#162 © Copyright 2010, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose, www.GamblingAndTheLaw.com

“I’m a man who can’t say no.”

Billy Joel, “Easy Money”

How far should governments go in protecting casino patrons from themselves?

In Pennsylvania, there’s talk of resurrecting 2007’s House Bill 783, which would require casinos to send statements each month to reward-card patrons, telling them how much they had won, or lost, gambling. In 2008, more than 60 members of the legislature signed on as co-sponsors.

In Australia and Nova Scotia, gamblers don’t have to wait. Some of the gaming devices there tell players how much money they have lost and how long they have been playing.

Machines of all types are being modified in the name of responsible gaming. ATMs are being removed from casino floors, VLTs are being slowed down, and Internet gaming sites are allowing players to set daily loss limits.

Even Nevada has decided that some devices are too enticing. In 1988 and 1989, Universal was ordered to retrofit 11,000 slot machines programmed to show near-miss jackpots on the payline. Regulators ruled that it was O.K. to have lots of winning symbols artificially bunched to appear above and below the payline. But players were being misled if the machine was programmed to show a winning symbol or two on the payline, when there should be only blanks.

Of course, all gambling requires near-misses. In fact, even after the Universal decision, it is O.K. in Nevada for a slot machine to have many jackpot symbols on the first two reels, and only one on the third reel, of a three-reel machine.

The distinction may make sense, at least with entirely mechanical slot machines. The theory is that a player could tell the true odds, by playing enough games. Of course, in this day of electro-mechanical or pure video gaming devices, it would probably take more than a lifetime to see all the combinations, particularly in a game with a separate bonus game, such as “Wheel of Fortune.”

But it is the job of regulators to draw lines, and they decided in Nevada that it was simply going too far to allow slot machines to show symbols on the payline that were not truly random. Players had to be protected from games that seemed more winnable than they actually were.

Lawmakers often dabble in social engineering when they are first discussing legalizing gambling. But this makes counter-productive restrictions the most difficult to change, because they are in statutes. It took years to eliminate the mandatory early morning closings of casinos in Atlantic City, the $500 loss limit in Missouri, and the four-hour cruises in Iowa, even when both operators and regulators called for changes.

Why would government agencies ask that player-protections be lifted? Because they did not work.

Closing casinos at 4:00 am weekdays, 6:00 am weekends, might have prevented Atlantic City patrons who had too little sleep, and too much to drink, from gambling. But it didn’t stop them from getting behind the wheel, and all at the same time.

Missouri’s $500 loss limit was almost impossible to enforce. In fact, it created a black market in gaming chips, with big losers willing to pay almost anything to buy chips from other players to remain in action.

My personal favorite “player-protection” was the four-hour cruise. I saw players split 10s at blackjack when they were told it was the last hand, just to get the most action. And whose idea was it that the best way to handle a compulsive gambler was to lock him in a riverboat casino for four hours, even when the boat was docked?

Governments have always acted to regulate participating in gambling, usually by making it illegal.

When gambling is made legal, the most common barrier is a minimum age to place a bet. The legal fiction is that everyone is incompetent the day before they turn 18, for most state lotteries, or 21, for most casinos. This fiction is irrebutable: An underage MIT cardcounter cannot go to court and prove he is completely competent to play blackjack.

The MIT would-be advantage player shows one of the major problems with player protections. Government draws an arbitrary line, because it would be too costly to hold hearings to decide each individual’s actual competence. A rule is created, which may protect a majority of the population, but harms a significant minority.

We know, for example, that many near-adults are completely competent, just as there are many people way past the age of majority who should not be allowed anywhere near a casino.

The danger with social engineering is that it is usually not being done by scientists, but rather by people with good intentions, but no actual knowledge.

Do players bet less after their slot machines have told them how much they had lost? The government of Nova Scotia conducted a study, which indicates this does work. But the study was done, in part, because there were reports that the same machines in Australia actually increased the amounts some players wagered, in attempts to break even.

The law of unintended consequences should warn all policy-makers to think through what else might happen if a player protection is created. The Pennsylvania proposals, for example, will probably help some borderline problem gamblers. But, think of the risks. I am sure that there will be increased domestic disputes, even violence, when wives and husbands open letters from casinos stating how much their spouses have lost gambling.

Internationally, the goal of most governments in the past was to import money won from foreigners, and export social problems.

Casinos often excluded local residents, requiring patrons to show their passports at the door. Countries in the Soviet bloc restricted play to West German deutsche marks, to squeeze this hard currency out of the underground economy and discourage all but the richest locals from gambling. Even dress codes acted as an efficient barrier to limit play to foreigners.

With the spread of casinos open to local residents, governments had to begin worrying about protecting their own citizens from gambling unwisely and too much.

One of the most restrictive regimes began in England in 1968. New casinos could only be opened if the proposed operator proved there was unmet demand. They were operated as private clubs; players had to register in person 48 hours in advance, before they were allowed to make a single bet. Casinos could have only two — literally two — slot machines.

Casinos could not advertise, or extend credit. They could take checks, and they were required to process them through the patrons’ banks, even if the player won enough to redeem them. This was done with the express purpose of embarrassing players for writing lots of checks made out to casinos, as if bankers read their customers’ checks.

The regulations went so far as to prevent players from making bets that the government thought was unwise. For example, players could only double down at blackjack if their first two cards totaled ten or eleven. Computer studies later showed this hurt card-counters who knew when to double on other hands, like soft 17.

The People’s Republic of China has gone the furthest in imposing regulations on casino patrons. The casinos of Southeast Asia are probably the only operators in the world whose fortunes depend more on the restrictions imposed on their customers than on rules from their own governments.

The PRC changed its rules in 2003, allowing mainlanders to travel to Macau without having to be part of a group. The first western-owned casino, the Sands Macau, opened in 2004, and took only eight months to recover its $260 million cost.

But, in 2007, residents of Guandong, the province bordering Macau, were suddenly limited to one visit every three months. The impact was immediate, on the 250,000 people who were crossing the Zhuhai-Macau border every day, and on the casinos. I was teaching Gaming Law at the University of Macau and had a student who lost her job: She had been in charge of a casino’s frequent visitor program.

No one knows exactly why the PRC is continuously changing its visa requirements for visits to Macau. Since China has practically no programs for compulsive gamblers, protecting casino patrons from themselves is probably far down on its lists of reasons.

It may be that, having allowed mainlanders to easily gamble in Macau, the Beijing government is embarrassed by reports of increased embezzling by government officials.

So this may be an unique case in which a government is acting to protect the government from itself.

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© Copyright 2010. Professor I Nelson Rose is recognized as one of the world’s leading experts on gambling law, and is a consultant and expert witness for governments and industry. His latest books, Internet Gaming Law (2nd edition just published), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.