CASH COW

and a

SACK OF HEARTACHE
The wages of gambling’s pervasive influence in Montana
BY AL AN KESSELHEIM
PHOTOGRAPHY BY THOMAS LEE

W

e all know one, right? Likely as not, we’re related to one.
The friend who heads out shopping for groceries, and comes
back hours later with no food and no money. The guy at the
Christmas party who disappears early, and after midnight,

driving home, you see his car in the casino parking lot. The brother-in-law who
one year drives a BMW and lives in a fancy house, and the next moves in with
his parents. The cousin who somehow loses his home, despite working a good
job, and along the way, also loses his marriage and the custody of his kids.
The guy who keeps heading off on mysterious business trips and pops back up,
weeks later, flat broke and looking like he’s been at a month-long bachelor party.
The co-worker convicted of embezzling to support her gaming addiction.
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More than make it easy, we promote it. Ad campaigns feature
the fun of it all, that shimmering chance of being the next big
winner. They tout worthy causes like education or open-space
funding, making it almost our civic duty to participate.
Or Will, who I met recently in a local coffee shop, and who
set the record for the fewest questions I ever asked during an
interview.
“So what’s the back story?” I started. His answer took just
under three hours.
More on Will in a minute.
According to Montana’s constitution, gambling remains
an illegal activity, as it has been since 1889. But during the
Montana Constitutional Convention of 1972, the door was
opened with a referendum allowing the legislature and the
people to approve or disapprove gambling activities. Starting the
very next year, that is precisely what the legislature did. In fact,
it’s as if they were just waiting for that crack of opportunity.
In 1973 the Montana Legislature passed the Card Game,
Bingo, Raffles and Sports Pool Act. In 1976 keno was legalized
as a form of “live bingo.” In 1985 the Video Poker Machine Act
was passed, allowing five poker machines per liquor license and
live keno. By the next year, 1986, there were 2,887 licensed
video gambling machines in the state. Also in 1986, the
Montana Lottery was approved. In 1991 the poker machine limit
was raised from five per liquor license to 20. And it keeps going
like that—more machines, more games, more loopholes.
It is worth noting that the people have not been as eager as
the legislature to usher in gambling, when given a voice. In 1950
and again in 1983, initiatives to legalize or expand gambling
were defeated by wide margins. The only exception was the
voter passage of the Montana Lottery in 1986, on the promise of
reduced property taxes.
To be fair, for the better part of last century, while gambling
was criminalized, you can bet it was going on like gangbusters
at small-town card tables, sports pools, and illegal gaming
halls. It’s also true that gambling has been with us since prehistory, when people circled up to throw bones in the dirt, and is
unlikely to go away, legal or not. Hell, you could argue that it is
with us in the biggest legal casino of all time, that one we call
Wall Street.
These days gambling seems to be everywhere under the Big

Sky. It feels like every third commercial during a football game
promotes online sports betting. I cringe each time, thinking of
friends and family for whom a couple hundred extra dollars is
always deeply seductive. Neon casinos sit garishly on Indian
land. Gaming machines line up, pinging and beeping and flashing, in bars and gas stations. Lottery tickets at grocery stores.
Scratch cards. Live card tables. Horse tracks. Town Pump alone
runs some 70 casinos under the banners of Lucky Lil’s, Montana
Lil’s and Magic Diamond. At this point Montana has steered
clear of “pit games” like blackjack or craps, but we’re all in
when it comes to poker machines and their ilk. And who knows
what new, inventive ways to wager will rear up on the wide-open
frontier of online gaming?
Montana reflects the national trend. Before 1989, commercial casinos were only legal in Nevada and Atlantic City. Several
court decisions in the late 1980s opened the door, and by 1995
commercial gambling was legal in eight states. By 2010 that
expanded to 13, tribal casinos were operating in 30 states, riverboat casinos became popular in the Midwest and South, and
state lotteries morphed into revenue generators complete with
advertising campaigns and hyped-up jackpots. In 2013 lottery
ticket sales alone came to $68 billion in the United States, more
than six times the $10.9 billion earned by movie ticket sales the
same year.
Why this tidal wave of legalization? Well, the short answer
is that there is money to be made by preying on the public’s
gambling proclivities, taxes to be gathered, and that is really,
really hard to resist.
How much money?
Currently, Montana collects on the order of $60 million from
video gambling machines every year, far and away the biggest
gaming tax generator. Add to that roughly $12 million annually
from the state lottery, which, since 1987, has contributed $229
million to state coffers. More than $5 million is collected from
permit fees, and smaller amounts trickle in from live card table
licenses, racetracks and other gambling outlets. So, somewhere
a bit south of $100 million in Montana tax revenue, every year,

Comfortable chairs await gamblers at many Montana casinos—part of the service package that can make time in front of a video gaming machine pass
quickly. The money passes quickly, too, with some machines generating as much as $120 a day for their owners.

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The Gamble Pays Off—At Least for the State
Fiscal year tax collection on video gambling machines in Montana:
$70 million
$65 million
$60 million
$55 million
$50 million
$45 million
$40 million
$35 million
$30 million
$25 million

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Montana Department of Justice

comes out of the pockets of those of us who hunch in front of poker machines, or buy
a lottery ticket every time we shop for groceries, or play at a licensed card table.
How that tax revenue gets parsed out is a bit of a thicket. Gambling has been regulated by the Montana Department of Justice since 1989. After what came to be known
as the “Big Bill” was passed and put into practice by the Montana legislature in the
early 2000s, gambling revenues were rolled in with other general state funds, and
ever since, the state has dispensed it to cities and counties through various formulas,
depending on which pot it’s pulled from and which way the political winds are blowing.
Back in 1998, a University of Montana Bureau of Business and Economic
Research study funded by the Montana legislature found that gaming revenues
provided an average of 14.4 percent of city tax revenues across the state. In some
communities gambling income contributed nearly 25 percent of the municipal
budget. It’s gotten more complicated since, but gambling tax revenue, at both the
state and local level, is a significant slice of the pie.
“The legislature plays with the formula all the time,” says Anna Rosenberry,
Bozeman City Finance Director. “From year to year they add here and subtract
there. You never know how it’s going to come in.”
According to DOJ figures, the state collects roughly $2 million a year from
gambling in the city of Bozeman, for example. Of that, the city might get $700,000.
Rosenberry calculates that gambling tax revenue currently funds 4-5 percent of
Bozeman’s tax base.
As a side note, Rosenberry remembers working for a local Lucky Lil’s as an
accountant while she was in college. “It was sad,” she says. “This is not the well-off
funding our tax base. These are people who are already in difficult circumstances.
Yes, you’re taxing a choice people make freely, but when I see the impacts on society, I don’t know if it’s a good trade.”
Of course there are more equitable, and less fraught, ways to raise taxes, especially in a state rolling in tourists. Sales tax, for one, as well as gasoline taxes or more
liberally applied resort taxes, all of which would capitalize on the tourism trade. But
tax talk in Montana is a political no-no, and those options don’t get much play.
Bozeman’s mayor, Carson Taylor, worries about “how much we are encouraging
gambling and facilitating problem gambling by making it so easy.”
More than make it easy, we promote it. Ad campaigns feature the fun of it all,

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that shimmering chance of being the next big winner. They tout
worthy causes like education or open-space funding, making it
almost our civic duty to participate. They show people rolling in
piles of money, with four-leaf clovers floating in the air. Never
mind that the odds of any one of us winning the lottery are akin
to being struck by lightning while being devoured by a shark.
Like nil. And sorry to say, the machines that are the real cash
cows ... they are programmed to win for the house. That’s just
how they work.
“You’ve heard the saying,” Taylor says. “Gambling is a tax on
people who can’t do math.”
“Is this like soft drinks in schools?” he wonders. “Some say
it’s a matter of free choice, others that it is preying on a sector of
society.”

Which brings us back to Will, with whom it becomes clear
that being able to do math is the least of it.
“It started when I was maybe 7 years old,” he says. “My
grandmother, a problem gambler herself, would take me with her
to horse races on weekends, and then to the bingo hall. All day
long it was horses, bingo, and drinking.
“My uncle was a problem gambler too. He committed suicide
after a big loss. You’d think that would have stopped me, but
I ended up kind of emulating him—hard living, drinking,
gambling.”
“When I was 18 or 19, living in Iowa, just across the river
from the track, I got into horse racing myself. That was when
I started pawning things to pay for the daily-double. It began
to consume me,” he admits. “I got suspended from high school

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“Gambling has always been with us. It’s deep within our character
from frontier days, part of the western tradition. As long as it’s out
there, we might as well fund worthy causes by taxing it.”
for running a football pool, trying to be Jimmy the Greek or
something.”
As Will’s story unfolds, his hands move delicately around his
coffee mug. He looks straight at me while revealing the depths of
his depravity. His recovery demands this level of full confession,
this unvarnished, no-excuses litany of the ways his addiction to
gambling utterly dominated his life and choices.
His saga careens from the Midwest to Santa Fe, to Great
Falls and West Yellowstone, Los Angeles and New Orleans,
Minnesota and South Dakota. His life was a repeating cycle of
new starts, clean living, and then some trigger setting him off
into a spiral of marathon gambling, blackout drinking sprees,
trouble with the law.
Remarkably, Will kept landing solid jobs managing restaurants and bars, working at hotels. Along the way he fell in love,
got married, had a daughter. But every time, something would
pull him back down. He robbed a hotel in Montana and set off
on a gambling spree to the West Coast. He borrowed money from
a friend and lost it all in the slots. He got in trouble with bookies, always needed money. Whenever he got some cash, it would
all vanish into slots or sports betting or horseracing or scratch
cards, didn’t matter, whatever was on.
“One time I blew an entire $1,300 paycheck in eight hours
on one machine,” he remembers.
“The gambling industry isn’t making their big bucks off of
occasional, recreational mom-and-pop gamers. It’s people like
me, who feed $20 bills into the machines until they’re all gone.”
Will’s marriage dissolved. He found himself, at various rockbottom points, standing on a high dock outside of New Orleans,
or holding a sharp knife in a Great Falls alley, wanted nothing
more than to end his life, but then lacking the will to go through
with it. Once he drank a cocktail of bleach, vodka, cocaine, and
whiskey, but the neighbors called the police and rushed him to
the hospital.
There were homeless shelters, counselors, drugs to control
his impulses, stints in jail, rehab centers. He lived in apartments with no furniture, because everything had been pawned
to support his habit. He missed his daughter. People tried to
help him—his mother, a mentor, friends. Others brought him
down by their own bad habits. His life was a spinning whirlpool
of helplessness in the cycles of addiction.
“Thank God for my mom,” Will says. “‘You’ll always be my
son,’ she kept telling me. She never gave up. My dad, he finally

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Will, one of an estimated 10,000 pathological gamblers in Montana, says
he wants to see the state divert some of its revenue toward treatment
options for people with gambling problems.

had enough. I can’t blame him. But my mom ended up buying
me a ticket back to Great Falls where I stayed in a homeless
shelter, got a job, eventually got some help.”
“I’ve been gambling free and sober since October 12, 2014,”
he says. “My longest run ever. It’s hard. I still sometimes miss
it, but I’m on a mission now to do something about gambling in
Montana. I’m not naïve, but it’s part of my recovery. I’ve started
a campaign, I’m speaking publicly at libraries and Rotary
Clubs, meeting with politicians, sharing my story, collecting the
stories of others.
“This is my way of paying back. On one level it’s also selfish,
because it helps me stay free.
“My goal is to stand in front of the 2017 Montana legislative
session and make a plea that 10 percent of gambling revenue be
set aside for treatment programs run by the state. Right now the
state doesn’t put a dime into treatment.
“Look, I understand that you aren’t going to stop gambling.

But when you put casinos on every corner, poker machines in
or six studies out there that make the attempt, including Walker’s,
every bar and gas station, you are forcing a temptation on the
but their numbers can differ by a factor of 10. Strict interpretations
populace.
of the direct costs of problem gambling come in as low as $2,000
“And who’s in charge of treating problem gambling in
per year per gambler. Those that take a more inclusive approach,
Montana?” he asks. “The Montana Tavern Association. That’s
and incorporate things like missed days of work, bankruptcy court,
who funds the problem gambling hotline.” Actually, the MTA is
divorce court, lost productivity … come in at nearly $20,000 per
joined by the Gaming Industry Association, Town Pump, and the
year.
Montana Coin Machine Operators Association in that funding
That same 1998 University of Montana study that quantipool, but his point stands.
fied city funding through gaming also found statistical correlaWill qualifies as a pathological gambler. Roughly 1 percent
tions between gambling and vandalism, burglary, larceny, DUIs,
of the general population falls into that category. Another 3-4
weapons offenses and robbery. Beyond that, how do you put
percent are problem gamblers. Sounds small, but in Montana,
value on more slippery, mundane stuff, like mom not being home
with a million people, we’re looking at 10,000 pathological
at night to help children with homework, or a kid’s malnutrition
gamblers and perhaps 40,000 with a problem. Take Will’s life
because the food money went into the poker machine?
and the troubles associated with it, and imagine the personal and
Ray Rasker, with Headwaters Economics, cites Paul
social mayhem when you do that math. Beyond that, studies show
Krugman’s work on “opportunity costs.” These are tangential to
as much as 80 percent of problem gamblers never seek treatment
the standard cost/benefit tallies.
and remain off the public radar.
“In the case of gambling,” says Rasker, “You’d look at the
“Look,” says Mark Staples, former lobbyist for the Montana
person who goes out and drops $300 in poker machines instead
Tavern Association. “Gambling has always been with us. It’s
of going to the hardware store to buy supplies to make a deck. Or
deep within our character from frontier days, part of the western
take the family to dinner, or go to Yellowstone National Park …”
tradition. As long as it’s out there, we might as well fund worthy
“Economists talk about the loss of productivity in both time
causes by taxing it.”
and work,” says Rasker. “Never mind time spent with kids or
Rosenberry, Bozeman’s finance director, agrees that perhaps gambling should
help pay for some of the social impacts
CUSTOM HOLIDAY GIFT BASKET S
that come as a result of problems associated with it—things like court costs,
criminal investigations, jail time.
“I’ve noticed that if you dig deep
enough into cases of fraud or embezzlement,” she says, “Gambling is usually
somewhere in the picture.”
Gambling proponents tout the
employment boost provided by the industry, and the worthy causes funded as
a result of the tax collections. Studies
on the long-term economic impacts of
gambling are more muddy.
A 2011 study headed by Douglas
Walker at the College of Charleston,
South Carolina, found that “Casino
gambling has a short-run stimulus effect,
but in the long-run … casinos actually
detract from state government revenues,
4:30–9:00 TUES–SAT
perhaps due to a large substitution away
from other types of spending.”
Coming to grips with accurate estimates of the social costs of problem
gambling is a challenge. There are five
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How It Plays Out
A glance at fourth-quarter fiscal year 2015 video game machine tax revenues:
City
Revenue
+/-*
$ per resident**
Belgrade $202,185 +1%
$25.93
Billings $2,645,588 +1%
$24.30
Bozeman $477,668 -1%
$11.47
Columbia Falls
$174,553
+6%
$37.23
Deer Lodge
$89,374
+6%
$28.73
Dillon
$86,942
+5%
$21.03
Glendive $182,952 -23%
$26.13
Great Falls
$1,307,494
-4%
$22.10
Hamilton $194,618 -6%
$44.76
Havre
$232,013
-5%
$24.92
Helena $741,060 -8%
$24.75
Kalispell $605,939 -9%
$28.16
Laurel
$213,237
+11%
$30.74
Lewistown $118,254 -10%
$20.16
Livingston $159,412 +5%
$22.00
Miles City
$263,024
-6%
$30.03
Missoula $1,144,401 +3%
$16.39
Sidney $273,047 -23%
$42.18
Whitefish $107,721 -11%
$15.69
*—from the fourth quarter in 2014
**—based on the most recent Census population estimate
Sources: Montana Department of Justice, U.S. Census Bureau

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more positive activities. Those are real costs, but tough to put a
dollar figure on.”
“I used to work out in a gym that was right next to a casino,”
Rasker remembers. “I’d come out after my workout, an hour
spent with people committed to being fit, and see that line of
folks heading in to gamble. Middle of the morning. Beautiful
day. What a contrast!”
Treatment for problem gambling in Montana is both complex
and in its infancy. Eleanor Wend, Licensed Addiction Counselor
for Alcohol and Drug Services of Gallatin County decries the
lack of funding. It wasn’t until 2013 that Montana started to
include gambling as an addiction, and people who seek treatment still have to pay out of pocket for services.
“We developed lotteries, installed machines, encouraged
casinos before we understood the ramifications,” Wend says.
Part of what’s complicated about gambling addiction is that it
is often a web of issues, co-occurring with drug and alcohol use,
and strongly correlated with PTSD.
Wend refers to studies that found the same areas of the brain
lighting up in response to gambling stimulation as with cocaine
use. Some military veterans and other victims of PTSD lock into
gaming machines as an outgrowth of life traumas, and out of the
need to escape their reality, Wend reports.
“It’s about isolation,” says Rory Berigan, director of the
Fellowship Hall in Bozeman, which sees a constant flow of 600
people per week attending various support groups, from Gamblers
Anonymous to AA, from sex addicts to binge shoppers.
“When people are sitting in front of those machines, they are
gone, they have left their bodies. And the sad thing is that some
people really need that escape,” she says.
Retired cop Rick Gale, who works in drug prevention in
Gallatin County, mentions the push by casinos to build “butt
huts” outside of no-smoking establishments as an example of the
unrelenting effort to capitalize on weakness.
“They propose building this lean-to shelter that is technically
not a building, and installing gaming machines so you don’t
have to take a break when you go outside for a smoke,” he says.
Gale talks about the confluence of drugs, alcohol and
gambling at casinos, where young people gather late at night to
escape the notice of law enforcement and make drug deals or
indulge their bad habits, while risking the seduction of gambling
addiction.
“There are people leaving their kids in the car in the middle
of the night while they go into a casino,” adds Wend. “You hear
of casinos sending buses to assisted living facilities the same
day that residents get their Social Security checks. They bring
them to the casino. They feed them. They give them free drinks.
And then they take their money.”
“At some point,” says Gale, “You start to ask yourself—what
are we doing?”