Tuesday, July 17, 2018
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Video slots good for bottom line but costly for compulsive gamblers
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This one cent video slot machine at Grand Casino Hinckley is typical of a trend in casinos toward machines that offer players the chance to make multiple bets. (MPR Photo/ Mark Zdechlik)
Minnesota lawmakers are debating whether the state should allow 3,000 video lottery terminals at Canterbury Park in Shakopee or a new casino in partnership with three northern Minnesota Indian tribes that would have 4,000 slot machines. So far, six states have turned to video slots over the past 15 years and they've made billions doing it. Why are slot machines so popular with gamblers and what problems might more slots create?

St. Paul, Minn. — In the White Bear Lake K-Mart parking lot along I-694 Kyle Risvold waits with his dad and brother for a free bus ride to Grand Casino Hinckley.

When he gets there, Risvold will not take his chances with blackjack and other so-called "games of skill." Instead, he says he'll hit the slot machines.

"I like to play the nickels and the quarters," Risvold says. "I don't really get into the big machines because I don't spend that much money up there."

Like Risvold, the vast majority of casino gamblers choose slot machines over any of the other games. Accordingly, slot revenue easily accounts for the majority of any casino's bottom-line profit.

"They're just fun to play. That's all," explains Risvold, who says he makes the trip to a casino only about twice a year. He says he usually parlays the roughly $30 he gambles with into $50 or $60.

As the Risvolds wait for the Grand Casino Hinckley shuttle, a large coach bound for Mystic Lake Casino in Shakopee pulls into the K-Mart lot.

For slot fans Minnesota offers a lot of choices. According to tribal advertising, there are more than 20,000 slot machines at the 18 Indian-run casinos in the state.

There are about 2,100 hundred slots at Grand Casino Hinckley. Robert Allen, who runs slot operations for the Mille Lacs Band of Ojibwe's two casinos, says slots are the biggest draw.

"Slots are what people are really interested in," he says.

Since their introduction in the 1890's, slot machines have evolved from coin-operated mechanical devices to high-tech video games. They're controlled by computers which randomly generate play while controlling the odds.

Until recently quarters were king in slot play. Now so-called "penny" machines are sweeping the industry. On the casino floor in Hinckley, Allen stands in front of a trio of "one-cent" slots.

"These games here would kind of represent a trend that we're seeing in the market which is expanded number of lines and a lower denomination machine," Allen says. Unlike traditional slot machines, video penny slots offer a large number of chances to win or lose for every computer-generated-spin. The more money you put in, the more opportunities you have to win.

"These games in particular are penny slots and they have 20 lines. So the games, because of the line count, have a higher payback or hit frequency, and the players really like that. So on every spin you generally see that you get something," says Allen.

In essence every time you play the machine you have the option, depending on how much money you spend, of betting on many different payouts.

The irony is that players can easily bet a lot more on any one play on a "penny" machine than they could on many of the old 25 cent slots.

On this particular penny machine, a player can bet as much as $2 per spin. Across the room the limit on two-cent machines is $4 per turn. By changing computer programs, casinos can dramatically increase those maximums.

If the state gets into the video lottery business with machines at Canterbury Park or at a new metro area tribal casino, Minnesota Lottery Director Clint Harris says the lottery terminals will look and function like slot machines. Harris declines to offer any opinion about the merits of the various gambling proposals. He says his office can handle whatever comes out of the Legislature.

"Both the state-tribal proposal and the Canterbury proposal -- the lottery's role is basically the same," Harris says. "The lottery would have a central system and we would own or lease the machines and provide the serious maintenance of the machines if big things go bad."

In 1989 South Dakota ramped up the nation's first video lottery. The South Dakota Lottery currently operates more than 8,300 video slots in bars.

Harris came to Minnesota last fall from the South Dakota Lottery where he was responsible for oversight of those machines. Pawlenty administration officials say the governor decided to hire Harris before Pawlenty made plans to propose more gambling.

Harris says using a central computer to link numerous remote terminals is nothing new to the Minnesota Lottery. He says the technology behind video lottery networks is the same whether there are 100 or several thousand machines.

"The central system component is something we already do. We have contracts with vendors to run our on-line games and the validation and accounting of our instant games. We already do that now," explains Harris.

There's little disputing slot machines are practically guaranteed money makers. Estimates of just how much a single machine can bring over a year vary widely from region to region. Minnesota's Indian tribes won't say how much they make from their 20,000 slots.

It's a lot of money, but I don't think it's free money.
- Compulsive gambling expert Dr. Robert Breen

The Minnesota Lottery estimates in a metro area casino each slot machine would clear just under $300 a day. That's about $430 million per year from the governor's casino proposal. The Canterbury park option envisions annual slot revenue of more than half that. Factoring in the costs of operations and profit sharing, the state general fund would end up with about $100 million a year from the Canterbery proposal. It would get about $120 million annually from a state-tribal metro-area casino.

Psychologist and gambling addiction counselor Bob Breen, who runs the Rhode Island Gambling Treatment Program, says all of the money comes with significant social costs. "It's a lot of money, but I don't think it's free money," insists Breen.

Breen has studied the link between compulsive gambling and slot machines. He says based on interviews with numerous addicts, he's determined the rapid pace of video slots can led to gambling addiction much more quickly than any other forms of gambling.

"You can sit down in front of a video slot machine, and by pushing a button you can play the maximum amount of coins. And depending on the machine it can be a lot of money. And you can do that every three seconds and receive an outcome win or lose, and do it again," Breen says. "So it's fast, fast, fast without a chance to think about what you're doing."

Breen's research suggests people with a propensity for compulsive gambling generally get addicted to slots in less than one year. He found it usually takes more than twice that long for people to become addicted scratch-off lottery games and more than three times as long to get hooked on table games, like blackjack.

He says only about 2 percent of the population is addicted to gambling. But separate scientific studies of thousands of people Canada and Australia found compulsive gamblers account for as much as half of video lottery revenue in those countries.

In other words, much of the big money video slots are bringing governments elsewhere, could be coming from people who are unable to control their gambling.

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