Perched on a balcony in “Romeo and Juliet,” the heroine of that Shakespearean tragedy utters words that have resonated through the centuries: “What’s in a name? That which we call a rose
By any other name would smell as sweet.”
Juliet goes on to tell the rapt audience: “When it comes to unregulated gaming, why do we use such anodyne words as ‘skill’ or ‘sweepstakes’ to describe games that are, at their core, a form of gambling, albeit an unregulated, unlicensed form?”
I confess that Juliet never mouthed that last part, and Shakespeare’s quill never put them on parchment. Yet, while I fail at my longstanding quest to bring the Bard into the 21st century, I stand by my position – and that of my colleagues at Spectrum Gaming Group – that all stakeholders in gaming have grouped highly questionable activities into categories that do not adequately or accurately describe their core business model. Those businesses that encourage players to risk real money in the hope of winning even more money are a form of gambling. Full stop.
Speaking before a powerful audience of elected and appointed law-enforcement officials at a recent meeting of the Attorney General Alliance, I began with a piece of advice: When describing “skill” slot machines, be sure to put quotation marks around “skill.” If you are verbalizing the word, use your fingers to indicate quotation marks.
Why? Those descriptive words are already in the industry’s lexicon, reflecting how those of us who focus on these issues have come to recognize such games. While the word “skill” may reflect how such slot machines are known, it does not reflect what they are. Quite similarly, in the digital world, we categorize unregulated, unlicensed sites under the broad heading of “sweepstakes” despite the reality that, when some such sites ask visitors to part with money to take a chance at winning more, they are in the gambling business, and are not in the same category as Publishers Clearing House, McDonald’s or other quite legitimate sweepstakes providers.
So, we raise our air quotes in a decidedly quixotic quest to help stakeholders distinguish between the legitimate operations and their less-than-legitimate brethren.
Such efforts are no match for the power that the words already possess. When stakeholders such as legislators, regulators, retailers or the media hear a word like “skill” or “sweepstakes,” they do not assume a questionable, underlying activity. Rather, they assume such activities are somewhat innocuous, and that assumption puts other stakeholders such as licensed gaming operators as well as their investors and suppliers at an immediate disadvantage. That latter group must make a case that is not readily apparent, but poses far greater risks.
The growing presence of unregulated, unlicensed, untested games in the physical and digital world presents a very real threat to those who have hitherto played by the rules, who have staked significant capital on the assumption that lawmakers had already determined the parameters as to the number and locations of licenses.
That threat – the result of devalued licensure – leads to less capital investment in physical facilities, since the returns on such investments would be lower in the face of less certainty and greater competition. Institutional investors in particular would also raise questions as to the potential returns on their dollars.
Such uncertainty leads to fewer planned hires, as well as reductions in planned purchases of goods and services from suppliers, including local small businesses. It also inevitably reduces the fiscal benefits of gaming, starting with lower taxes on gross gaming revenue, as well as reductions in sales taxes, and taxes related to employment.
The easy answer for policymakers who must wrestle with the challenges of an installed base of such machines is simply to license those machines and their owners, generating some increase in GGR taxes.
In this instance, the easiest response is arguably the worst response. Gaming licensure over the past half century – starting with the adoption of the New Jersey Casino Control Act in 1977 – rests on the core principle that a gaming license is a privilege granted to those who have demonstrated they possess the requisite good character, honesty and integrity.
Adherence to that principle in state after state has led to public confidence in the integrity of licensed gaming. Bad actors – particularly those who previously operated outside the boundaries of licensure – have not been welcome. In other words, licensure must precede operations, not follow it.
Beyond undermining public confidence in licensed gaming, legislators and regulators must consider another longstanding principle: Elected and appointed officials in each state bear the responsibility of establishing and carrying out their state’s respective gaming policies.
Such policies could include urban redevelopment, employment growth, tourism expansion and a range of other laudable goals. Licensing those who were previously unlicensed simply because they are already in place effectively means that policymakers have abdicated their central role. They would no longer be setting the gaming policy in their state.
As Shakespeare might have noted, lawmakers need to look beyond words such as “sweepstakes” and “skill” as they grapple with this tangled and difficult issue. The proper response is to make the commitment needed to protect the public interest and maintain the integrity of gaming.
Government agencies such as the Michigan Gaming Control Board have already begun the process of issuing cease-and-desist orders on “sweepstakes” operators that operate outside the bounds of legal, authorized gaming. It can be done, and the will can be summoned.
To quote Shakespeare once more: “The game’s afoot.” All that is required is that the games meet proven standards of integrity.
