Casino Enterprise Management

The casino gambling industry is in a period of unprecedented growth and prosperity. New gambling resorts seem to spring up daily, and construction budgets have soared from millions to billions of dollars, begging the question, “How big can legalized gambling grow?”

But perhaps a more sobering question is now appropriate: “How long will legalized gambling last?”

The lure of gambling is powerful. Whether because it represents the patterns of life or simple laziness, few of us can resist — be it by card, dice, point spread or stock market — the opportunity to win. Of course, gambling is as much about failure as success, and the consequences of recurring loss create undeniable tragedy for those unable or unwilling to regulate their wagering activity.

Written more than 3,000 years ago, the ancient Indian Rig Veda is a collection of Sanskrit poems that include this (translated) gambler’s hymn telling of the havoc excessive wagering and bad luck with dice can wreak upon a family:

    These dice nuts, born of a lofty tree in a windy spot, which dance on this gambling ground, make me almost mad. These wakeful dice intoxicate me like a draft of Soma from Mount Mujavant.
    Never has she said an angry word to me, nor has she ever scolded me. She has been so pleasing to me and my friends. With all this, without any fault of hers, I have driven my devoted wife away because of a die exceeded by one.
    My mother-in-law hates me; my wife pushes me away. In his defeat, the gambler finds none to pity him. No one has use for a gambler, like an aged horse put up for sale.
    Dice are like pieces of divine coal that cause the heart to burn, though remaining themselves cold.

The allure — and curse — of the wager has repeated itself time and again in the three millenniums since. A gambler denied the chance to gamble is crazed with desire for a game, even if illegal. A gambler granted the right to wager, and having lost, is even more crazed for another game in which to get even. Unchecked, this craziness destroys families and harms society.

For centuries, governments have flip-flopped between allowing and banning the act of gambling. Even in its own relatively short history, the United States has already endured two such cycles and is now in the midst of a third. Setting aside the gambling habits of Native Americans, widespread gambling began in North America after the arrival of the Pilgrims. It was eventually banned around 1840. The California Gold Rush began a new cycle of tolerance that ended in 1910 with an even stronger ban than before.

Legalized gambling reappeared for the third time during The Great Depression and has continued ever since. Initially the pace was slow, with only Nevada allowing full-fledged casino wagering. The more recent explosion of legalization began with a 1976 report from the Commission on the Review of National Policy toward Gambling, which stated: “Gambling is inevitable. No matter what is said or done by advocates or opponents of gambling in all its various forms, it is an activity that is practiced, or tacitly endorsed, by a substantial majority of Americans.”

Unaware that such a commission on gambling even existed, 1976 found me working through my senior year at Ball State University. Having already worked for a couple of years in Las Vegas casinos, I was familiar with the profits that quarters in machines could provide. Of course, gambling was illegal in Indiana then — and everywhere else in the country except Nevada — so I settled for a route of amusement machines as a part-time business.

While seeking new locations in central Indiana to place my games, I quickly learned that gambling, though illegal, was readily available. Every little town, it seemed, had a fraternal organization, bar or small cafe with a door leading to a backroom where slot machines and pull-tabs were (barely) secreted away. Just knowing to go through the door was sufficient enough to gain entry at many locations; at others, you had to know the bartender, quote a secret password or otherwise prove yourself trustworthy.

Occasionally someone would complain — usually a wife whose husband had lost the week’s paycheck — and the county sheriff would dutifully raid a location and seize whatever illegal games were found. Prosecutions were rare because, in many cases, the raid was preceded by a warning telephone call, resulting in no discovery of illegal activity at all. When machines were confiscated, they were often quietly returned to the owner and placed back into service. While I had no direct knowledge of this, it was common lore that the cooperation of law enforcement was bought, and so gambling also became associated with the corruption of law enforcement and politicians.

Having lived in Nevada for a couple of years prior, I was surprised at the disdain with which Hoosiers viewed gambling. It was then that I also learned this valuable lesson: Human beings have a penchant for privately engaging in the very behaviors they publicly disclaim. It was not uncommon to find the mayor or police chief at the local Elks or Moose Club on Friday night, helping maintain the health of a slot machine by feeding it a steady flow of quarters. That a portion of his losses went to maintain the club in which he belonged, and which did charitable work for the community, was all the justification necessary.

At age 22 and hungry for income, the idea of adding slot machines to my amusement route was awfully tempting. Yes, it was illegal, but gambling should be a personal choice, shouldn’t it? Or at least that’s how I rationalized the idea. Other people were making great money running slot machines, so why shouldn’t I?

I soon found a great reason: The people already running those gambling machines wouldn’t like it. In fact, they didn’t even like the pinball and video games I’d placed in area bowling alleys. During one game delivery, my brother was run off the road by a truck without license plates. A competitor amused himself by squirting honey into the coin chutes of my video games, and once I even had my tires slashed during a service call. The idea of guns and revenge came to mind. A quick inventory of my own lack of skill with firearms and low tolerance for pain quickly laid that idea to rest. Besides, graduation was near and there was more money — and far less physical risk — in Nevada.

My honey-squirting competitor (let’s call him Andy) was pleased to know I was leaving the business and volunteered to buy some of my game inventory. In one transaction, I sold an Atari Twin Racer and a Duck Hunt game for $3,200 — a very fair price.

Reaching into the pockets of his baggy jeans, Andy pulled out a huge roll of bills and placed 32 of them into my hand. Most impressive was that the roll seemed no smaller when he was done counting than when he began. Pleased that I noticed, Andy smiled, walked back to his truck and pulled a cigar box from underneath the seat. “Most of my cash is buried back at the house,” he explained. “I start the day with my pocket money and an empty box. I pay cash for everything. Whatever’s in the box at the end of the day is my profit. Banks keep too many records. Stay away from credit — that interest will kill ya.”

It was only early afternoon, but already that box was near overflowing. Clearly, business was good. Besides cash and financial advice, Andy offered me a job. “Times are changin’ and I’m gettin’ old,” he said. “You start with me now, put in a couple years, learn the business, then buy it from me when I move to Florida.”

That overflowing cigar box somehow made the idea at least a little appealing, and we met several times over the next few days to discuss it. Andy showed me his operations and explained that the real money came from gambling. One proven technique was to identify good short-order cooks and give them locations from which to operate. “Let ‘em keep all of the food profits,” Andy told me, “so long as they guard the backroom door and make good sandwiches for the players there. The only reason people stop playing is they get hungry. I pay him full-price for every sandwich. He keeps all the restaurant money. I keep all the slot and pinball money. I pay the rent. He guards the door. We’re all happy.”

Ultimately, the idea of a life with money buried in the yard, a cigar box under the seat, and a .38 in the glove compartment somehow didn’t ring true to me, and I never saw Andy again.

I went back to Las Vegas soon after. New Jersey legalized a couple of years later, and the legitimate gambling industry has been growing ever since.

Even Indiana, a staunch anti-gambling state in the 1970s, ultimately legalized a lottery and then casino gambling. There wasn’t enough honey in Indiana to fill all the coin acceptors at casinos, and raids on illegal locations were no longer preceded by phone calls. The Andys of the world became extinct, though I like to think Andy himself is still enjoying white sand and sunshine in Florida.

What happened in Indiana had already happened in some states and soon happened in others thereafter. One big reason was the income that gambling taxes provided to the government. But another reason, and perhaps the strongest, is found in the first sentence of that 1976 report: “Gambling is inevitable.”

If gambling itself is inevitable, then so, too, are gambling problems and problem gambling. Strong regulations such as those established and enforced by Nevada and New Jersey can minimize gambling problems caused by dishonest games and dishonest operators. That’s important because corruption was a major reason gambling was banned in earlier times.

The problem of problem gamblers cannot be resolved with strong government regulation. Some people simply gamble more than they can afford, and many believe this is a matter of personal discipline; if people gamble beyond their means, they should and will suffer the consequences. Others proclaim excessive gambling is an illness that cannot be helped by those afflicted and point to the harm done to innocent family members and society by these uncontrollable acts of excess. They believe the damage done is so great that all gambling for all people should be illegal.

Will these forces gather enough steam to bring this third gambling cycle to an end? Perhaps it is already happening in Australia. Ten years ago, the clubs of New South Wales comprised a vibrant and growing gambling market. Today, because of steps taken to protect people who cannot control their gambling habits, this market is rapidly deteriorating. Limits are placed on how many machines can be in each club and how many clubs are allowed in an area. Clocks must be displayed on each machine to show players how long they’ve been wagering. Another display tells how much was lost during that time. Anti-gambling messages are played at regular intervals, and player’s clubs are limited in how many points can be given for frequent play. Combined with anti-smoking laws, the impact on gambling revenues has been severe.

In the United States, we’ve moved away from the belief that individuals are responsible for their own behavior and toward the idea that government must protect us from ourselves. Australia has always been ahead of the United States in this regard, but the United States is following its lead and gaining ground. Whether it’s tobacco, alcohol, seatbelts, motorcycle helmets or even mandatory health insurance in Massachusetts, new laws are progressively invading territory that was previously the domain of personal responsibility.

Whether we agree with this or not doesn’t matter; the trend is only growing stronger. Whatever your position, whether game designer, casino manager, floor host or player club manager, you must begin to manage this responsibility or risk becoming as obsolete and unwanted as my old friend Andy.

If you believe, as I do, that history repeats, you can learn a great deal more about the history of gambling in the book Roll the Bones by David Schwartz. I highly recommended it.

John Acres is CEO of Acres-Fiore and a Director of Game Logic Inc. He is the Founder of EDT, Mikohn and Acres Gaming, and holds a number of U.S. patents relating to the gaming industry. He can be reached at john@acresfiore.com or (541) 738-4301.