Craven Capitulation: Massachusetts Edition

[Update: July 13, 2017: In light of the news that House Ways and Means Chair Brian Dempsey is stepping down, I note the following:

  1. ML Strategies is a lobbying powerhouse on Beacon Hill. Its biggest client in 2016, to the tune of $276,579.23, was Wynn Resorts.
  2. The budget provision that could give casinos (including Wynn’s Everett casino) a big competitive advantage was included as part of the House Ways and Means budget.  The Senate did not include such a provision.
  3. Today, House Ways and Means Chairman Brian Dempsey resigned from the House to become the chief operating officer at ML Strategies.]

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[Original post: July 7, 2017]

While we’re understandably fixated today on the craven capitulation of our president over in Hamburg, let us pause to recognize a nadir of submission reached right here in Massachusetts — in the annual budget released this morning.

Casino magnate Steve Wynn, the finance chairman of the Republican National Committee and a friend and supporter of his fellow tycoon Donald Trump, has been busy lately twisting the arm of Senator Dean Heller of Nevada, one of the few Republican opponents of the Senate health care plan, to retract his opposition and get with the program. That health care plan, of course, would cost Massachusetts a billion dollars a year starting in 2020 (the year after Wynn’s Everett casino is scheduled to open). By 2025, the plan would have ruined our health care system and possibly our economy: a quarter-million of our poorest residents would have lost their health care coverage and annual costs would have nearly doubled.

Our state’s response? To amend our gambling law so that casinos could continue selling alcohol after the 2 a.m. closing time for bars and restaurants.  A spokesperson for the House of Representatives, where the amendment originated, explained that we need to “ensure competitiveness,” a rationale that will come as a surprise to the hospitality industry establishments that will be trying to compete without the advantage of the late hours (or a slots barn).

Anyway, a nice kiss for Steve Wynn that leaves the rest of us wondering — whatever happened to this piece of advice from the current POTUS? “Get even with people. If they screw you, screw them back 10 times as hard. I really believe it.”

 

Outstanding Achievement by a State Agency in Public Records Law Evasion: The Award Goes To…

The Massachusetts Gaming Commission, in a unanimous decision by the judges.

State and municipal agencies are prone to resisting public records requests (sometimes for reasons that may be understandable — like a lack of resources — but are nonetheless insufficient).  We’ve seen their trailblazing efforts at evasion in such areas as dilatory response tactics, exaggeration of the costs of compliance, and the fearless use of redaction.

Meanwhile, the Gaming Commission truly has been thinking outside the box. Rather than evading the law by withholding records that are in its possession (shutting off the outflow pipe), the Commission has pioneered a new approach: evading the law by declining to accept records in the first place (shutting off the inflow pipe).

Here’s what won the award for the Gaming Commission:

By statute, casinos have to file reports with the Commission about the complimentary services — “comps” in the trade lingo — that they provide. Comps are things like a free drink, a free meal, a free room — whatever will keep the gambler on the premises. In one famous case, a very wealthy casino patron was treated to comps in the form of private jet flights to Las Vegas, which contributed to her betting a billion dollars at casinos and racking up thirteen million dollars in gambling losses.

Information about comps is certainly not something the casinos favor disclosing, and they sought relief from this filing requirement. The Gaming Commission, agreeing with the casinos, recommended to the Legislature that it eliminate the requirement, but the Legislature failed to act. So the Gaming Commission stepped in to take care of the problem.  They used their regulatory power to excuse the casinos from having to file the reports, while continuing to require that the casinos maintain them and provide them to the Commission upon request.  Since the Commission has already stated that it “cannot envision a compelling use for this data,” don’t expect a request for the records anytime soon.

So the Gaming Commission has no records, for example, of the comps from the Plainville casino, which opened last year. If they did have them, those records would be subject to the public records law and we could have them too.  But no. Not so far anyway.

It’s certainly possible to argue that the statute requiring that casinos “shall submit” reports to the Commission doesn’t give the Commission leeway to decline them.  That the statute would result in the records being available under the public records law while the Commission’s regulation results in their being unavailable seems relevant to this whole analysis.  The right plaintiff could make things interesting.

(An earlier version of this post cited a source that misstated the amount of gambling losses accrued by the wealthy casino patron. Error, which author regrets, has been fixed.)

 

The Gaming Commission’s Hurry-Up Offense: Dispatch from the “ATM’s in Casinos” Battlefront

The latest episode in the drama concerning the legality of placing ATM’s in casinos here in Massachusetts.

Quick recap. At present, a state law says that no ATM “shall be located upon premises where there occurs legalized gambling.” This law presents an obstacle of major significance to the casino industry, under whose business model casino patrons must have ready access to all of their assets. In a very lightly attended legislative session on Christmas Eve, the State Senate included a repeal of that law in an amendment to a much larger bill concerning the regulation of state-chartered banks. The maneuver did not go undetected, and those who favored more careful deliberation on this policy question succeeded in removing the proposed repeal before allowing the bill to pass.

The Gaming Commission, in sympathy with the casino industry, had earlier asked the state’s Division of Banks for its views, and last week the agency responded: no repeal of the law is necessary because it has already happened. Their argument goes like this: the 2011 gambling law included a directive to several state agencies to ensure that casinos do not allow “any credit card or automated teller machine that would allow a patron to obtain cash from a government-issued electronic benefits transfer [EBT] card.” This prohibition against EBT cards, the Division of Banks reasons, also operated to repeal the earlier law prohibiting the placement of ATM’s in casinos altogether. Despite the fact that the Legislature did not expressly repeal the ATM prohibition (as it did with seven other statutes it regarded as inconsistent with the gambling law), the repeal nevertheless occurred “by implication,” because no other interpretation is conceivable: the prohibition against the use of EBT cards can mean only that the Legislature intended that ATM’s capable of rejecting EBT cards are permissible.

Whether the Division of Banks is correct in its interpretation is certainly a matter of dispute. (Courts are very relucant to conclude that repeals “by implication” have occurred: the test for the principle of implied repeal is “whether the prior statute is so repugnant to, and inconsistent with, the later enactment that both cannot stand.”) For one thing, the Legislature evidently lacked confidence that the gambling law repealed the entire ATM prohibition “by implication,” or else it would not have attempted to repeal it expressly last month.

In any event, now that it believes it has a green light of sorts from the Division of Banks, the Gaming Commission has a hurry-up offense going. Draft regulations allowing ATM’s as long as they are 15 feet or more from the gaming area have been issued and the Commission is requesting comments from the public by 4:00 pm on this Monday, January 19 (yes, it’s a federal holiday).

The Commission’s decision on ATM’s is far from the final word. And they should know what you think. So this weekend, maybe while you’re watching the Patriots’ hurry-up offense, drop a line to the Commission with your thoughts — and remember, the wisdom of the ATM policy is fair game, too. Use ‘draft regulation comment’ in the subject line and email to mgccomments@state.ma.us.

Hey, “Yes” Voters on Question 3. Something You Can Do.

Update: November 18: The Boston Globe is reporting that the state’s Gambling Commission is likely to require the state’s licensed casinos and its licensed slots parlor to assist gamblers who want to set limits on how much they gamble. Yay, us!

In our last episode we saw that, post-election, there are still many decisions to be made about about the gambling industry in Massachusetts, and there may be opportunities for the 840,000 or so of us who voted “yes” on Question 3 to influence those decisions.

Here comes an opportunity now.

As the Globe reported Monday, the state’s Gaming Commission is considering whether the casino industry ought to assist gamblers who want to set limits on how much they gamble. The assistance would work this way: before sitting down in front of a slot machine, a casino patron decides that setting, say, a $50 limit on gambling losses that day would be a prudent idea. This amount is entered into a “loyalty card,” which tracks that individual’s gambling activity throughout the casino. As the losses mount, the patron is informed, through the loyalty card, that the $50 limit is approaching. If the the player reaches the limit, he or she can still choose to override it and continue to play, but at least there’s been a reminder.

This assistance is known in the industry as a “play management system.” Considering that it’s voluntary for casino patrons in the first place, you might be wondering what possible reasons the gambling industry would have for opposing it. Here they are. First, borrowing from the strategy of climate science deniers, the industry contends that there is no scientific evidence showing that a play management system works and a whole lot more study is needed before it is instituted here. Second, the industry wonders whether gamblers might respond inappropriately to a play management system. They might, for example, set very, very high limits so that they never hit them and end up losing more money than if they had never set a limit in the first place. Isn’t it sweet of the casinos to care about us like this?

The industry will be exerting its considerable power to try to convince the state Gaming Commission to abandon this very modest proposal to counter gambling addiction. So what can you do?

The Gaming Commission is asking for your opinion. You can send an email (ideally before 5 PM tomorrow, November 13) to mgccomments@state.ma.us, with “Play Management System” as the subject line, asking the Commission to require the companies with gambling licenses here in the state to make a play management system available to casino and slot parlor customers. It is, almost literally, the least the industry can do.

We’ll keep you posted.

Licenses in Hand, Casinos Are Coming Back for More

The day after last week’s election, in which the pro-casino forces spent $14 million to defeat the casino law repeal effort, the state’s Gaming Commission officially awarded the casino licenses that beforehand had been only provisional, pending the outcome of the vote.

So you might well think that now that the licenses have been awarded and the i’s have been dotted and t’s crossed, everything is ready for takeoff. But that’s not how things work in the gambling world. As casino opponent Steven Abdow told the Globe yesterday, from the experience of other states we know what happens next: the casinos return to the Legislature with another wish list. Turns out that the law they lobbied so hard for is, well, not quite all of what they want.

For the past few months the casinos been working hard, and successfully, to get the state’s Gaming Commission on their side. The Commission, for example, now supports the notion that casinos should be exempt from the responsibility of checking to see if gambling winners are on the list of persons who are delinquent in paying child support or past due taxes before they make payouts. The state lottery isn’t exempt, but the Commission (which, incidentally is charged with protecting the lottery’s interests) appears to be of the view that casinos deserve an easier time.

And here’s another of the many changes the gambling industry wants. The law the Legislature passed three years ago requires casinos to file reports on the complimentary services — “comps” in the trade lingo — that they provide. Comps are things like a free drink, a free meal, a free room — whatever will keep the gambler on the premises. In one famous case, a very wealthy casino patron was treated to comps in the form of private jet flights to Las Vegas, which contributed to her racking up a staggering $1 billion in gambling losses. It’s hardly surprising that the Legislature regards the complimentary services a casino provides as worthy of the state’s regulatory attention.

But the industry has complained that these reporting requirements are administratively burdensome and wants them to be eliminated, and again, the Gaming Commission has taken the casinos’ side. The reports on complimentary services are unnecessary, the Commission agrees, not only because they would burden the casinos but also because the Commission itself cannot even “envision a compelling use for this data.” Well, here’s an idea — maybe a compelling use for the data is to see if complimentary services are playing any role in increasing compulsive gambling — like the casino law contemplated?

The Legislature will not return to formal sessions until January, so one might expect that bills to tilt the gambling law further in the industry’s favor will not emerge until then. But don’t count on it. You, like most of the members of the House of Representatives, were probably unaware that this past summer House Speaker Robert DeLeo quietly (very quietly) added a pro-casino provision to an otherwise uncontroversial bill on state-chartered banks. The House passed the bill without comment on the gambling law change (which reads opaquely as follows: “the second paragraph of section 3 of said chapter 167B, as so appearing, is hereby amended by striking out the last sentence”) discreetly tucked inside. If the bill is enacted during the remaining months of 2014, the casino industry will have defeated a law now on the books that prevents ATM’s from being placed inside casinos. If it’s not enacted, it will undoubtedly be back again in 2015, along with who knows what other requests.

So the lesson from other states is that now that the Massachusetts licenses have been issued, it’s time for us to really be on our toes. Eternal vigilance is the price of the “responsible gaming” the Legislature promised us. Assuming that one can even envision such a thing.

Gaming Commission Has to Try Some Fancy Footwork to Get Around ATM Ban

Last week’s meeting of the Massachusetts Gaming Commission included some lip service about responsible gambling, specifically, a discussion of the “Responsible Gaming Framework,” which the Commission says “is based on the commitment by the Massachusetts Gaming Commission and their licensees to the guiding value of ethical and responsible behavior.” (You may add your comment about oxymorons here.)

Among the topics addressed by the responsible gaming folks was how to prevent casino customers from emptying their bank accounts — I mean rather, how to encourage casino customers to empty their bank accounts responsibly. To this end, it was recommended that ATM’s be placed at least fifteen feet away from gaming areas, the idea being that a fifteen-foot stroll would suffice to deter a problem gambler.

Which is pretty funny, especially when you consider that there is a law on the books right now that says that no ATM’s “shall be located upon premises where there occurs legalized gambling, other than a state lottery.” Just how the Commission was planning to get around this law in order to allow ATM’s in the first place is not quite clear, but it would seem to involve a very restrictive definition of “the premises where there occurs legalized gambling” — so restrictive, in fact, that seven or eight steps will take you off the premises entirely and put you in front of an ATM.

Or maybe there’s another way around the law. How about getting rid of it altogether? Last month, our House of Representatives voted to do just that, as one small part of a big bill entitled “An act modernizing the banking laws and enhancing the competitiveness of state-chartered banks.” (Wonks: see section 31 of the bill.)

The repeal of the ATM casino ban was quietly added to the banking bill in January by the Joint Committee on Financial Services, whose House Chairman, retiring Representative Michael Costello of Newburyport, has been known to engage in clandestine efforts at lawmaking that only House leadership seems to be aware of.

Thankfully, the State Senate did not act on the bill before the Legislature’s formal sessions ended on July 31. So the Gaming Commission will likely have to rely on its fancy (fifteen) footwork to try to circumvent the law that now prohibits ATM’s at casinos.

(Imagine where we’d be if the gambling industry’s guiding value was not ethical and responsible behavior.)

Nice Casino Referendum You Got There: Too Bad if Anything Was to Happen to It

House Speaker Bob DeLeo, the Legislature’s biggest casino fan, had some ominous-sounding words to say to WGBH News yesterday about the possible budget consequences if the casino repeal succeeds at the polls:

Massachusetts speaker of the House Bob Deleo says lawmakers would have to patch a multi-million dollar hole in the state budget if voters choose to repeal the casino law in November.

“We would have to make some difficult decisions in terms of cuts. That’s one of the issues I thought about this morning actually,” DeLeo told reporters Wednesday.

The state is banking on $54 million in casino licensing fees and $20 million in slot parlor money in the budget for the fiscal year that begins July 1.

“We’ve already started to use it and depend upon it.”

OK, OK. Message received. We are to understand that there’s a threat of a big budget hole — something that would require either big budget cuts or big tax increases to fix.

Well, those of us who think casinos are a terrible idea also like to think of ourselves as problem solvers. And if budget cuts might be needed because the casino law is repealed, we offer up one suggestion to the House for the very first cut to make: give up the “sales tax holiday” that you have proposed for the second weekend in August.

The sales tax holiday weekend is a gimmick that’s been going on in the state for a decade. Its original purpose was to encourage people who to go buy things that they would not ordinarily buy during one of retail’s slowest months. But, even assuming that the holiday met its intended goal a decade ago, the fact that the Legislature has reprised the holiday in seven of the eight subsequent years has substantially reduced whatever stimulative power it once had. Now that buyers anticipate the holiday, it doesn’t encourage more sales, but simply shifts the timing of sales to coincide with the holiday. Little wonder that the Senate Ways and Means Chair, while defending the program, said in a moment of understated candor that it “may not be the finest public policy on the planet” (State House News, 7/28/11). On top of everything else, the accounting complexities the holiday requires of retailers favor bigger rather than smaller companies. The result? One weekend each August we shovel millions to our Walmarts.

According to the Department of Revenue, last year’s sales tax holiday cost the state over $24 million. We could make up one-third of the $74 million gap that Speaker DeLeo is forecasting just by bagging the sales tax holiday this year. Now that didn’t hurt too much — maybe this won’t be such a big problem after all. And eliminating the sales tax holiday is just one idea.

The budget hole that concerns the Speaker, when compared to the $22 billion in revenue that the state will collect amounts to…let’s see, about three-tenths of one percent. And by eliminating the sales tax holiday we’ve already made a big dent in that three-tenths of one percent.

The Speaker really shouldn’t worry so much.