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Contents

Help Restore the Ban on Slot Machine Gambling in Maine

If at First You Don't Succeed ...

The Legislation Gets a Facelift

The Pre-Election Agreement

Changes to the 2003 Citizens' Initiative by the Maine Legislature

Who's in Charge in Augusta?

Mainers are Losing Big Time in Bangor

We All will Pay the Social Costs

The Threat of Runaway Expansion

The Press Room

Our Citizens' Initiative

Want to Help?

For More Information

Help Restore the Ban on Slot Machine Gambling in Maine

In 1980 and again in 2000, the voters of Maine voted by similar 60-40 margins against slot machine gambling in this state. The voters were wise to reject this highly addictive form of gambling.  Just how addictive are slot machines?  This question was answered in a study conducted recently in Rhode Island by clinical psychologist Robert Breen.

Dr. Breen found that slot machine players in treatment for gambling addiction had progressed from "social gambling" into full addiction in about 13 months, more than three times faster than those engaged in more traditional forms of gambling.  In discussing this "rapid onset" phenomenon, he characterizes slot machines as "addiction delivery devices."  Gambling addiction is a serious mental disorder that often leads to huge debts, crime, family abuse and suicide.  Addiction rates are highest among the most vulnerable segments of society - the poor, the undereducated, members of minorities, the young and the elderly.

This finding of a close connection between slot machines and gambling addiction should come as no surprise.  In his article "The Tug of the Newfangled Slot Machines" in the May 9, 2004, New York Times Magazine, writer Gary Rivlin paints a chilling portrait of the game designers at International Game Technology of Reno, which recently received a slots distributor license to supply slot machines in Bangor.  Rivlin's article describes Mr. Anthony Baerlocher as one of a "cadre of people inside I.G.T.'s giant slots factory who study addiction -- though unlike their counterparts in academia, of course, he and his colleagues work on the promotion side of things."  Studies referenced by Dr. Breen indicate that the money lost by gambling addicts accounts for 40 to 50 percent of slot machine revenues.

If at First You Don't Succeed ...

In spite of their earlier defeats, the advocates of slot machine gambling in Maine tried again in November 2003, when an initiative to authorize slot machine gambling at the harness racing track in Bangor was placed on the same ballot as an initiative to authorize a huge Tribal casino in southern Maine. The Tribal casino initiative was defeated, but this time around the voters narrowly approved slot machines. As incentives to different blocs of voters, the measure allocated specified small amounts of slot machine revenues to a wide variety of causes, including prescription drug assistance for the elderly and new subsidies for the state's harness racing industry.

There were dramatic variations of voter sentiment over the eight month period prior to the 2003 election. An analysis of these opinion shifts strongly suggests that, in the end, many voters supported the slots facility only because they feared that the Tribal casino initiative would pass and felt that harness racing needed to be defended in some way from this tough new competition.

The voters of Maine deserve a chance to vote again on the legalization of slot machines, this time as a stand-alone proposition, after a fair, open and thorough discussion. As a contribution to that discussion, let's take a look at some of the events that have taken place since the 2003 election.

The Legislation Gets a Facelift

The law approved through the 2003 citizens' initiative (IB 2, LD 1371) suffered from major problems.  At that time, Gov. Baldacci said "We must protect the public interest and welfare of our state, and the racino law enacted by the voters has too many holes in it to fulfill that goal. If we don't get our arms around this at the beginning, we never will." In April 2004, the initiated law was repealed by the Legislature and replaced with new slots authorization legislation (HP 1342 - LD 1820).

With the passage of LD 1820, we at least have a clearer idea of what it will cost the state to regulate and administer slot machine gambling, namely, about $10 million per year. The bulk of this money is to be spent in guarding against fraud or mishandling of the gambling revenues, the conduct of criminal background checks of employees, and other activities aimed at maintaining government control this new form of gambling.

The Pre-Election Agreement

However, governmental control was not the only thing on the mind of legislators and lobbyists in the 2004 session. Groups involved in the breeding and racing of racehorses and the operators of off-track betting parlors lobbied aggressively for a bigger share of the gambling revenues than what the voters had approved at the polls.

This lobbying effort in 2004 was part of a joint strategy agreed to among the state's gambling interests prior to the 2003 election. In that pre-election agreement, the commercial racetracks, the horsemen and the operators of off-track betting parlors agreed to cooperate politically, first to get the slots initiative passed and then to lobby the Legislature after the vote to change the legislation to increase their financial benefits.

The pre-election agreement was not disclosed to the Governor's office until the day after the election. The Governor's spokesman Lee Umphrey reacted by saying "The sense is this kind of agreement should've been seen by the public before the election, so that people voting on Election Day would have all the information necessary to make the right decision."

Under intense lobbying pressure, the Maine Legislature agreed to many of the changes put forward by these special interests.  These changes authorize more than $7.6 million a year in additional payments to gambling interests and, at the same time, reduce by $1.2 million a year the benefits to the general public. The complete set of funding modifications made by the 2004 Legislature are shown below, with legislatively approved percentages converted to dollar amounts using an estimated gross revenue of $82.5 million per year for both cases.  The "winners" are shown in red,

Changes to the 2003 Citizens' Initiative by the 2004 Maine Legislature

Under the category "benefit to general public," we include payments to programs that offer a benefit to those members of the public who neither own gambling related businesses nor are employed by gambling related businesses or boards. For this group of people, which includes the vast majority of Maine's residents, the passage of LD 1820 means a loss of benefits, dropping from an already low 16% of gross gambling revenue down to 14.5%.

Faced now with the final form of the distribution of funds, it is informative to return to the referendum question that was actually printed on the ballot in 2003. "Do you want to allow slot machines at certain commercial horse racing tracks if part of the proceeds are used to lower prescription drug costs for the elderly and disabled, and for scholarships to the state universities and technical colleges?"  The sad truth is that as much of the revenues will be spent augmenting harness racing purses as assisting seniors with their drug costs. Worse yet, as much will be handed out to the operators of off-track betting parlors as will be spent on university scholarships.

The 2004 Legislature added more stringent government controls, and that was a good thing. However, the Legislature also:

• substantially changed the distribution of funds approved by the voters, and
  

• reduced the percentage of gambling revenue returned in benefits to the general public.

These are two compelling reasons to send the slot machine issue back to the voters

Who's in Charge in Augusta?

The cozy relationship between the gambling interests and the State Legislature has not changed much since the post-election alteration of LD 1820. This relationship was the subject of an important article published in the July 1, 2007, edition of the Lewiston Sun Journal.  The author of the article is Mike Peters, a former Member of the Gambling Control Board established by LD 1820.  

Mr. Peters is a close observer of the gambling scene in Maine.  In his report, he writes:

"When members of the Legislature's Appropriations Committee earlier this year suggested changing the 2004 statute governing gambling revenues, Penn National erupted in indignation, shut down its $131 million Bangor construction project, and caused a State House stir that ground the entire legislative process to a halt. Quickly, all proposals in the Appropriations Committee concerning Penn were pulled, and closed-door meetings were held by legislative leaders, the governor's office, Penn National, and others.

The apparent result?

Penn National agreed to restart construction, but with the guarantee that their revenues, and the money received by the other statutory beneficiaries, could never be touched. Gov. John Baldacci, and the leadership of the House and Senate, apparently acquiesced to this cockeyed demand.

Some of their astute advisors, however, knew supplying Penn with this guarantee required a strategy to circumvent statutory limitations and challenges. Otherwise, citizens, like myself, could continue to confront this giveaway of Maine tax dollars, and this total lack of legislative accountability.

Thus, the governor issued an executive order on June 1, creating a 'special committee.'

The purpose of this committee, I believe, is to protect the money Penn National and all the other statutory beneficiaries collect into the future. It also precludes changes to the list of beneficiaries."

Mainers are Losing Big Time in Bangor

The above figures are based on an assumed annual gambling revenue of $82.5 million per year.  The first 4 years of slots operation in Bangor provide actual operating data that largely confirm the above expectations.  According to the latest data (through July 2009), gamblers at Hollywood Slots are losing at an annual rate of $57 million per year.  After the full effects of gambling addiction take hold, the annual loss rate could very well reach the $82.5 million figure that the developers have projected from the beginning.

While the slick pre-election ads assured voters that passage would mean only a "limited number of slot machines" at existing racing venues, the expected loss rate of $82.5 million per year is five times larger than the amount lost annually on all harness racing wagering in the state (live and OTB) in the years prior to the construction of Hollywood Slots.

The detailed breakdown of funding amounts shown above is based on the assumption that the slots operator would take the maximum amount of profit permitted by LD 1820.  It turns out that the operator of Hollywood Slots is currently paying out 91.4% of the bets in winnings, whereas by state law the payout could be as low as 90%.  For the bettors, this higher payout means that they can spend a few additional hours at the machines while losing a given amount of money.

However, the most direct beneficiary of this higher payout ratio is the State's gambling "control" bureaucracy, which is funded by a 1% tax on the amount bet (not the amount lost).  In contrast, funds that benefit the general public (such as university scholarships) are calculated as a fixed fraction of the money lost.  Due to this peculiarity in the tax calculation, the benefit to the general public has now dropped to just 14.1% of the amount lost by bettors.

We All will Pay the Social Costs

Another reason to reconsider the legalization of slots is that the Maine Legislature has consistently shown a total lack of interest in the large costs imposed upon society by this highly addictive form of gambling, for example, the cost of bankruptcy, embezzlement and insurance fraud, police and court costs, lost business productivity, mis-spent household funds, and the cost of addiction treatment, family abuse and suicide.  

Mainers have already experienced first-hand the high social costs of slot machine gambling.  Consider the following four case histories.

Hollywood Slots had been open barely two months when John Ethridge, former manager of a Somesville, ME, convenience store, was facing a theft charge after reportedly admitting to taking more than $23,000 and blowing it at Hollywood Slots. According to published news reports, Ethridge admits he has a severe gambling problem. It is also reported that Mount Desert police officer Leigh Guildford has viewed videotapes of Ethridge feeding the stolen money into high-payoff slot machines at the Bangor facility.

Another serious criminal case related to gambling Hollywood Slots took place over a 15-month period in 2006 and 2007.  Lucy Faria, a Portuguese citizen and housekeeper at The Country Villa, an assisted living facility on Kenduskeag Avenue in Bangor, has admitted to stealing $43,700 from three victims — two of whom are over the age of 80 — and from her employer.  She took checks from patients and forged them to get money for the slot machines. In September 2008, Faria was sentenced to three years in prison, likely followed by deportation, after her conviction on forgery and theft charges.

According to another news report, the dream of striking it rich at Hollywood Slots has turned into a nightmare for one  Bangor area woman.  In March 2007, reporter Meg Haskell wrote in the Bangor Daily News, "Since early last year, 'Nancy,' a health care professional in her mid-50s, has lost at least $100,000 at Hollywood Slots in Bangor.  In the process, she has drained her pension fund, remortgaged her home and put her marriage in jeopardy."

According to a May 2007 report on CNN, gambling addiction figured prominently in the recent suicide of a Maine resident.  Aaron Walsh, a former helicopter pilot for the U.S. Army, had begun playing slot machines on military bases and became a gambling addict. It eventually ruined his military career.  Thenl, after what his wife says was one final "gambling binge" at Hollywood Slots in Bangor, the 34-year-old walked into the Maine woods, put a gun to his head and killed himself.

U. of Illinois Prof. Earl Grinols is a nationally respected economist and author of the new book "Gambling in America: Costs and Benefits," Cambridge University Press.  In his book Prof. Grinols writes that, because of its addictive nature, casino-style slot machine gambling imposes huge social costs on the general public, including those that do not gamble.  He estimates that this cost sums to around $54 billion per year in the US, about equal to the amount of money lost directly by the gamblers themselves.

A study by Clyde Barrow, University of Massachusetts Dartmouth, indicates that 95% of the patrons of the Bangor casino are Maine residents. This means that 95% of the social damage done by the Bangor casino is being done right here in Maine.

Most of the social costs associated with gambling originate with the out-of-control behavior of pathological and problem gamblers. Unfortunately, LD 1820 does not require the State or the operator to identify addictive gamblers or exclude them from the Bangor facility. Nor does it impose loss limits, which several states have imposed to try to limit the financial damage that addictive gamblers do to themselves and their families, friends and employers.  Loss limits also serve to limit the usefulness of gambling venues for the purpose of money laundering.

Because of these omissions, there is no reason to expect that the social costs arising from this project will be any lower than they have been in other states.  If the gross gambling revenue reaches the figure of $82 million per year mentioned above, then the involuntary social costs will also be around $82 million per year.  In other words, the general public will have to pay over $7 in increased social costs for every $1 of benefits they receive.

If you want to learn more about how these costs are estimated, Grinols' book is available online in hardcover for around $30, including shipping, or it can be ordered on interlibrary loan from your local library.

While the personal pain caused by bringing slot machine gambling to Bangor will be felt most acutely by families in the northern half of the state, communities throughout Maine will be forced, through taxes, to share the burden of paying the social costs.

There is an additional cost to casino-style gambling, namely, the loss of jobs.  Although promoted as a source of jobs and economic growth, a recent review of the facts shows that the slots facility in Bangor will result in the net loss of more than 400 jobs in the Bangor market area.

The Threat of Runaway Expansion

Finally, it has to be noted that every day that passes with Maine in the business of big time casino-style gambling increases the likelihood of the construction of additional casinos in the state.  The appalling situation in California gives some idea of what we may be facing if this trend is not reversed.

The best recent example of runaway expansion of gambling in Maine is the citizens' initiative by the Passamaquoddy Tribe to authorize a new racetrack and casino in Washington County.  After some well publicized problems with rejected signatures, backers of this plan finally did get (just barely) enough signatures approved to place their legislation on the November 2007 statewide ballot.

The Press Room

Our efforts toward a citizens' initiative has stimulated positive comment in Maine newspapers.  Especially noteworthy has been an entire series of strongly supportive editorials published by the Portland Press Herald, beginning with editorials published in October 17 and October 31, 2004, and on April 19 and June 4, 2005.  In more recent editorials, the Press Herald has continued to express support for a referendum on banning slot machine gambling in Maine.

On May 31, 2006, an editorial in the Bangor Daily News highlighted the connection between casinos and crime and expressed concern over the crime impact of the Bangor racino.  On August 11, the Magic City Morning Star (Millinocket) published a column advocating a statewide ban on slot machines. The Kennebec Journal (Augusta) and the Morning Sentinel (Waterville) published a similar column on August 20, 2006, and a closely related editorial the same day.

An excellent editorial by Jim Brunelle was published on April 12, 2007, in the Kennebec Journal.  He writes "Rather than just putting a few slot machines in the lobby to attract more patrons to an existing racetrack, the "racino" operation is developing into a huge, free-standing $131 million gambling emporium, catering largely to people who aren't likely to go anywhere near the Bangor Raceway.  Maine voters made a big mistake when they approved this bait-and-switch operation ... "

As reported in the Boston Globe on April 18, 2007, a member of the Maine Gambling Control Board has resigned and is speaking out against proposals to expand the number of slot machines in Maine. In his resignation letter to Gov. John Baldacci, Mike Peters of Dixfield said the state must do all it can to stop the spread of gambling.

Maine is not benefiting as promised from the state's only slot machine facility, Hollywood Slots of Bangor, and further expansion of gambling could create "grave harm" to the people of Maine, Mr. Peters wrote in his letter, dated April 3. "If we do not act to reduce the shameful profits being made by gambling operators and the coalition of beneficiaries that support them, our state and our people will soon be overrun with the few getting rich at the expense of the many," Peters wrote.

Peters, who was appointed to the five-member gambling board in August 2004, wrote that he expects other board members to resign. "There are some other folk of good moral fabric on the board and they suffer from the same affliction that bothers me -- a desire to do what is right for all the people of Maine," Peters wrote.

Following publication of this letter, Peters was interviewed on MPBN’s MaineWatch. During the wide-ranging interview with reporter Susan Sharon, Peters raised additional concerns about slot machines and whether the revenues from Hollywood Slots that are divided among several interest groups are fully accounted for. He said voters were promised in the 2003 campaign that money from the slots would benefit Maine’s harness racing industry and lower the cost of prescription drugs for the elderly. But he said the Gambling Control Board lacks the authority to even ask if the money is accomplishing its goals.

An editorial supporting Mr. Peters' decision to resign, and echoing his concern that the existence of Hollywood Slots may lead to a tidal wave of further gambling expansion, was published on April 21, 2007, in the Kennebec Journal/Morning Sentinel in Augusta.  Similar thoughts were expressed in an excellent editorial in the Portland Press Herald on April 27, 2007.

Our Citizens' Initiative

For all of these reasons, the grassroots organization No Slots for ME! has been formed to work toward providing voters a chance to restore the ban on the operation of slot machines that was in effect before November 2003.  

The reasons we oppose slots are clear: Whether at casinos or racinos, whether in northern Maine or southern Maine, whether operated for the supposed benefit of this cause or for that, legalized slots always breed addiction and crime, they cost jobs, they raise our taxes, and they hurt our families.  We don't need slots anywhere in Maine, and that's why No Slots for ME! continues to work toward a complete, statewide ban.   

In 2006, the text of our enabling legislation was approved by the Maine Secretary of State on March 24, 2006, as the first step of the citizens' initiative process.  Also approved is the referendum question.  The question is clear and concise:  "Do you want to ban all public use of slot machines in Maine?"

Unfortunately, we did not get enough signatures to place our legislation on the 2007 statewide ballot.  We fell short this time mainly because we were unsuccessful in recruiting enough people to help us organize signature gathering at the county level.  We only need three or four more people to step up to the plate and serve as facilitators.  Here's a place where you really can make a difference!  We look forward to hearing from you.  See below for our contact details.
 

Please Join Us

In an essay written over a century ago, Mark Twain observed "It would not be possible for a humane and intelligent person to invent a rational excuse for slavery; yet you will remember that in the early days of emancipation agitation in the North, the agitators got but small help or countenance from any one. Argue and plead and pray as they might, they could not break the universal stillness that reigned, from pulpit and press all the way down to the bottom of society."  Now is the time for all of us to "break the stillness" and put a stop to the spread of gambling in Maine.

Please join us in getting the state law changed by volunteering some of your valuable time. There are several ways you can make a difference. You can help, for example, by coordinating the efforts of No Slots for ME! in your home community, by helping us organize our next petition drive, or by studying the issues and contributing letters to the newspapers. To ask questions, to make suggestions, or to volunteer your services in any capacity, please contact Steve Whiting by e-mail at mail@whitinglawfirm.com or by phone at 1-207-780-0681.

Want to Help Gather Signatures?

If you are, or plan to become, a registered Maine voter, then we need your help.  To learn more about signature gathering, please click here. 

Want to Make a Contribution?

To make a contribution in any amount, call us toll-free at 1-800-769-4132 or mail a check (made out to "No Slots for ME!") to Mike Hein, 70 Sewall Street, Augusta, ME 04330.

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For More Information

For more information on the No Slots campaign, please contact any of the members of the No Slots for ME! Steering Committee listed below:

    George Rodrigues, President, grodrigu@maine.rr.com
    Steve Whiting, Clerk, mail@whitinglawfirm.com
    Fred Kilfoil, fkilfoil@maine.rr.com
    Doug Muir, dwmuir@mailaps.org

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