The New York Constitution since 1821 has made all gambling illegal except gambling specifically authorized by that same provision. Through various Constitutional amendments during the 1900's, the New York Constitution has been amended to give New York revenues from pari-mutuel (racetrack) wagering and the New York lottery. In 1988, the federal government enacted the Indian Gaming Regulatory Act, 25 USC 2701, et seq., that requires or encourages many states (including New York) to permit certified Indian tribes to open up full-scale casinos under agreements negotiated with the state relating mainly to taxation and regulation of the Indian operations. As a result, various Indian casinos have sprung up in and around New York to wholly vitiate the original intendment of the Constitutional provision, so that its continuing prohibition now acts as an irrational prohibition of New York residents and businesses from participating in one of the largest and fastest growing industries in the United States, far exceeding the movie industry in revenues.
It is the purpose of this website to provide information in support of the author's proposal (and related lawsuit) that the New York Constitutional provision (Article I, Section 9(1)) be declared null and void, as unconstitutional and/or unenforceable, and that gambling of all types be permitted with appropriate regulatory and taxation legislation to enable New York State and the county, city, and other local governments in New York to share reasonably in the gambling revenues. A copy of the complaint filed in the Supreme Court of the State of New York, at 60 Centre Street, New York, NY on September 8, 2005 may be seen at Copy of Complaint to Legalize Gambling in New York State and a copy of the attached Exhibit A, an analysis of New York gambling by Carl E. Person dated September 8, 2005 Exhibit A, 9/8/05 Analysis of New York Gambling by Plaintiff Carl E. Person
During December, 2005, all of the defendants moved to dismiss the action. A pdf copy of the moving documents, together with my response to their motion, together with a copy of my cross-motion for a partial summary declaratory judgment, are available by link immediately below.
Defendants' reply and any response by them to Plaintiff's Cross Motion, and any reply by the Plaintiff, are to be submitted to the Court on March 1, 2006.
As a further goal, the elimination of the prohibition of gambling would create competition in the industry and a vast array of benefits far exceeding the adverse consequences of gambling that originally prompted the prohibition. New York no longer prohibits gambling because of the adverse social and economic consequences, and instead participates in and heavily promotes gambling as a monopolizing owner of the gambling venues.
Competition would result in more favorable gambling odds, a variety of more convenient and entertaining types of gaming opportunities (such as full-pay slot machines, slot machines for fun instead of gambling, $2 poker tournaments with possible prizes of thousands of dollars for the winners, less travel, reduced gas, hotel, food and other travel expenses, higher incomes and business values for New York residents and businesses, more jobs in the service industry as well as in the creation of gambling products and gambling software, and a better gambling deal for New Yorkers, who now have their gambling opportunities in venues such as Connecticut (Foxwoods and Mohegan Sun), Atlantic City (12 casinos), Las Vegas and other Nevada casinos, Montreal, a growing number of Indian casinos in New York and elsewhere throughout the US, a growing number of "racinos" (i.e., racetracks with slot machines otherwise known as video game terminals), and especially the thousands of online casinos that offer poker games, poker tournaments, bingo games, slot machines, roulette, and probably every type of casino game available in Las Vegas or Atlantic City.
New York and local governments would obtain increased tax revenues, not only from the direct tax on legal gambling, but from the income and sales taxes imposed on the additional jobs, higher incomes, higher business profits, and increased sales.
The gambling revenues have been greatly underestimated by persons preparing reports on the dollar amount of gambling in the United States. They never look at the major corporations selling to consumers that are using illegal lotteries (consideration, chance, prize) to attract hundreds of billions of dollars of sales of their products to consumers, by offering such proposals as 1 "free" coke or pepsi for each 12 bottles distributed (just look under the bottle cap to determine if you are a winner ("Sorry, play again", the usual words seen), contests to take vacations, attend football superbowls, win cash, automobiles or other valuable prizes. These illegal lotteries continue unabated even while the various state regulators are attempting to enforce the anti-gambling restrictions against "numbers" or "policy" runners and bookies in Harlem, or persons who maintain poker games for a small percentage (to cover expenses and often to show a small profit), and to stop store owners from having video game terminals in their places of business (which are used to gamble, with the winner having to collect his/her winnings from the cashier rather than receiving the money from the machine).
Because of this irrational policy by New York and perhaps most or all other states of prohibiting gambling, permitting the rich and powerful to run lotteries, but putting the small person in jail for his/her attempts to participate in the profitable gambling business, the time has come to rewrite New York's laws prohibiting gambling, and permit all types of gambling, with appropriate regulation and taxation.
In a society increasingly separating its population from social engagements with groups of persons that know each other from past gatherings, legalized gambling at the most local level would encourage low-cost forms of entertainment and social gatherings, run for profit, such as $2 poker tournaments; $5 bingo contests; no-gambling slot-machine and video poker machine arcades; and local entertainment venues with artists of the less than Foxwoods or Atlantic City quality.
In light of Hurricane Katrina, causing a reduction in oil production and dramatic increase in gasoline prices, a section has been added below, as the next to last option, entitled "Legalization of For-Profit or Commercial Gambling Would Reduce Gas Consumption by Billions of Gallons and Decrease Gas Prices by about $.50 to $1 Per Gallon", explaining how legalization of gambling throughout the United States could lead to a reduction of gasoline prices by an estimated $1 per gallon, through substantial reduction of driving mileage.
Gambling Evils - a Discussion
The expansion of gambling in New York would raise immediate concern for possible social, psychological and economic harm to persons today not able to participate in certain types of gambling activities, especially with casinos and shot machines. This fear is not as sound as one might believe at first glance.
If competition is brought to the gambling industry, as it exists already in other industries, the effect would be price competition that would reduce the profitability of gambling to the owners/suppliers of gambling services. This would reduce the adverse economic, psychological and sociological impact on gamblers to "injury" levels experienced by smokers, drinkers, and persons addicted to video games, movies, football games, or watching television 12 hours per day.
Gambling in a local casino or bar with slot machines actually could be a healthy diversion. Entertainment has its costs, including the costs of loyalty (or "addiction"), and playing in legalized poker games, poker tournaments, bingo evenings, or playing full-pay (100% payout) slot machines does not seem as harmful as excessive drinking or smoking.
The evils of excessive gambling come mainly from participating in monopolized gambling activities (where higher profits are extracted from the gamblers) such as the gambling activities run by New York State (lottery and pari-mutuel betting), other New York governments (OTB), Indian casinos, and Atlantic City casinos, for example.
Permitting unregulated local gambling would have the anticipated benefit of reduced profitability to levels comparable to other industries and result in far less injury to gamblers. Slot machines, e.g., could well be set and widely advertised at 101% payout to encourage persons to register in a hotel, eat in a restaurant (with gamblers not minding their wait to be seated - even hoping for a long wait) or attend a racetrack (as we know does occur with New York's and the nation's "racino" experience). Slot machines and other games of chance (poker, bingo, lotto, keno, etc.) could be used to draw persons to social events in a locality to encourage continual social gatherings by the same group of persons akin to a favorite bar experience without any alcohol, but with slot machines, poker, or bingo instead.
As an aside, it should be noted that poker, blackjack and players of video poker slot machines do have skills to enable the persons with greater skills to predictably make money from their activities. We know that in poker tournaments the same persons tend to wind up as winners; counting cards and remembering odds makes blackjack profitable for many gamblers; and many thousands of professional gamblers eke out weekly profits with skillful playing of video poker slot machines (if they know to use only the machines awarding 9 units per unit bet for a Full Boat and 6 units per unit bet for a Flush - the other machines pay off with lower odds).
If gambling becomes legal in New York, we can expect the creation of local city clubs (for city dwellers, in contrast to country clubs for the wealthy) and there would be an increased demand for local storefronts and for office rentals. Club memberships would be obtained through the offering of gambling, in the form of poker tournaments, poker games, 100% slot machines, bingo games and prizes, slot machine tournaments and other games of chance. In an industry newspaper, SlotsToday, 8/30-9/5/2005 edition (p. 2), Sierra Gold announced its opening as "Las Vegas' first style tavern" with "a tavern experience [including] an ultra lounge with the casual comfort of a neighborhood tavern ... featuring ... gaming excitement...." This is a sales pitch to "locals" in Las Vegas to patronize the tavern on a regular basis, a social rather than casino pitch.
Finally, ...
The rest of this website is devoted to providing information in support of the foregoing.
The text of the present New York Constitutional provision prohibiting gambling is derived from the 1821 Constitution (in Article 7, Section 11) prohibiting all "lotteries" (which prohibition was intended to prohibit all gambling (inasmuch as "lotteries" are defined in the commonlaw as games of "chance" with "prizes" and "consideration" paid by the player. The present provision is the result of various amendments that relaxed the absolute prohibition in various respects. The present provision provides:
Article I. Bill of Rights § 9. [Right to assemble and petition; judicial divorces; gambling, except pari-mutuel betting, prohibited] * * * 1. * * * except as hereinafter provided, no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state and the sale of lottery tickets in connection therewith as may be authorized and prescribed by the legislature, the net proceeds of which shall be applied exclusively to or in aid or support of education in this state as the legislature may prescribe, and except pari-mutuel betting on horse races as may be prescribed by the legislature and from which the state shall derive a reasonable revenue for the support of government, shall hereafter be authorized or allowed within this state; and the legislature shall pass appropriate laws to prevent offenses against any of the provisions of this section.2. Notwithstanding the foregoing provisions of this section, any city, town or village within the state may by an approving vote of the majority of the qualified electors in such municipality voting on a proposition therefor submitted at a general or special election authorize, subject to state legislative supervision and control, the conduct of one or both of the following categories of games of chance commonly known as: (a) bingo or lotto, in which prizes are awarded on the basis of designated numbers or symbols on a card conforming to numbers or symbols selected at random; (b) games in which prizes are awarded on the basis of a winning number or numbers, color or colors, or symbol or symbols determined by chance from among those previously selected or played, whether determined as the result of the spinning of a wheel, a drawing or otherwise by chance. If authorized, such games shall be subject to the following restrictions, among others which may be prescribed by the legislature: (1) only bona fide religious, charitable or non-profit organizations of veterans, volunteer firefighter and similar non-profit organizations shall be permitted to conduct such games; (2) the entire net proceeds of any game shall be exclusively devoted to the lawful purposes of such organizations; (3) no person except a bona fide member of any such organization shall participate in the management or operation of such game; and (4) no person shall receive any remuneration for participating in the management or operation of any such game. Unless otherwise provided by law, no single prize shall exceed two hundred fifty dollars, nor shall any series of prizes on one occasion aggregate more than one thousand dollars. The legislature shall pass appropriate laws to effectuate the purposes of this subdivision, ensure that such games are rigidly regulated to prevent commercialized gambling, prevent participation by criminal and other undesirable elements and the diversion of funds from the purposes authorized hereunder and establish a method by which a municipality which has authorized such games may rescind or revoke such authorization. Unless permitted by the legislature, no municipality shall have the power to pass local laws or ordinances relating to such games. Nothing in this section shall prevent the legislature from passing laws more restrictive than any of the provisions of this section.
Relevant Amendments: Amended November 7, 1939; November 5, 1957; November 8, 1966; November 4, 1975, effective January 1, 1976; November 6, 1984, effective January 1, 1985; November 6, 2001, effective January 1, 2002.) The 1939 amendment permitted pari-mutuel betting on horse races; the 1957 amendment authorized, upon a local option basis, the conduct of games of chance commonly known as bingo or lotto, subject to state legislative supervision and control, by only bona fide religious, charitable or non-profit organizations of veterans, volunteer firemen and similar non-profit organizations, the entire net proceeds of any game to be exclusively devoted to the lawful purposes of such organizations. Single prizes were limited to not more than two hundred fifty dollars and no series of prizes on any one occasion might exceed in the aggregate one thousand dollars. No person except a bona fide member of any such organization might participate in the management or operation of any such game and no person might receive any remuneration therefor. The legislature might enact laws more restrictive than any of the foregoing provisions and pursuant to the mandate of the amendment the legislature enacted laws, which became effective simultaneously with such amendment, to effectuate the purposes thereof. Abstract of Department of State; the 1966 amendment excepted from the Constitutional provisions prohibiting gambling, lotteries operated by the state and the sale of lottery tickets in connection therewith as might be authorized and prescribed by the Legislature, the net proceeds of which could be applied exclusively to or in aid or support of education in New York State as the Legislature might prescribe; the 1975 amendment in the sentence beginning "Notwithstanding the foregoing" added clause "(b)"; the 1984 amendment (subd. 2) authorized the prohibition against a single prize exceeding two hundred fifty dollars and provided that the prohibition that no series of prizes on any one occasion shall aggregate more than one thousand dollars to be varied by provision of law.
Derivation of Present Constitutional Provision from Prior New York Constitutions: The present prohibition of gambling was derived from the New York Constitution of 1894, Article 1, § 9; the New York Constitution of 1846, Article 1, § 10; also the New York Constitution of 1821, Art. 7, § 11, which prohibited lotteries.
In 1939, by amendment to Article I, Section 9(1) of the New York Constitution, pari-mutuel gambling at racetracks became legal, and New York State received a percentage of the pari-mutuel handle in return. Over the years, New York established a variety of regulatory bodies to regulate (and ensure New York received its percentage interest in) racetrack operations and pari-mutuel wagering on race outcomes. The present regulatory body is the New York State Racing and Wagering Board, established by the New York Legislature in 1973, and its 2004 Annual Report is quite informative, as to the locations of all lawful gambling venues in New York State (other than the New York Lottery locations or existence for that matter), the dollar amount wagered at the various racetracks, and the dollar amount of New York's taxation of pari-mutuel wagering, as well as the identity of each of the 6 OTB Corporations operating in New York State (Capital, Catskill, Nassau, NYC, Suffolk and Western OTB's). Also, the relatively new revenue source of Simulcasting, enabled New York and other New York governments to participate in the pari- mutuel handle created through off-track betting operations throughout New York State. The Board's "Annual Report and Simulcast Report - Calendar Year 2004" may be seen at 2004 Annual Report of New York State Wagering and Racing Board. This report is must reading for anyone wanting to learn about the regulation of all types of gambling in New York State. The Board apparently, however, does not attempt to regulate the vast amount of illegal lotteries taking place at all times by major retail corporations (and others) selling their goods and services to New York consumers (such as 1 free bottle of soda for every 12 bottles distributed, or winning a free vacation or trip to a SuperBowl game).
Total revenues for 2004 for the various gambling activities regulated by the Board are stated to be $2.71 billion for pari-mutuel and off-track betting (down from $2.74 billion in 2003); and public charitable bingo and other games of chance had wagering in the amount of $397 million, with $66.8 million being raised for the charities. To put this into perspective, the Indian casino at Foxwoods (the nation's largest casino with annual net wagering revenues in excess of $1 billion) is patronized each year by 25 million gamblers (mostly from New York and Massachusetts), and has wagering retention of $66.8 million in approximately 2-1/2 days of operations.
There are a total of approximately 235 OTB "simulcast branches" or betting parlors throughout New York State, as follows:
Lotteries were prohibited throughout the United States (other than in Nevada) up until New Hampshire, in 1966, changed its laws to create the New Hampshire, with a specified percentage of the sale of lottery tickets to be used for educational purposes.
Threw competitive pressure (persons in surrounding states purchasing New Hampshire lottery tickets) and as a way to obtain additional moneys to use for educational purposes, most of the states in the United States followed suit, and approved their own lotteries. This was so successful as a money-raiser for the states that some of the smaller states combined together to create a multi-state lottery offering larger cash prizes than the largest states such as California and New York could offer.
New York amended its Constitution, Article I, Section 9(1) during 1966 to permit New York State to set up, own and operate a lottery in New York, with the proceeds to be used for educational purposes.
The New York State Lottery Commission was established, during 1966 or 1967, to run the New York Lottery. Its website is at New York State Lottery Commission Website
The New York Lottery permits more than an estimated 100,000 salespersons working for 17,000 "Lottery Retailers" to sell lottery tickets from 17,000 small businesses throughout the entire State of New York. The 17,000 small businesses receive a 6% commission on lottery-ticket sales running through them, plus it is rumored a small percentage of a winning ticket sold by such retailer.
The Commission reports in its website that in "fiscal year 2003-2004", "$1.9 billion was earned for education", and that "3.3 billion in cash prizes" were paid, indicating that lottery-ticket sales amounted to more than $5.5 billion (including the 6% retailer commission).
A history of lotteries in the United States can be found at History of Lotteries in the United States, which states:
In 1833 Pennsylvania, New York, and Massachusetts put an end to state authorized lotteries. By 1840, most states had banned lotteries. By 1860, only Delaware, Missouri, and Kentucky still allowed state-authorized lotteries. * * *From 1894 to 1964, there were no legal government-sponsored lotteries operating in the United States. This ban led to a paradox: lotteries were widely played, but always illegal. One of the most well known was the Irish sweepstakes which began in 1930 for the purpose of raising money for hospitals in Ireland.
Growing opposition to tax increases was a leading factor in establishing state-run lotteries in the 20th century. In 1964 New Hampshire was the first state to sponsor a lottery, followed by New York in 1967. New Jersey launched the first financially successful modern lottery in 1971. The New Jersey lottery was successful because it stressed frequent action at low cost, and it returned a higher percentage of lottery revenues as prizes. There were also various attempts to legalize a national lottery, but they failed to be passed by Congress.
State-run lotteries enjoy annual revenues of more than $42 billion per year, according to CitizenLink, in its 7/9/03 article "Lotteries in the United States: An Overview". See Article about Lotteries in the United States, an Overview. But state-run lotteries are like a fox managing a chicken coop. The article reports:
According to the North American Association of State and Provincial Lotteries, state-run lotteries combined are a $42 billion per year business (or tax revenue) for state governments in 2002. Unfortunately, the majority of lotteries fall short of promises made, and the social costs often are greater than citizens realize.Advertising
State lotteries spent approximately $466 million on advertising and promotional costs in 2002. .... (fn omitted) Much lottery advertising is misleading; some is downright dishonest. The New Republic offered one example: "Take a current Washington, D.C., lottery ad campaign for D.C. Daily Millions. The slogan is 'A Million a Day--Just Play.' D.C. Daily Millions would be more accurately titled D.C. Daily Thousands: no one has won more than $5,000 in the history of the game." ... The same article also noted that lotteries typically advertise only the top prize, which can run into the tens of millions of dollars, and then give the odds of "winning" the lowest prize, often another lottery ticket. ... Kentucky has a 'shelf talker' targeted for the coffee section of the supermarket that says, 'If you want a real jolt, play Scratch-offs.'" ... Additionally, state lotteries are exempt from Federal Trade Commission truth-in-advertising standards. ...
If New York opened up gambling to competition and free enterprise, the state would have a greater interest in ensuring honest lottery advertising. The overall gambling revenues for New York would probably increase, from a variety of new and improved gambling activities, according to public demand, and with better odds for the
It is axiomatic or a no-brainer that better odds would attract more users, from casinos and lotteries that offer worse odds. The slot- machine odds are more favorable in Downtown Las Vegas, and regulars patronize the Downtown casinos - and casinos in outlying areas (often called "family" casinos, such as the Station Casinos) because of the better odds for players. It is also known that slot machines provide daily earnings for casinos from about $100 to $500 per machine per day, with the higher earnings enjoyed by casinos having no competition. Part of the increased earnings might well be from less favorable odds for the player as well as the increased traffic naturally resulting from the lack of competition.
For years, the only legal casino action for persons residing in the United States was located in Las Vegas, Reno and everywhere else in Nevada; Puerto Rico, various Caribbean countries; Cuba (until Castro through the casinos out of Cuba); Monte Carlo, and various other countries. In 1976, New Jersey permitted casinos to be built in Atlantic City, as part of an envisioned economic improvement program for the area. As it turned out, the casinos in Atlantic City did not have the beneficial effect that unlimited casinos have had in Nevada. The only persons prospering are the casinos, apparently because gambling is permitted only along a 3-mile oceanfront (and only on the Eastern side of the access road, as well as 3 other casinos several miles away).
States were permitting all sorts of other gambling, however, mainly in the form of state lotteries, state-controlled pari-mutuel wagering on horserace outcomes, and simulcast televising of races to many hundreds if not a thousand or more off-track betting parlors throughout many of the states in the United States; as well as by the licensing of the local Catholic Church and other non-profit organizations to hold bingo games with cash prizes for money-raising entrance fees and other games of chance, such as Las Vegas nights.
By reason of these state activities in permitting if not conducting games of chance and other gambling operations, the United States Congress enacted a statute (the Indian Gaming Regulatory Act) in 1988, 25 U.S.C. Section 2701, et seq., to require states to permit accredited Indian nations (of which there are about 350 or so in the United States) to set up casinos on their tribal lands and permit non-Indians to gamble at the casinos.
The Act set up three classes of Indian gambling activies: Class I remained unregulated and consisted of traditional gambling games enjoyed for years as part of the Indian culture ("social games played solely for prizes of minimal value or traditional forms of Indian gaming engaged in as part of, or in connection with, tribal ceremonies or celebrations"); Class II was certain types of games of chance with numerous limitations, and of little use to most of the tribes; the states were not permitted to obtain any part of such revenues ("the game of chance commonly known as bingo including [if played at the same location] pull-tabs, lotto, punch boards, tip jars, instant bingo and other games similar to bingo"); and Class III gambling activities, which referred to all other types of gambling, including lotteries, slot machines, roulette, and other games of chance found at casinos throughout the world ("all other types of gambling, including banked card games [e.g., baccarat and blackjack], slot machines, pari-mutuel wagering and jai alai"). As to these Class III activities, the state had the right and duty to negotiate with the Indian tribe to reach an agreement as to oversight and regulation of the Indian casino, and a percentage of net gambling revenues (before management fees) as a tax to be paid to the state for permitting such gambling operations, with the state to use the money to support education. The states do not regulate Class I and Class II activities, but Class II activities are subject to oversight by the National Indian Gaming Commission.
As a result of this Act, casinos exploded throughout the United States, with groups of Indians setting out to convince the federal regulators that they were in fact a "tribe" and as such entitled to open up a casino, or two or three, etc. The Pequot group obtained certification as a tribe and opened up the overwhelmingly successful Foxwoods Indian casino north of Interstate 95 near Stonington, CT (Exit 92), and has not reached gaming revenues in excess of $1 billion per year. Of course, it helps to be the only casino located near New York City, Boston, Providence, Hartford, Albany and hundreds of other cities, counties and towns in the 4-state area of New York, Connecticut, Massachusetts and Rhode Island. Later, another Indian casino opened up in the region (about 30 minutes driving time away, to the Northwest), Mohegan Sun, and the same good fortune was experienced, with the Mohegan Sun enjoying, as a Johnny come lately, almost $1 billion in annual revenues, and apparently hoping to overtake Foxwoods.
These revenues are coming mainly from New York residents (or New York and Massachusetts combined) and really should be available to non-Indian businesses, regulation and taxation in New York, Massachusetts (Rhode Island and Connecticut).
By reason of their monster revenues, Foxwoods and Mohegan Sun have become leading live-entertainment venues for world-class starring performers far exceeding anything New York City now offers. If there were competing casinos, there would be more opportunities for lesser acts to make their respective bids for entertainment success, and for smaller businesses to obtain contracts creating the new gambling venues, and for more competition, locally, for residents and businesses of New York, with substantial benefits for New York and New Yorkers, including New York education.
New York's Indian Casinos New York has entered into agreements with at least 4 tribes to permit them to open up casinos in New York. According to the New York State Racing and Wagering Board, New York has entered into agreement with the following tribes for casinos at the locations given:
A question arises as to how any responsible official for a state's government could enter into an agreement giving a monopoly to an Indian tribe and then lose any right to participate in revenues (even in a lesser percentage or amount) if non-Indian businesses were permitted to compete.The federal National Indian Gaming Commission reports that tribal gaming generated $16.7 billion in gross revenues in 2003. This figure represents about one-fifth of the total U.S. gaming industry, according to the National Indian Gaming Association. The Commission makes available a copy of the 1988 federal statute in the Commission's website, at Indian Gaming Regulatory Act of 1988.
An agreement (compact) between tribal and state governments must be in place for a tribe to conduct casino-style or high-stakes gambling. Compacts usually are negotiated by the governor or a designee and sometimes require legislative approval. Tribes have regulatory responsibility for their operations, although compacts also may include a regulatory role for the state. The National Indian Gaming Commission provides general regulatory oversight.
The Indian Gaming Regulatory Act (IGRA) of 1988 specifies that states may not tax tribal gaming revenues. Tribes can agree to share a limited portion of their gaming proceeds with state and local governments, however, subject to approval by the secretary of the Interior. In Arizona, California, Connecticut, Michigan, New Mexico, New York and Wisconsin some tribal governments have agreed to share casino revenues with the state, often in exchange for the exclusive right to conduct such gaming. The most well-known tribal casino is Foxwoods, operated by the Mashantucket Pequot Tribe near Ledyard, Conn. A 1989 Pequot agreement with Connecticut specified the tribe's willingness to give the state either $100 million or 25 percent of its net revenues annually, whichever was greater, as long as nontribal casinos were not permitted in the state. An agreement with a second tribe, the Mohegan, was reached in 1996. Connecticut's general fund will garner $405 million in FY 2004 from the two tribal casinos, with local governments receiving $85 million of the total.
Although New York has a Constitutional provision outlawing casinos and slot machines, many states including New York have decided that slot machines are not that bad for the pubic because racetracks throughout New York State are being given the opportunity to buy, install and operate slot machines in conjunction with their horse-racing activities. In other words, the racetrack may run an average of 1 hour per day with horse races, and is now being permitted to run 24 hours per day of slot machine activity. The justication is to enable the track to remain open, having been stripped of much of its business by the combination of Indian casinos, state lotteries (particularly the New York Lottery) and New York's Off-Track betting facilities located throughout New York State. The racetracks have been unable to compete with so much gambling. The history of racetrack operations and wagering is one of exclusivity, when the only significant competition was the Irish Lottery (an annual event), illegal bookie operations, illegal numbers (policy) operations, and trips out of New York to casinos located in Nevada or Cuba, for example.
Racinos have actually been created in New York State, with others authorized. A NYS Senate Research Service 1-page map entitled "Gambling Establishments in New York State -- Existing Facilities and Authorized Locations for Expansion" dated June 30, 2004 shows that VLT-type slot machines have already been installed with Board approval at the following racetracks: Buffalo Raceway, Hamburg, New York; Finger Lakes Race Track, Farmington, New York; Saratoga Equine Sports Center, Saratoga Springs, New York. Monticello Raceway, at Monticello, New York, is in a different category, for some unknown reason. It opened on 6/30/04 with real slot machines, not the VLT type, sharing the racetrack grandstand building with the racetrack. It seems possible that the Indian tribe (under the name Mighty M Gaming casino) owns the racetrack and has been able to put together the first real "racino" in New York State.
Also, the report shows that as of June 30, 2004 slot machines (euphemistically called "VLTs" or "video lottery terminals") have been authorized but not installed at the following racetracks: Batavia Downs, Batavia, New York; Vernon Downs, Vernon, New York; Yonkers Raceway, Yonkers, New York; and Aqueduct Racetrack, Jamaica, Queens, New York. Also, the report states that slot machines (VLT's) are expressly forbidden at Saratoga Race Course, Saratoga Springs; and Belmont Park, Elmont, New York (presumably because of the proximity of slot machines at nearby Saratoga Equine Sports Center and Aqueduct Racetrack. Finally, the report states that one casino site in the Niagara Falls/Hamburg area and 3 casino sites in Sullivan/Ulster Counties (in which Monticello Raceway operates) have been authorized by the Board.
After a 5/28/05 decision upholding the right of New York racetracks to possess and use VLT's, Yonkers closed its track (June 2005) and is spending $185,000,000 to build a new racetrack combined with casino (minimum of 5,500 VLT slot machines, with a maximum of 7,500 VLT slot machines, which would result in more slot machines at Yonkers raceway than at Foxwoods.
Now, the former racetrack patrons can see the races simulcast from Off-Track branches in New York or from betting rooms in casinos throughout the United States. To save these gambling operations, there was the need to provide them with a stronger dose of gambling.
It should be noted, as an aside, that the only horse racetrack in Vermont, located at Pownal, Vermont, closed during the late 1970's, but could have been saved if it had been allowed to become a racino. Perhaps this can still take place. Meanwhile, the buildings just rot along Route 7 as you enter Vermont from Williamstown, Massachusetts.
An article states that the property was recently acquired with the owners wanting to preserve its status as a racetrack, and that an earlier owner tried to convert the property into a casino, without success. See Article about Vermont's only Racetrack.
Perhaps the new owner will be able to arrange for racino status to bring back a racetrack to Vermont, but perhaps it's too late for Pownal, which has to live with the competition of larger racetracks, racinos and Indian Casinos in other states. The Pownal racetrack was apparently overwhelmed by the lottery in adjoining New Hampshire (the 1st in the nation) that opened up in 1964, followed by the Massachusetts Lottery in 1971 - See Massachusetts Lottery - with Vermont getting ready to follow suit, starting the Vermont state lottery in 1978 (about the time of the Pownal track closing). To make things worse for Pownal, the Vermont Lotter is part of a Tri-State Lottery with adjoining New Hampshire and Massachusetts. Also, the Vermont Lottery is part of the Powerball multi-state lottery involving 27 states, Washington, D.C. and the US Virgin Islands. With all of this lottery activity, no wonder the Pownal racetrack closed. The racetrack lost its customers and was unable to offer prizes to winning horse owners sufficient to attract good horses to the track. The only solution today is to bring in the slot machines, even if the regulators call them VLT's.
The law of New York and other states prohibiting non-licensed lotteries is not being enforced. Every year there are thousands of lotteries created to promote sales of a beverage, fast-food sales, automobile, and hundreds of other types of consumer goods.
At this writing, the author has seen what allegedly are illegal lotteries by Coor's Beer, Pepsi-Cola, Coca-Cola, Burger King, the NFL, Motorola, and hundreds of others.
Here are some current non-licensed lotteries being run in New York without any New York or federal officials trying to prohibit them, as they are trying to prohibit online gambling, for example, and other interesting observations, in no particular order:
As reported at Fixing the Pepsi Lottery for Fun and Profit - a 2/18/04 Article (without mentioning the light source):
How to get free iTunes from Pepsi with every bottleIf you tilt a sealed, new Pepsi bottle at 25 degrees and squint at the underside of the cap, you can tell whether it's a winning free-iTunes-track bottle or a try-again bottle. Link (via Futurismic)
The Kansas appellate courts have long defined "lottery" to include any scheme, gift, enterprise or similar contrivance wherein persons agree to give valuable consideration for the chance to win a prize or prizes.(5) The three essential elements constituting a "lottery" are prize, chance and consideration. The courts have viewed consideration under this constitutional prohibition as requiring that something of value must flow from those who participate [emphasis added].(6) However, even if a good or service is acquired with the consideration given, in addition to a chance to win a prize, something of value has flowed sufficient to constitute "consideration."(7) In State ex rel. Beck v. Fox Kansas Theatre Co.,(8) the Kansas Supreme Court held that a scheme involving registration at a movie theater for a chance to win an amount in a bank account was a lottery in violation of the Kansas Constitution, even though participants were not required to purchase a ticket to the movie or anything else. The Court held that the indirect benefit derived by the theater in the way of increased gross receipts from paid admissions was sufficient consideration to meet the requirements as to that element of a lottery.(9)
A: Here's the legal definition: something of value given in return for a performance by another for the purpose of forming an agreement. Consideration represents the element indicating that a party agrees to surrender something or forbear from doing something in return for that which will be received. In incentive marketing, if a prospective prize winner pays, purchases merchandise, sells merchandise in a trade promotion, or performs any act other than merely completing an entry blank, this constitutes consideration. It thus could transform a promotion into an illegal lottery, if chance is the determining factor in the selection of a prize winner. Sweepstakes should always give consumers the option to enter in writing without making any purchase.
The website's perhaps should be amended to say that any entry form should restrict its data requirement to information essential to notifying the customer of his/her prize, and that any information in excess of that, to be used in a marketing database to make later offers to the registrant, is "something of value" and therefore turns the contest into an illegal lottery.
Illegal Promotional Lotteries Probably Involve Consideration in Product Purchases Amouting to 10 or 100 Times as Much as United States Casino Gambling and State Lotteries Gross Revenues Combined
In addition, there are the less obvious allegedly illegal lotteries, such as the rebate practice, in which retailers or manufacturers offer rebates to purchasers of their products with the expectation that the customers will not in fact be able to obtain the promised rebate which contributed to the purchaser's decision to purchase. There is no reason that the company offering a rebate cannot make the rebate reasonably available to the purchaser as a condition to being able to advertise the rebate. There is sufficient sophistication today for a retailer to be able to generate a form of email for the customer, addressed to the rebate provider,to enable the customer by a single email to provide the required information. Also, the retailer should have a computer available for the customer to apply for the rebate as soon as the customer makes his/her purchase. Otherwise, the advertised rebate is a lottery, with a great chance that the customer will not get the rebate (or "prize") for the purchase price he/she paid for the goods or services (the "consideration").
Another type of sophisticated illegal lottery appears to be the way in which drug-store retailers are increasingly using a system of cards to provide lower prices to the persons who carry the card, but charge a higher price to another customer who, at the same time, buys an equal quantity of the item, but cannot find or has forgotten, or never had a card. The difference in price (the "prize") is lost by the happenstance ("chance") that the customer does not have a card at the time of his/her purchase ("consideration"), thereby meeting the time-honored definition of a "lottery", that a "prize" be awarded basically by "chance" when the lottery player has provided "consideration" to play.
Article I, Section 9(1) of the New York Constitution dating back to 1821 has prohibited such lotteries, but there is no enforcement of such prohibition, thereby enabling the major corporations to bring in hundreds of billions of dollars in sales to which they are not entitled under law, whereas at the same time the law-enforcement officials of all states, including New York, put small businesspersons in jail for running the lottery activity of the numbers game (or policy). It's not fair and doesn't make sense. The numbers game could produce tax revenues for New York and should be allowed to compete with the other games of chance that New York makes available abundantly to New Yorkers.
In spite of the Constitutional prohibition against gambling, New York is a major port for ships of various vacation cruise lines (each ship equipped with a casino, including slot machines) including Carnival Lines, Princess Lines and Cunard Lines. Carnival's website states in its FAQ section:
Is there a Casino onboard?Yes. We offer a fun-filled casino with a welcoming atmosphere and friendly international staff.
We have all of the popular table games and slots that you expect to find in any modern casino with some new games and some old favorites. * * *
During your cruise you can join in on one of the exciting tournaments for a nominal entry fee and win great cash prizes.
Our "Megacash" progressive jackpot is linked to many ships and has the highest payout on the high seas often reaching over $1Million!
All of our casinos have a casino host who will answer any of your questions and ensure you have a relaxing and entertaining gaming experience.
* * * For more information, visit www.oceanplayers.com, where you will also find links to contact one of our casino hosts onboard. * * *
Please Note: Players must be at least eighteen years old to play in the casino.
Cruise Lines advertises in its website that it docks in New York. See See Cruise Lines Website. Cunard Line owns and operates the Queen Elizabeth 2 and the colossal Queen Mary 2 (largest ship in the world, and twice the size of the QE2), each of which has a casino and docks in New York to pick up and discharge passengers. QE2 has 79 slot machines - see Cunard Lines Website - and the QM2 has about 50 slot machines, and docks in New York - see QE2 and QM2 Casinos and Slot Machines.
Norwegian Cruise Lines, with 12 cruise ships, advertises that it stops at New York - see Norwegian Cruise Lines and provides casino activities, stating at Norwegian Cruise Lines - New York Stops:
... or maybe the ringing sounds of a jackpot. NCL casinos deal some of the best gaming action this side of Vegas. And whether Lady Luck is naughty or nice, you'll leave with a smile. Norwegian has some of the friendliest dealers at sea.
Princess Cruise Lines stops in New York - Princess Cruise Lines - New York Stops - and has a casino onboard - Princess Lines Has Casino Onboard. In fact, this same website states that each of the following cruise lines have onboard casinos, on all ships:
New York is not adverse to cooperating with these casino cruise lines even though it provides a way for New Yorkers to play games of chance, including slot machines, in a casino. As long as New York obtains its docking fees, shipside business and on-shore purchases from the other gambling passengers. This is not a policy of prohibiting canino gambling, but of aiding and participating in making such gambling possible for wealthy New Yorkers.
A casino cruise business leaving daily from Sheepshead Bay in Brooklyn, New York was harrassed to stop its casino cruise business, but not by New York State in enforcement of New York Constitution Article I, Section 9(1). Instead, the enforcement or harrassment came from New York City trying to protect its gambling empire of NYC OTB.
Finally, in 1998, New York City gave in and set up the New York City Gambling Control Commission and accepted applications for licenses from six cruise line companies to run casino cruises departing from New York City. See Las Vegas Sun Article about New York Casino Cruise License Applications.
The six companies include the Circle Line Cruises, which operates tour boats around Manhattan; the multibillion-dollar partnership behind the Foxwoods Casino in southeastern Connecticut; and a St. Louis-based operator of Missisippi River gambling cruises. Note: Here is an instance of Indian casino revenues being used to extend the gambling operations to additional New Yorkers, without New Yorkers having any right under New York law to open up a casino in New York in competition with Foxwoods. Also, the C.E.O. of Foxwoods' tribal regulatory authority during November 2004 announced that Foxwoods was possibly going to purchase the Poconos Downs racetrack and 5 off-track betting facilities, for purposes including the addition of slot machines to the Pennsylvania racetrack, stating in a conference call taken down by a stenographer Transcript of Foxwoods Business Meeting by 11/18/04 Conference Call:
(Bill) Velardo: And with respect to our agreement to purchase Pocono Downs and five off-track wagering facilities in Pennsylvania, we've been diligently working toward closing. * * *In addition, we have developed a very comprehensive checklist of non-closing issues and items, you know, including various meetings with appropriate agencies, like the Pennsylvania Harness Racing Commission, the horsemen's associations, key legislators, and others potential strategic alliances and reporters and so on and so forth. * * *
* * * And we have also been in the process of selecting a Chief Executive Officer for Pocono Downs and hope to complete that process by November 18.
We have a meeting scheduled with employees at Pocono Downs in mid-December and we're looking forward to that. And so thus far we do not see or have any reason to believe that there will be any problems in completing the process and closing and moving forward.
Probably the primary variable that is a bit uncertain is the - our application for our slot machine license, which is dependent upon the completion of the writing of the regulations by the gaming board of Pennsylvania. And I believe that they are starting to make progress. You know, we don't have any reason to believe that that's going to be an issue. * * *
Larry Klatskin: Hey, great results. Always nice to see you guys being number 1. As far as Pennsylvania timing goes, what do you think the fastest you'd get something going.
Bill Velardo: Larry, we're still working on the - with our model that we would be open and operating it by April of 2006. We're hesitant to give a timeline on something sooner, even though the bill does permit a conditional license. We don't know enough just to speculate.
Larry Klatskin: All right. And your total spending on that project's going to be about $500 million?
Bill Velardo: Well, it - you know, we paid $280 million for the Pocono Downs and there's a $50 million license fee, so that's $330 million. And we've budgeted up to $175 million for construction. So that would be $505 million. * * *
Larry Klatskin: All right. Now what do you guys see the effect of - if they lower the taxes in New York, and the Aqueduct in [probably should read "and"] Yonkers gets going, do you effect in you guys?
Bill Velardo: I would say that it would be minimal if no effect. Mitch Etess: I mean, you know, I guess we'll see how much they lower the tax and, you know, it really isn't the same experience, and they're really not the same thing we're offering here as opposed to just stepping over to Aqueduct for a few - for a little bit.
Larry Klatskin: No, I don't disagree with you. I like that. Congratulations.
Leo Chupaska: Thank you. * * *
Fred Taylor: Good morning guys. One of the agencies, I forget which one, mentioned with the rating downgrade that their understanding was that after phase two of your main casino that, you know, you would be reducing debt at a little bit faster pace, and they feel like, you know, it wasn't a bad comment but just said maybe there's a sea change and you all continue growing your franchises possibly with other purchases beyond Pocono Downs.
Can you kind of address where you are on the growth versus rating versus debt repayment sort of cycle if you would over the long haul.
* * * Leo Chupaska: I think that, you know, the Tribe at some year or so ago, a year and a half ago adopted a strategy to grow the company, and we've explained this in great detail to the rating agencies. We told them a year ago, or a year and a half ago, and we're continuing to tell them that we feel that, you know, we've reached a point in the lifecycle here that we can go out and do some other things. And we identified four or five or six of those things that we want to do.
And both of these type of opportunities fit right into our plans. One, to talk to other tribes and perhaps do some management agreements, development agreements, and to acquire if it makes sense to acquire an asset. And you know, we understand that, you know, it may drive leverage up. It may be a little departure from where we were once we completed phase two here, but we think that it's a good story and something that, you know, we want to do and we think it makes sense for this company - or I shouldn't say for this company, for this Tribe. And so they - you know, they are aware. They told us when we talked to them at S&P about leverage, they look at the entire property. They include in their leverage calculations of us the tax-exempt financing that we have on the government level, and it really drives the leverage, you know, beyond (5).
But our models for Pocono Downs show that that leverage, you know, tweaking right down into the lower (4)s. We did I think what we said we were going to do post-phase two, and that is bring leverage down...
Fred Taylor: Right.
Leo Chupaska: to 3.
Man: Yeah.
Leo Chupaska: What it is at (9/30) was 3.7.
Bill Velardo: Their concern is as we follow our - what we say we're going to do and de-lever a little and then find an opportunity and lever right back up...
Bill Velardo: ...that technically we're always at that little bit higher...
Leo Chupaska: Higher.
Bill velardo: ...which is accurate. And then they just need to reflect that risk in their rating. But we understand it.
Fred Taylor: Right. And it's not dissimilar to how other casino companies grew.
Leo Chupaska: And we did talk about that with them.
Fred Taylor: Okay. Thank you, and good luck.
Leo Chupaska: Okay, thanks.
* * * Greg Aikman: Hi. Greg Aikman with Mellon Financial. Could you give a little bit of color as to as to with the Pocono property, how much EBITDA you expect to throw off from that? How much per machine and so on?
Bill Velardo: I'm not sure if we're allowed to - what we're allowed to say here. Hold on one second. It's okay? We essentially modeled, you know, based on the previous capital investment that we gave you. That we would be at around 7 to 7-1/2 times our total investment. So I think conservatively we're between $55 million and $60 million in EBITDA, and we're using 3000 slot machines with a win per unit of (212).
Greg Aikman: And you start out with 3000, and I read the Act itself. It wasn't really super-clear to me as to whether or not you can get the additional 2000. Is that up to the commission themselves?
Bill Velardo: Yes. You have to operate your 3000 for a minimum of six months, and then you can make an application for more.
Greg Aikman: And do you get any kind of sense as to whether, you know, whether there might be any impediments there? Is it totally up to the commission? Do they have criteria?
Bill Velardo: I do not believe there would be any impediment. That the only impediment would be whether or not the market could bear it.
* * * Jerry Lian: ... Just wondering for the build out of the Pocono Downs, the $175 million in capex that you have budgeted, what specifically will you be building? You know, are you going to be adding a slot machine parlor that's a separate building? Or is it going to be expanding the existing footprint? Or how is that going to work?
Bill Velardo: Well, we have just actually started to do some serious work on that as we've been going through a number of iterations. But essentially the Pocono Downs Raceway, the buildings that's existing there now is not in very good condition. So there really isn't an opportunity to do it within the existing facility. So a - new construction would be required for the majority. I would say 95% of the products that we're going to offer, which would include some slot machines and some food and beverage and maybe some small entertainment amenities. So it would be primarily in new construction. There will be - we will of course be looking at the track itself because we'll need to do some enhancements at the track, and then the bill itself requires capital be invested in what they call the backside, which is where of course the horses are taken care of and the staff and personnel that manages the racing take care of the standard-bred horses. The track itself is in very good condition. It's considered and has had a long reputation for being an excellent track and desirous to hold races there. So the track itself, very good condition. Backside it needs capital investment. The track itself needs capital investment. But the majority of the product that we'll be bringing will have to go into a new building, new construction.
Jerry Lian: What kind of cash flow is the racetrack throwing off on it's own?
Bill Velardo: The racetrack and the OTWs combined are doing about $5 million a year now.
Jerry Lian: And will you be able to put slot machines in the wagering parlors? Or is it confined to the racetrack?
Bill Velardo: Only at the track. * * *
Leo Chupaska: Okay. * * * But that's their goal, but I think they all realize, and we all realize, if we're going to purchase an asset that then has opportunity with that asset, like Pocono Downs that, you know, our investment - we'll have to make the investment and, you know, our leverage will increase. And I think as long as we, you know, can bring that leverage down in a reasonable, you know, timeframe I think, you know, people here are comfortable with that. We see this as adding - this asset will add to the tribe. It certainly provides revenue flow to them and I think it's - so, you know, leverage is one thing, and we certainly look at it. And we look at ratings and we look at it. But I think if we do these things for the right reasons, I think we can live through some of these peaks in our overall leverage. I don't know if that answers your question, but we have adopted a strategy to grow the company, and we're going to do what it takes. And we think most of our investors, albeit the bankers or the bondholders I think, you know, believe in us.
* * *
For reasons I would like to know (probably by agreeing to pay more than Foxwoods) the purchase of Poconos Downs was made by Mohegan Sun. See Mohegan Sun's website for the Poconos Downs racetrack at Mohegan Sun's Website for Its Poconos Downs Property .
A financial gambling juggernaut in the form of Foxwoods, Mohegan Sun and other Indian casinos is gather like the recent Katrina to wipe out most opportunities for anyone in New York to compete in the ever-growing gambling industry unless New York opens up competition to let businesses operate in competition with Foxwoods and others.
Perhaps it's too late and that law enforcers and regulators in New York have already decided that the end solution for New York's financially-troubled racetracks is to have them purchased and run by Foxwoods.
Mayor Rudolph Giuliani is quoted in the article as having said, prophetically, that "the arrival of legalized gambling in New York was inevitable", and he signed a law during the summer of 1997 creating the commission. The mayor is also reported to have said that high fees and strict regulations created by the law would let the city tightly control which gambling operations do business.
At least two provisional "shipboard gambling business licenses" were issued by the Commission pursuant to Local Law 57, but operations ceased for some non-disclosed reason. Two of the applicants still wish to obtain the final license and resume operations, and another applicant also seeks a license at this time, in 2005.
Meanwhile, after various changes of name (from New York City Gambling Control Commission (1997), to Trade Waste Commission (2000), to Organized Crime Control Commission (July, 2002), then renamed to its present name of Business Integrity Commission In a NYC Comptroller Report on the audit of the accounts of the Commission dated April 5, 2005, it was recommended that the applicants' funds remaining after deducting the considerable investigation expenses be returned pro rata to the 18 applicants. The audited Commission disagrees, arguing that there are still the three applicants seeking to obtain a "shipboard gambling business license". The matter remains in limbo. Because of the existence of Local Law 57 permitting the licensing of "shipboard gambling businesses", there is no reason why the requested licenses could not issue, having been authorized under Local Law 57, a 1997 amendment to Title 20 of the Administrative Code of the City of New York. See the report and transmittal letter at NYC Comptroller's Report on Audit of NYC Business Integrity Commission Re Casino Cruise Licensing.
Also, there currently exists a casino cruise leaving from Freeport, Long Island, New York on a daily basis (which the author verified by telephone call at this writing). A gambling information website description provides:
Freeport Casino Cruises 361 Woodcleft Avenue Freeport, New York 11520 (516) 377-7400 Reservation Number: (516) 377-7400 Gambling Age: 21 Ship's Registry: U.S.A. Buffet: Included Schedule: 11:30am - 5:00pm 7:00pm - 11:30pm/12:30am (Fri-Sat) Price: Free Port Charges: Included Parking: Free Special Features: 500-passenger, Midnight Gambler II departs from Freeport's Nautical Mile. Normal $15 admission charge was temporarily suspended at press time but may be reinstated at a later date.Another such casino cruise line, Majest Casino Cruises, with a nearby address, also listed in the website, had a non-working telephone number and a non-working website address. The website description for Majesty Casino Cruises is or was:
Majesty Casino Cruises 395 Woodcleft Avenue Freeport, New York 11520 (516) 777-5825 Web Site: www.majestycasino.com Reservation Number: (516) 777-5825 Gambling Age: 21 Ship's Registry: U.S.A. Buffet: Included Schedule: Noon - 5:30pm 7:30pm - 12:30am/1am (Fri-Sat) Price: $20/$25 (Eves) Port Charges: Included Parking: Free Other Games: Poker, Bingo, Mini-Baccarat Special Features: 450-passenger, Majesty departs from Freeport's Nautical Mile. First-time visitors can show any slot club card and sail for $5.It is increasingly clear that gambling and slot machines are being permitted to operate by state and local officials, for certain favored persons, but not for a voting resident such as the author to be able to purchase a slot machine for his own use (a non-gambling use). Unless competition is opened up, the gambling industry is going to be dominated by Foxwoods and others using the money of New Yorkers seeking gambling entertainment at the Indian or out-of-state casinos.
The first thing to remember about New York's law prohibiting gambling (with the exceptions noted above) is that the prohibition is set forth in New York's Constitution, and the provision was adopted, in its earliest form, in 1821. Prior to that time, gambling was legal in New York. The prohibition started by prohibiting "lotteries", which meant games of chance, including roulette, blackjack, and other games of chance, whether found in a casino or not. The various prohibitions in the Constitution have always been construed to outlaw slot machines, as games of chance or lotteries, without specifically referring to slot machines in the Constitution.
Slot machines were invented by Charles Fey in 1895 (74 years after the initial gambling prohibition was adopted by New York), as reported in Website About - Slot Machines, 1895 Invention of Slot Machines, as follows:
The first mechanical slot machine was the Liberty Bell, invented in 1895 by Charles Fey, a San Francisco car mechanic. Fey's slot machine had three spinning reels, with diamonds, spades, hearts and one cracked Liberty Bell painted around each reel. Three bells in a row produced the biggest payoff, a grand total of fifty cents or ten nickels. The original Liberty Bell slot machine can be found at the Liberty Belle Saloon & Restaurant on 4250 S. Virginia, Reno Nevada. Source "Mark Pilarski's Gambling Column"A "fruit machine" is the British term for a Slot Machine, or "one-armed bandit."
According to "Legal Slots": The term slot machines was originally used for automatic vending machines as well as for the gambling devices, but in the 20th century the term became restricted to the latter. Charles Fey's slot machines were a huge success, and he couldn't build them fast enough in his small shop. Many larger gambling supply manufacturers tried to buy the manufacturing and distribution rights, but Fey refused. However, in 1907, Herbert Stephen Mills, a Chicago manufacturer of arcade-like machines, began production of a machine very similar the Fey's Liberty Bell. The Machine Mills produced was called the Operator Bell."
New York law, pursuant to the Constitutional provision, makes it illegal for a New Yorker to own or possess a slot machine, even (it seems) if the machine is disabled by removal of the mechanism which makes payments of coins, and presumably the new paperless mechanism which prints out a voucher for payment by other machine or casino cashier. There seem to be two exceptions: (i) for working slot machines that are older than 30 years of age; and (ii) for slot machines that are permanently disabled from being turned back into a working slot machine.
These prohibitions, of course, prevent an interested person from owning a slot machine similar to the ones currently being used in most of the casinos or racinos throughout the United States, or which had been used up to 30 years ago.
New York Penal Law § 225.32>
McKinney's Penal Law § 225.32 provides various inapplicable defenses against the strict prohibition against slot machine possession by individuals and others in New York, regardless of actual or intended use. These defenses do not permit anyone to possess a new-type of slot machine for non-gambling purposes. The statute provides:
§ 225.32 Possession of a gambling device; defenses
1. In any prosecution for possession of a gambling device specified in subdivision one of section 225.30 of this chapter, it is an affirmative defense that:(a) the slot machine possessed by the defendant was neither used nor intended to be used in the operation or promotion of unlawful gambling activity or enterprise and that such slot machine is an antique; for purposes of this section proof that a slot machine was manufactured prior to nineteen hundred forty-one shall be conclusive proof that such a machine is an antique;
(b) the slot machine possessed by the defendant was manufactured or assembled by the defendant for the sole purpose of transporting such slot machine in a sealed container to a jurisdiction outside this state for purposes which are lawful in such outside jurisdiction;
(c) the slot machine possessed by the defendant was neither used nor intended to be used in the operation or promotion of unlawful gambling activity or enterprise, is more than thirty years old, and such possession takes place in the defendant's home; or
(d) the slot machine was transported into this state in a sealed container for the purpose of product development, research, or additional manufacture or assembly, and such slot machine will be or has been transported in a sealed container to a jurisdiction outside of this state for purposes which are lawful in such outside jurisdiction.
2. Where a defendant raises an affirmative defense provided by subdivision one hereof, any slot machine seized from the defendant shall not be destroyed, or otherwise altered until a final court determination is rendered. In a final court determination rendered in favor of said defendant, such slot machine shall be returned, forthwith, to said defendant, notwithstanding any provisions of law to the contrary.
Emphasis added.
(McKinney's Penal Law § 225.32 added L.1979, c. 526, § 1; amended L.1983, c. 676, § 1; L.1997, c. 619, § 1, eff. Nov. 1, 1997; L.1998, c. 346, § 1, eff. Nov. 1, 1998.)
This prohibition against slot machine possession in New York does not seem to make sense, especially today.
Today a gambler can turn on his/her computer (as a "gambling device" and play poker games for money (and for the profit of the online casino), and there are about four slot-machine manufacturers that have announced (during the summer of 2005) that they have developed downloadable slot machines to enable casinos (and others) to acquire a new machine, or a machine with a changed denomination or payout, in several moments of downloading time, using a computer.
It should be noted that efforts by the United States to prohibit internet gambling may be illegal under international treaties with the United States and therefore ultimately unenforceable by the United States, New York State and other states. In a March, 2004 ruling by a World Trade Organization panel, at the request of Caribbean countries licensing internet gambling website owners, the W.T.O. held that efforts by the United States to prohibit internet gambling in the United States was a violation of various treaties with the United States. See Websight Article Based on a 3/24/06 New York Times Article Announcing W.T.O. Internet Gambling Decision
The predictable effect of downloadable slot machines is discussed at Article
Entitled Downloadable Slot Games Many foreign-based websites offer
downloadable slot machine games, roulette games and other gambling games. See Downloadable
Slots Available at UK Website British Information.Com and
The effect of the foregoing is that federal and New York law enforcers have made the ownership and use of computers illegal in the United States because (as with functioning slot machines) they are capable of being used as gambling devices, and New York residents must not be able to own devices capable of being used as slot machines or roulette tables, for example. The way New York law now stands, unless changed by the court construction or by Constitutional amendment, computers are illegal gambling devices under New York law and the owners thereof should be prosecuted for illegally owning a device fully capable of providing unlawful gaming activities, such as internet gambling and the playing of downloadable slot machines.
Remember, the New York Constitutional provision is 185 years old, and there were no radios, telephones, chips, engines, steam ships, movies, radio, television, cell telephones, airplanes, trucks, interstate highways in existence at such adoption.
Clearly, the prohibition should be removed from the Constitution as non-enforceable, and as an unlawful restraint upon businesses, and because it is not being enforced, and because the policy of New York (and all other states) is not to stop gambling, but instead to foster gambling for the tax revenues the states obtain from gambling. In light of this dramatic turnabout of purpose, the prohibition needs to be declared unconstitutional or unenforceable, and the New York Legislature needs to enact a coherent legislative policy consistent with the real world, which means legalized gambling, with appropriate regulation and taxation.
The New York legislators and Governor involved in revising New York's gambling policy should strive to reach the following goals:
If commercial gambling becomes lawful in New York, hundreds or thousands of social clubs would be created servicing hundreds or thousands of neighborhoods in New York. Some of these clubs would be brand new social clubs or venues, but most of them would probably be created through conversion of existing businesses or non-profit activities to turn them into something close to the model neighborhood club I envision.
The Neighborhood Club, as It Probably Would Develop
I believe that "Neighborhood Clubs" would develop, if given a chance, to fill certain needs that I can articulate. To fill these needs, such clubs would provide certain services. Thus, I can predict to some degree what my Neighborhood Clubs probably would be like.
I see a need for places where people can meet and talk with each other on a recurring basis. By this, I mean that the place is somewhere where the same people would go, from time to time, to make it possible for the same people to establish social relationships because of the expectation that they will meet time and time again. This requires that the club be local, and it also requires that there be something that attracts people from the community to patronize the club.
The Neighborhood Clubs that I believe would be created would have the following gaming and other services:
Conversion of Bars and Restaurants with Liquor Licenses
The closest thing to this appears to be a local bar, in which for the opportunity to socialize one must pretty much be willing to drink alcoholic beverages, at a price per drink that reduces the financial ability (for some patrons) to go to the bar daily or for extended hours at a time. Also, many people (such as myself) do not consume alcoholic beverages and/or don't want to be forced to do so.
If gambling is legalized, I see virtually all bars in New York (of which there are approximately 12,731 ("On-Premises Liquor Licenses in New York State" as of 1/20/04) installing anywhere from 3 to 20 slot machines to attract and hold patrons. The main attraction, however, would still be drinking.
At the rate of 6 slot machines per bar or licensed restaurant, on the average, one could predict the purchase and installation of 78,386 slot machines by bars/licensed restaurants, exceeding the 61,000 slot machines already planned for the whole Commonwealth of Pennsylvania. This assumes, of course, that the State Liquor Authority does not impose any significant barriers.
At a $250 annual license fee per machine, this would mean immediate revenues of $19,096,500 per year for New York State, just as to slot machines in bars (and restaurants with liquor licenses).
Conversion of Hotels
Hotels would start with slot machines and possibly add other casino games in what could be called a mini-casino. The hotels would be tempted to have high payoffs on the slot machines to attract customers to the hotel, such as conventioneers. The hotel casino would have mostly transients and not fulfill the social communication need that is fulfilled by my Neighborhood Casino.
It is possible, in some cases, that a hotel might rent rooms to a group (or use rooms as sponsor) to create a neighborhood casino of my envisioned type in the hotel, and if so the club would have the added advantage of real hotel services, for a price of course.
Conversion of Coffee Houses
Coffee houses would get into the act, and add slot machines, and probably use high-payout slot machines as they do with FREE Wi-Fi connections for computer users, as a way of attracting business for the coffee house. Coffee houses tend to have a transient clientele, one that stays for much shorter periods of time than I believe would be spent by patrons of my Neighborhood Casinos.
Conversion of Other Restaurants
Other restaurants (the ones without on-premises liquor licenses) would also add slot machines (as they have done in Nevada and in Canada), which gives patrons something to do when waiting to be seated or when waiting for their food order. The length of time spent in a typical restaurant (with or without a liquor license) would be much shorter than the time spent in my Neighborhood Casinos, and in a restaurant there would probably be little opportunity for socializing beyond the immediate party of 2-4 persons to be seated at a single table, typically.
Fast Food Operations
I'm not sure what fast-food chain stores would do, such as Burger King and McDonalds. When traveling, you do see arcade type video games near the restrooms patronized by customers of the fast-food branch. It is conceivable that the fast food restaurants would install 1-2 slot machines for a test, and make sure they have instructions on the machines warning persons under 18 or 21 years old not to play.
Disco Slots? Unsure
Disco clubs might consider adding slot machines, but might feel they don't need to have them to attract patrons to the club, and may not want to be bothered with them. Even the hurting racetrack owners in New York State rejected the opportunity to put in slot machines (called video lottery terminals) when offered only 2% of the money wagered in the machines. They said it wasn't enough. Actually, I think they made a bad mistake. I think what they should do is put in the VLT-type slot machines (or regular slot machines if I win this lawsuit), have them set for a 100% or even 101% payback, and then market the hell out of that high payback to attract patrons to the track to view and bet on the horse races.
All gambling is not evil. The evil is with its excesses and the financial, psychological and social consequences that flow from gambling excesses or addiction. Gambling addiction means socially unacceptable excesses. A weekly $2 lottery-ticket purchase by a welfare client is not “gambling addiction”. The weekly $2 expense is not causing the welfare client or the client’s family any loss of food, housing, clothing or medical services, but is similar to buying a movie ticket each week.
Gambling is taking place all around us without having anyone say the participants are “addicted to gambling”. Someone going to the racetrack each day to watch the horse races isn’t addicted to gambling, especially if he is not doing any wagering. He may be addicted to going to and watching the races, but not to gambling. If the level of gambling (and related costs to go to the track) reaches socially unacceptable proportions, we can say that he is addicted to gambling. The degree of gambling is the key, especially when the level precludes purchase of life’s necessaries or adversely affected his business or employment (which in the long run could prevent obtaining the necessaries).
Is a person addicted to gambling if he buys a Pepsi-Cola (rather than a Coke) because of the chance (1 bottle cap in 12) of winning a free Pepsi-Cola? Most people would say no. This gambling event, although recurrent, is not preventing the consumer from obtaining his necessaries.
Is betting $25 on a football game or playing poker with anticipated wins or losses of perhaps $100 a socially unacceptable activity or gambling addiction? For most persons, probably not. Some people can choose to spend their disposable income on gambling services rather than for dining out and going to movie theatres to see new releases. Is spending $2 to participate in a 3-hour bingo session (with the possibility of obtaining a prize of several hundreds dollars) worse than spending $10 for a lottery ticket or $10.00 for a movie ticket?
Why, then, is all gambling prohibited (other than the New York State lottery, pari-mutuel racetrack betting and New York‘s 10 racetracks, off-track betting, video lottery terminal wagering at many of the 10 racetracks, or playing slot machines at one or more of five existing Indian casinos in New York)? By reason of these exceptions built into the New York Constitution during the past 66 years or so, we see that there is no policy of New York State to prevent commercial gambling, other than commercial gambling in which New York State has no major financial interest. In other words, from trying to protect New York residents the New York Constitution now protects the owners and marketers of monopolized gambling venues, causing injury to residents (assuming gambling is bad) rather than the original goal of protecting all residents from any types of gambling.
Presumably some or all of the gambling allowed by New York State is socially acceptable conduct, at least when not done in excess to deprive a person or his family of necessaries, or adversely impact upon the participant’s business or employment.
My concept of the Neighborhood Casino incorporates responsible gambling activities (such as low-fee bingo and poker tournaments, low-price 100% payout roulette or slot machines) as a attraction to obtain customers for the casino. The gambling is used to pull them into the casino where they will be able to do other things, such as meet with friends and neighbors, relax in comfortable furniture without the need to gamble, play in a $2 bingo tournament, go on internet to look up the answer to a troubling question or to see any recent email, or to play a full payout slot machine or full-odds roulette game, so that the potential for any significant loss is dramatically reduced.
Meeting people draws people into bars for which purchases are made to permit the desired social contact. Of course, there are some people who go into bars solely to drink, and this might be one way to help determine that the drinker is addicted to drinking because it is the reason for bar attendance, not the price of some other desired activity.
My Neighborhood Casino is an idea whose time has come, for a variety of converging reasons, including:
1. Senior citizens flock to casinos to have something to do, and on the trip to be able to socialize with a group of their peers. These senior citizens don’t want to be restricted to Senior Citizen’s Clubs with little to do or say except talk about their health. They would rather be able to socialize with a mix of persons including younger persons, active in business, politics, fashion, ideas and other things. Senior citizens aren’t as willing or able to purchase and consume alcohol at local bars to be able to be part of a mixed social gathering.
2. Senior citizens have less reason to flock to coffee houses because they are set up near the business part of town, to attract businesspersons and employees of business as customers. Senior citizens are generally not employed and don’t live in the business part of town. Accordingly, typical coffee shops are not open to them, and they would have less to do if they used coffee shops as a social gathering place. Coffee houses are not planned to have anyone lounging around their for hours nursing a cup of coffee. They want a turnover of customers.
3. Senior citizens do obtain social intercourse every two years, during the pre-election period, by participating in politics in support of one candidate or another, but this leaves the Senior Citizen without anything to do for 18-20 months out of every two-year period.
4. Senior Citizens could take adult education courses, but many Senior Citizens might not have the money to pay for such courses, and do not have the desire to train themselves for another field of employment.
5. The number of Senior Citizens not working at a fulltime job or in a fulltime business is approximately 30,000,000 - and with nowhere desirable to go if they want to get out and socialize.
6. They are not invited to office parties, or to college parties, or to homeowner parties given by younger couples. In fact, Senior Citizens are moved out of their neighborhoods into housing or nursing facilities that collect and hold older persons, making them further removed from society and in greater need of a place to go to be able to mix with the non-Senior part of society.
7. Computers may give a Senior Citizen access to the world, but this access is obtained while operating the computer alone, away from any meaningful social contact with other human beings. Attendance at movies, watching television, going to live performances such as concerts and live theatre, or sports events such as boxing matches, or football, baseball or basketball games, or going to public libraries, do not provide good venues for anyone to meet and talk with others. These listed events provide an opportunity to listen to and/or watch others, but not to talk with other attendees.
My concept of the Neighborhood Casino would change this for the Senior Citizen and provide an additional social venue for the non-Seniors. Almost everyone in a local community (of proper age, of course) would be drawn to a local Neighborhood Casino for a bingo game, poker game or tournament, to play hi-payback slot machines, or perhaps 32 number roulette wheel (with no 0 or 00 as the casino’s percentage).
Although drawn to the Neighborhood Casino by reason of the low-profit, low-cost gambling opportunities, the Neighborhood Casino would offer a variety of other things, such as the ability to mingle and socialize with a mixed group of people from the area, who can be expected to return to the casino on a regular basis. Because of this expectation of return to the Neighborhood Casino, almost everyone in the casino would be willing to take notice of a Senior Citizen or non-Senior and invest time by talking with the person, knowing that the time would not be wasted, and that such Senior Citizen or non-senior will be at the casino again, at which time the conversation can be resumed.
My envisioned Neighborhood Casinos are a needed venue for the social mixing of persons living in a community, when at the present there really is no place for many people to meet and talk with each other.
Gambling is a useful catalyst for bringing together diverse types from a community, and the availability of useful things to do other than gamble, including the availability of high payback gambling opportunities (more like an arcade game experience) makes the Neighborhood Casino an activity that can pull addicted gamblers away from their addiction into a socially acceptable experience, something better than the experience present-day casino gambling experience forced upon many persons because there is very little else for them to do to get out and try to socialize with people.
The addiction of gambling occurs for many people because of the lack of something else to do. Gambling enables a person to while away time by himself when there is no meaningful opportunity to while away time with others. The Neighborhood Casino will change this, and enable persons to look upon the wide range of activities at the local casino as a socially acceptable way of spending one’s spare time, similar to the hours spent by others at a country club, bar, city club, private club, and certainly more useful than spending the same time watching television, drinking alcohol, ingesting unlawful drugs, getting deaf at a disco or non-stop watching of sporting events.
The envisioned range of activities for patrons of my Neighborhood Casinos is set forth immediately above in the section entitled “The Services to Be Offered by the Proposed 'Neighborhood Clubs'”.
Gambling is not something that should be outlawed. Gambling encourages a useful purpose of social mixing where few other activities allow this to take place. Low-profit, high payback gambling is something less than injurious gambling and does not lead to anti-social behavior or “gambling addiction” any more than someone is “addicted” to collecting stamps, going to the movies, watching football games, going to a local bar, or playing poker with friends. Gambling activities can be a socially acceptable theme for bringing people together, especially if the gambling is low-profit, high payback, and not the only activity for the casino participants.
Legislation attempting to regulate gambling should not prohibit the socially useful Neighborhood Casino as I have described it. Instead, this type of casino should be encouraged, as an alternative to bars, Senior Citizen clubs, television and computer addiction, and socially unacceptable gambling activities and related addiction. Such encouragement could take place with an exemption from certain types of regulation and an exemption from any gambling taxes.
If all commercial gambling is legalized, subject to reasonable regulation and taxation, the public will obtain Neighborhood Casinos because they make good business and social sense, and will attract patrons because of their nearby convenience, diverse offering of affordable, non-injurious gambling activities, provide greatly needed opportunities for social mixing especially for our residents of 50 years old or older, reduce travel time and expenses, dramatically reduce gasoline consumption, and compete favorably with more injurious types of acceptable venues (e.g., venues where alcoholic beverages, disco dancing and rock concerts accompanied by deafness and drugs, and smoking are the principal attraction). It should be noted that approximately 21% of the U.S. population is 55 years old or older, and this group generally does not patronize discos, bars and coffee houses (the places where younger persons tend to hang out).
There is a good and sufficient answer to the typical anti-gambling argument that “Gambling should not be encouraged by making it legal“. The answer is that competition (producing venues such as Neighborhood Casinos) will cure the present excesses and evils of gambling and allow gambling to become a non-injurious, socially acceptable activity, taking place in moderation. Persons opposed to legalizing gambling are in fact supporters of the present monopolized system of gambling with its attendant addictions and other evils.
Prior to 1821, gambling was legal in New York and probably most other states in the United States, as well as in many other countries throughout the world. In 1821, New York adopted a Constitution which, in its Bill of Rights, prohibited all gambling, called "lotteries" in the Constitutional provision.
For the past 185 years, New York has had to live with that Constitutional prohibition. Meanwhile, developments were taking place, such as the telephone, radio, cell phones, computers, interstate highways, airplanes, motion pictures, subways, buses, taxicabs, chips, programming, refrigerators, thermostats, and thousands of other inventions, and most particularly the ever-increasing globalization of the nation's economy, in which the state and federal governments are less able to impose their will on the persons residing within their governing jurisdiction.
At all times during the 185-year prohibition, gambling has been taking place, whether good or bad for the persons involved or the population of the area in which the gambling is taking place. Poker games for money; office pools for money; bets on sporting events, purchase of foreign or out-of-state lottery tickets, as well as approved lottery tickets, numbers (policy) purchases, casino gambling at craps tables, roulette tables, blackjack tables, slot machines, and betting on stock market and real estate prices and now online poker games, poker tournaments and othe casino games have been taking place with little effective prevention by New York. There is so little interference with these gambling opportunities that the major consumer-oriented corporations have already amended the Constitution for themselves (and to the detriment of individuals who feel constrained to obey the Constitutional prohibition) by continually offering illegal lotteries to book their consumer-product sales efforts, such as by offering one free bottle of soda in 12 (determined by looking under the bottle cap after the purchased bottle is opened up).
The cost of trying to stop New Yorkers from gambling is the giving away to other states, other countries and to the state's and country's Indian tribes a potentially trillion dollar industry, with the easily anticipated consequences (such as with China's favorable balance of payments position) that the money handed over by New Yorkers to others instead of themselves will come back to take over numerous companies and industries, and further empoverish New Yorkers who already are suffering economic deprivation in various parts of New York State.
To argue that trying to stop gambling is more important than providing jobs is an argument that New York can no longer make. Long ago, both New York City and New York State have been profiteers of gambling and have actively promoted gambling through massive, often misleading and false advertising, to take gambling revenues instead of legitimate taxes. But these monopolies of gambling are short sighted because they do not demand improvements and keeping up with technology, and instead lead to bloated public payrolls and inefficiencies, and closing and loss of the monopolized business opportunities.
Instead, New York should have the Constitutional provision repealed or declared void and of no effect, and then enact a coherent legislative policy with Nevada in mind, at least to start out.
One may ask why the New Jersey model would not be better.
The New Jersey model is to grant a monopoly (or shared monopoly) to a very restricted number of casino owners, all operating in Atlantic City (and a location 2 miles away). At this time in Atlantic City there are just 6 casino owners: Harrah Entertainment, owning Harrah's, Showboat, Claridge/Bally's/Bally's Wild Wild West, Caesar's and until very recently the Hilton (a maximum of 7 casinos); Trump or Trump partners, owning Taj Mahal, Trump Plaza and Trump Marina; and the 1-casino owners of the Borgata, Resorts International (now affiliated with the Hilton), Tropicana and the Sands - a total of 14 casinos (involving only 12 licenses).
The promise to Atlantic City of giving it a gambling exclusive has not been realized. The casinos are doing well, but nothing else is happening in Atlantic City. The jobs basically are low-paying service jobs with these casinos and little else. Atlantic City is not a high-economic growth community, and the rest of New Jersey hasn't seemed to prosper by reason of the gambling exclusivity given to Atlantic City.
In fact, this exclusivity has not been given to all of Atlantic City, an area of 11.3 square miles. Instead, gambling is permitted only in about 1/5th of a square mile, which amounts to about 1/56th of the city's land area. Gambling is allowed only on the East side of Pacific Avenue, which is a strip of land less than 1/10th of a mile in width and about 2 miles in length (plus the land occupied by the 3 casinos about 2 miles away). New Jersey has a size of 8,722 square miles and Atlantic City's gambling area of 1/5th of a square mile is .0000229305 of New Jersey's total size.
In comparison, gambling is legal in all of Nevada, with a land size of approximately 110,567 square miles (the 7th largest state in land size). Nevada for years has been the fast growing state and economy in the nation, undoubtedly attributable to its policy of legalized gambling, with regulation to ensure integrity and that Nevada and its cities, counties and towns obtain their fair share of tax revenues from the casinos and equipment used in gambling. See 1/1/05 Article, Census: Nevada Fastest Growing State nd About Website Article, Nevada: Fastest Growing State and Article against Gambling Based in Part on Atlantic City's Experience.
It would be wrong to limited gambling, as is being done today, to a few sites selected by governmental officials. A free market, as in Nevada, should select the sites and what types of gambling are to take place at such sites. Towns will spring up or renew themselves and gaming activities will also spring up to service the town. Regulation is not needed of the Atlantic City type. What is needed is the go ahead to start competing with Las Vegas, the rest of Nevada, Foxwoods, Mohegan Sun, the other Indian tribes, the online poker and casino sites, Montreal, Puerto Rico, the Caribbean countries, the numerous casino and vacaion cruise lines, other countries such as Monte Carlo, Spain, and all over the world where gambling is allowed, and to permit New Yorkers to become engaged in the fastest growing industry in the United States, already surpassing the vaunted movie industry.
Gambling problems can be cured similar to the cure for smoking, over eating, lack of exercising, even some type of drug use, but the continued prohibition of gambling in New York to protect the state (lottery and pari-mutuel) and city/county/region (OTB) monopolies is senseless and probably unconstitutional.
Radio, television station, newspapers and magazines and billboard owners among others (including website advertising) would obtain advertising substantial revenues and be able to expand their services to the public.
Jobs of many types would be created, not just in the gambling industry, but in the accelerator effect of gambling industry money used to purchase land, homes, building services, food, entertainment, automobiles, repair services, club memberships, education and, yes, even or especially taxes to New York and its local governments.
A debate needs to be started on the legalization of gambling in New York, and it is hoped that this website and related lawsuit will get the ball rolling. An interesting website, Gotham Gazette - New York City News and Policy, has published an article by Erica Pearson dated May 26, 2003 entitled NYC's Blue Laws. It provides a good history of New York's Blue Laws, including the gambling prohibition. See History of New York's Blue Laws.
Carl E. Person
New York, New York
I have compiled a list of arguments in favor of legalization of gambling, and set them down below. Also, I include some arguments against gambling, but I am not trying at all to be neutral. I believe gambling should be permitted, subject to reasonable regulation and taxation, in spite of various arguments that are being made against the legalization of gambling.
My list is in no particular order, and I invite visitors to submit additional points on either side of the argument, by email to Submit Additional Points Pro or Con to Improve My List
Arguments in Support of Legalization of Gambling
Arguments in Support of Continued Outlawing of Commercial Gambling
The highest state court in New York, the New York Court of Appeals, rendered a recent decision (May 3, 2005) in Dalton v. Pataki, upholding three specific challenges to New York's regulation of gambling. [Important Note: In early September, 2005, the losing parties filed a petition for certiorario requesting the United States Supreme Court to review and overturn the 5/3/05 decision of the New York Court of Appeals. Thus, the action is not truly over.] The challengers claimed that the gambling activities in question were not authorized by the New York Constitutional provision, Article I, Section 9(1). The Court of Appeals disagreed, with two dissents in part.
The Court of Appeals upheld the agreements between the New York Legislature and Governor Pataki with various Indian tribes or nations in New York enabling the Indian tribes to open up casinos in New York, in spite of the Constitutional prohibition. One of the dissenting judges, in a lengthy dissent, argued that New York had no Constitutional authority to enter into any agreement with the Indian tribes, and that New York should have let the Federal Government and Indian tribes do whatever Federal law imposed on New York, without New York agreeing to anything.
The second holding was that video lottery terminals that were permitted by the New York Racing and Wagering Board, to stimulate racetrack attendance and increase the prizes or purses for owners of the winning racehorses, did not run afoul of the New York Constitutional provision. The reasoning of the majority was that video lottery terminals are not "slot machines". Instead, VLT's are instant lottery games in which the player is playing against a pool rather than, as with slot machines, the player is playing against the machine. Some players of slot machines might not be able to detect any significant difference. One dissenting judge pointed out that all lottery revenues after prizes and expenses must be used for educational purposes, and that the 3% interest given to the racetrack owners to induce them to buy, install and maintain the VLT's was clearly a violation of the Constitutional provision. Another point should be considered, which is that VLT's seem to be a variation of progressive slot machine pools and perhaps should be considered "slot machines" rather than non-slot machines.
As an interesting aside, see the UK's national (i.e., legalized) £1.00 Monopoly lottery game (the Interactive Instant Win Games) with schedule of prizes, described as:
Game ProceduresGame: Monopoly
This Game ("the Game") is subject to these Game Procedures ("the Procedures"), the Rules for Interactive Instant Win Games ("the Rules") and the Interactive Account Terms and Conditions which can be found at the National Lottery website (www.national-lottery.co.uk). The meaning of any word or term in the Procedures shall be as defined in the Rules for Interactive Instant Win Games unless the context clearly indicates otherwise.
Game name: Monopoly
Game Price: £1.00
Finally, the Court of Appeals upheld New York State's participation in the multi-state Powerball and Mega-Millions lotteries, in spite of the New York Constitutional prohibition that requires New York to have control of the lottery. The Court of Appeals held that because the moneys raised from sale of lottery tickets in New York remained in New York (after expenses), the Constitutional requirement of control was met.
In effect, the Court of Appeals is enlarging gambling opportunities for New Yorkers in spite of the 1821 Constitutional provision. A discussion of the decision may be found at Westchester News Article about 5/3/05 Court of Appeals Decision in Dalton v. Pataki. It is interesting to note that although construction of the new Yonkers racino waited until the legal hurdles were cleared in New York State, the construction may have started prematurely - because during early September, 2005, the "Appellants-Respondents Dalton, et al." (as losers) in the New York action filed a petition for certiorari, asking the U.S. Supreme Court to reverse the decision of the New York Court of Appeals, the highest New York court.
A question remains whether the Court would decide that the Constitutional provision should no longer be construed to prohibit commercial gambling in New York, for the various reasons set forth in the author's lawsuit. A copy of the complaint filed in the Supreme Court of the State of New York, at 60 Centre Street, New York, NY on September 8, 2005 may be seen at Copy of Complaint to Legalize Gambling in New York State and a copy of the attached Exhibit A, an analysis of New York gambling by Carl E. Person dated September 8, 2005 Exhibit A, 9/8/05 Analysis of New York Gambling by Plaintiff Carl E. Person
During the writing of this website, the national tragedy and catastrophe involving Hurricane Katrina was taking place, with one result being a reduction in oil production and refinery, and a dramatic increase in price for gasoline and other oil products.
This led me to look at the amount of gasoline consumed by gamblers forced to travel long distances to patronize casinos when the laws of their state (such as New York, Massachusetts, New York,Rhode Island, Maine, Vermont, etc.) prohibit commercial gambling.
My first research was to determine the number of visitors each year to various gambling venues, and I found that 1.1 million visitors patronized Mighty M Gaming casino in Monticello, New York during its first year of operations (ending 6/04); that 33 million visitors each year go to Atlantic City; 25 million patrons each year go to Foxwoods and Mohegan Sun Indian casinos in Connecticut; and that an estimated 8.9 million visitors go each year to the four other Indian casinos in New York.
Thus,in the area surrounding New York City, there are 19 casinos, involving an estimated 68 million visitors per year, coming from many places, but many of such persons coming from New York City.
Now, I have to make several assumptions: (i) that trips by car average 2.0 passengers; (ii) that fuel consumption per passenger arriving by bus, airplane or train is comparable to the fuel consumption for cars on a per passenger basis, to enable the estimate to be made as if cars were the only way by which persons arrived at the casinos; (iii) that the average roundtrip distance driven is 250 miles; and that the rest of the United States with its 340 casinos in Nevada (see Number of Nevada Casinos and an estimated 300 Indian casinos (300 Indian Casinos in US throughout most of the other states (but not including Massachusetts or Vermont, for example) is 10 times the total calculated for the 19 casinos in the New York area. One important fact to remember is that many of the patrons of the Nevada casinos come from California, and the distance from Los Angeles to Las Vegas and back is approximately 540 miles.
The 68 million visitors to the 19 New York area casinos had the equivalent of 34 million car trips, averaging 200 miles each, or a total of 6.8 billion miles, consuming .52 billion gallons of gas at 13 miles per gallon, on the average. Multiplying this by 11 (which is the 1 for the 19 casinos and 10 times that for the other 640 casinos in the US), we arrive at an annual gasoline consumption equivalent of 5.72 billion gallons being used for driving to and from casinos in the US each year.
Yahoo, in answering a user's question of "How many gallons of gasoline are consumed in the U.S. on an average day?" responded:
According to this piece in the Seattle Times, Americans used 8.93 million barrels of gasoline a day in 2003. A barrel holds 42 gallons, so that's roughly 375 million gallons per day.Over the past five years, gas consumption has increased annually at a rate of 1.6 percent, on average. ... A recent Bloomberg article states that the U.S. government projects that in the summer of 2004, the daily consumption rate will be 9.32 million barrels (or about 391 million gallons). * * *
The Congressional Budget Office states that gasoline used in motor vehicles accounts for about 43 percent of U.S. oil consumption and about 11 percent of world oil consumption. * * *
Thus, Americans use about 375 million gallons of gas each day, or 137 billion gallons per year, of which 5.72 billion gallons are used driving back and forth to casinos, or .042 or 4.2% of the nation's gas consumption is used for casino travel. A 3% reduction in gasoline demand might well cause a $.50 to $1 drop in per-gallon price at the pump, which is merely an estimate.
What about the cost of travel to and from casinos because of the various state prohibitions of commercial casinos?
5.72 billion gallons of gas each year at $4.00 per gallon, amounts to about $23 billion, plus the wear and tear on the cars, say another $10 billion; and the amount of time spent traveling or other lost time, probably amounting to 18 hours per person, on the average, for a total "wasted" hours amounting to (68 million + 680 million or) 748 million individuals times 18 hours per person, or a total number of "wasted" hours equal to 13.5 billion hours, which at $20 per hour equals lost time value of $270 billion per year, exceeding by a few multiples the amount of gross profits received each year by all casinos, state lotteries and state percentage of racetrack pari-mutuel and off-track betting.
This is a very rough estimate, but does show to me that monopolized gambling has far more avoidable costs than most people think.
It is not difficult to figure out what individuals, corporations, trade associations, charitable organizations, politicians, governmental agencies, underworld characters and others would tell you, if asked, that they oppose legalization of commercial gambling, and which persons as a group would say they are in favor of liberalization of the anti-gambling prohibitions.
The interests against legalization of commercial gambling seem to be organizations and individuals who currently own, control, operate and profit from existing gambling operations, such as:
Interests That Can be Expected to Favor Legalization of Commercial Gambling Seem to Be:
State governments (with very few exceptions) are the primary beneficiary of legalized gambling because of the state-run lotteries, pari-mutuel and off-track betting, licensing of Indian casinos, and placing slot machines in racetracks. Because of this heavy financial interest in gambling, most states would probably try to prevent any gambling activities that would compete with the state's current gambling portfolio. The state is a monopolist in licensing gambling, and exercises this monopoly by licensing itself to conduct various gambling activities and enforcing state law to prohibit any competition.
The interests of citizens and residents, as I see it, is to have competition in the gambling industry and "let the chips fall where they may". Competition is considered good for almost everything else, and it certainly would be good for the gambling industry. This, of course, what it is all about - the fear that competition in gambling would hurt the state gambling monopolies and require an increase in tax to be paid in part by non-gamblers.
The reality is, however, that competition in gambling (with appropriate regulation and taxation) will increase the state's tax revenues and provide a higher standard of living for the residents of the state.
The major owners of casinos in the United States are:
Indian Casinos:
Other Casinos: [data obtained from "Owners of Las Vegas Casinos dated 8/10/05, Non-Indian Casino Information]
A significant amount of information about the publicly-traded casino owners can be obtained through the SEC filings by clicking on the casino owner's stock symbol in the website (and then clicking on the left side "SEC filings"): Casino Owners Website with Links to SEC Filings
Here is an incomplete list of slot machine manufacturers, hoping that the list includes the most important U.S. manufacturers (with credit going to List of Important Slot Machine Manufacturers, which interested persons should review:
Older slot machines are readily available for sale by most of the used equipment companies listed below. The problem is trying to find a company that has the newer and newest, video type machines (as distinguished from "reel-type") machines, particularly a specific slot machine in which you may be most interested. It appears that as soon as the newest machines come off the floor at the nation's casinos, there are casinos and others seeking to purchase the machine, and the machines are shipped directly from the casino to the foreign customer, in a deal arranged by the used slot-machine dealer. Anyway, here is a list of some of the better advertised used slot machine dealers (who give appropriate warnings about various state laws that prohibit purchases of some types of slot machines by residents of some states such as New York):
Anyone interested in learning about the gambling industry can obtain a substantial amount of useful information from each of the following publications:
An informative study was prepared and published by the Pennsylvania Economy League entitled "Gambling Toward Tax Reform? Part IV -- Gambling in Other States" containing a large amount of compiled information about gambling taxation, a state-by-state analysis of available gambling alternatives, application of tax proceeds, and more. See Pennsylvania Economy League Study on Gambling.
A study by PriceWaterhouseCooper described in the Nevada Review Journal, 6/22/05 edition, predicts major increases in gambling revenues, stating: "Revenue from legal casino gambling worldwide will top $100 billion by the end of the decade and Nevada's casino industry will continue to trump competition from American Indian tribes and regional gambling halls". See 6/05 PriceWaterhouseCooper Study of Gambling Industry.
Forbes Magazine, in an online article dated 1/27/03, favors legalization of betting on outcomes of sporting events. See Forbes Article Urging Legalization of Sporting-Event Wagering.
Carl E. Person, Editor, LawMall,