Betting on Sam

Politicians in Harrisburg say they're working to lower your property taxes by introducing slot machines to Pennsylvania. If that comes to pass, it may be the likes of Sam who really cut your taxes -- and that may prove the costliest tax cut you'll ever receive.

Sam's not betting these days, but like an alcoholic, he's never really cured. He placed what he hopes were his last bets on Jan. 26, when he dropped $1,500 into the slot machines at Wheeling Island Gaming Center on what he viewed as a suicide mission. Sam estimates his losses to Wheeling's machines at well over $100,000 in 10 years. For a middle-income North Hills machinist with a family, that's real money -- enough to drag him into bankruptcy and beyond.

Sam's Wheeling misadventures capped a 27-year gambling career that started with sports bets and video-poker playing. Those vices balance the books of local tavern owners and vending-machine distributors, but few people are talking about making them legal. Instead, state leaders are looking at legalizing slots at some dozen racetracks and "slots parlors" -- an arrangement likely to funnel money from the Sams of the world to a few corporations. The upside, according to Gov. Ed Rendell, would be $1 billion in annual revenue that would fund education, lower property taxes, and fix the broken finances of the airport, convention center and elsewhere.

No doubt the casual gamblers who lose their standard $20 and board their tour buses for home would provide a lot of those dollars. But much would come from gamblers like Sam. And if you pay interest on your credit-card balance or pay a health-care premium, some of it might come out of your pocket, too -- even if you never bet a dime.

In addiction counseling, they tell you to look back to your childhood for some unresolved issue that spurs compulsive behavior. Sam can't identify one. His youth wasn't marked by trauma. There was gambling around -- his dad's nickel-ante poker games, Skee-ball at a now-defunct amusement park. He and his pals played no-stakes games of chance. "We used to flip cards, and you'd win all of somebody else's cards, or they'd win all of yours," he says.

Sam sits with his wife and his Gamblers Anonymous sponsor in the basement of a church, after a GA meeting. He is near to completing 90 such meetings in 90 days. Because GA meetings are held in different places on different nights, his quest takes him to Allison Park on Mondays, to Etna at lunchtime and Castle Shannon in the evening on Tuesdays, Penn Hills on Wednesdays and Saturdays, the South Side on Fridays and Verona on Sundays. Thursdays he has off. "I credit this program right now for keeping me alive," he says.

It's been months since his last bets, but Sam still has gambling debts. He hasn't yet told some friends about his recovery effort. Some things he did were illegal. For those reasons, he and his wife asked that their real names and some identifying information be kept out of this story, which starts in 1977 at a local bar.

At age 17, Sam was a dropout working for a moving company. After carrying furniture all day, his co-workers went out for beers. "I started going down to the bar, where they knew I wasn't old enough to drink, but they'd bring me drinks in the back room, and that was where the machines were," Sam says. "The poker machine was instant gratification, because if you won, you'd get the money right back." Chasing that rush, he'd sometimes drop his entire paycheck into the machines.

Over the years his habit would ebb and flow. At times he wouldn't play much. Other times gambling devoured much of his income, forcing him to live with his parents or sleep on the floor of the warehouse where he worked. He'd run up sports betting debts with the bartender who served as his bookie, bring the money to pay them off, and instead lose it to the machines. Occasionally, he tried to even the score. "Me and a couple of guys broke into a bar once and broke into the machines and got our money back," he says. He lost his share of the loot to the same machines the next day.

Sam knew the machines were set to pay out less money than he put in, but he liked being a player. "When you win $200 and buy everybody drinks, they think you won big," he says. "Everybody doesn't see you stick in $400 of $20 bills" before winning half of it back. There's always that lingering hope for a big score. "You think, ‘I'm lucky, I'm on a roll, I'm gonna kill them this time.'" He'd get up by hundreds of dollars, then play it all away. "I gambled until I lost. There were very few times that I left with money."

Sam won't say where he played, for fear of getting tavern owners in trouble. It's perfectly legal to operate video poker and casino-style games like Cherry Master, and this year owners of taverns and social halls within the City of Pittsburgh alone have registered 825 such machines, paying a $444 licensing fee for each. But it's illegal in Pennsylvania to pay players who win on the machines [see sidebar, "Diamonds and Clubs"]. That law is widely flouted, says Pittsburgh Police Detective John McBurney, who heads the city's effort to enforce video gaming laws. "People aren't playing these for amusement," McBurney says. And if you think tavern owners want the machines for decoration, he adds, "You've got to be out of your mind. Think about it. Why would you spend about $500 per machine [in licensing fees] if you're not trying to make some money?"

Sam says video-poker players half-joke that they paid for their favorite bar-owner's swimming pool or car. In 1994, he graduated to a new game. A friend invited him to Wheeling Downs (now Wheeling Island), which had just added 400 video slot machines to its greyhound wagering. At the time, Sam was about to marry Wendy. Though Wendy knew Sam gambled, he didn't tell her where he was going -- or why he needed money. "I made up some insane reason for getting $500" from Wendy, he remembers.

When they got there, his friend went to bet the dogs. "I faded off to the machines," Sam says. From then on, he wouldn't play much in Pittsburgh taverns. "At that point, I knew where Wheeling was."

Wendy married Sam because he seemed like "a really good family man," she says. He's easy-going, gentle, funny. "Give you the shirt off his back." Each had a daughter from prior relationships, and she hoped the arrangement would bring stability to four lives. "But then there was the disease."

"I wasn't as involved in my family life as I should've been," Sam says. "I tried to be there for the big days," Wheeling Island's machines consumed ever-increasing amounts of his time and money. "At the time I was doing what I was doing, I didn't care how it affected them, or anybody else for that matter."

Depart I-79 for I-70 West, and you're immediately met with a Wheeling Island billboard asking: "Feeling Lucky?" It's one of several between Washington and Wheeling. "The most fun was the drive up, because I could dream of this great hit," Sam says.

When Sam put those dollars in Wheeling Downs slots and hit "play," he was prompting the machine to snatch three numbers from a nonstop blizzard of digits created by its random number generator. Each number coincided with a symbol on one of three electronic "reels" displayed on the machine. Electronic reels have from 22 to 512 symbols per reel. That translates into 10,648 to 134.2 million possible combinations of symbols. Each combination coincides with a given result -- usually a loss, but sometimes a modest, medium or big win.

Machines are programmed so that, over about five years, they pay out a certain percentage of what they bring in. In West Virginia, a machine must, by law, pay out at least 80 cents in winnings for every dollar put in, and the average is 91 cents on the dollar, according to that state's Lottery Commission. "You're not bound to lose," says Frank Legato, a gambling magazine writer and author of the just-released book How to Win Millions Playing Slot Machines!...or Lose Trying. Pop star Jennifer Lopez's mother, for instance, won $2.4 million on a New Jersey slot machine in April. "Casinos need winners. If casinos didn't have winners, nobody would come." Most lose, Legato admits. "For the vast majority of people who go to casinos, it's a recreation activity with a little bit of risk."



Not for Sam. Sometimes he drove 60 miles to Wheeling, lost all of his money, drove back to Pittsburgh, got more money, drove back to Wheeling, lost again, made another money run back to Pittsburgh, and blew it all at Wheeling again -- in a single day. Sam has a hard time explaining the allure of Wheeling. The best he can do is note that hope springs eternal in the mind of an addict. "If the guy in front of you loses all his money, you can get on there and win that money," he'd convince himself. And if a machine had been churning out jackpots for somebody else, he'd figure it was "hot" and might hit for him, too.

After a while, his losses became not a deterrent, but a rationale for more gambling. "If I can get $3,000 this day, I can get enough money to pay off all these people who are calling me for money," Sam says. But if he got up to $3,000 in credit on a machine, he'd convince himself to go for more by risking just $200 of that amount. He'd lose that $200, and convince himself to try to win it back. And so on. "I would usually exhaust whatever funds I had before I went out the door." He'd put the gas to get home on a credit card. "The drive home was thinking about what I could tell my wife to get away and gamble more."

Wheeling Island Gaming Center is a pastel palace including a hotel, dog track and huge parlor now containing 2,200 slot machines. Walk in the front door and you're met with fake palm trees and a waterfall flowing over fake rocks. Ascend the escalator, and you're in a glittering lagoon of sound and light, decorated with more fake trees, nautical rigging and an Easter Island-type head. The beeps of machines and the clinking of coins and tokens mingle with faint rock music and a constant, numbing, jingling noise. Seniors and working stiffs drift between machines with names like Easy Street, Life of Luxury, Money to Burn, Razzle Dazzle, Fortune Cookie and On the Money. On a Monday afternoon, perhaps half of the machines are occupied. There are few smiles, little conversation, the occasional "Yessss!"

Tiny stickers on the flanks of some machines read: "Call 1-800-GAMBLER if you need confidential help with a gambling problem." More prominent are the colorful ads for the Wheeling Island Preferred Player Club. Members get points "equal to a percentage [of] all gaming dollars played," and can redeem those points for "cash, food and beverage, lodging, entertainment and retail offers," according to Wheeling Island's financial statements. They also get chances at prizes like digital cameras, camcorders, $5,000 in cash or a new car. Members' Preferred Player Cards are usually attached by a tether to their shirt collars. When they play, they insert the card in a slot near the top of the machine. The tether then connects machine and player, hanging like a hospital IV tube.

Wheeling Island's financial statements say the Preferred Player Club is the "primary promotional tool used to develop customer loyalty." Wheeling Island claims 249,000 club members, and doesn't say what percentage of revenues come from those members. The company wouldn't address whether the club promotes or rewards compulsive gambling, and declined requests for an interview for this story. Sam never joined the club. "They mail things" to members, he says. "They may call....I couldn't take that risk," because he was increasingly trying to hide his gambling from Wendy.

Sam's marriage to Wendy and his affair with Wheeling started simultaneously, with disastrous results. "When I married my wife, she had very good credit, and then I got a hold of credit cards, and it progressed very quickly from that point," Sam says.

"I had A-1 credit. I had to have everything paid off," Wendy says. But she couldn't pay off what she didn't know about. Sam got half a dozen credit cards, and began using some to pay off others. He took out home-equity loans. "He would always intercept the mail," Wendy says, so she knew little. "I didn't even know that he went behind my back and borrowed from my mother and other family members."

The National Council on Problem Gambling estimates that 2 to 3 percent of Americans are problem gamblers. In a 1999 report, the National Gambling Impact Study Commission, which included pro- and anti-gambling interests, cited estimates that those gamblers account for about 15 percent of total gambling revenue.

If that's true for Wheeling Island, then problem gamblers like Sam lost more than $26 million there in 2003. That year, Wheeling Island's machines took in $175 million more than they paid out. After state taxes and fees, the business was left with $89 million. Dog racing, by comparison, grossed $8 million. Slot revenue more than paid for all of the establishment's expenses and debts, leaving $15 million in profits. That went to parent company Delaware North Co., a Buffalo-based conglomerate owned by Jeremy Jacobs. Worth an estimated $875 million, Jacobs owns the Boston Bruins hockey team.

After helping to enrich Jacobs for four years, Sam had run up about $60,000 in credit-card balances, and owed at least $25,000 to various family members. About half of that $85,000 went to Wheeling Downs, he estimates. It was no longer possible to hide the debts from his wife. "We couldn't even pay the minimum amount and still keep our house," says Wendy. "To think about filing for bankruptcy devastated me."

They had little choice. In late 1998, they filed for Chapter 7 bankruptcy, which was soon granted. Debts to 10 financial institutions were wiped out.

With that, Sam's habit finally transformed him from a burden on his family and friends into a drain on society as a whole. "The credit-card companies have to charge a high enough interest rate to cover the bad debts and bankruptcies of some of their clients," says Earl Grinols, a Baylor University economics professor and author of the 2004 book Gambling in America. Lenders "are charging you and me more on our balances because of this guy's bankruptcy."

The bankruptcy prompted Sam to attend a few Gamblers Anonymous meetings, but he says he "still felt that I could, with willpower, quit or control my gambling." His sports betting ended, because his bookie wouldn't extend him any credit. So to test his willpower, he headed back to Wheeling.

In the five years between the discharge of Sam's bankruptcy and his Jan. 26 kamikaze run, he estimates he lost another $100,000, most of it at Wheeling Island. It wasn't easy. His bankruptcy made it harder to borrow. Wendy had his paychecks direct-deposited into an account that was in her name. But he got cash by making up bogus expenses like car repairs, taking out payday loans, once borrowing from an employer's petty cash, forging his wife's name on checks, and hitting up those close to him. "At that point, the major borrowing was from friends, family members, even daughters," Sam says.

"There were a lot of times when I'd do that hour drive back from Wheeling, thinking, ‘I have to stop doing this. It's killing me.' But the next morning I'd be trying to lay my hands on more money and go back up there again." The thrill was long gone. "I wasn't even enjoying it. If I got a hit, it didn't mean anything anymore. It just meant I'd be there longer." Long enough, that is, to lose it all.



Sam's marriage became a sham. He constantly lied about where he was going. "I could not have a conversation with my wife, because I could get caught in my lies," he says. "They only time I could have an extended conversation with her was if I was trying to scam money off of her."

"It got to the point where I didn't believe anything he said," says Wendy. She wondered if all his time away was really being spent gambling, or if he was cheating on her. "Sometimes I think I'd have been better off if that was the case." As their finances deteriorated again, she started suffering from chest pains, and losing hope. "A couple of times he said, ‘I wish I was dead,'" she recounts. "And sometimes I thought, ‘That may be the only way I'll ever get out of this.'"

"I started thinking that maybe it was time to put an end to this and help some of the people I'd hurt, through some insurance policies I had," Sam says. On Jan. 26, he headed for Wheeling. "I had already decided that I'd either win the money I needed to get out of these problems, or I was going to end my life."

That day Sam made three round-trips to Wheeling, losing $500 each time. He scrounged up another $60 and went to a local bar. "I was going to get drunk and figure out what to do," he says. He drank, did a line of cocaine and went for a drive. "I thought I might run off the road, but I didn't have the guts to do it." He bought a case of beer, picked up a stranger and his girlfriend, and let them guide him to a North Side crack house. He didn't smoke, just continued drinking, and eventually left. He found his way home, where he downed a bottle of prescription pills. He vomited repeatedly and went into convulsions. His wife eventually found him and took him to the emergency room, where he was stabilized and transmitted to Western Psychiatric Institute and Clinic.

Sam spent nine days in Western Psych. "Their thing was to make sure I didn't want to kill myself," he says. Immediately upon release, Wendy took him to Keystone Center, a 114-bed addiction treatment center near Philadelphia with a gambling program. The couple waited an entire day in the lobby, only to be told that their insurance wouldn't approve the treatment.

"I was feeling a little better, because they ain't getting me," Sam says.

"I was devastated," says Wendy.

The next day Keystone called and said the insurance would pay after all. Faced with the possibility of returning to his former lifestyle, Sam decided to make the drive to Philadelphia and check in. He was there for 21 days. He says he learned how to cope with stress, and was reintroduced to Gamblers Anonymous. Since then, he's been a regular in "the rooms," as GA members call their meeting places. "At this point, I need something like this every day," Sam says. Rather than wake up and think about how and when he'll gamble, he says, "The first thing that comes to me every day now is, ‘Where's my meeting and when do I have to be there?'"

So far, Western Psych and Keystone have submitted more than $25,000 in invoices, and it's unclear how much the insurance will cover. Most policies don't cover gambling addiction, so Sam had to be admitted under a primary diagnosis of severe depression, with a secondary diagnosis of addiction.

To the extent insurance covers it, says economist Grinols, that's "a cost to the insurance companies, which means that the next time they write the kind of policy that guy had, they'll charge more for it....The cost is still being paid by society at large, which has to pay higher costs because of this guy's gambling problem."

Including the treatment, Sam's habit has cost at least $210,000 over 10 years. Some of that came from his earnings, but perhaps half came from family and friends, and from you and me through interest rates and insurance premiums. It flowed through him to a variety of destinations, including the accounts of his bookie, local bar workers, vending machine distributors, Wheeling Island employees and vendors, near-billionaire Jeremy Jacobs, treatment providers, and the West Virginia state government.

Nearly 40 percent of the money gamblers lose in West Virginia goes to the state. This year its take is expected to approach $420 million -- more than 6 percent of the state's budget. Of that, $168 million will go to education, $127 million to general government spending, $48 million to senior citizen programs and tax breaks, $40 million to infrastructure, $19 million to economic development, $11 million for tourism promotion, and $5 million to parks.

Rendell and other slots proponents argue that Pennsylvanians are going to play the slots anyway, so the state should offer that activity here and tax it. Rendell's most recent public proposal would put up to 3,000 slot machines at eight racetracks and three slots parlors. The facilities could increase their inventory to 5,000 machines after one year. The state would charge each facility $50-$75 million in one-time licensing fees, and then take 35 percent of the profits from the machines. The revenue would go to school funding, and the state would compel districts to reduce property taxes by an average of 23 percent, or an average of $339 per homeowner.

Grinols says politicians ignore gambling's economics. The licenses would initially go to local firms, which might be expected to keep profits local, he says. But those firms would be tempted to sell out to out-of-state interests like Mississippi-based Isle of Capri Casinos, which recently paid $518 million for a casino license in Illinois. Those companies "would then drain Pittsburgh" and other towns in which slots were located, Grinols predicts.

Having casinos closer than Wheeling would also bring nearer the "compulsive gambling and the crime and embezzlement" associated with slots, says Grinols. His economic analysis suggests that the costs of increased policing, court cases, insurance premiums, interest rates -- not to mention theft or "borrowing" perpetrated by gamblers -- exceed any tax or economic development benefit that might come from legalizing slots. The only way to come close to evening the score would be for the state to own the machines and plunge about 85 percent of slot machine profits back into public services.

That's not on the table. Harrisburg insiders say a bill roughly similar to Rendell's proposal will likely emerge from negotiations within weeks or months. If Rendell cuts the right deals, it could pass; separate slots bills passed the House and Senate last year, but the chambers couldn't reconcile the differences. For Pittsburgh, legalization would mean slots at The Meadows, and at one or two of numerous other proposed locations.

One of those proposed locations is across from PNC Park, just a few miles from Sam's home. Should that happen, he thinks he'll manage, through Gamblers Anonymous, to keep from walking through that door. He worries about its potential effect on others who haven't yet come to terms with their addiction. "I may have progressed more quickly with my addiction if [slots] were closer," he says. "I'd never have survived them being here, and a lot of people may not survive them being here."

Wendy says she no longer has anxiety attacks when Sam is a few minutes late coming home, but she's not breathing easy yet. "I want to trust him," she says. "But it's too soon. I can't give him more than $20....I can't send him grocery shopping."

Diamonds and Clubs