Memorandum from the American Gaming Association
(DGB 156)
1. REGULATORY
REGIME AND
TAXATION
1.1 Any jurisdiction considering expansion
of legalized gambling should develop policies that will provide
for adequate regulatory controls and an equitable tax structure.
The decisions you make today in these key areas will have a far-reaching
impact, determining the long-term economic and social benefits
that will be derived from gaming.
1.2 It's critical to put in place an extensive
regulatory regime that will ensure fairness of the games, prevent
criminal activities and determine the scope of the industry. Adequate
regulatory controls are important to ensure public confidence
in the integrity of this industry.
1.3 Regulatory controls are important in
helping to fulfill specific economic objectives. If operators
have the incentives to invest in hotels, restaurants and other
nongaming amenities, the final product will maximize job creation,
tax revenue and economic development.
1.4 The gaming tax rate set by policy-makers
is critical because high tax rates suppress capital investment
and other expenditures, limiting jobs as well as revenue, thus
reducing the potential tax revenue. While gaming is a privileged
industry and therefore can be taxed at a higher rate than other
industries, a careful balance needs to be achieved.
2. DEPENDENCE
ON SLOT
MACHINES
2.1 In the United States, the number of
slot machines per facility varies by jurisdiction, influenced
by the size of the market, the amount of competition, the individual
business model of a casino company and many other factors. (See
enclosed chart "Statistics of Various US Casinos and Markets"
for a comparison of square footage, number of games, hotel rooms
and other data.)
2.2 In Nevada, there is a wide range in
the number of gaming devices per property, but the large Strip
casinos have between 1,500 and 3,300 slot machines, with most
in the neighborhood of 2,000. Statewide, slots make up approximately
two-thirds of overall gaming win. At large Strip properties, however,
the ratio of slot revenue to overall gaming revenue is far lower—most
likely among the lowest nationwide. For example, at the Strip
properties owned by MGM MIRAGE, the average contribution of slot
revenue to total gaming revenue is in the low 40% range, with
gaming revenue contributing to 49% of the company's total revenues.
2.3 In jurisdictions outside of Nevada,
slots make up a greater share of overall gaming revenue. In Atlantic
City, NJ, where casinos have anywhere from 1,700 to 4,800 slot
machines, slots make up an average of about 75% of overall gaming
win. In smaller riverboat markets, the ratio of slot win to overall
gaming win tends to be slightly higher, with slot revenues accounting
for upwards of 80% of overall gaming revenue. For example, statewide
slot revenues in Illinois constituted about 85% of total gaming
revenues.
2.4 The Joint Committee has expressed concerns
relative to the minimum size criteria of large casinos and the
potential for the uncontrolled overexpansion of gaming machines.
The AGA, on behalf of its member company operators Ameristar Casinos,
Caesars Entertainment, Harrah's Entertainment, Isle of Capri Casinos
and MGM MIRAGE, has enclosed a set of guidelines that may address
those concerns, while encouraging maximum investment and economic
development.
3. SLOT MACHINES
AND DISORDERED
GAMBLING
3.1 If problem or pathological gambling
behavior were a necessary consequence of gaming machines, then
everyone who engaged in this type of gaming activity would become
addicted. But the fact of the matter is, and the majority of the
research and clinical community would concur, that disordered
gambling is much more a question of individual physiology and
psychology as opposed to being a condition that is a function
of the consequences of engaging in a particular type of gaming
activity.
3.2 Dr. Howard Shaffer, a leading researcher
in the addictions field and director of the Division on Addictions
at Harvard Medical School, addressed the question of whether certain
slot machines are more addictive than others: "Addictive
behaviors represent complex and confusing patterns of human activity.
These behaviors can include alcohol and other drug abuse, some
eating disorders, pathological gambling, excessive sexual behaviors,
and a variety of other intemperate behavior patterns. The most
common conceptual error committed by clinicians, researchers and
public policy-makers is to think that addiction resides in the
object of addiction. Conventional wisdom, for example, refers
to "addictive drugs" or "addictive gambling."
However, addiction is not the product of a substance, game or
technology, though each of these things has the capacity to influence
human experience. Rather, experience is the currency of addiction.
Therefore, when a particular pattern of behavior reliably and
robustly can change emotional experience, the potential for addiction
emerges. Addiction results from the relationship between a person
and the object of their addiction; it is not simply the result
of an object's attributes. Addiction represents an intemperate
relationship with an activity that has adverse biological, social,
or psychological consequences for the person engaging in these
behaviors." (Personal correspondence, 4 September 2002)
3.3 Higher jackpots do not impact the rate
of disordered gambling. While win per day per machine in the United
States on wide-area progressives or linked machines may be higher
than win per stand-alone machine, this is because people are more
naturally inclined toward winning larger amounts of money without
having to risk more money on larger denomination machines. The
same principles hold true with the lottery in the United States:
As multistate Powerball jackpots grow, more and more individuals
want to try their luck winning the big prize. But, as a sizeable
amount of the research has shown, participation rates do not necessarily
correspond to disordered gambling rates.
3.4 Research published in 2001 in Psychology
of Addictive Behaviors examined whether the possibility and/or
achievement of "big wins" impacts gambling behavior.
The two researchers who published the work studied the behavior
of 180 slot machine participants and found that the occurrence
of big wins was not significantly related to how long they continued
to play afterwards (each individual was free to gamble as long
as he or she wished) and thus how much they continued to wager.
(Kassinove, J I & Schare, M L (2001). Effects of the "near
miss" and the "big win" on persistence at slot
machine gambling. Psychology of Addictive Behaviors, 15(2),
155-158.)
3.5 A significant body of research contradicts
the common assumption that increased gambling opportunities lead
to higher levels of pathological gambling. Government-sponsored
studies in Connecticut, Louisiana, South Dakota, Michigan, Minnesota,
Oregon, Texas and Washington, as well as in New Zealand, British
Columbia and South Africa, have shown that the prevalence of pathological
gambling has either remained stable or even decreased despite
the introduction of new gambling facilities.
3.6 An estimated 0.77% of Americans were
found to be "probable compulsive gamblers" by the 1976
Commission on the Review of the National Policy Toward Gambling.
Twenty-five years later, in 1999, after the largest expansion
of gambling in U.S. history, another federal commission estimated
the number at 0.6%—despite the fact that during the period
between those surveys the percentage of Americans gambling in
a casino more than doubled and the percentage playing the lottery
doubled.
3.7 A commission comprised primarily of
representatives from the public sector issued a report in 2000
with similar findings. It found that: ". . . there is no
solid basis for concluding that the wider legalization of gambling,
which has cut into illegal gambling and friendly betting, has
caused a concomitant increase in pathological gambling. In fact,
it appears that pathological gambling is quite rare within the
general population, (and) it does not appear to be increasing
in frequency."
4. IMPACT OF
CASINO INTRODUCTION
ON THE
LOTTERY
4.1 A 2002 report on expanded legalized
gaming prepared for the governor of Massachusetts evaluated how
the introduction of casinos has affected state lotteries throughout
the United States. According to the report, "Different studies
have suggested different effects of expansion of legalized gambling,
ranging from no significant substitution between lotteries and
casino and slot machine gambling, to substitution only for certain
types of lottery games, to decreasing the rate of lotteries' growth.
In no instance, however, has a study found sustained decreases
in lottery sales following the introduction of other forms of
legalized gambling."
4.2 A 1996 report commissioned by the Massachusetts
Lottery concluded the following: "Alternate gambling activities
appear to impact traditional lottery game sales. But, the impact
is subtle. These activities do not cause lottery sales to decrease;
only a minority of traditional lottery games in a minority of
states had decreasing sales trends. Rather, casinos and devices
appear to suppress or inhibit the growth of traditional lottery
sales."
4.3 A 1999 analysis published in the Gaming
Law Review found that "despite the protestations of gambling
opponents, from the perspective of gambling generated revenue,
the substitution and saturation questions surrounding the impact
of commercial casinos and state lotteries have proven to not be
valid. In a majority of states lottery generated revenues have
actually increased since the introduction of commercial casino
activity."
4.4 The bottom line is that in every state
with a pre-existing lottery where casinos or slots at the tracks
have been established, publicly available records indicate that
total gambling revenues to the state have significantly increased.
For example, in Illinois, the lottery generated $583 million in
government revenue during 1990, the year prior to the introduction
of riverboat casino gambling. In 2001, however, total state revenue
from the lottery plus riverboat gaming was $959 million. In Missouri,
the lottery generated $108 million for the state prior to the
introduction of casino gambling in FY1993; in the most recent
year, both forms of gaming contributed $364 million to the state.
5. RESPONSIBLE
GAMING CODE
OF CONDUCT
5.1 The importance of tight regulatory controls
cannot be underestimated. To maintain the integrity of our business,
it is our view that regulations should establish minimum industrywide
standards. As in the United States, companies often will not just
meet those standards but exceed them.
5.2 The members of my organization, the
American Gaming Association, recently adopted a Code of Conduct
for Responsible Gaming, which commits our members to a comprehensive,
industrywide approach to promoting responsible gaming. (A copy
of the code is enclosed.) The code encompasses all aspects of
member-company business, from employee assistance and training
to alcohol service, advertising and marketing. It also details
the commitment of AGA members to continue support for research
initiatives and public awareness activities surrounding responsible
gaming and underage gambling.
5.3 While each of our member companies has,
for many years, taken individual steps to address these issues,
this code represents a pledge to our patrons and our employees
that we will make responsible gaming an integral part of our industry's
operations across the United States. The code details a general
national program to promote responsible gaming but also contemplates
that companies can go beyond the scope of its provisions if desired
or required by state gaming laws.
5.4 Compliance with the code is not a legal
requirement; a membership organization like ours cannot impose
its will unilaterally. However, in adopting this code our members
have publicly committed to the highest level of ethical and responsible
policies and procedures concerning responsible gaming. Because
of this public commitment, we have every confidence that the code
will be implemented by each of our members.
March 2004
STATISTICS OF VARIOUS US CASINOS AND MARKETS
(2001)*
INDIVIDUAL CASINOS
Property |
Location | Casino
Sq Ft |
Number
of Hotel
Rooms
| Convention Sq Ft
| Casino Sq Ft Per Position** | Number of Slots
| Number
of Tables | Number of Slots Per Table
|
| Foxwoods*** | Connecticut |
315,310 | 1,916 | 55,000
| 51 | Total Positions=6,178
| 18 |
| Beau Rivage | Biloxi, MS |
71,669 | 1,780 | 50,000
| 26 | 2,277 | 88
| 26 |
| Bellagio | Las Vegas (Strip) |
156,257 | 3,005 | 125,000
| 45 | 2,440 | 178
| 24 |
| Bally's | Atlantic City, NJ |
163,673 | 1,254 | 50,000
| 31 | 4,313 | 160
| 27 |
| Argosy Riverside | Kansas City, MO
| 36,000 | NA | 14,000
| 28 | 1,115 | 32
| 34 |
| |
| | | |
| | |
MARKET AVERAGES
Atlantic City (12 casinos) | 101,456
| 1,032 | 42,771 | 27
| 3,089 | 107 | 29
|
| Las Vegas Strip (29 casinos) | 81,644
| 2,485 | 98,768 | 37
| 1,695 | 84 | 20
|
| Mississippi Gulf Coast (12 casinos) | 58,520
| 597 | 23,550 | 32
| 1,554 | 51 | 31
|
| Reno/Sparks, NV (18 casinos) | 46,183
| 794 | 28,521 | 31
| 1206 | 44 | 27
|
| Las Vegas Downtown (15 casinos) | 35,369
| 668 | 5,507 | 28
| 976 | 32 | 32
|
| |
| | | |
| |
*
2001 is the most recently available data.
**
Casino square feet per position is a figure
that is used to show how open or crowded a casino floor is. In
this figure, a "position" is either a slot machine or
a spot at a table game. Most table games have six positions and
all slots equal one position.
***
Foxwoods is the largest casino in the world
and not typical of US casinos.
****
Includes 925 room expansion and other new
facilities (open September 2004). This should not be used for
comparative purposes.
AGA Proposed Guidelines for Minimum Size Criteria
The Joint Committee on the Draft Gambling Bill has expressed
concerns relative to the minimum size criteria of large casinos
and the potential for the uncontrolled overexpansion of gaming
machines. The American Gaming Association, on behalf of Ameristar
Casinos, Caesars Entertainment, Harrah's Entertainment, Isle of
Capri Casinos and MGM MIRAGE, has therefore enclosed a set of
guidelines that may address these concerns.
These proposed guidelines depart from a table-to-machine
ratio alone (which we would support for smaller venues) and, instead,
endeavour to provide incentives for developers by incrementally
raising machine-to-table ratios only as investment in nongaming
areas increases. If adopted, these guidelines would encourage
destination entertainment venues with maximum levels of investment
in nongaming entertainment and leisure amenities.
In developing these guidelines, we have utilised the benchmark
of 10,000 square feet and 40 table games, as this initial formula
has been suggested as the minimum size for a "large"
casino. For casinos with up to 10,000 square feet of table gaming
area or less than 40 tables—"small" casinos—we
support the current proposed ratio of three machines per table.
We have assumed the following definitions:
1. Table game—a gaming table that is manned
and available for use for a minimum of 50 hours per month.
2. Gaming area—the area in which casino
table games and casino machines can be played, including related
circulation and cashier/redemption areas.
3. Nongaming area—all other areas other
than the gaming area, including but not limited to food, beverage,
entertainment, back-of-house, bingo and betting areas, but excluding
parking areas, both enclosed and open.
Our proposal is as follows:
A "large" casino with a table gaming area of not
less than 10,000 square feet and a minimum of 40 table games:
— Would be permitted to have a machine gaming area
of up to three times the table gaming area (together defined as
the "gaming area"), provided that the nongaming area
was not less than 50% of the gaming area.
— Would be permitted to have a machine gaming area
of up to four times the table gaming area, provided that the nongaming
area was not less than 100% of the gaming area.
— Would be permitted to have an unlimited machine
gaming area, provided that the nongaming area was not less than
200% of the gaming area.
The following example illustrates the minimum space allocations
for casinos operating under these guidelines.
| At Three Multiple
Sq Ft
| At Four Multiple
Sq Ft | Unlimited
Sq Ft
|
Table game area | 10,000
| 10,000 | 10,000 |
| Slot ratio | x 3 | x 4
| Unlimited |
| Slot machine area | 30,000 |
40,000 | Unlimited |
| Total gaming area | 40,000 |
50,000 | Unlimited |
| Nongaming ratio | x 50% |
x 100% | x 200% |
| Nongaming area | 20,000 |
50,000 | Unlimited |
| Total area to be developed | 60,000
| 100,000 | Unlimited |
| |
| |
Based on an area allowance of 250 square feet per table and
30 square feet per slot machine, the guidelines would give rise
to casinos with the following gaming components:
| At Three Multiple
| At Four Multiple |
| Table games | 40 | 40
|
| Slot machines | 1,000 | 1,333
|
| Slot-to-table ratio | 25.0 |
33.3 |
| |
|
These ratios are similar to those from most existing overseas
jurisdictions where there have been significant levels of investment
(see Section 5 below). Investment in the majority of these casinos
was in excess of US$100 million (and many significantly higher),
and we do not believe that any of these casinos have a nongaming
area that would not meet the nongaming ratios proposed above.
We recognize that existing gaming licensees may be disadvantaged
in the future if they are immediately required to comply with
the proposal set out above, and we would therefore propose that
licensees in operation at the time that the gambling bill is enacted
be grandfathered in and not be initially subject to the proposed
formula.
SELECTED LARGE-SCALE
CASINO STATISTICS
On the following page, we list some relevant statistics from
existing large-scale casino developments.
| Property Name | Casino
Space
(sq ft)
| Number
Slots | Number
Tables
| Slot-to-
table
Ratio | Total Main
Facility Space
(sq ft)[1]
|
USA
Medium-sized Las Vegas Strip
New York-New York
| 84,000 | 1,955 | 80
| 24.4 | >500,000 |
| Treasure Island | 84,000 |
1,949 | 75 | 26.0 |
>500,000 |
| Monte Carlo | 102,000 | 1,914
| 74 | 25.9 | >500,000
|
Las Vegas Local Market
Green Valley Ranch
| 110,000 | 2,212 | 49
| 45.1 | 435,000 |
| Sunset Station | 110,000 |
2,847 | 53 | 53.7 |
428,000 |
| Suncoast | 92,000 | 2,350
| 53 | 44.3 | >400,000
|
Detroit
MGM Grand Detroit |
75,000 | 2,694 | 80
| 33.7 | >500,000 |
| Motor City | 75,000 | 2,539
| 106 | 24.0 | >200,000
|
Atlantic City
Sands | 77,000
| 2,043 | 79 | 25.9
| >200,000 |
| Atlantic City Hilton | 60,000
| 2,004 | 85 | 23.6
| >200,000 |
California
Harrah's Rincon Casino, San Diego
| 56,000 | 1,600 | 35
| 45.7 | >150,000 |
| Spa Resort & Casino, Palm Springs | 40,000
| 1,000 | 30 | 33.3
| 131,000 |
Mississippi
Beau Rivage |
80,000 | 2,262 | 90
| 25.1 | >300,000 |
| Casino Magic Biloxi | 49,000 |
1,372 | 31 | 44.3 |
>150,000 |
South Africa
Montecasino, Johannesburg
| 91,000 | 1,700 | 70
| 24.3 | >500,000 |
| Caesars Gauteng, Johannesburg | 56,000
| 1,500 | 50 | 30.0
| >200,000 |
| Suncoast, Durban | 75,000 |
1,250 | 50 | 25.0 |
>300,000 |
Australia[2]
Star City, Sydney
| 104,000 | 1,500 | 200
| 7.5 | >500,000 |
| Conrad Treasury Casino Hotel, Brisbane | 71,000
| 1,321 | 88 | 15.0
| >150,000 |
France/Switzerland [3]
Casino Le Lyon Vert, La Tour de Salvagny
| 16,000 | 400 | 15
| 26.7 | >50,000 |
| Casino de Divonnes les Bains | 14,000
| 355 | 13 | 27.3
| >100,000 |
| Casino Barriere de Montreaux | 14,000
| 310 | 20 | 15.5
| >100,000 |
| |
| | | |
1
Main facility square footages are estimates only and do not include
the additional nongaming space of hotel towers and parking. The
nongaming space also typically includes a number of restaurants,
bars, lounges and entertainment theatres. Back
2
Lower slot to table game ratio is due to the proliferation of
machines in small clubs in the Australian market. In New South
Wales there are approximately 100,000 gaming machines in clubs
and hotels with a population of 6.4 million. In Brisbane there
are approximately 15,000 machines in clubs and hotels with a population
of 1.6 million. This is not a feature of any other market. Back
3
Square footages estimated. Back
|
