The Big Problem With A Small Number: 0.000041%

A proposed reduction in money dedicated to problem gambling in Nevada leaves it with such a small percentage compared to gross gaming revenues that it helps to see it written down. And that number also represents a converse threat to the gaming industry, not only in Nevada, but across the U.S. if operators and manufacturers don’t wake up and do the right thing, says gaming industry conscience Richard Schuetz.

The Big Problem With A Small Number: 0.000041%

Sometimes words are not enough.—Lemony Snicket, The Ersatz Elevator

If one takes the state of Nevada’s gross gaming revenue results for the last reported full-year, the number is basically $12 billion. If one takes the governor of Nevada’s budget proposal for the state’s problem gambling fund, the number is $500,000. If this budget number is divided by the gross gaming revenue number, one gets the number that is the title of this article. If one wants to look at this in percentage terms, this means the state is willing to provide 41 ten-thousandths of 1 percent of the last known gross gaming revenues to help those members of its community who are adversely affected by gambling. It is important to understand that this is not a financial act the governor is performing, but rather an act of cruelty. It is also not smart.

One relevant fact about this number is it will crush the program. Another relevant fact is that the number was not always this small. Governor Steve Sisolak, who seems to specialize in half-way solutions to things, didn’t have the strength of character to simply say he could care less about the people who are harmed by gambling and eliminate the program entirely, but rather he offered what amounts to a de facto killing of the program by reducing it by 75 percent.

In 2005, the Nevada legislature passed a bill that redirected funds from a slot tax to Problem Gambling Services and this was codified in NRS 458A. Governor Sisolak appears to not be interested in what the legislature wanted and is working to redirect these funds elsewhere. This wasn’t a particularly clever move for the current governor to make, for his predecessor, Brian Sandoval, made the exact same move during the Great Recession. It seems that starving problem gambling of funds is a bi-partisan thing to do in Nevada, which does help us understand how that supposed Gold Standard jurisdiction operates.

Nevada actually is pretty lucky in that it is fundamentally a tourist market for gambling. This means that in the area of problem gambling, the state can export most of the damage and costs associated with gambling back to the state from where the visitor originated. It is as if Nevada is a factory on a river and can dump its waste into that river making it the problem of someone downstream, albeit the dumping is done at McCarran Airport or on the on-ramps of Interstate Highway15.

There are some people within the state, however, who are harmed by gambling, and while this is a small percentage of the population, the damage is real. Unfortunately, the past two governors have spoken clearly and what they have said is that they don’t care.

It does seem that there is some money available in the state. I would guess that both Governors Sisolak and Sandoval will find themselves sitting in skyboxes as someone’s guest in the new Allegiant Stadium in Las Vegas, built with $750 million in tax revenues generated in the state for a billionaire football team owner, and the price of the skybox would support a great problem gambling program. Maybe they could be the guest of the company who just had a CEO leave with more than $30 million, a company, I might add, that Sandoval joined one-day after Sisolak was inaugurated which gives new meaning to the concept of blazing through the revolving door. This firm’s CEO also saw that Sisolak received lots of campaign contributions. But all of that money is about politics and wealthy people and is apparently untouchable, whereas problem gambling dollars are expendable for they just save lives and work to improve the condition of people within the communities of Nevada.

In the 1970s, I spent several years working on a Ph.D. dissertation about the development of the regulatory apparatus within the state of Nevada, a building process that really starting in 1955. I learned of a great many people who fought hard in the state to legitimize the industry by building a viable regulatory entity. The primary goal of this action was to keep the federal government out, for the federal government, led by people like Robert Kennedy, Estes Kefauver, and the extraordinarily corrupt J. Edgar Hoover, was dead set on crushing the life out of the casino gambling industry in Nevada.

In the 1990s, I lived through the episode of where President Clinton decided he wanted to introduce a substantial and expensive welfare-reform program, but the Republican congress said he needed a funding source other than increasing the national debt. President Clinton came up with the idea of taxing the casinos. This threat to Nevada and other states was quashed and was the driving force behind the formation of the American Gaming Association, with Frank Fahrenkopf at its helm. This was also the event that set into motion the forces that resulted in the National Gambling Impact Study. The one thing that Mr. Fahrenkopf clearly understood was his first and foremost task was to keep the feds out of gambling, a task he performed brilliantly for almost 20 years, making him, in my opinion, one of the most important people in the entire history of gambling in the United States.

Unfortunately, the men and women who had the foresight to build an incredible regulatory apparatus in the state, and the visionary Frank Fahrenkopf, have moved away from the industry, leaving us with people who seem to have little idea as to what they are trying to accomplish, or why. If there was ever an open invitation to the federal government to jump into gambling it is now taking place under the leadership of Governor Sisolak and the industry that props him up. The federal motivation and justification would be to protect those who have suffered harm from gambling and who have been left discarded by the state of Nevada.

Having said that, I really do not blame Governor Sisolak for crafting this gold-plated invitation, for he is but a politician and I have very low expectations of politicians. What bothers me is the foolishness of the casino operators. This 75 percent reduction in problem gambling funding is peanuts in the overall scheme of things, yet look at what is at risk. I would like you all to glance across the pond and look at a gambling industry in the United Kingdom that is being brutalized by the press and the government and note that the fuel feeding that fire is the neglect by the industry of those suffering from gambling harm. Take a real good look at the UK, for this type of stupidity by the industry across the pond seems to be contagious, and I think Nevada is becoming infected.

Articles by Author: Richard Schuetz

Richard Schuetz started dealing blackjack for Bill Harrah 47 years ago, and has traveled the world as a casino executive, educator and regulator. He is sincerely appreciative of the help he received from his friends and colleagues throughout the gaming world in developing this article, understanding that any and all errors are his own.