Good morning and thank you for the opportunity to speak here today. As the president and CEO of the American Gaming Association, it is my privilege to represent the commercial casino-entertainment industry on federal legislative and regulatory issues. It’s important to note that the AGA does not lobby or get involved in state issues except when we are invited to testify or appear before groups such as yours on behalf of the industry. In addition to representing the industry on federal issues, the AGA also serves as an information clearinghouse, develops educational and advocacy programs, and provides leadership on industry-related issues of public concern.
Let me start by saying in advance thank you for the important and critical commitment you are undertaking for the state of Massachusetts.
The bulk of my presentation will focus on regulation and the industry; however, I would like to tell you about the 21st century casino gaming industry from the perspective of someone who has been involved in the business during most of its modern history.
Growing up in Reno, gaming in Nevada was mostly about male gamblers playing table games, while a few slot machines were stuck in the back of the casino to keep the wives occupied while their husbands gambled. Much has changed since then—most of it due to rigorous regulation and appropriate law enforcement oversight of our industry.
Among the most important changes was the shift in ownership from private to publicly held companies and the accompanying resources that led to the creation of the fabulous resorts that are the hallmark of the industry today.
The industry has also become truly global during the past two decades, with significant industries in Asia, Europe, South America and elsewhere around the world.
The patrons of casinos have also changed dramatically. In today’s casinos, men and women of from all walks of life and from across the nation and around the world not only play slots or cards, but enjoy fine dining, shop at a variety of stores and experience world-class shows. The typical casino patron has a higher than average annual income and is either a college graduate or has some college education. And, they no longer need to come to Nevada to visit a casino because, chances are, with commercial or tribal casinos in 38 – soon to be 40 – states, there is a casino within easy driving distance. Of course, not all casinos are in resorts, but even the non-resort casinos offer sophisticated, exciting games, and they focus on providing patrons with a great entertainment experience.
I want to tell you more about the specific segment of the industry I represent—the commercial gaming sector. Today, there are 566 commercial casinos in 22 states that generated $49.5 billion in consumer spending and 400,000 direct jobs in 2010. In addition, when indirect and induced impacts are taken into account, the industry supports an estimated additional $76 billion in spending with suppliers and other businesses, and more than 470,000 additional jobs with salaries and benefits totaling almost $25 billion. Taken all together, the commercial casino industry supported about $125 billion in spending and 875,000 jobs in the U.S. in 2010. This economic activity supported by the commercial casino industry was roughly equivalent to 1 percent of the $14.5 trillion U.S. gross domestic product in 2010.
These results come from a study developed by The Brattle Group for the AGA and released earlier this year. The study also compares the gaming industry with others that are similar in size and scope. When compared with industries of similar revenue, we generate far more jobs.
The jobs created by the industry compare more than favorably to jobs in similar industries. The average salary and benefits provided to employees in the commercial casino industry totaled almost $42,000, more than many segments of the broader recreation and retail industries.
And, then there are the tax benefits to the states and communities where commercial casinos operate. Nearly three-quarters, or 71 percent, of our community leader poll respondents say casinos generated a net tax increase, and well more than half, or 57 percent, say casino tax revenues allowed their communities to avoid cutting key programs or start new projects that would not have been possible otherwise.
That response is understandable when you consider that in 2010 the commercial casino industry directly paid almost $16 billion in taxes and that another $9 billion can indirectly be attributed to our companies.
The AGA companies that operate casinos, large and small, are also committed to being good corporate citizens and even the smallest casino adheres to a formal code of responsible gaming conduct and supports internal and external efforts to address problem gambling.
As you can see, casino gaming has become a critical component of the U.S. and global entertainment economies. Our casinos and the manufacturers, suppliers and vendors that support our business are creating jobs in almost every state in the nation and our employees and local operators have become a part of the fabric of the communities where they live.
As the industry has evolved and grown during the past few decades, so too has the technology that drives our operations. For example, many games are now networked and designed to accommodate multiple players, or allow for a single machine to host a variety of games. Technological changes present a host of new challenges for regulators. However, technology also offers regulators the tools to even more closely monitor these games, casino management and financial activities.
In addition to the technological changes, today’s commercial casinos are also subject to more sophisticated federal regulations from the IRS, the SEC, the Treasury Department, even the Coast Guard. All of these factors – domestic and global geographic expansion of gaming, the modernization and diversification of casinos, technological advances and greater federal oversight contribute to a growing interest in modernizing, streamlining and coordinating current gaming regulations, which makes this meeting very timely.
Several gaming states have already begun this review. In Nevada, Gov. Brian Sandoval recently convened the Gaming Policy Committee to examine current regulatory technology and to work towards modernizing regulation of the industry. Similar conversations are taking place in other states including, Missouri, Mississippi and Iowa.
As a major stakeholder in these discussions, the AGA and our member companies look forward to working with regulators as they undertake these reviews or, as is the case here in Massachusetts, as they develop their own set of regulations.
Last fall, the AGA organized a taskforce of compliance officers, lawyers and other industry experts – including former and current regulators – to identify necessary regulatory reforms and to determine practical opportunities for change. The result was a white paper, titled “Improving Gaming Regulations: 10 Recommendations for Streamlining Processes While Maintaining Integrity.”
The paper, as its title suggests, recommends broad-based regulatory reforms and state-specific actions such as improving the licensing process, simplifying the gaming licensee’s ability to gain access to financing, reforming regulation of gaming machines and modifying or eliminating unnecessary red tape and reporting requirements. Let me tell you about two examples of ways new technology could make current regulations more efficient and effective.
First, some jurisdictions require that an employee’s fingerprints be taken by a law enforcement agency within that jurisdiction as part of the licensing process.
Many employees are licensed in multiple jurisdictions and subject to continuing license renewal.
With today’s technology, regulators could accept certified electronic images of the applicant’s fingerprints from a legitimate law enforcement agency, rather than the time-consuming task of visiting an agency in person whenever and wherever fingerprints are needed.
Similarly, video-conferencing could be used for conducting regulatory licensing interviews. In the current system, applicants often have to travel long distances – even overseas – for a relatively brief interview. We could all save time and money by taking advantage of a reliable technology that many businesses use every day.
These examples demonstrate the need not for less regulation, but certainly for more efficient regulation. And, as the white paper points out, duplicative or dated regulations increase costs and divert industry resources away from investment and innovations that create jobs and economic opportunity. They sap the creative spirit of employees and waste taxpayer dollars and industry resources on misguided enforcement. And they reduce the morale of regulators, who recognize they are imposing standards that are losing their relevance.
Massachusetts is in a unique and enviable position because regulators have the opportunity to craft regulations that can address modern gaming from the beginning. Massachusetts can start fresh and incorporate some of the changes their peers nationwide are discussing. As you undertake the task of creating your regulations, I hope you consider the research and recommendations in our white paper and consider the AGA to be an ally.
I would like to take a moment now to talk about a factor that, in my experience, all regulators should consider when developing regulations.
As you can imagine, I have closely followed the media coverage of the legalization of gaming in Massachusetts and, after hearing a litany of anti-gaming claims, it is understandable if you have concerns about the widely claimed negative social impact of commercial casinos.
Casinos are proven to bring many positive benefits to the communities that host them. The proof of that statement can be found not only in statistics, but more importantly in the attitude toward casinos of the men and women in the communities where casinos operate.
NBC/Wall Street Journal pollster Peter Hart recently conducted a poll that found that 83 percent of elected officials and community leaders in casino jurisdictions say the introduction of casinos has met or exceeded their expectations. That same overwhelming majority says that the overall impact of casinos has been positive. These civic leaders view casinos as vital community partners.
The positive feelings toward casinos don’t stop there. More than eight out of 10 community leaders think that casinos have done a good or fair job of producing promised benefits, such as taxes and government revenue, quality jobs, increased local and regional economic activity, increased tourism and expanded entertainment options. And 76 percent of community leaders say casinos have done more to help than hurt other area businesses. Meanwhile nearly three-quarters say casinos are good corporate citizens.
Perhaps the most telling result is that, when everything is taken into account, 76 percent, of gaming community leaders would choose to vote “yes” if given the chance to go back and cast the deciding vote to allow casinos into their communities.
Community leaders aren’t the only ones who understand the positive benefits of commercial casinos. Until recently, Iowans were asked to vote every eight years on a referendum to continue allowing gaming in their area. Each time, voters overwhelmingly approved the measure. Iowans voted in favor of casinos so often that the referendum has been deemed unnecessary and will no longer be used in used in the future.
Another area of natural concern centers on those who cannot gamble responsibly. I know that responsible gaming is a priority for you, and it is also a priority for the gaming industry. We take this issue very seriously and work hard to make sure policies and regulations related to responsible gaming are based on sound science.
While gaming opponents would have you believe that pathological gambling is a rampant problem that tears communities apart, the truth of the matter is that countless research reports have confirmed the prevalence rate of pathological gambling has held steady at approximately 1 percent of the adult population for the past 35+ years. If more casinos caused more gambling problems, then the explosive growth of casino jurisdictions over the last two decades would have seen a proportionate increase in the prevalence rate of pathological gambling. Research shows that is simply not the case.
That is not to say we should not be concerned about those who cannot gamble responsibly, and AGA member companies make every effort to address this important issue. In fact, the issue of responsible gaming was on the agenda at the very first AGA meeting 17 years ago, and over the years we have made significant progress in addressing this topic. I would like to take a few moments to tell you about two specific programs supported by the AGA.
The first is the AGA Code of Conduct for Responsible Gaming, which was created in 2003 to establish a consistent, industrywide approach to responsible gaming across all of the AGA’s member companies. The Code of Conduct is a pledge to employees, patrons and the public to promote responsible gaming in every aspect of the casino business, including employee training, customer education, the prevention of underage gambling, responsible alcohol service and responsible marketing and advertising.
The Code also details the commitment of AGA members to continue support for research initiatives and public awareness activities surrounding responsible gaming and underage gambling. Specific provisions include a commitment to train employees with regard to responsible gaming and responsible alcohol service, as well as a provision to allow patrons who have a gambling problem to self-exclude themselves from gaming activities. According to the Code, this self-exclusion will also include opportunities for patrons to request to be removed from promotional mailing lists and to revoke privileges for casino services such as casino-issued markers, player club/card privileges and on-site check-cashing.
All AGA member companies adhere to the provisions of the Code, and its reach has extended well beyond AGA membership. The Code has become a model for responsible gaming programs in international jurisdictions and non-member casinos across the country as well.
But the Code is just one part of the gaming industry’s commitment to responsible gaming. In 1996, the AGA founded the National Center for Responsible Gaming (NCRG), the largest private funder of research on gambling and addiction in the nation and the only national organization exclusively devoted to funding research that helps increase understanding of pathological and youth gambling. This organization is devoted to finding an effective method of treatment for the disorder.
The NCRG’s mission is to help individuals and families affected by gambling disorders by supporting the finest peer-reviewed research; encouraging the application of new findings to help improve prevention, intervention and treatment strategies; and advance public education about gambling disorders and responsible gaming.
The NCRG’s competitive grant-making process is overseen by a Scientific Advisory Board that is composed of leading independent scientists with expertise in addiction and related topics. They monitor the conduct of the research grants, and peer-review panels evaluate all proposals based on criteria modeled after those used by the National Institutes of Health. As the AGA’s affiliated charity the NCRG has provide some $22 million for research and education programs that have stood the test of time and been reinforced by numerous studies conducted by both gaming proponents and opponents.
I should note that one of the foremost researchers on gambling and addiction is right here in your own backyard. Dr. Howard Shaffer and his team at the Division on Addictions at the Cambridge Health Alliance have contributed more to this field of research than perhaps anyone, and the NCRG has been proud to support their work and benefit from their expertise over the years.
Given the NCRG’s high standards for awarding grants, NCRG-funded studies have resulted in the publication of more than 170 articles in highly competitive, peer-reviewed scientific journals such as Harvard Review of Psychiatry, Addiction, Psychology of Addictive Behaviors, the American Journal of Public Health, and The Archives of General Psychiatry. This peer-reviewed research has been conducted at some of the most prestigious institutions in the U.S., including Harvard University, Yale University, Johns Hopkins University, Massachusetts General Hospital, University of Minnesota, Duke University, the University of Iowa and the University of Michigan.
The NCRG is committed to translating this research into practical applications that prevent problem gambling. Many of these applications will be of use to you as your state prepares to open commercial casinos. In fact, the NCRG has already begun building a relationship with stakeholders in Massachusetts. Each year, the NCRG Road Tour travels to a new city to share information about the latest research on gambling disorders and make key stakeholders aware of the science-based programs and resources the organization has to offer. In 2011, the Road Tour stopped in Boston and partnered with the Massachusetts Council on Compulsive Gambling for several events. The NCRG maintains a strong relationship with the Council today.
As your state moves forward with gaming, both the AGA and the NCRG can serve as excellent resources when addressing the issue of responsible gaming. Casino companies in Massachusetts can adopt the Code of Conduct – and, if any AGA member companies are selected as licensees they will already be committed to the Code. The Harvard-developed EMERGE training program also is a tool that could prove helpful in Massachusetts. EMERGE stands for Executive, Management and Employee Responsible Gaming Education and is the only program of its kind grounded in scientific research that has been translated into an accessible training tool for gaming employees across the board.
Additionally, the AGA has a variety of tools to educate casino customers about how slot machines work, what the odds of each game are and ways to play responsibly. Research has shown that understanding the odds and how casino games work are key elements of making responsible decisions when playing. Such an understanding also helps prevent gambling problems before they start.
The NCRG also offers resources that can be used to address underage gambling, one of which is CollegeGambling.org, a first of its kind online resource designed to help colleges and universities address gambling and gambling-related harms on campus. The website was created for campus officials, students and parents, and it brings together the latest research and best practices in responsible gaming and the field of addiction awareness and prevention. Massachusetts professors from Boston University School of Public Health, Bridgewater State College and Harvard/Cambridge Health Alliance were among the blue ribbon group that helped in the development and utilization of this tool.
The gaming industry has a strong relationship with the NCAA and we have over the years worked together to prevent youth gambling and to monitor sports betting patterns to identify and prevent potential cheating. The NCRG will be presenting at the NCAA’s annual Gambling Summit later this year to share the college gambling resource and further strengthen that partnership.
The NCRG’s efforts to prevent youth gambling also include a science-based guide for parents called Talking with Children about Gambling. It helps parents and others who work with kids to deter children from gambling and recognize possible warning signs of problem gambling and other risky behaviors.
Several educational opportunities are also available through the NCRG, including its annual conference, which is one of the leading gambling and addiction conference in the world. The NCRG also hosts a series of workshops and webinars for counselors and clinicians across the country. It also offers an extensive library of publications to help everyone – from business leaders to the general public – have a better understanding of gambling disorders and responsible gaming.
I know my office sent packets including many of these AGA and NCRG resources to you in advance of my visit. I hope you’ll take the time to look those over and will find those materials informative. These tools are already in use in gaming jurisdictions across the country and around the world and can be tailored to the individual needs of each state. I also encourage you to go on our website, www.americangaming.org, and that of the NCRG, www.ncrg.org. Both of these sites offer a wealth of resources, including many I’ve discussed here today.
Also of note, our annual State of the States report will be released next week. It includes much of the public opinion polling data I’ve previewed this morning, as well as detailed national and state-level economic impact data on the commercial casino industry for 2011. We’ll be sure to get all of you a copy of that once it is released on Wednesday.
Let me close by reiterating my commitment and that of the AGA member companies in working with you and other regulators to improve on what has already been for decades a regulatory success story. The proof of its success is the trust our patrons have when they come to our casinos. And the reward for both you as regulators and our companies is in the hundreds of thousands of jobs, billions of dollars in economic stimulation and tax revenues. We are an industry that welcomes the role the men and women in this room play. So I will conclude as I began, with a sincere thank you. And remember – trust, but verify.