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10 Things the Media Hasn’t Told You about Gambling

It’s been said since the advent of the internet that we now live in the “Information Age”. For the most part, that’s true. Anyone can hop on a computer and go to sites like CNN, Fox News, MSNBC, the Drudge Report, or hundreds of other news sites.

For years, we took the word of these sites as gospel. They would go the extra mile to bring us news from around the corner and around the globe. CNN was the first network to embed their reporters in a war zone during the initial attacks of Desert Storm. They provided live updates on all the missile strikes made by allied forces. 15 years later Fox News would embed Geraldo Rivera with forces in Afghanistan to show events occurring there in real time.

But in the last few years, the public has become leery of these sources. As a result, some less than reputable sites have popped up. People seeing news fashioned to cater to their personal beliefs became commonplace. The problem was that a lot of these sites were hoax or satirical sites. We’ve all heard the term fake news. We hear stories about how major tech companies like Google and Facebook are trying to fight fake news. But no one trusts them either.

So the media has dropped the ball in several aspects of spreading the news. It’s not going to change anytime soon either. They have their narratives and their agendas that they wish to push, and that won’t change. After all, they have stockholders to answer to. But it’s not just misinformation. It’s a lack of information. There are things that they avoid reporting on because it doesn’t fit in with their agenda. A big subject that the media tends to gloss over, or skip altogether, is the happenings in the gambling industry.

Some of it is apathy. They don’t care or find it newsworthy. Some of it is agenda. They don’t like aspects of the industry, so any positive stories get lost in the shuffle. But there are stories that the mainstream media isn’t telling you about gambling. You may find them on some local news site or even a blog like this. But Fox won’t tell you. CNN won’t report it. MSNBC doesn’t care. So it’s up to smaller blogs like this to give you the full story.

1 – Congress No Longer Can Regulate Whether States Allow Sports Betting

It all started in 1992. The biggest gambling states were Nevada and New Jersey. But New Jersey didn’t allow sports betting. They were anticipated to allow it, but it hadn’t happened. Congress, at the behest of major league sports organizations such as the National Football League (NFL), the National Basketball League (NBA), the National Hockey League (NHL), and Major League Baseball (MLB), along with the major governing body of collegiate sports the National Collegiate Athletic Association (NCAA), passed the Professional and Amateur Sports Protection Act of 1992 (PASPA).

PASPA was designed to define the legality of sports betting throughout the country. This would affect most sports–with the notable exceptions of jai alai, parimutuel horse racing, and dog racing. The law was written so that states that allow sports betting (Oregon, Delaware, Montana, and Nevada) would not be affected. Also, they created a window for other states to be granted an exemption from the law.

The exemption could be granted for any state that:

Already allowed licensed casino gaming for the previous ten-year period (January 1, 1983-December 31, 1992) and
Passed a law allowing sports gambling within one year of PASPA taking effect.

This would require any state that met the first criteria to pass legislation to take effect by January 1, 1994. The exemption provision was written with the state of New Jersey in mind. They were already looking at legalizing sports betting.

The early 90s saw a downturn in the economy. It also saw the now famous bankruptcy of the Trump Taj Mahal Casino (as well as some of Trump’s other casino ventures). Both of these played roles in the sports betting law never getting passed in the New Jersey legislature and thus locked them out of the option by PASPA.

Over the years, many states lobbied to repeal PASPA. They were unsuccessful. Having waited over a decade, New Jersey now wanted sports betting. In 2011, voters overwhelmingly approved an amendment to the New Jersey state constitution. This amendment legalized sports betting in New Jersey.

The next year, the New Jersey Legislature passed the Sports Wagering Act (also known as the 2012 Act). This allowed sports wagering at New Jersey casinos and racetracks. The problem was that even though it was allowed by state law, PASPA superseded it, because federal law trumps state law due to the Supremacy Clause.

The Supremacy Clause is found in Article VI, Clause 2 of the US Constitution. It states:

“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

Once the law was passed, the NCAA, the NBA, the NFL, the NHL, and MLB joined together in a lawsuit against New Jersey. They claimed that the 2012 Act violated PASPA due to the Supremacy Clause.

New Jersey made a unique argument. They argued that PASPA violated the 10th Amendment to the Constitution that states:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Previous case law had established that the 10th Amendment protected states from the practice of “commandeering”. This is when the federal government actions which would force a state government to take some action that it otherwise would not take.

The case that defined this prohibition is Printz v. United States. The opinion of the court stated:

“The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States’ officers, or those of their political subdivisions, to administer or enforce a federal regulatory program.”

The case (Murphy v. National Collegiate Athletic Association) went through the federal court system. New Jersey would lose at trial and on initial appeal. They appealed to the Supreme Court of the United States (SCOTUS). In May 2018, the court would find by a 6 to 3 margin that PASPA violated New Jersey’s 10th Amendment rights and ruled that the law was unconstitutional.

2 – Gambling Laws May Lead the Way to Legalizing Marijuana

As of the writing of this post, 9 states have legalized marijuana for medical and recreational use. 47 states have laws on the book that legalized marijuana for at least limited medicinal use.

But the problem is the Controlled Substances Act of 1970 (CSA). This is a federal law that puts marijuana in the same categories as cocaine or heroin. Because marijuana is banned by federal laws, the state laws decriminalizing, or even legalizing use, are moot. It’s the Supremacy Clause again. There’s no doubt that federal legislation removing marijuana from the Controlled Substances Act is on the horizon. But until that happens, everyone involved in the marijuana business is vulnerable.

At any time, the federal government can do any of the following in states where marijuana is legal:

arrest those who have any pot
raid dispensaries,
arrest farmers who grow pot
destroy their pot crop, and can
penalize financial institutions that do business with these businesses

That’s where gambling comes in. Because of the decision in Murphy v. National Collegiate Athletic Association, federal laws against marijuana in any form could be ruled unconstitutional. It could even go so far as making the entire Controlled Substances Act unconstitutional, which would legalize any drugs listed in the act. There’s a big argument that the CSA is a commandeering law and thus is a violation of states’ 10th Amendment rights. We will see in the next few years if that is the case. If it is, gambling paved the way.

3 – The Numbers of Problem Gamblers in the United States

Those who are addicted to gambling or have issues with controlling their gambling have resources to get help. But because the numbers are low, not much get said about it except in the occasional commercial for the lottery. In 2008, the percentage of people who are either compulsive or problem gamblers was under 3% of the population. And while that may not sound like a lot, that’s almost 10 million people.

It can be argued that they’ll hit bottom when they run out of money, but gambling addiction is an impulse control issue much like kleptomania. And most gambling addicts have other addiction problems such as alcohol or drugs. It’s not a pretty subject, and it won’t attract advertisers, so the media doesn’t report much about it.

4 – Las Vegas and Atlantic City Aren’t the Only Places to Gamble

When people want to play the slots or play blackjack, the first places they think of are Las Vegas or Atlantic City. They may know of a Native American run casino, but, for the most part, most people look to Nevada or New Jersey. The truth is that 22 states and 2 US territories allow casinos in some form. In these states, around 450 casinos exist.

These states and territories are:

California
Colorado
Delaware
Illinois
Indiana
Iowa
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Missouri

Nevada
New Jersey
New York
Ohio
Oklahoma
Pennsylvania
Puerto Rico
Rhode Island
South Dakota
U.S. Virgin Islands
Washington
West Virginia

Casinos in these states account for almost $50 billion in annual revenue.

5 – Native American Casinos Aren’t Allowed Everywhere

30 states have Native American gaming in some form. The ability to run games on reservations is authorized under the Indian Gaming Regulatory Act of 1988. It divided gaming into 3 categories, with each one having different levels of regulation:

Class 1 – traditional Indian gaming and games played for minimal prizes. These are exclusively controlled by the tribe.

Class 2 – Bingo and related games and card games where players play each other (such as poker). These games are regulated by the tribes in conjunction with the National Indian Gaming Commission. The state must permit these games.

Class 3 – These would be full-service casinos. To have a casino, the tribe must meet the following criteria:

The Particular form of class III gaming that the Tribe wants to conduct must be permitted in the state in which the tribe is located.
The Tribe and the state must have negotiated a compact that has been approved by the Secretary of the Interior, or the Secretary must have approved regulatory procedures.
The Tribe must have adopted a Tribal gaming ordinance that has been approved by the Chairman of the Commission.

Only 30 states allow tribal casinos is some form. Despite having no rules. 14 states have no rules and don’t have any applicants for tribal gaming. And 6 states outright ban them under the provisions of federal law. There are about 350 tribal casinos in the US, and they account for more the $20 billion in annual revenues.

6 – Casinos Are a Controversial Subject for Some Native American Tribes

Only about 40% of federally recognized tribes take part in gambling ventures. That is due to the controversy, the internal debates within the tribes about the industry, and the effect on the tribe. There’s no doubt that tribal casinos are profitable, but some tribes view it as chipping away at their culture–a culture that has been chipped away at for over 4 centuries.

Some tribes believe that they are too far away from major populations to be able to be successful. Some tribes just do not want non-Native Americans on their land. Some tribes do not trust any compacts that state or federal government agencies enter into. They will not move to open a casino because of the requirements that involve agreements between the tribe and the state they are located in. In any case, the internal debate within the tribe is a common reason for not starting a casino.

7 – Card Counting Isn’t Illegal

One way that experienced blackjack players gain an edge while playing is card counting. The basics of card counting involve assigning a point system to the cards to determine the likelihood of making a winning hand. Movies and television shows portray card counters as cheaters and either see them get roughed up by the casino or arrested.

But that isn’t reality. If you are caught counting cards, a casino may:

change the table rules slightly
shuffle the deck more often
ask you to play another game
in some cases ask you to leave

If they catch you doing it often, they can ban you from the casino. A famous instance of this happened in 2014. Actor Ben Affleck was banned for life from playing blackjack at the Hard Rock Casino in Las Vegas for card counting.

8 – Nevada Has Pop-Up Casinos

The state of Nevada is the issuing authority for all casino licenses within their borders. Before 1990, these were generally issued without any type of restrictions. Yet, after 1990, these unrestricted licenses were no longer issued.

Licensees that had the licenses before 1990 could continue to use them as issued. Over the years, some of these casinos would shut down. But they still had the licenses. These licenses would remain valid as long as they were used for a period of 8 hours every 2 years.

This led to owners of closed casinos to rent trailers and fill them with slow machines to open up a pop-up casino for a day to keep their license valid. To have these pop-ups, licensees do have to apply for more permits. The hoops they jump through aren’t a huge barrier, especially considering the value of the license. So if you see a trailer full of slots with a sign inviting you to play, it’s likely that a pop-up casino is trying to meet the requirements to keep their license.

9 – A Russian Engineer Cracked the Code to Many Slot Machine Algorithms 7 Years Ago, and There Isn’t a Fix

In an attempt to crack down on organized crime, Russia banned almost all gambling in 2009. This led to casinos trying to sell off all their equipment as soon as they could and at discounted rates. Several of these slot machines wound up in the hands of Russian engineers Murat Bliev and his bosses. Bliev reverse engineered the pseudo-random number generators (PRNG) to determine how to beat them. Because they are not truly random, PRNGs have an algorithm. Bliev and his team were able to crack these codes on several different slot machine models and manufacturers.

The first discovery of the manipulation of the slots was in June 2014 at the Lumiere Place Casino in St. Louis. They noticed that one of their slot machines had paid out more than the average and it was small wins. This shouldn’t have happened with the computer system in the slot machine. They should have paid out in accordance with the normal house edge.

They researched their videos and found the same man would play, leave, and then come back again. The man was Murat Bliev. By the time they had figured out who he was, he was on a plane back to Russia. The casino reported their findings to the state casino commission and they sent out a warning to all the other casinos nationwide. Soon, other casinos were reporting similar situations.

After hearing what had happened in Missouri, a casino security expert started researching. Darrin Hoke was the director of surveillance at L’Auberge du Lac Casino Resort in Lake Charles, Louisiana. He identified 25 scammers worldwide. Eventually, Bliev was caught when he came back to the US along with his 2 accomplices. They were sentenced to 2 years in prison for their part. The only way to fix the issue is to completely change the software, so at this time there still is no way to prevent this from happening.

10 – Almost None of the Casinos We Associate with Las Vegas Are in Las Vegas

Most of the casinos in Las Vegas are actually in the unincorporated town next to Las Vegas called Paradise. It is the largest unincorporated town (by population) in the US with a population of about 225,000. Paradise contains most of the Las Vegas Strip, McCarran International Airport, and the University of Nevada, Las Vegas. There was an attempted to merge Paradise with Las Vegas in 1975, but the Nevada Supreme Court ruled the action unconstitutional.

Conclusion

Not all the happenings in the world are on the news. I’ve gone over the reasons why. They could be financial, ideological, or just apathy. Many of the items on this list were found by combing through scores of websites and articles to find the information. It may be hidden, but it’s out there.

The trick is finding the information through reliable sources. If you are trying to find information about gambling that the media hasn’t told you, check and double-check your facts. Use verification sites like snopes.com when possible. Just don’t believe it all at face value.

Joey Richardson