Saturday, September 23, 2006

Not a chance


Gambling, quite obviously, involves chance; you pays your money, you takes your chances. The chance element means you can win or you can lose. There is the widespread belief that when you gamble there are winners and losers, any winners are sometimes losers and vice versa.

But in the organised world of gambling, particular when gambling with gaming machines, the only losers are the players. Against a gaming machine, you may win from time to time, but over time you will only lose. There is no element of chance.

This is because the machines are controlled by computers and the computers are set by the owners of the machines to make sure they keep more money than they pay out. They fix the odds so there is no chance they will lose.
It is a common belief that the odds on a machine have something to do with the number of each kind of symbol on each reel, but in modern slot machines this is no longer the case. Modern slot machines are computerized, so that the odds are whatever they are programmed to be.

Slot machines are typically programmed to pay out as winnings between 82 to 98 percent of the money that is wagered by players. This is known as the "theoretical payout percentage". The minimum theoretical payout percentage varies among jurisdictions and is typically established by law or regulation. For example, the minimum payout percentage in Nevada is 75 percent and in New Jersey is 83 percent. The winning patterns on slot machines, the amounts they pay, and the frequency at which they appear are carefully selected to yield a certain percentage of the cost of play to the "house" (the operator of the slot machine), while returning the rest to the player during play. Slot machine
Thus, whilst at an individual level you may get lucky enough to keep more than you bet, at a societal level, the community at large is a bunch of losers.

Now it may be that there is no harm in that, particularly where the "fixed" percentage of return to the machine owners is so small that the endeavor may fairly be characterised as "entertainment". But even here you have to ask if this is a valuable form of entertainment.

In my experience in Sydneytown, I saw wonderful old corner pubs, where people would congregate for an evening's worth of comaraderie and networking, turn into loud, glitz, cold places where the social fabric was torn by zombies. And that was the best part of it. You've all heard of the stories of people leaving kids in cars, becoming addicted to machines, etc. For mine, the gaming machine gamble is not worth the price of the "entertainment".

So, the owners of these machines, who after all have a legal license to take money with no-lose odds, devise these grandios schemes to try to convince us they actually "give something back" to the community. Usually this comes in the form of so-called grants or contributions to social institutions like sporting clubs, hospitals, child care, libraries and the like. But, in the first case, this is just a skim off the top, and in the second, it is a form of dirty money charity.

Then they say the "industry" creates jobs and employment. Mainly, it is an industry to feed itself, and perpetuate the gambling. An honest economic assessment of the situation would include a look at the jobs lost to other endeavours and the opportunity cost to other forms of entertainment and social life.

Where it gets really devious is when the gambling machine industry "hooks" the local government on the gambling machine addiction. This is because the government is on the take with these things, too. They are guaranteed a certain amount of tax revenues from the moneies these machines are programmed to take away from the players.

And the thing gets even more pernicious when the scheme is set up to give the impression that some or all of these taxes are being directed to community welfare, such as hospitals, schools and parks. You'd have to ask, why doesn't the government simply fund these things in the first place rather than set up defacto privitised taxing machines that pay the machine-owning tax collectors an enormous amount of money that is taken from the very community it pretends to be benefiting.

The stories that spawned this particular rant appeared in recent days in the Australian and Guam papers, as below:

You bet: households lose record $18.8b on luxury of gambling

AUSTRALIANS lost a record $18.8 billion gambling last financial year, the equivalent of almost 2 per cent of the national economy.

Households spent more per head on gambling each week ($17.60) than on fuel and maintenance for cars ($17), and almost as much as they spent on clothing ($18.50), unpublished Bureau of Statistics figures analysed by Commsec show.

A separate Bureau of Statistics survey of gambling businesses, released yesterday, said the industry's net takings reached $15.5 billion in 2004-05. That equated to $996 for each adult, up from $901 in 2000-01, when the bureau last surveyed the gambling industry.

Gambling industry takings doubled in the decade to June 2005, the figures showed. Poker and gaming machines in clubs and pubs took $8.7 billion in 2004-05, more than half of all net takings.

Each of the nation's nearly 200,000 poker or gaming machines took an average of $46,300, even after winnings were deducted.

The number of poker and gaming machines increased by more than 80,000 between 1994-95 and 2004-05.

Gambling takings were much higher in NSW than in other states, averaging $1196 per adult, compared with $490 in Western Australia (where there are relatively few poker machines), $725 in South Australia and $853 in Queensland.

Gambling taxes and levies reached $5.63 billion in 2004-05, up from $4.43 billion in 2000-01.

Gambling-related taxes, which go mostly to state governments, grew by an average of 6.2 per cent a year between 2000-01 and 2004-05, the bureau said. Taxes represented 36.4 per cent of the net takings from gambling.

Taxes and levies on poker and gaming machines in clubs, pubs, taverns and bars accounted for 55.5 per cent of all gambling revenue.

There were 76,848 people employed in the provision of gambling services, with about 60 per cent of those working in clubs and pubs, taverns and bars.

Slot proponents pitch jobs
If Guam voters approve of legalizing slot machines at the Guam Greyhound, the racetrack would create "500 or more jobs," the racetrack's owner, John Baldwin, said yesterday.

At a press conference, Baldwin also said the racetrack would start with 200 slot machines, if given voter approval in the Nov. 7 General Election.

Based on those estimates, the racetrack would then be creating more than two jobs for every slot machine unit at the racetrack.

...there also will be franchise restaurants that will help the racetrack reach the jobs target. The franchise names were not publicly disclosed.

Besides jobs directly related to slot machines, there will be other jobs that will be created, Anderson said. If its plans were for a casino, the racetrack might be closer to its jobs goal.

At a possible initial gross gaming revenue of $20 million a year, the racetrack could possibly create 242 jobs, if its slots revenue would rise to the level of casino revenues in the U.S.

The $20 million in possible slots revenue for the racetrack is based on Baldwin's statement yesterday that the racetrack would be able to contribute about $2 million a year for Guam's public education and health care, if slots are allowed at the Tamuning facility.

The initiative to legalize slots at the racetrack proposes a 10 percent annual tax on slots revenue.

The Guam Greyhound has stated it will not operate casino-type gambling, and that it will limit itself to slots.

With the slot machines at the racetrack, Anderson said: "One thing I can guarantee you -- no children will be left in cars."

The racetrack will have a security system that can spot children left unattended in cars, and there also is a plan to provide child care to the young children of racetrack patrons in response to tour operators' input, the Greyhound management stated.

ABOUT THE INITIAVE
• The "Initiative to Revitalize Tourism in Guam and Generate Revenue for Health Care and Public Education by Allowing Slot Machine Gaming" proposes legalizing slot machines at an existing racetrack where a pari-mutuel betting system is in place. The betting system is used at the Guam Greyhound, a dog racetrack.
• It says "the tax would be used to subsidize (1) health care costs, including prescription drugs for Guam residents, (2) education, including improvements to the physical condition of Guam schools, and (3) other programs for the general well-being of the territory."

Anderson envisions arts center in new role
Anderson said the racetrack's plan to build a performing arts center was part of what convinced him to hop aboard Guam Greyhound's campaign for legalizing slot machines, which will be limited to the racetrack.

"He's got a genuine interest in turning this into a performing arts center," Anderson said of John Baldwin, new owner of the Greyhound.

The performing arts project, however, will happen only if the slot-machines proposal becomes a reality, Baldwin said.

Nation gambles $15.5bn a year
The preferred form of gambling is in poker and gaming machines, with takings from the descendants of one-armed bandits now reaching $8.7 billion, or $1 billion more than in 2000-01.

But the big rise in takings worries South Australian No Pokies Independent MP Nick Xenophon.

"These latest figures make a mockery of state governments' so-called harm minimisation efforts," he said.

"They've now been exposed as largely window dressing rather than real reforms."

"The only reform that's taken place over the last few years has been the Victorian government banning smoking, which had an initial impact of 10 or 15 per cent in 2002," he said.

The Salvation Army's coordinator of recovery services for Queensland, NSW and the ACT, Gerard Byrne, said a secondary roll-out of pokie licences in recent years, particularly in pubs, had made them more available to people.

"What we've seen as a result of that is an increase in the people who are reporting, either as their primary dependence problem or secondary dependence problem, problem gambling," he said.

"The vast majority of them report their problem to be electronic gaming machines."

Mr Byrne said the Salvos would like to see a rollback of pokie licences.


Now, Guambat is not opposed to gambling, per se. Hell, Guambat "plays" the futures market, which is a pretty tough gamble. And Guambat had a flutter on every Melbourne Cup over the last 17 years.

More to the point, there are some very nice people involved. Guambat reckons Jon Anderson to be one very decent chappie.

Guambat's point is not to come down hard on gambling. The point must be, however, to carefully weigh the form, extent and consequence of the form of community-supported gambling. The point is that some things are not harmful in particular doses or in particular instances.

Guambat is fond of a tipple or two, and the community condones that. But in excess or in the wrong circumstance, a tipple or two could lead to harm, to Guambat or others, and the community needs to remain mindful of that and establish tight controls to minimise that potential for harm. So, too, with legalised gambling.

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