US - Gamblers Fight Back To Even The Score
Source: http://www.gamblingproblem.org/gambling_makes_the_news.htm
May 10, 2004
By RICK GREEN, Courant Staff Writer
William H. Poulos couldn’t get enough of slot machines and video poker.
On a binge from the late 1980s and into the 1990s, the Florida man - a self-described professional gambler - followed the usual path for slots players: He lost. From Foxwoods to the MGM Grand in Las Vegas to the Trump Taj Mahal in Atlantic City to gambling cruise ships out of West Palm Beach, Poulos left a trail of losing bets.
Poulos and a handful of other hard-core bettors are now out to even the score and bring the $70 billion U.S. gambling industry to its knees, forcing it to tell what they say is the truth about slot machines.
Inside The Machine
For 10 years, Poulos and his hardluck plaintiffs have pursued a class-action lawsuit charging that casinos, slots manufacturers and cruise ship operators - virtually the entire gambling industry - have fleeced machine patrons with a knockout cocktail of computer technology, crafty marketing and outright deception.
More Addicts In Treatment
The case is pending in the U.S. 9th Circuit Court of Appeals in San Francisco.
“On most individual plays of the machine there is no chance that a jackpot can be won,” say the plaintiffs, who are represented by David Boies, lawyer for Al Gore in the 2000 presidential vote recount in Florida. Behind it all is a broad industry conspiracy, Poulos charges, involving dozens of casinos and manufacturers.
The casinos and slots manufacturers, Poulos argues, are “engaged in a course of fraudulent and misleading acts and omissions to induce people to play their video poker and electronic slot machines based on a false belief concerning how those machines actually operate.”
Faster Slots, More Addiction
The plaintiffs’ argument mirrors what a small cadre of researchers say: Computerized, high-speed video slots hook gamblers by disguising astronomical odds. Games are designed to convince players that the next win is just around the corner, as close as the 7 or bunch of cherries that just missed the pay-line.
The Poulos case is part of a ripple of lawsuits beginning to confront the gambling industry, challenging the gaming business in the same way that tobacco litigation succeeded during the 1990s.
Previous lawsuits took aim at casinos that continued to serve known problem gamblers, even in cases where they signed up for voluntary “self-exclusion” programs. The target this time is more basic: the slot machine.
“It is the addiction delivery device,” said Henry Lesieur, a leading gambling researcher in Rhode Island who treats slot machine addicts. “People don’t want to have that discussion, though, because there is too much money involved.”
BIG MONEY
Industry Funding Research
When he met with the industry chiefs who made up the board of the newly created American Gaming Association in 1996, Frank J. Fahrenkopf Jr. had a haunting image in his mind: the infamous picture of tobacco company chairmen, hands raised, swearing in to testify before a congressional committee.
“I indicated to the board that I would not accept the position [as director] if they intended to make the same mistakes the tobacco industry had made,” said Fahrenkopf, a former national chairman of the Republican Party and now the association’s president and CEO.
“We know as an industry that there are certain people who can’t gamble responsibly,” he said. “We have a responsibility to step up to the plate and do something about it. We don’t want people who have difficulty gambling.”
In the last 10 years Fahrenkopf’s group has funded the creation of the National Center for Responsible Gaming, which says it is committed to identifying “the risk factors for gambling disorders.” The group has pumped millions of dollars into gambling research through a Harvard institute it underwrites.
Scott Harshbarger, former president of Common Cause, a citizens lobbying group, said the gambling industry is “so much better than tobacco” at public relations.
“They are open,” he said. “They are willing to engage in debate. And there has been no serious organized public opposition.”
Still, Harshbarger said, “it is always hard to accept independent research funded by the industry that is most affected by it. That’s what got tobacco in trouble.” As attorney general in Massachusetts, Harshbarger was one of the first to sue tobacco companies. He predicted that the combination of risk, lack of governmental oversight and the potential for large settlements will fuel more lawsuits against the gambling industry.
“Tobacco lawsuits started 20 years before they ended up being so successful,” he said.
Recently, the gaming association released a “code of conduct” for gambling. It emphasizes training employees, voluntary exclusion of problem gamblers and advertising “responsibly.” The group also sponsors an annual conference that brings together gambling executives and health researchers - all of whom invariably call for more research, not government regulation.
Late last year, Caesars Entertainment - which includes Caesars Palace, Bally’s and the Hilton properties - said it would bar problem gamblers for life. Caesars, Hilton and Bally also are defendants in the Poulos case.
“We are not the tobacco industry. Eighty percent of people who walk into a casino go in with a budget and stick to a budget,” said David Stewart, senior vice president for corporate communications with Caesars.
“We don’t want customers that have a gambling problem,” he said. “There are plenty of other ways for us to make money.”
Others see a more basic self-preservation motive behind the industry’s recent efforts to emphasize responsible gambling.
Casino and slot machine companies are “trying to bulletproof themselves from pending lawsuits. They are trying to demonstrate that they are doing the right thing,” said Harold Wynne, a gambling researcher in Ontario and Alberta whose work has linked video lottery terminals with increased gambling addiction.
“Gambling moves in and out of favor with the public,” Wynne said. “It may be in the not-too-distant future that it begins to move out of favor again. And that would scare the hell out of the industry.”
If so, it appears things aren’t headed in that direction anytime soon. There are now more than 750,000 slots and video lottery terminals in North America - with half a dozen states considering expanding or adding machine gambling. New York, Rhode Island and Maine recently added or expanded their video lottery terminal offerings in response to Connecticut’s casinos.
Fahrenkopf said the proliferation of gambling - and in particular slot machines - during the last 20 years has had no effect on the number of pathological gamblers. “You have had this dramatic rise in gaming,” he said. “But there has not been a concomitant rise in the prevalence rate.”
Gambling researchers say it is more complicated than that. The percentage of diagnosed pathological gamblers may not have grown, but the number of people who are having financial and emotional problems caused bygambling has exploded.
“I don’t think people who play a slot machine are being misled in any way. I don’t think any jury will buy that,” said Fahrenkopf. “The average players know that the odds are you are probably going to lose.”
Knowing The Odds
Lawsuits against casinos and slots manufacturers say the odds are precisely what people don’t understand.
“It is a case about whether slot machines and video poker machines fail to honestly represent to the players how the machines operate and what their chances of winning are,” said David Barrett, one of William Poulos’ lawyers. “The representation of the symbols on the reels bears no relation to the chance of winning.”
The Poulos suit goes on to state that the “manufacturers, distributors, owners and operators know that the machines’ popularity would be undermined if the public were aware of the true nature of electronic slot machines. They have made a concerted effort to perpetuate public misunderstanding and conceal the true facts concerning the operation of electronic slot machines from the typical player.”
Poulos’ suit targets the major casinos in Las Vegas and Atlantic City, as well as slots makers such as International Game Technology and Bally. Indian casinos, because they are immune from lawsuits, are not named.
“The Poulos case, I think is the leading-edge case right now,” said John Kindt, a professor of business and legal policy at the University of Illinois.
“One of the major issues that’s coming up is, are the games in fact fair? Who is determining what is fair, with all these billions of dollars being lost?” said Kindt, an outspoken foe of the gambling industry. “I don’t think the state regulators have a clue what is going on.”
Thus far, U.S. courts have chosen not to lay any blame at the door of casinos or slot machine manufacturers.
“The only way to solve any problems that are out there may have to be through the courts. [State] legislatures can’t say no to the money,” said Terry Noffsinger, an Evansville, Ind., lawyer who said courts are only just beginning to understand gambling’s effect on society.
David N. Williams, an Indiana man who lost $175,000 on a slots bender in the 1990s, sued Aztar casinos under the federal Racketeer Influenced and Corrupt Organizations Act and lost. Noffsinger, Williams’ lawyer, argued that the casino knew he was a compulsive gambler and enticed him with complimentary services and promotional offers.
“They make these people feel like they are important,” Noffsinger said. “He would go home at night after he lost money and the next day he would run stop lights to get back there.”
In another case, Stephen Small, a losing gambler and a Kansas City, Mo. lawyer, targets a casino and International Game Technology for “cheating the public.”
“The machine does not in any table identify the odds of any particular winning result or overall odds of winning any prize,” Small argues in his suit filed in state court in Missouri. “The defendants use deceptions to create the impression that large prizes are nearly missed by demonstrating reel positions close to but not achieving large prize wins.”
In Quebec, a class-action lawsuit against the provincial lottery and the companies that supply it with video lottery terminals could go to court late this year. The lawsuit, filed by a lawyer who lost thousands on the machines, seeks $700 million (Canadian) in damages.
“It’s the same as the harsh warning that goes on a cigarette package. The onus is on the manufacturer to warn you,” said Sol Boxenbaum, a spokesman for the plaintiffs in the case. “They should have said there is a risk.”
In general, though, gambling is seen as a personal choice, much as smoking or drinking once was viewed.
“From the industry’s point of view, they want to put all the blame on the gambler. When are they going to take responsibility?” said Tracy Schrans, who has studied the behavior of video lottery terminal players in Nova Scotia for seven years.
“It is not just about the machines. It is about how the product is delivered,” said Schrans. “Litigation is going to force them to deliver their product in a responsible way or get out of business.”
Schrans said one in every four people who play regularly is going to run into trouble.
“These are not people who had problems with other things. It is specific to this form of gambling,” she said. “Why is gambling different from any other product with well-documented risks?”
One reason, said Bo Bernhard, a sociologist at University of Nevada, Las Vegas, who studies the gambling industry, is that society has yet to agree on how threatening gambling might be - and how much damage is acceptable.
“We haven’t yet arrived at that consensus,” he said. “We are still grappling with … what is an appropriate level of harm.”
“Are there going to be lawsuits? Yes, anytime you have that level of potential [financial] settlement,” said Bernhard. He blames the lack of concern about machines’ effect on people on the “MBA-ization” of casinos run by “people trained to maximize profit per square foot.”
Still, the gambling industry has closely followed what has happened in Australia, where outcry over slot machines has led to strict controls, said Connie Jones, director of responsible gaming for International Game Technology, the world’s leading slot machine maker.
“We care about our business. We want our customer to understand responsible gaming,” said Jones, who believes the industry one day may be forced to label its machines more clearly.
“Really this is about the sustainability of our market. There is nothing wrong with enlightened self-interest,” she said. “Tell the player how the machine works - this is randomness and this is how pay-out percentages work.”
A Personal Decision
Lawyers for International Game Technology and casino companies, however, have aggressively and successfully fought attempts to force them to be more open about their machines, saying decisions about playing the slots fall on the individual. In a decade of wrangling in courts from Florida to Nevada to California, they have sought dismissal of the Poulos suit.
Playing a machine is “purely a function of individual belief, expectation and perception,” industry lawyers argue in a court deposition. They further cite the fact that it is the responsibility of state regulators to make sure that games are fair. They also note there is no evidence of a nationwide conspiracy among casinos and slots manufacturers.
Industry lawyers responding to Williams’ Indiana lawsuit make a similar argument. “Williams gave in to his internal urges,” lawyers for Aztar casino say in court documents. “The harm was caused by Williams’ unilateral decision and action to engage in lawful gaming activities.”
Nelson Rose, a law professor at Whittier College in California and gambling law expert, sees little future in lawsuits modeled after tobacco litigation.
“First tobacco is legal unless the government makes it illegal. Gambling is the opposite,” Rose said. “Gambling is illegal unless the government makes it legal. Where you have legal gambling the government has weighed all the costs and benefits and decided that this is OK.”
“But,” Rose added, “I think there is an interesting question about whether the new machines are getting so complicated and the payoff systems are so obscure that players don’t know what they are doing.”
Poulos, who did not respond to repeated requests for an interview, has described himself in court depositions as someone who was “fairly successful in most forms of wagering” - until he encountered slot machines and video poker machines.
“It really struck me once in the late ’80s that something wasn’t right about this,” Poulos said in a deposition. “In 1990 I was sitting at a video poker machine. Twelve [losing] hands in a row I had … I probably said to myself, `I should sue these bastards because they’re cheating me.
