reads as follows:
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p>The business model, the product and the marketing practices of the predatory gambling trade deserve intense and thorough public scrutiny. And to date, there has been virtually none of it.
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p>Les Bernal
…is that several times you have “loaded the dice” (sorry, couldn’t resist!) with regard to this debate by suggesting that the discussion is only valid if we start with your given premises. I’d rather start the discussion with a blank slate and see if the premises are valid first. I’m sorry if there was satire in your original post which I missed, but when there are contributers here with a clear agenda (not necessarily a bad thing – “Dave from Hvad” relative to Fernald League is another example) I tend to want to subject what they say to more than the usual scrutiny.
Thank you for taking the time to tease out your perspective. I think maybe, it sometimes happens that people who have studied an issue and have a tremendous body of knowledge jump into a discussion without laying the foundation for how they got to their conclusions. I have been advised by friends and family to curb my tendency to jump ahead. On the other hand, it sometimes comes across as patronizing to start a post with say, Slots 101 and not give the readers here some credit for having a grasp on the subject matter. Conundrum.
But with the not-so-shiny state of affairs in RI and CT, would we really want to enter a potentially losing proposition?
Legalizing slots is a permanent regressive solution to a temporary fiscal situation. With the national and global economy in recession due in great part to predatory lending and overspending, is it prudent to invite state sponsored gambling that creates no tangible product and increases debt? How can anyone consider that sensible public policy? Another empty get rich scheme.
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p>What I wonder is how the “progressive” state of Massachusetts could have such misguided, myopic leadership?
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p>Can anyone answer that please?
Most everyone here knows that the Rhode Island Racino is on the brink — and taking the state with it — but how many people realize that Foxwoods is not so far away, either? http://www.boston.com/business…
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p>Foxwoods is doing so bad that it’s causing panic in banks across the country, because when these resorts start going under, they’re on their own nations. The banks probably can’t come and claim them, like they could my car or house if I defaulted. Foxwoods has already boasted that it will rather default on the loans than stop paying their tribe’s members their shares. And, by all accounts, it doesn’t look like they’re very far away from defaulting.
Just google “Greektown Casino”. Heads up!!
Mall of America is seeking to build a new shopping and entertainment center in Massachusetts. Their preferred site is located across from exit 8 on the Mass Pike in the slowly evaporating area of Palmer MA, but anywhere outside of Boston would be OK. There have been strong arguments against such a proposal.
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p>It would increase crime and traffic. There would not be enough money for the local govenments to support it, they would need more police and fire services, they would need to upgrade infrastructure. There would be transient low income workers hovering around everywhere. But most of all, there is the increasing problem of shopping addiction.
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p>It is estimated that 6% of the US population is affected by shopping addiction, Since Massachusetts has an estimated population of 6,497,967 bringing such a facility as Mall of America to Massachusetts it could have a burdensome affect on the already high (estimated 389,878 people)incidence of those affected by shopping addiction in our state. Bringing Mall of America to Massachusetts could hurt more families, cause them to increase their debt, lose their jobs and go bankrupt.
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p>We do not need all of these problems coming to Massachusetts. It is in our best interest to continue to let Massachusetts lose jobs and it’s population. Less population means less addicts, less transient low income workers, less crime, and less traffic. No big destination malls in Massachusetts, no way, no how.
As someone who lives in Lawrence, the poorest community in Massachusetts, Mall of America has no interest in building a mall here because there’s virtually no money. But for more than 15 years, proposals to build a casino have been floated. If malls and casinos are the same thing, then why aren’t Mall of America type developers clamoring to build them in places like New Bedford, East Boston, Palmer and Lawrence?
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p>Because there are enormous differences and I’ll identify a few. Does Sears provide free alcohol to you as you consider purchasing new lawn furniture in an effort to cloud your decision-making? If it became public knowledge that Macy’s business model was based on getting you “to buy to extinction,” would state government partner with Macy’s to get a cut of the profits or would the state shut them down? If you eat at a mall restaurant and want to know if there’s peanut oil in the fried chicken fingers or gluten in your brownie sundae, will the wait staff refuse to answer your questions about what’s inside their products? Is the mall open 24 hours a day seven days a week to fuel more addictive behavior? Would the state need at least 500 new public employees to regulate the new mall? Would the state need to create new statutes for wiretapping and other law enforcement measures?
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p>With good reason, economists have described our current economic crisis as “casino capitalism”: using predatory practices and financial gimmicks to promote an illusion of free money, all at the expense of unsuspecting Americans.
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p>”Shopping mall capitalism” does not fit this definition.
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p>Les Bernal
but they provide “instant credit” at the register, for all of those shopaholics to enjoy.
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p>What are retailer’s business model?
Take your pick
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p>So, not that I’m happy much about corporate America on all levels. But unfortunately in today’s America, manufacturing jobs are hard to find. Service sector jobs
are the only ones being created these days. Whether it be retail, casino, hotel, spa, whatever. The business model is always… what can we do to make people spend more?.
If you buy a pair of shoes at a retailer, my neighbors and I don’t have to lose our shoes for you to benefit.
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p>If you win money at a casino, you didn’t beat the casino. That money comes from the losses of your neighbors. Name another “service sector job” where that’s the case.
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p>Money spent gambling at a casino is simply a transfer of wealth …there is no creation of wealth unless you own the casino.
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p>That’s why the people who own and promote casinos don’t use the product.
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p>Les Bernal
Forcing you into these casinos to spend your money.
The predatory gambling proposal before the state is dependent on addicted or heavily-indebted citizens. Predatory gambling proponents attempt to elude charges of exploitation by pleading it is a “voluntary” act, hiding under the cloak of “freedom.” But by definition, someone who is an addict or someone who is in deep financial debt is not free.
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p>I’ll raise the same point I raised in the initial post again: In a country where everyone is considered equal, where all blood is royal, how can the state actively promote a product that renders some of our fellow citizens as expendable?
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p>Les Bernal
Therefore my blood is not royal blue.
Since you insist upon taking it up another notch. We need to ban grocery stores. Having grocery stores all over the map encourages people with food addiction to eat more. We need to stop that.
Yes I have issues with state-run gambling. A $20 scratch ticket is not an impulse buy. Playing Keno where the odds of winning are at least 4-1, and the payoff is 5-2 (or 2 1/2 to 1, for the non-gamblers) is just a bad bet.
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I haven’t lost any shoes lately.
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p>But…every pair I buy is probably made in China. So if you and your neighbors are losing shoes, it’s probably because you are losing jobs due to the whole export/import issues this country has.
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p>You are trying to blame the woes of the world on Casinos. I am trying to find jobs for my neighbors down the street who need shoes.
but no one would argue that his “something for nothing” business model is the right direction for our state and national economy. Casinos and slot machines are another kind of “something for nothing” scheme.
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p>And that’s why your earlier comparison to a retailer doesn’t apply.
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p>When you buy something at a retailer whether it’s shoes, groceries or a cup of coffee, the benefit you receive does not come as a result of other citizens giving up their own shoes, groceries or coffee.
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p>In the casino business model, for you to receive a financial or material benefit, a small amount of other citizens need to lose a significant amount of money. They experience no benefit. You gain only at the expense of others. Name another business model where that’s the case.
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p>It’s also a business model that defies one of President Obama’s core themes of his presidency…that we’re all in this together.
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p>Which is why this is not a debate about whether people gamble. It’s a debate about whether this business model should be put on Main Street across the state and most importantly, it’s a debate about who we are as a people.
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p>Les Bernal
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