BEFORE THE

PENNSYLVANIA GAMING CONTROL BOARD

 

In re: Promulgation of Temporary Administrative

Regulations Pertaining to Category 1 Licenses and

Compulsive and Problem Gaming Requirements

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COMMENTS OF SENATOR VINCENT J. FUMO

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By and through his undersigned counsel, Senator Vincent J. Fumo, in his capacity as a duly elected member of the Pennsylvania State Senate and as Chairman of the Senate Democratic Appropriations Committee, respectfully submits these comments pursuant to the Board’s Order of May 18, 2005. In so doing, Senator Fumo seeks to share with this Board the perspective of a member of the legislature who was significantly involved in the development and eventual enactment of the Pennsylvania Race Horse Development and Gaming Act.

Introduction.

In its enactment of the Pennsylvania Race Horse Development & Gaming Act (hereinafter, the "Act"), the General Assembly explicitly declared that the primary objective of the Act, "to which all other objectives and purposes are secondary is to protect the public through the regulation and policing of all activities involving gaming. . .". 4 Pa.C.S.A. § 1102(1). The legislature further determined that the "public interest of the citizens of this Commonwealth and the social effect of gaming" should be taken into consideration in any decision or order by this Board. 4 Pa.C.S.A. § 1102(10). According to the National Council on Problem Gambling, approximately 1% of the adult population in the United States meet the criteria for pathological gambling, while another 2-3% do not meet the full criteria for pathological gambling but would be considered "problem gamblers." See, . Problem gambling is a general term that includes any behavior involving gambling that causes disruptions in any major area of life: psychological, physical, social or vocational. Id. The term "Problem Gambling" includes, but is not limited to, the condition known as "pathological" or "compulsive" gambling, a progressive addiction characterized by an increasing preoccupation with gambling, a need to bet more money more frequently, restlessness or irritability when attempting to stop, "chasing" losses, and loss of control manifested by continuation of the gambling behavior in spite of mounting, serious, negative consequences. Id.

As one of the principle architects of the Act, Senator Fumo was particularly sensitive to the social impact of compulsive gaming and, as a result, successfully included several provisions in the Act intended to mitigate the occurrence of this problem. See, e.g., 4 Pa.C.S.A. § 1504 (Prohibiting the extension of credit and the acceptance of credit cards or debit cards for the purposes of gaming); 4 Pa.C.S.A. § 1508 (Prohibiting, in any manner, the wagering on professional or amateur athletic events at a licensed facility); 4 Pa.C.S.A. § 1509 (The establishment of the nation’s second largest dedicated source of revenue for compulsive gaming treatment); 4 Pa.C.S.A. § 1540 (Authorizing the Board to regulate the number and placement of ATM machines at licensed slot facilities); 4 Pa.C.S.A. § 1516 (Establishment of patron "Self-Exclusion" program); 4 Pa.C.S.A. § 1509(c) (Requiring the posting of problem gaming treatment signs in slot facilities). It is the position of Senator Fumo that those who support the legalization of gaming in the Commonwealth have a public responsibility to provide the regulatory tools necessary to address its social consequences – particularly compulsive gambling.

While each of the cited provisions in the Act serve the important function of mitigating negative social consequences of the legalization of slot machines in the Commonwealth, the Board’s responsibility to protect the public is not limited to these particular functions. Rather, these are minimal safeguards. Recognizing this, the legislature endowed the Board with broad authority to promulgate regulations necessary to carry out the purposes of the Act – including regulations that alleviate the negative social impact of gambling. See, Pa.C.S.A. § 1202(14). Accordingly, it is consistent with the provisions and policy objectives of the Act for the Board to affirmatively impose additional regulatory requirements on potential slot machine operators during the license application process for the purpose of minimizing the negative social effects of gaming. In particular, the Board should amend its proposed draft regulations to:

require the submission of a compulsive and problem gambling plan, at the time of application, from each potential slot machine operator applicant;

require the inclusion of "Self-Exclusion" compliance as part of compulsive and problem gambling plan, and prohibit intoxicated patrons from playing slot machines;

require the posting of Board approved signs, containing the gambling treatment referral information, within each licensed facility listing and as part of any gaming advertisement; and,

prohibit certain forms of check cashing or cash advances on payroll checks at licensed facilities.

Each of these proposals complement the Act’s objective to regulating and policing gaming activities in a manner that lessens the occurrence of problem gambling.

Comment -- Submission of Problem Gaming Plan at the time of application.

Senator Fumo proposed the following amendment to section 501.2 of the Board’s proposed administrative regulations (page 33):

§ 501.2 Compulsive and problem gaming plan.

A slot machine license[e] applicant must submit a compulsive and problem gambling plan to the Board [within 90 days of issuance of a slot machine license] as part of the application for a slot machine operator license. The plan shall meet the minimum standards set forth in this subpart. The maintenance of the plan approved under this subpart shall be a condition of license renewal.

 

It is commendable that the Board has directed the adoption by licensed gaming entities of a compulsive gambling plan intended to ensure that persons employed at a slot machine facility received adequate training in identifying patrons who exhibit compulsive gambling behavior and provide treatment referral services. However, it is appropriate for the Board to consider requiring the submission of such plans at the time of application in order to make the programs an explicit condition of licensure and to ensure that the scope and details of such plans are weighed against competing applications. An after-the-fact submission, as suggested under section 501.2, does not permit the Board the opportunity to make an effectual comparison between competing alternative problem gaming plans – thereby ensuring that the most effective, progressive and comprehensive plan is adopted by the Board. Additionally, requiring applicants to file proposed compulsive gambling mitigation plans as part of the application process sends an important signal to the gaming industry that the Board places equal weight and priority on the alleviation of problem gambling as other parts of the application proposal, such as slot machine revenue projections. The Board’s regulation, as proposed, relegates the compulsive gaming plan as an afterthought in the licensing procedure, and does not accord it the significant value in the licensing decision process it demands.

Comment – Inclusion of Employee Training for "Self-Exclusion List" compliance.

Senator Fumo proposes that section 501.4 of the Board’s proposed regulations (page 37) be amended to include additional employee training to ensure compliance with the Act’s mandated "self-exclusion" program and to prevent patrons from gambling while visibly intoxicated. See, 4 Pa.C.S.A. § 1516 (relating to List of persons self excluded from gaming activities). Section 501.4 of the draft regulations should be amended to include, at a minimum, the following:

(e) Provide procedures designed to prevent serving alcohol to visibly intoxicated gaming patrons.

Provide procedures for removing self-excluded persons from a licensed facility including, if necessary, procedures that include obtaining the assistance of appropriate law enforcement personal.

 

Provide procedures preventing any person identified on the self-exclusion list from receiving any advertisement, promotion, or other targeted mailing after 90 days of receiving notice from the Board that the person has been placed on the self-exclusion list.

Provide procedures for the dissemination of written materials to patrons explaining the self-exclusion program.

Provide procedures to prevent any person placed on the self-exclusion list from having access to or from receiving complimentary services, or other like benefits.

Provide procedures designed to prevent persons from gaming after having been determined to be visibly intoxicated.

The legislature’s purposeful inclusion of section 1516 to create a program through which individuals with a compulsive gambling problem may request placement on a list of persons to be excluded from gaming facilities and marketing campaigns was modeled from New Jersey’s successful program. Compare, N.J.S.A. §5:12-71.2. In fact, the states of Illinois, Louisiana, Missouri, Michigan, Mississippi, and Nevada have adopted by statute or regulation similar programs. Ill. Admin. Code § 3000.750-793 (Illinois voluntary self-exclusion list administrative regulation); LSA-R.S. § 27:27.1 (Louisiana statutory self-exclusion list requirement); M.C.L.A. § 432.225 (Michigan statutory disassociated exclusion list); Code Miss. R. § 50 012 002 (Mississippi self-exclusion list administrative regulation); V.A.M.S. § 313.813 (Missouri statutory self-exclusion list); Nev. Gaming Reg. § 5.170 (Nevada self-limit list administrative regulation). In each jurisdiction, the casino operator is required to include, as part of a problem gambling awareness plan, procedures for the implementation of the patron self-exclusion list.

The suggested language is derived from the administrative regulations in Louisiana. See, La. Admin. Code tit. 42, pt. III, § 301, et seq.. Alternatively, section 19:48-2.4 of the New Jersey Administrative Code clearly defines the responsibilities of casino licensees and may be relied upon in lieu of the suggested language from Louisiana. In either case, it is entirely consistent with the objectives of the General Assembly, in particular section 1516 of the Act, to place an affirmative burden on the casino operators to comply and implement the provisions of Pennsylvania’s self-exclusion program. Additionally, the proper management of visibly intoxicated patrons by the casino operator is necessary to limit the negative effects of problem gambling. Patrons who are visibly intoxicated have impaired judgement and cannot responsibly gamble. It is not only sound public policy, but common sense to prevent drunk patrons from playing slot machines. Each of these proposed provisions are reasonable safeguards intended to enhance the ability of the Board to "protect the public".

Comment – The prominent posting of compulsive gaming treatment signs and inclusion of problem gambling treatment information in all casino advertisements.

Senator Fumo proposes that the Board require the conspicuous posting of signs at licensed gaming facilities that comply with the Act’s requirement for providing gaming treatment information pursuant to section 1509(c) of the Act. In particular, the Board’s regulations should be amended to include the following section (page 39):

§ 501.7 Signage Requirements.

Pursuant to section 1509(c) of the Act, each licensed gaming entity shall post signs that include the statement: "If you or someone you know has a gambling problem, help is available. Call (toll-free telephone number)." The complete text of the sign shall be determined by the Board. The signs shall be prominently posted at the following locations:

within 50 feet of each entrance and exit of the facility; and,

within 50 feet of each ATM, cash dispensing or change machines in each facility.

(b) Each licensee shall print a statement related to obtaining compulsive or problem gambling assistance, the text of which shall be determined by the Board, on all marketing or advertising materials that are offered to the general public by a licensee, including but not limited to signs, billboards, print, radio or television advertisements.

The Act mandates the prominent posting of signs informing gaming patrons how they may obtain compulsive gambling treatment assistance. 4 Pa.C.S.A. § 1509(c). Similar requirements have been adopted in Illinois, Iowa, Louisiana, Michigan, Mississippi, New Jersey and Nevada. See, 230 ILCS. § 10/13.1 (Illinois statute requiring the posting of gambling assistance on river boats); 3 I.C.A. § 99D.7 (Iowa statutory requirement for posting of signs as a condition of licensure); LSA-R.S. § 4:149.4 (Louisiana statute requiring posting of signs); M.C.L.A. § 432.209c (Michigan statutory requirement for casinos to post treatment referral signs); Code Miss. R. § 50 012 002 (Mississippi regulatory requirement to post signs at casinos); Nev. Gaming Reg. § 5.170 (Nevada Gaming Board regulation that gambling treatment referral signs are to be post conspicuously); N.J.S.A. § 5:12-70 (New Jersey statute requiring posting of treatment information and its inclusion in all advertisements). The proposed regulation parallels the statutory requirements in Illinois and Louisiana that not only require the posting of signs within a gaming facility, but the inclusion of similar information on all promotional material issued by a casino operator. Id. It is necessary for the Board to ensure that information related to problem gambling treatment is readily available to the general public, and that gaming patrons are cautioned to gamble responsibly. For example, New Jersey has statutorily adopted the phrase, "Bet with your head, not over it" as a reminder to patrons to gamble responsibly, on all billboards, signs and other forms of advertisements made by casinos. See, N.J.S.A. § 5:12-70. Each of these regulatory approaches are consistent with the Act’s charge to the Board to consider the effects of problem gaming in all of its decisions and its statutory responsibility to protect the public interest.

The Board’s proposed regulations are silent as to the type, form or content of signs that are to be placed within a licensed gaming facility, or the inclusion of compulsive gaming treatment information in promotional materials and advertisements. Section 1509(c) of the Act is a statutory requirement that necessitates the Board’s implementation through administrative regulation. This existing void in the regulations related to treatment information should not be permitted to remain. The Board would be well served by following the example of the seven other states that have imposed similar sign and advertisement requirements on licensed gaming facilities.

Comment – Prohibit certain types of check cashing or check advances.

Senator Fumo proposes that the Board’s proposed administrative regulation be amended to include the following limitation on the ability of a licensed gaming entity to cash checks (page 39):

§ 501.7 Prohibition of Check Cashing.

Except as otherwise permitted in this section, no licensed gaming entity or any person acting on behalf of a licensed gaming entity, shall cash any check, including, but not limited to social security, unemployment insurance, disability payment, public assistance payment, or payroll check from any person to enable such person to take part in gaming.

Notwithstanding the foregoing, a licensed gaming entity may accept a recognized traveler’s check, cashier’s check, money order, wire transfer check or other cash equivalent.

The states of Illinois, New Jersey and California have enacted, by statute or regulation, similar limitations on check cashing by casino operators. See, Cal.Bus. & Prof. Code § 19841(q) (California regulations prohibit chasing of checks drawn against any federal, state or county fund); N.J.S.A. § 5:12-101 (New Jersey statute prohibiting any casino from cashing a check that is not made payable directly to the casino); Ill. Admin. Code § 3000.1050 (Illinois regulation prohibiting cashing of checks that are not personal or money orders). These restrictions serve two important public policy objectives – limiting the extension of credit or non-cash equivalents to gaming patrons, and the strict monitoring of casino revenues. Section 1504 of the Act explicitly prohibits licensed gaming entities extending credit, "in any manner" so as to enable a patron to play slot machines. (Emphasis added). Cashing checks, without cash payment guarantees like traveler’s checks, money orders, cashier’s checks or wire transfers, may reasonably be considered to be a form of credit extension because a risk of collection is placed on the licensed gaming entity upon the acceptance of the check. Such forms of credit extension have been prohibited by the General Assembly through the purposeful use of the broad phrase, "in any manner," to describe the forms of credit that are prohibited. Id.

Conclusion.

While it was the clear desire of the General Assembly to legalize slot machine gaming at fourteen locations within the Commonwealth, it was also the stated intention of the legislature that the implementation of the Act would be directed by the Board in a manner that would protect the public by alleviating the negative social effects of problem gambling. In fact, the inclusion of problem gaming mitigation plans, prominent posting of treatment referral signs, preventing visibly intoxicated patrons from gambling, and responsible advertisements are all concepts that have been embraced by the American Gaming Association, the largest casino industry trade organization. See, American Gaming Association, Code of Conduct for Responsible Gaming (Adopted, September 15, 2003).

The legislative goals of increasing slot revenue and mitigating problem gambling are not incompatible goals. Rather, they reflect the reality of the overwhelming acceptance of gambling as a form of entertainment in our society. As noted by the National Council on Problem Gambling;

"The cause of a gambling problem is the individual's inability to control the gambling. . . . The casino or lottery provides the opportunity for the person to gamble. It does not, in and of itself, create the problem any more than a liquor store would create an alcoholic."

Accordingly, as the Pennsylvania Liquor Control Board strictly regulates the transportation, distribution and serving of alcohol in the Commonwealth, this Board should adopt these safeguards that lessen the occurrence of problem gambling, restrict access to slot machines and easily provide information concerning problem gambling treatment.

WHEREFORE, for the foregoing reasons, Senator Vincent J. Fumo respectfully requests that this Honorable Board amend its proposed draft temporary administrative regulations in such a manner that is consistent with these comments.

Respectfully Submitted,

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Christopher B. Craig, Counsel

Senate Democratic Appropriations Committee

Room 545, Main Capitol Building

Harrisburg, Pennsylvania 17120

717.787.5662

Counsel for Senator Vincent J. Fumo

June 9, 2005