Potential casino owners decry daily cap on losses

By Pat Doyle

Star Tribune

      As legislators consider casino gambling as one way to pay for state government, they must decide how much to rely on big losers to help balance the budget.

      The latest proposal for state-sponsored gambling includes a $500 cap on each gambler's daily losses, a provision that reflects a desire among some legislators to curb compulsive gambling. But the people in line to own the casinos say the limit could cut severely into profits, and call the curb unrealistic in a competitive gambling market.

      Iowa repealed its $200-a-day loss limit for riverboat casinos in 1994 after it was blamed in part for the departure of two floating casinos.

      "They picked up their anchors and went down the Mississippi," said Linda Vanderloo, director of racing and administration for the Iowa Racing and Gaming Commission. She said Iowa learned a hard lesson: "You're either pregnant or you are not; you're either in gaming or you're not. Either jump in with both feet and get into Sin City, or don't do it."

      The opposition to loss limits suggests that gambling executives count on big losers to add significantly to their bottom line.

      "We couldn't run a competitive operation with restrictions that are unreasonable, and that's unreasonable," said White Earth tribal leader Erma Vizenor, whose band runs Shooting Star Casino in Mahnomen, Minn., and hopes to own one of two state-sponsored casinos proposed for the Canterbury Park racetrack in Shakopee.

      Several studies show that 2 to 7 percent of adults living within 30 to 40 miles of a casino account for roughly 30 to 50 percent of its revenues, according to Earl L. Grinols, Distinguished Professor of Economics at Baylor University and a longtime critic of state-sponsored gambling.

      Problem and pathological gamblers, defined as about 2.5 percent of adults, accounted for about 22 percent of the money gamblers lost at casinos in one year, according to the 1999 Gambling Impact and Behavior Study done for a congressional commission.

      Rep. Paul Gazelka, R-Brainerd, said concern about compulsive gambling motivated him to push for the $500 limit on an individual's daily losses in each of the two proposed casinos. It was added to a casino bill backed by Gov. Tim Pawlenty, White Earth and Canterbury that passed the House Jobs and Economic Opportunity Policy and Finance Committee.

      Gazelka said he's under no illusion about its potential impact.

      "This isn't a solution," he said. "It's simply a speed bump on the road to financial stupidity. It's not going to stop them. But if you're traveling down that road, you have an opportunity to hit a bump and realize you're going too fast."

      Gazelka said that he would like to reduce overall gambling in Minnesota, but that such a goal isn't realistic. "If I'm going to approve an additional [casino] site, it's because we've built a better model," he said. "If it's more of the same, then I don't think we're doing anybody a service. I think gambling does not teach proper principles of building wealth. I think that's unhealthy."

      The governor's office says it is reviewing the provision as a possible way to curb problem gambling.

      "We're looking forward to further discussing the idea of loss limits," said press secretary Brian McClung. "We think it's a reasonable idea that needs further discussion."

      But critics of the strategy argue that the loss limit would have little effect on stopping compulsive gamblers.

Admitted "gamblerholic"

      Marge, 59, of St. Paul Park, says she lost about $16,000 a year in casinos, roughly half of her income as a telemarketer, while she was gambling. She relied on advances on her payroll checks and credit cards to gamble and get by. On days when she was gambling, Marge said she spent anywhere from $500 to $900.

      After years of playing the slots at Treasure Island Casino in Red Wing, she asked the operators to ban her. Unable to stop playing slots, she soon switched to Mystic Lake Casino in Prior Lake. A few weeks ago she asked Mystic to ban her. She is undergoing counseling from a certified gambling therapist in Edina.

      Marge, who asks that her last name be withheld to avoid problems at work, said she thinks a $500 loss limit at a Canterbury Park casino would slow down compulsive gamblers, but probably not stop many, given the track's proximity to Mystic Lake.

      "They go to the new casino and spend their $500 and they're done, then go up the road to the next one," she said. "I would, if I were still out there gambling."

      Grinols, the Baylor professor, said loss limits are well-intentioned but may only make state-sponsored gambling more palatable to politicians.

      "Those are more a fig leaf to get some marginal support," he said. "In the long run I don't think anyone would believe those limits would withstand pressure to have them removed."

      Competition for gambling dollars has prompted calls in the Missouri Legislature to repeal the $500 loss limit for two-hour sessions in that state's riverboats. St. Louis gamblers patronize riverboats on the Illinois side of the Mississippi, where there is no limit. And serious gamblers can find ways around the limit, causing administrative headaches.

      Vizenor said the limit proposed for the new Minnesota casinos would put them at a serious competitive disadvantage to Mystic Lake Casino, where no cap exists.

      "It's doomed for failure with those kinds of restrictions," she said. "I don't believe it will stand as it is, but if it did, yes, we couldn't be competitive. We wouldn't be able to have any kind of high stakes."

      Canterbury Park President Randy Sampson was concerned about the impact of a loss limit on profits. "We do believe it would have a serious impact," he said. "It would certainly lower revenues."

      He said blackjack players, in particular, could be deterred from playing because high-stakes players can easily exceed that limit at some point during a session.

      "There are times when people who are gambling at table games can be down more than $500 but at the end of the day they come out ahead," he said. "You go through those swings.

      "It isn't necessarily a case of how may people actually lose more than $500, but how many people have a bankroll larger than that that they're using to try to weather the ups and downs."