Slot machines: boon in Ohio, bane in Hungary

Are slots the "crack cocaine" of gambling?

By Nicholas Nehamas

A soccer-themed slot machine in Hungary. (Reuters)

As revenue-hungry American states rev up their gambling industry, they might want to take a look at Hungary.

After the fall of communism in the early 1990’s, Hungary liberalized its gaming industry. Slot machines popped up in pubs, cafes and gaming parlors.

But this week the office of Prime Minister Viktor Orban announced his government would ban slots across the country, with the exception of those in Hungary’s three casinos.

Why? Because, according to State Secretary Janos Lazar, slot machines are dangerous and have ruined tens of thousands of Hungarian lives.

It’s not clear the government’s motives are totally sincere. Orban, a former democratic activist, has displayed worryingly authoritarian tendencies since taking power in 2010. A Hungarian political analyst told the Associated Press that the government might be trying to centralize all gambling activity under its control. Lazar also claimed slots are a threat to his country’s “national security,” but did not explain how.

Even so, Hungary’s decision is worth paying attention to in America.

In the midst of budget crises, many states have legalized or expanded slots over the last few years, including New York, Illinois, Florida, and Pennsylvania. In November, Marylanders will vote on whether or not to expand slots and other forms of gambling. And Ohio will soon introduce slots in its four casinos, despite a study by the state’s Lottery Commission concluding the machines could put nearly four percent of Ohioans at risk of gambling addiction.

When slots were legalized last year in Massachusetts, Latitude News’ home state, we wanted to learn more about the machines, which are truly a global phenomenon. One of our readers sent us this tweet in response to our piece on a proposed casino in Foxboro, MA:

Well, Martha, for slots there’s no better place to turn than Australia.

Pokies Down Under

Aussies love a wager. Last year they spent around $23 billion on gambling, the highest per capita in the world. At least half of that was bet on slots, or “pokies,” as Australians call them— it’s short for poker machines. The country currently has more than 200,000 machines in at least 1,500 different venues. That’s a fifth of the world’s total.

“They’re ubiquitous,” Christopher McAuliffe, Visiting Professor of Australian Studies at Harvard University, told Latitude News. “They’re in local bars, clubs, hotels. If I walked out my front door [in Melbourne], a hundred yards down the street there would be a pub and a room with maybe 30 electronic gambling machines.”

But these contraptions aren’t the one-armed bandits of yore, where you pull a creaky handle and hope for three-of-a-kind. Modern slots are like flashy, hi-tech video games that play music and scenes from TV shows. Some let you place a bet every three-and-a-half seconds.

A patron smiles as she plays with “The Phantom” slot machine at a club in Sydney. Slot machines aren’t all fun-and-games though. Experts say they can be highly addictive. “You can play for 24 hours a day if you want,” says Dr. Alex Blaszczysnki, an Australian professor of psychology. “The only thing stopping you is fatigue and lack of money.” (Reuters)

The “Crack Cocaine” of Gambling?

People who gamble on slots do it even though they’re almost guaranteed to lose. Playing the “pokies” isn’t like sitting down to a game of blackjack or seven-card stud, where you know the odds and have a reasonable idea of what the house is holding.

A slot machine is more like a coin flip. Nothing you can do will change your chance of winning. In Australia, pokies are guaranteed by law to pay out 87 percent of what you put in. Yes, that means if you put in a hundred dollars, you’re promised eighty-seven back.

The house keeps the difference.

“In all but the most extraordinary cases, winning [over the long term] is impossible. But the random nature of these machines makes people think they’re just one twirl away from a jackpot,” said Dr. Alex Blaszczysnki, head of the School of Psychology at the University of Sydney and an expert on gambling behavior, in an interview with Latitude News.

Scientific research suggests gambling triggers dopamine centers in the brain, just like habit-forming drugs, and slots are the most addictive of all. Enthusiasts who stop playing can experience symptoms of physical withdrawal.

As a result, some experts have compared slots to “crack cocaine.”

Trouble in Plainville

Concerns about addiction and crime have popped up in Plainville, Massachusetts, where a horse-racing track has announced it wants to bring in slots. The Plainville track is competing for the slots with a former dog track in Raynham.

Slot machines are “a breeding ground for problem gambling,” said Mary-Ann Greanier, co-founder of No Plainville Racino, a local anti-slots group, in an interview with Latitude News. “We’re not talking about morality here. It’s about children not getting fed because their parents are addicted to gambling. It’s about people beating their spouses, or not having enough money to buy food. It’s a thread. Once you start tugging on it, our whole town unravels.”

Australian Prof. McAuliffe’s grandfather was a bookie. His brother raced greyhounds. He says he has no moral objection to gambling.

But for him, the parallels between Plainville and his homeland are clear: “As an Australian, the first thing you think of on seeing this story in Massachusetts is that government will come to depend on these machines [for revenue] while ordinary people, the people who can least afford it, will lose their money.”

In America and Australia, the relative number of problem gamblers is similar, ranging from between one to five percent of the total population, depending on the criteria of the study. These problem gamblers are much more likely than non-problem gamblers to divorce, suffer from depression, abuse alcohol, engage in criminal activity and commit suicide.

Problem Gamblers: A Cash Cow for Casinos

Even though their numbers aren’t huge, problem gamblers still lose an incredible amount of money — and casinos would hardly be as profitable without them. A 2004 study in Ontario found that people with a moderate to severe gambling problem provided 36 percent of casino revenue there.

A similar study in Australia found that around 40 percent of the gambling industry’s profits come from people who are addicted to pokies. On average, problem gamblers in Australia each lose $21,500 a year. They’re also a lucrative source of revenue for Australia’s states, which cannot impose an income tax.

Protesters hold banners and shout slogans as they march on the New South Wales state parliament in Sydney in 2003. Around 10,000 people protested the state government’s planned tax on poker machines, claiming that the tax would signal the end of community services provided by registered clubs and threaten many national Rugby League teams. (Reuters)

Australia recognizes it has a problem with pokies.

The Austrialian government recently introduced what it called “pre-commitment reform,” a law limiting the amount gamblers could spend on each session with a pokie. But the gambling industry launched a $3.5 million media campaign against vulnerable government MPs, calling the law “un-Australian.” The law is now stalled.

Even someone as familiar with problem gambling as Blaszczysnki admits that pokie reform is a difficult issue. “It’s a question of civil liberties,” he says. “If you impose mandatory pre-commitment on gambling, say 200 dollars a month, why not extend the commitment to alcohol and limit people to four drinks a day? You’d have a significant social benefit . . . [then] what about fast food? You’d see a general creep into a highly regimented 1984 or Brave New World scenario.”

Tuned In and Talking: Reader Responses

“Are there any countries that allow gambling but regulate it in the way that pre-commitment reform would work?”~Joya Misra

From the editors: We’ve looked into your question about pre-commitment legislation. Norway is the one country that has mandatory pre-commitment where people can only use slots with a pre-paid electronic card. Read more here.

Tuned In and Talking features reactions from Americans affected by our stories.

Editor’s note: This is an updated version of a story that appeared on April 17, 2012.