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Cash In: Vote Approves Slot Machines

November 12, 2008
Slot Machines Are Here At Last, But Who Will Strike It Rich?

By Michael Anft

Vegas, in Your Backyard?

A state referendum to allow slot machine gambling passed by a 59 to 41 percent margin on Nov. 4. In the next two to three years, winning bidders for slots licenses will build gambling parlors in these five areas:

Allegany County, at Rocky Gap State Park: 1,500 machines

Anne Arundel County, near or at Laurel Racecourse: 4,750 machines

Baltimore City, in a former industrial area near Russell Street and the Camden Yards complex: 3,750 machines

Cecil County, most likely near Perryville: 2,500 machines. Penn National Gaming, owner of several racecourses, including Charles Town Races and Slots, will likely be one of the bidders.

Worcester County, near Ocean City, and most likely at the Ocean Downs harness racing facility, owned by track owner and horseman William Rickman: 2,500 machines
The voting public has spoken. It has deemed now to be the time for a bold, new player to rise up--a game-changer, a once-downtrodden dynamo--and stake its claim to the masses.

Yes, it’s time for slots.

After years of pushing for them, the horse racing industry, casino lobbyists, and politicians from several levels of government have gotten their wish: the imminence of 15,000 gleaming, chirping-like-R2D2 machines that work day and night to take money from strangers and convert it into gold that will line the pockets of “racino” owners and political administrations too cowardly to raise the taxes necessary to run a civil society. (You can bet those two constituencies were dancing on the streets late on Nov. 4—figuratively at least—just as much as Barack Obama’s were.)

We know those folks will make out on the deal, but what about your average player, the gambler with an appetite for a taste of the strange, for some new action to spice up a gaming scene that has become a dull, slow trot around the state’s decrepit racetracks, or a long, glacial line for lottery tickets that represent a better chance of getting struck by lightning than striking it rich?

To find out, I—a slots novice—and my friend, Sean—an inveterate gambler, but not quite an addict—decided to head 85 minutes west to Charles Town Races and Slots, home to the highest-grossing slots palace in the United States, and where machines have been force-fed bettors’ lucre for over a decade.

The faux glitz of the racino could not provide more of a contrast to West Virginia’s down-at-the-heels wildness, or the city of Charles Town’s utter, rundown-but-functioning aura. All of the ka-ching! is inside the gambling complex. With its thick, padded, brightly-patterned carpeting, banks of blinking and encircling casino lights, and plush rooms-with-a-motif (The OK Corral, Hollywood), the slots palace might as well be a meteor that smashed into the earth. It’s also a bit like an amusement park that features a gigantic good court and scads of people dressed in cartoon suits—but just one ride.

On the plus side for players, admission, parking, and soft drinks—there are machines built into the walls—at the meteor are free. Unlike what will happen in Maryland, where tobacco is verboten (but where you are will soon be encouraged to lose your shirt), ashtrays sit between each slot machine and alongside fake Ionic columns. Ladies in skirts, some hard-worn and others quite fetching (the ladies, not the skirts), fetch liquor from the bar for a price. You see some multi-tasking sinners here—drink in one hand, cigarette in the other, with a pinkie free for pushing the PLAY 3 CREDITS button.

Sean parks himself on a soft tan leatherette bar chair before I do, after carefully picking out the machine to which he will entrust a $20 bill. Immediately, we notice the difference between the legendary machines of yore, which are generic and functional, as you might expect, and the whippersnapper ones, which feature sometimes-absurd pop culture tie-ins. Machines modeled on the Village People, The Simpsons, Jeopardy!, and, somewhat improbably, Tabasco Sauce announce themselves with music or messages. Sean’s choice is the same basic size and configuration as all other machines, but is based on that mock-scary, goofy staple of ‘70s reruns, The Munsters. It plays the series theme song.

Slot machine manufacturers pay millions of dollars a year to get the rights to likenesses of popcult figures in hopes of enticing new or younger players to complement the gads of retirees and alienated, past-midlife, working-class wage slaves who flock to these places. Considering that each machine costs $10,000 or more, you can’t feel sorry for companies that pay to plaster images of Vanna White all over their machines. (Or for casino owners, who make anywhere from $250-$400 per machine per day. At that rate, they can pay off a high-end machine, at about $15,000, in a minimum of two months.)

But there’s another notable difference. Slot machines once had holes for coins and levers on the side to pull in order to get the action rolling; the new ones don’t. Today’s one-armed bandits have no arms. The new era of slot machines means no slots. Instead, Sean’s $20 bill is fed into the tray of a 25-cent machine, meaning he gets 80 quarters worth of credits to play with. He can cash out anytime he wants, with any number of credits still in his account. But make no mistake about it. Without the self-limiting aspect of having to put one coin in a slot for each play, it’s all too easy to keep pushing the buttons that determine how many credits you’re betting, as well as the one labeled SPIN REELS or some variation on it.

The folks who build the machines—known to Maryland government officials as “video lottery terminals”—understand this. The psychological concept called “intermittent reward syndrome” was tested on pigeons in the middle of the 20th Century. One group of birds was given bits of food every time they pushed a lever. A second group would push levers as well, but get food only once in a while. After scientists stopped giving the first group food, they ceased pressing the lever almost instantly. The second group, swayed by occasional offerings of pellets, would keep pressing it until they fell over from exhaustion. All too often, slots players resemble the second group of witless birds. And in this game, slots operators who run computers play the role of the scientists, giving players enough wins to let them know that good spins are possible—and that they should keep pressing PLAY.

As Sean plays the Munsters machine, he wins little bets—three credits (75 cents) here, four credits ($1) there. Then, he’ll lose five or six bets in a row. “I ain’t having much fun here,” he says, already leery of pushing buttons and letting the computer-aided random number generator determine the fate of his Jackson. But he goes on a bit of a roll.

Once he hits 120 credits after about 5 minutes of play, he decides to end it all, pushing the CASH/CREDIT button and getting a voucher for $30. Although there’s a stainless steel trough below his machine and all the others, no coins land in them. Instead, his machine makes an ersatz, simulated sound of coins hitting a bucket. He’s a winner.

Still, like me, he prefers the tiny print of the Daily Racing Form, with its Beyer speed figures, detailed information on a horse’s racing history, and analysis, so he heads outside to the races. At the track, you can compare the performance and odds of one betting interest—a horse—against others. Slot machines defy any kind of intellectual activity—although, admittedly, making bets on a creature that weighs a short ton, eats grass, and often doesn’t have enough sense to get out of the rain doesn’t sound all that smart, either.

Slots enthusiasts in governmental and gaming company circles like to point to the fact that bettors get back 87 percent of the take—the total amount bet--similar to the amount that is returned to them from parimutuel betting at many racetracks. Still, over time, bettors will lose something virtually every visit. They get the equivalent of about 87 cents of each dollar bet. Because a very small handful of them win big—and on this day we hear no whoops or hollers of the instantly rich—the odds of breaking even are considerably worse than even that 87 percent figure makes it sound.

Are there ways of improving the odds? Experts say you can up your chances by a mere couple of percentage points by picking your discards at video poker-type machines, like the ones hidden way back at Charles Town’s OK Corral section. Or that, in places like Las Vegas at least, playing higher denomination machines—say, the $5 minimum bet instead of the basic quarter slots—will increase your chances of winning by a fraction because the house might take a smaller cut of the action.

But they’re still not worth it.

“My advice to gamblers is not to play slots,” says Robert Hannum, a professor of statistics at the University of Denver, and a gaming researcher. “It’s too easy for people to be mesmerized and just keep going. One surefire way to lose is to just sit there and keep playing. Length of time is crucial. If your bankroll is $100 and you’re playing quarters, and you’re willing to bet to the last quarter, you’ll probably lose it. If you play for a short while, then stop, your odds will have improved a bit.”

In other words Sean, for once, was right.

Left on my own, I pick a standard, characterless machine—a “Triple Jackpot” that tells me that getting three “7”s is the goal, but gives me no idea of how to get there. It does inform me that I can win $625 by playing in 25-cent credits and hitting a lucky spin or twelve. Armed with $40 I’m willing to part with--$1 for each year Maryland had banned slot machine gambling, until this year—I slip a Jackson into the machine’s mouth, watch it smack its chops, and go about my business at 1:24 p.m. I miss on my first bet, losing one credit (25 cents). But after betting 2 credits on the next spin, I pick up 18 ($4.50) after I “roll” three single bars.

Over the next half-hour, my mind goes through denial during long losing skeins and euphoria when I hit something, jolted by excited beeps the machine emits. The intermittent reward syndrome, I figure. Halfway into what I tell myself will be 30 minutes, max, of playing—unless I get back to 80 credits first, or lose it all—I’m at 40 credits and fading. I start thinking about the ponies outside. I get bored.

I start playing somewhat impulsively with the wagering, working my way up to three credits per bet to deal with the ennui. I either want to win big, or for this to be over. I’m already closing in on 30 minutes of my life I’ll never get back. Suddenly, random numbers start adding up in my favor—30 credits here, 15 there (twice). At exactly 1:54, I have 95 credits, 15 more than I started with. I’ve earned $3.75 in a half-hour, right about the rate of the minimum wage. I cash out.

Emboldened by my mastery, I move to the high-denomination machines, picking a “Black Tie” $5 machine for my second $20 bill and following Hannum’s dictum to seek out machines that might offer better odds, though there’s no way to be sure. I settle in for all of two minutes. I lose my first three bets ($15), then win back my would-be last $5 bet three straight times. Convinced that the machine is letting me off easy, and that it wants me to walk out with a Lincoln, I cash out. Total take from the two machines: $28.75. Total bet: $40. I lose $11.25—or about 28 percent. I’ve been playing for 41 minutes.

As I head out to the races, away from the heady, bolt-upright attention the machines induce, the room’s glitz dissipates. I start to notice things. Stale tobacco smoke. People with distant, desperate looks in their eyes. A mixed, international crowd that doesn’t mix at all. There’s no socializing, no joy. They sit. They spin. They come and they go, usually alone. Poker players and racetrack handicappers all have stories to tell. You get the feeling that none of them spends their time here, and that slots players lack anything resembling a compelling narrative.

* * *

Picture a humming, fast-moving conveyor belt that runs 24 hours a day, seven days a week. On it are piles of bills of various denominations once crammed into slot machines and now being separated onto smaller, but still accelerating belts. Those piles of cash are on their way to the actual winners of Maryland’s new law legalizing the now-unarmed bandits.

The largest pile—about 50 percent—of what hasn’t been paid back to bettors travels on one belt to the state government, which hopes to reap $660 million a year. Casino owners get to keep about 33 percent of the total take for their ostensible trouble. Maryland racetracks, including Pimlico, will get about 10 percent, with which they will pump up payouts to horse owners and trainers and fix up their dilapidated grandstands and backstretches—a nice reward for doing nothing meaningful to improve their facilities for years. (And if Laurel Racecourse wins one of the five state slots licenses to build a gambling parlor, its owners, Magna Entertainment Corp., can double up on the action.)

Even local governments and minority businesses get a small piece of the pie.
If slots are the gambler’s equivalent of crack cocaine, as their detractors allege, then the machines rank as a very secular Holy Grail into which political leaders and racetrack officials can pour their hopes and dreams. For Baltimore Mayor Sheila Dixon, a slots palace on a $41-million site near the Camden Yards stadia would mean a chance to lower the city’s frighteningly high property tax rate and build on one of the city’s few remaining economic cards in the post-industrial deck: tourism.

For the other four sites where slots will be built (see accompanying box), local governments will get 5.5 percent of the total bet and a chance at some economic development. The big winner—the state—promises that the redistribution of wealth upward from slots players, mostly working- and middle-class folks, will trickle back down to create more and better schools. They’re doing all this for the kids, we’re led to believe. Who can maintain an argument against that?

With so much high-mindedness at stake, slots are much more than a necessary evil. Like an Ayn Rand novel, they’ve become a moral justification for all kinds of behavior that strain the meaning of the term “ethics.”

Those who campaigned against the state’s effort to pass the slots referendum—loftily dubbed “For Maryland, For Our Future”—pointed to higher crime and suicide rates, and estimates that 5 to 10 percent of slots gamblers, few of whom are of anything more than modest means, will become addicted. They dragged out experts like Earl Grinols, an economics professor at Baylor University and author of Gambling and America: Costs and Benefits, in which he posits that slots cost more in social problems, family breakdowns, and personal bankruptcies than states rake in. Sixty percent of the revenues slots casinos take in are from long-term users, a euphemism for “problem gamblers,” Grinols says. “Slot machines create gambling disorders in people at a rate about one third higher than other forms of gambling,” he adds. Slots move faster than most games, and eliminate the need for skills. They’re a game for the id, not the intellect.

Grinols says states were once constrained by a gentlemen’s agreement of sorts to keep gambling illegal, so as not to fleece people from neighboring states. “Then, there was this whole race of escalation, kind of a race to the bottom. Now, with so many states legalizing gambling, you won’t be able to get at your neighbor’s money,” Grinols says. “You’ll just have local people with social problems.”

* * *

Outside at the old Charles Town—the racetrack--a little more than 100 people enjoy a beautiful, sunswept Sunday. Horses run every 25 or so minutes—hardly the potential betting frenzy that the thousand or so people inside are indulging in by the second. But the trackside attendance looks more promising than a fall Sunday at slots-less Laurel. And that’s the idea that buoys the hopes of guys like Alan Foreman.

Chief counsel for the Maryland Thoroughbred Horseman’s Association and its dwindling membership, Foreman sees slots as nothing less than the salvation of an industry—one, he notes “that is part of the fabric of the state of Maryland” and generates an economy valued in the hundreds of millions of dollars.

People who train Maryland horses have been moving outside the state to take advantage of slots-fattened purses—the payouts to the top finishers in each race—and a more equine owner-friendly environment in Delaware, Pennsylvania, and West Virginia. Slots palaces here should stop the bleeding, Foreman believes. “I don’t think there’s anybody in the horse racing industry here who isn’t delighted” by the referendum results, he adds. “It’s a time of great hope. We can finally rebuild the industry.”
State thoroughbred tracks are required to maintain races 220 days out of the year—or risk losing their slots licenses. So, even if slots become the dominant force in state-sanctioned gambling, as expected, the ponies will run. That’s great news for horsemen, as racinos in other states have hardly witnessed a stampede to the parimutuel windows.

“You don’t stimulate demand for horse racing by improving purses with slots money,” says William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno. “You keep the horsemen around, but you don’t create new players. Slots are a subsidy that really doesn’t work to reinvigorate the industry.” Instead, Eadington says, slots are a way for track owners to transition from a dying business—racing horses—to a booming one: casinos.
In other words, slots are a bailout. In an age when every big-time loser—bad automakers, bad financiers, bad lenders--gets one, gamblers and the victims of bad loans stand alone as stalwarts of laissez-faire capitalism: people who took a risk, lost, then went home (if they had one) to deal with it.

No one ever held a radio-thon for the buggy-whip industry when the automobile came to the fore. Yet, saving the tradition of ponies running in ovals is, we’re told, worth the potential risk to human beings of saturation gaming. If racetracks are “where the windows clean the people,” as the old joke goes, one wonders whether slots palaces might become the mirrors that show us as desperate and greedy, and beyond the reach of reason.

Issue 131: November 2008