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Casinos in Philly: Millions of dollars a year, but is it worth 8,000 addicts statewide?

Just around the bend from trendy restaurants and bars not far from Center City, step onto the slots floor at SugarHouse Casino on the Delaware River where dozens of people tap away at flashing screens at all hours of the day.

Some are soaking in the experience, betting just a few dollars and watching the whir of the electronic machines with smiles on their faces. But others have the stoicism of zombies, a calm blankness that’s overtaken them. They can feed the machines, tapping the buttons, repeating, for hours.

And the state and the city make millions this way each year. Casinos, which have existed in Pennsylvania for just over 10 years, have turned the state into the second largest casino hub in the nation, dwarfed only by Las Vegas. With 12 operating across the state, Pennsylvania has brought in more than $9 billion in tax revenue in the last decade that was supposed to reduce property tax rates for residents across the state.

But some experts say the “social costs” of casinos — like crime and depression that stems from addiction — are hidden. Meanwhile, just .002 percent of that revenue goes toward efforts to curb what can become a crippling addiction that can affect more than half of the gamblers who are generating casino revenue.

Casinos and politicians in Pennsylvania tout a program that’s allowed more than 8,000 people to put themselves on a “self-exclusion list” that’s designed to keep them out of casinos because of a severe addiction. Others say what officials are doing is nowhere near enough.

“Nobody really cares about casinos,” said Rep. Mike O’Brien, whose district includes SugarHouse, the casino that’s been in Fishtown for about five years. “They care about the revenue that’s produced by it. They care about the original intent of the bill. Are they getting property tax reductions?”

The industry in Pennsylvania is only growing. The state has approved another license for a second casino to open at the sports complex in South Philly, which will become the fifth casino in southeastern Pennsylvania while we’re just a short drive from Atlantic City — which, as you know, is falling apart.

Thousands of people in Atlantic City have lost their jobs in the past several years, and the gambling Mecca lost a third of its casinos in 2014 alone, not in small part due to the increase in gambling in Pennsylvania.

The new casino in Philly estimates it will bring in $15.2 million to the city every year through taxes. And now, the state is considering legalizing online gaming.

Problem gambling

Philadelphia criminal defense attorney C.R. Mirarchi started betting on sports and horse racing at the age when most of us were in elementary school. It spiraled, and his gambling addiction manifested itself during college and law school as he started spending more time at casinos.

By 1984, Mirarchi says he was sick and tired of constantly being on the brink of moral and financial bankruptcy. He went to rehab and successfully completed the 12-step program associated with Gambler’s Anonymous.

But a few years later, the stock market beckoned — “this was not really betting,” he told himself — and he stopped attending meetings, sliding back into his compulsive habit. In 2003, FBI agents came to his door, which led to him pleading guilty to one count of mail fraud. He was sentenced to three years of probation, six months of house arrest, the revocation of his law license and a lifetime of being labeled a convicted felon.

Since that point, Mirarchi’s law degree has been reinstated. He earned a masters degree in counseling from La Salle University and he now counsels other people in the city who are addicted to gambling.

“When people say, ‘how bad could it be?'” he said, “Well, I lost my law license. How bad do you want it to be?”

Between 1 and 4 percent of the American population are considered pathological gamblers — between 15 million and 20 million people nationwide. That number is, of course, much higher when you look at the amount of gamblers who have a problem.

So far in 2015, the Pennsylvania Helpline for Compulsive Gamblers received a total of 4,369 calls, and more than half of the problem gambling calls were related to slots or table games, according to the Council on Compulsive Gambling in PA.

And in a statewide compulsive gambling report compiled to reflect 2013, the majority of calls coming into a state helpline consisted of people struggling with slot machines, which are widely seen as the most addictive form of gambling — but account for three quarters of revenue for most casinos.

What’s all this addiction mean? Increasing social costs that are hard to measure, which, according to advocates against gambling addiction, can range from depression and suicide to embezzlement and drug sales that gamblers turn to in order to feed an addiction.

“It’s every bit as bad as being addicted to drugs and alcohol,” Mirarchi said. “Except you can’t drink $3,500 worth of liquor in one sitting. Nobody can shoot that much dope in a day. But you can lose that in a half hour over your lunch break at the casinos. For those people who have a problem, it’s ruined a lot of lives.”

The state’s Compulsive and Problem Gambling Treatment Fund is funded each year with either $2 million or an amount equal to .002 multiplied by the revenue of all active casinos (whichever is greater). Rep. O’Brien called this amount “woefully inadequate.”

Doug Harbaugh, spokesman for the Pennsylvania Gaming Control Board, said the state has an Office of Compulsive and Problem Gambling that does outreach at events, collects compulsive gambling plans from casinos and ensures the hotline number is on casino advertising materials.

He said “the biggest” thing the office does is manage the state’s self-exclusion list that, at last count, had 8,188 people on it. It works like this: A problem gambler submits their information to the state, has their photo taken and can choose to be placed on the list for periods of one year, five years or a lifetime.

For that time period, if the person steps into a casino, they’re to be charged with misdemeanor trespassing and taken to prison. Some 1,600 people have been caught in violation in the last decade.

But there are problems. For one thing, the list is totally incumbent upon the gambler wanting to be on it. Second, they can ask to be removed at any time. And third, it’s difficult for casinos to properly monitor this — with more than 8,000 photos in a book, how are casinos expected to know the face of every excluded person?

“Candidly, a lot are gotten off after they access the floor,” Harbaugh said, “and gamble and try to claim their winnings and then they would be flagged.”

The activism group Casino Free Philly, which advocates against more gambling being brought to the city, contends the efforts of the Gaming Control Board to curb problem gambling are insufficient.

“What the self-exclusion thing is, is part of the industry PR to pretend they care about it,” said Casino Free Philly spokesman Dan Hajdo. “The self-exclusion program is what the industry came up with so that they wouldn’t have to do anything serious.” But do the costs of addiction outweigh the benefits of the casinos?

The economics (and the warning signs)

Though activists claim the social costs of gambling statewide are high, the casinos have been an economic driver, without a doubt. The month of March had record-high table games revenue. More than 17,000 jobs have been created across the state. And Harbaugh said casinos have spent a collective $410 million in partnership with local businesses and other contractors.

Here in Philly, SugarHouse Casino in Fishtown employs more than 1,000 people, and last year, more than $94 million was paid in slots taxes and another $12 million in table games taxes. This also meant $4.8 million to Philadelphia’s ailing school district and about $4 million to the city itself.

And while slots and table games revenue has actually dropped in Pennsylvania over the last two years, their statewide contributions remain huge.

Whether or not average citizens feel this revenue remains to be seen.

In 2004 when gaming in Pennsylvania was legalized, then-Gov. Ed Rendell promised Pennsylvanians that this was a good idea — that billions of dollars in gaming taxes collected from casino revenues would ease the property tax burden on residents throughout the state.

And while Pennsylvania is No. 1 in gaming taxes collected from its 12 operating casinos, the state collected about $1.4 billion in casino taxes last year. About half of that goes directly to property tax reduction across the state and wage tax reduction in Philadelphia. (The rest goes to the government, local law enforcement, volunteer firefighting companies and horse racing.)

Despite $1.4 billion being brought in, the property tax and school tax burden of Pennsylvanians is significantly higher. According to an Associated Press analysis, the average homeowner over the span of about five years saw a $187 tax break, while low-income seniors saw a bit of a higher rebate.

“I’m certain that Democrat and Republican politicians were at fault for this misconception that the gaming act was going to eliminate property taxes in the state of Pennsylvania,” Sen. John Yudichak, D-Luzerne, told the AP last year. “That math was simply never going to add up.”

What’s next

The Gaming Control Board approved a second license in Philadelphia last November, and Live! Hotel and Casino will have a license to operate in South Philly in the shadows of the city’s stadiums.

Live! estimates it will bring in $15.2 million to the city every year, $9.6 million from gaming taxes and the rest from other taxes. It also guesses it will drive $78.5 million in taxes each year to the state.

Meanwhile, 15 million Americans struggle with a compulsive gambling problem, and the state’s self-exclusion list grows almost every day. Social costs like crime, depression and financial struggles will mount. And addiction will continue.

“A lot of people don’t think of it as an addiction because it’s advertised all over,” Mirarchi said. “When the church air conditioning unit breaks down, they have a bingo night. When the state’s need new roads, they come up with a new lottery game so people look at it. Casinos are everywhere.

“But there’s help. They just have to want it.”

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