How Governments Rely on Problem Gamblers

We all know when it comes to gambling, the house always wins.  I was cashing my paycheques, taking it there, started borrowing from banks, started borrowing from loan sharks. But the dirty little secret is just how much government-run casinos rely on problem gamblers.

 15% to 50% of gambling revenue comes from the problem gamblers.  There’s no doubt that they exploit addicted gamblers. It’s their stock and trade.

Governments say they promote responsible gambling, but do they really?  Who has a problem with responsibility? It’s a good thing. But it is also a concerted public relations campaign.  They need to come up with a way to ensure that this is not gonna happen to other people, what happened to me. On this edition of The Fifth Estate, we go undercover to investigate the government’s addiction problem.

And Terence McKenna enters a Dominican jail to visit a Canadian businessman locked away just after he appeared on The Fifth Estate. When it comes to gambling, Canadians have plenty of skin in the game. Last year, we spent about $13 billion on legal, government-run gambling. It’s estimated we spend another $12 billion or so every year on gambling websites and illegal bookmakers. Imagine that, about $25 billion a year. That’s three times more than we spend on movies, hockey tickets, and Tim Hortons, combined.

What fun is waiting at OLG Slots & Casinos? Hey, Canada. Hey, Ireland, casino online ie, could it be we have a gambling problem? Well, not if you watch the casino adds on TV, like these ones for Ontario’s Lottery And Gaming Corporation.

Good luck charms, well. Here, the only gamblers they portray are good, wholesome people.  I got a hat that I wear on poker. I figure it brings me luck. I always have to walk in on my right foot.

And gambling? Good, wholesome fun.  I just keep this in my hand. I keep hoping it brings me luck.

I say, “Come on, you can do it for me.” You don’t see people like Joe Frieri in their ads, but you sure see them in their casinos, pushing buttons, staring at screens, hour after hour after hour. Like hundreds of thousands of Canadians, Joe is a gambling addict. How much money do you think you’ve lost gambling?  I had estimated, just a short time ago, I would say anywhere between 2 and $3 million.And how much money do you owe today?

 Probably about… Between family, about $1.5 million.Between family, loan sharks  Loan sharks.Bookmakers. Yes, correct.

  That’s a deep hole, Joe.  Yup, yup. And it all started so harmlessly.

Joe’s childhood defined by family, church, school, and sports.  I innocently liked to play cards. When, you know, we would get together as a family and play on Christmas, you know, and we’d play cards for a few hours to pass the time.

As Joe grew older, the stakes grew higher. He was soon gambling every day. And the casinos wanted his business, sending him promotional flyers and coupons, urging him to keep coming back.

At what point was it when you realized that you had crossed that line, and?  Probably in the early to mid-twenties, early to mid-twenties, because I’d already at that point had got received a few bailouts from my family. Joe’s weakness? Electronic gaming machines, or EGMs, like slots and video poker. Seems everyone loves them.

Governments certainly do. OLG says 88% of casino gaming revenue comes from slot machines. To put their popularity in perspective, there are some 100,000 legal EGMs in Canada. That’s compared to 65,000 ATMs. Author and academic Natasha Schull says these machines have a corrosive effect on all gamblers, not just addicts, designed with sophisticated algorithms to separate you from your money.

 What I found I actually find more sinister, which is that people are not trying to create addicts. They’re trying to increase revenue, and a kind of collateral damage is that they create addicts.Success is measured not only by revenue, but by the time gamblers spend on these machines.

It’s known as TOD, or time on device, where gamblers are lulled into a trancelike escape from life, and loss.  I kept hearing this word, you know, I’m in the zone, I go into the machine zone, and the machine zone they described was a kind of state that’s outside of time and outside of space, where monetary value falls away. You’re just in a flow. You lose track of even yourself. But surely it’s only addicts who end up in the zone, right?

Well, I came to the Gambling Research Lab at the University of Waterloo to find out. Kevin Harrigan leads a team examining the physiological rush gamblers get.  These have to go on. Should be fairly snug, but… Yeah, no problem.I’m wired up to measure my heart rate, sweat level, and the pressure from my trigger finger as I play.  How’s that feel?

  Feels perfect.  Okay.I start with 1000 credits on the machine.

What are the odds of me winning in this game?  The odds of you winning something are really good. About half the time or a third of the time, you’re gonna win something.I would have thought the odds would have been lower. But hold on, there’s a catch to all those so-called wins.  Well, what happens is a lot of those wins, about half of them are actually losses, so you’re wagering, let’s say 20 cents and you’re winning 8 cents, so you have a loss of 12 cents.

But it flashes and makes sounds as if you’ve won.So it’s a loss disguised as a win.  Correct.And as long as my body interprets that I’m winning, I keep playing? Yep.As my heart rate increases, I learned even the illusion of winning gives players a blast of dopamine, like a chemical jackpot for the brain.

  Okay, so now, here you have one of these losses disguised as wins.So, I am I’m closer to a win, but I’m still losing?  Yup.

I’m feeling like a winner. If I didn’t see what my credits were.  Right.

  Am I up or am I down? I would tell you I’m way up.  Like one gambler said, “If I keep on winning, “I’m gonna go broke.”Unlike card games or horse races, bets on a slot machine come fast and furiously.

According to Harrigan, the industry average is about 1,000 spins an hour. Studies suggest the rapidfire gambling increases the onset of addiction. And there is something mesmerizing about this. Gamblers may see these as games of chance, but insiders say they have been designed to reduce the chance of winning the longer gamblers play.

So, you win the casino wins and the house wins on two fronts, is that they’ve taken all my money that I put into this machine…  Right…and they’ve increased the likelihood that I’m going to come back and do it again. Correct.

  Some compare these machines to crack cocaine, others to cigarettes, both highly addictive by design.  I heard one game designer talk about the math that he was designing. He was drawing a some graphs for me. He was like, “This is what an old slot machine looked like.” Big valleys and peaks, spike really spiky. “This is what our new machines look like,” and he drew this slow curve.

He said, “We want people to recline on our algorithms “the way you recline on a comfortable couch.”But the line is eventually heading down.  It’s all about slowly eroding, nibbling away at your budget until you reach zero.

So, this is discussed as giving gamblers a smoother ride, a ride to where? A ride to zero. A ride on that graph down to the moment when you can’t play anymore, which is often called the moment of extinction.Joe knew he was past the point of extinction. His gambling debts were slowly killing him.

You need to be protected from yourself.  Sometimes, yes. In this case, I did.

In this case I couldn’t do it on my own anymore, as I was trying.Joe had an idea. He could ban himself from the casinos.

It’s a program called Self-Exclusion, common at casinos across Canada. Ontario’s casinos now have facial recognition software. This company video shows how it’s supposed to keep banned gamblers out.

 Once they’re isolated and identified via the cameras at fixed entrances for example, the alerts are sent to the operator at which time the operator can make an informed decision on the self-excluded individual as to next steps. But does this high-tech security system really work? As we’ll show you, we went undercover to find out.  Announcer: The story doesn’t end here. Like The Fifth Estate’s Facebook page so you can follow our investigations.

We will post updates on stories and special video features that take you deep inside.  ♪ Come on, Ontario ♪Ontario’s appetite for legalized gambling had pretty humble beginnings.  Welcome back to Wintario. Tonight we are coming to you live from Queen’s University in Kingston.

 Tonight, live from Warsaw.  From the Etobicoke Olympian.It began in 1975 with a single lottery called Wintario. With spinning balls and televised draws.

The lottery made a meagre $43 million profit in its first year of operation, but that was then.   Voice-over: Thrilling games, delicious food, and exciting. This is now. Today, the gleaming OLG is the biggest provincial gaming corporation in Canada, with more than 18,000 employees, generating $7.5 billion in gross revenues for a deficit ridden government. But ever wonder who’s anteing up that cash?

 So, today we’re talking about the proportion of gambling revenue derived from problem gamblers.Robert Williams is a professor at the University of Lethbridge in Alberta. He’s an expert in gambling research.  Depending on the jurisdiction and the time period between 15 to 50% of gambling revenue comes from problem gamblers.By his calculation, addicts pump billions a year into government run casinos across Canada. If your revenue base is hinged on drawing a good portion of your money from an addictive population, that’s a problematic business enterprise.

If you’re just in private business, let alone government. Consider this. In 2016, the Alberta government made more money from gambling than it did from oil and gas revenues, because this is a business that’s all boom, no bust. In the past 20 years, gaming revenues in Canada have quadrupled, much of it pure profit for governments. Joe Frieri says the OLG made a pretty profit from him.

He says he spent about a million dollars at OLG casinos and insists no one on staff ever suggested he stop playing or get help.  It’s an addiction that’s very quiet. In other words, you’ll never know if somebody has a gambling problem.

And the province needs to know that, and they need to come up with a way to ensure that this is not going to happen to other people, what happened to me.What percentage of your clientele would you define as a problem gambler?  So, the research suggests that between 8 and 12% of a player base may have some kind of issue, so we needPaul Pellizzari doesn’t deny problem gamblers are a problem for the casinos. He’s the OLG’s Executive Director for policy and social responsibility. Do you want problem gamblers in your casino?  We do not want problem gamblers in our casinos, and here’s the reason why, Mark.

For the most part, Ontario is a local’s market. It’s different from Las Vegas. It’s different from Macau. We need people who can play today, tomorrow, next year, and five years from now.  So, this is where you are showcasing the machines, or testing the machines? Yeah, we test them, weSo, how do you keep them playing safely?

Make sure they don’t reach that moment of extinction. Pellizzari shows me how the OLG is giving players the option to limit the amount of time and money they spend on slots. It’s kind of like a casino nanny cam.

But for all the information that is provided here…  Yes.I am free to ignore it. Again, informed decision-making, internal building for players internal self controls, that over the long-term is what leads to healthier playing. The OLG spends about $50 million a year on problem gamblers, for research, awareness, and treatment. Joe benefited from that program.

He received gambling counselling paid for by the OLG. He also signed an agreement with OLG to voluntarily ban himself from their casinos. They call the program self-exclusion. But Joe says none of that stopped him from playing whenever he got the itch.  I was still self-excluded and I went back, walked into Woodbine, and I just started all over again.

You know, I was cashing my paychecks, taking it there. Starting to borrow from banks, starting to borrow from loan sharks again.But you’re on the self-exclusion list?  I still am, yeah, yeah.And nobody has stopped you? Nobody’s stopping me.

  Nothing.  Nothing.Pellizzari says the OLG has built a better firewall to keep self excluders out, spending half a million bucks on facial recognition software. And if they are detected?  If they are detected, then a staff member very discreetly goes over, talks to the person, probably pulls them away from the gaming floor, determines that they are who we think that they are, in terms of the self-exclusion program, and then we discreetly remove them from the property. So, does the high-tech detection system really work?

Well, we decided to put it to the test. Our producer, Scott Anderson, put himself on the self-exclusion list. OLG took his picture and his personal information. A week later, we sent him out on a mission. Could he walk into an OLG casino and play?

Or would the state-of-the-art cameras catch him? First attempt, the slots at Flamboro Downs.  How you doing? Good, you?

 Good, thanks.He walks past the security guard and the cameras and into the casino. He plays the slots… ..then cashes out, and exits.

Well, maybe it was beginner’s luck. So, we make a second attempt an hour later, the slots at Mohawk racetrack.  How are you?Once again, he gets a polite welcome, then sits down and plays.

He decides to push his luck and heads to Casino Niagara. New location, same warm welcome, and no one stops him from playing. Shortly after, we make a fourth and final attempt across town at Fallsview Casino. Well, it’s four of a kind. Our so called self-excluded gambler has beaten the house time and time again.   Jackpot!

  And then he went to see what would happen when he showed up at your properties, and this is what happened. We showed the video to Paul Pellizzari. How do you explain why our producer got into four different properties and was never detected?  We provide supports to detect self-excludersBut you have facial recognition. No one element of the program is designed to be foolproof.But four out of four?

 We detect over 3,000 people every year. We’ve improved that number. It is one support that we provide. We’re going to look at how we can improve it, but the important point is to not characterize it as a policing program.

Because that’s a disservice to gamblers.Author Natasha Schull says self policing isn’t an addict’s strong suit. That’s the weakness, she says, of responsible gambling programs.  But it is also a concerted public relations campaign that deflects attention away from problematic products and industries, and puts it all on the person.

You manage yourself.So, is there a better way to weed out self-excluded gamblers? Well, why not simply ask them to show ID at the door?  Most countries in the world, you gotta show any government ID to get into a casino.

There is no long lineups. In fact you can automate it by just scanning it. You know, Disneyland does that with thumbprints. There’s lots of automated ways to have a more reliable detection system.

It’s just North American casinos have been reluctant to do it.It’s they’re choosing not to do it.  They’re choosing not to do it.

I think it’s a fair characterization. But there’s one policy the OLG enforces rigorously. If you are self-excluded and you win big, you’re out of luck.

So gamblers on the banned list are free to lose hundreds of thousands of dollars in the casino, but the minute they win a jackpot of more than $10,000, casino reps won’t pay them out. No, they’ll kick them out of the casinos. So, how often does this happen? Well, according to information obtained by The Fifth Estate, it’s a growing problem.

Over a six-year period, there were 274 cases of self-excluded gamblers who were caught when they won big jackpots. Last year alone, there were 77 new cases. That’s a 28% increase. But you understand the objects here, that if I am sel-excluded, I can lose, give you thousands and thousands of dollars, which you will freely take, but the minute I ask for my winnings back, you say, “No, sorry.”

 They’ve made a commitment to themselves to stay away from the property. They know it’s on them to not come back to the casino and that these things are in place to remove them. OLG has settled at least 18 cases out of court, paying off the problem gamblers who then sign an agreement to ensure everyone keeps quiet about it. Sean Dewart has taken on more than a dozen of these cases.

 I mean, now everyone who participates in the self-exclusion program learns pretty early on it’s a joke, and that this piece of paper they’ve signed means absolutely nothing, and they are free to go back in and indulge in their addictive behaviour.Do you think OLG knows that this is a toothless policy?  There’s no doubt in my mind that OLG knows this is a toothless policy, because OLG hasn’t really done anything to give it any teeth.

  Pellizzari won’t explain why the OLG settles with the problem gamblers.  I can confirm that there have been lawsuits in multiple jurisdictions, including Ontario. We’re obliged to respect confidentiality in these matters.Dewart has a simple, albeit cynical explanation about why OLG settles.  For one thing, they frequently get the money back, which is to say that there is a settlement that ends up in my client’s pocket, and my clients do what all addicts do, which is they go right back into a casino, so in some cases I’m quite sure OLG is cognizant of the fact that the money is just gonna go in a circle.And the circle of publicity keeps spinning, like the numbers on the slot machines.

Last year the OLG spent $333 million on marketing, and promotion. Urging gamblers to come early and come often.  I love this guy! We’re leaving in five minutes, okay?

 Three more.  Three more. Such a fun age.

 Isn’t it? Across Canada, governments, it’s estimated, spent close to half a billion dollars a year promoting gambling with ads like these, while at the same time banning ads for smoking and drinking.  The only thing missing is you.As for Joe, whether you sympathize with him or not, don’t tell him fun wins every time. He’s more than a million dollars in debt, and the loan sharks are circling. Do you fear for your life?

 I do. I do, yeah. Every day I do, but it’s just something I have to deal with.

  How are you going to get out of that hole?  I don’t know. I’m just fighting now to I mean, I’m basically fighting just to just try to make ends meet. It’s just it’s never enough, and it always puts me back in the thinking of, maybe I can go back to gambling to win, to have that big score, to help me with this, at least.

But what really angers him is after pumping $3 million into legal and illegal slot machines, his life is hanging by a thread, and the casinos continue to profit on addicts like him.