Slot Machines In The U.s Military
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I’ve discovered a lot of odd things while living overseas, but none has surprised me as much as the presence of slot machines on military bases. Every base I’ve been to in Europe has slot machines. I’d always thought that gambling on military bases wasn’t allowed. I was definitely wrong!
While I have no problems with recreational gambling, I find it odd that the military would allow slot machines. The Department of Defense regs clearly prohibit gambling, as explained in this excerpt from Hill AFB’s Hilltop Times:
“While on government-owned or leased property or on duty for the government, an employee shall not conduct or participate in any gambling activity, including conducting a lottery or pool, (or) participating in a game for money or property …” (5 C.F.R. ¬ß735.201). The Department of Defense has wholly adopted this rule. “A DoD employee shall not participate while on federally owned or leased property or while on duty (for military members, this means, in this context, present for duty) for the federal government in any gambling activity prohibited by 5 C.F.R.” ¬ß735.201. (Joint Ethics Regulation — DoD 5500.7-R).
If this is accurate, how in the heck can the Department of Defense justify having slot machines available on base?
History and Current Situation
I did a little research, and I discovered that slot machines have been present on military bases since at least the 1930s. Official support for slot machines has waxed and waned over the years. The machines were removed from all Army and Air Force bases in 1972, but remained on Navy bases. The machines began to be reintroduced in 1980. While hard and current numbers are hard to find, there are at least 5,000 slot machines located on nearly 100 overseas military bases.
Positives of On-Base Slot Machines
There are some reasonable arguments for having gaming machines available on base in locations where similar gambling is illegal off the military installation. Occasional gaming can be fun and relaxing for troops and their families. Officials state that on-base machines offer higher payouts than off-base machines. Gambling on-base can be safer than off-base gaming locations, and there is a decreased chance that a problem gambler will do something illegal if they are within the grounds of the installation.
The money earned from these on-base gambling machines is used to supplement the Morale, Welfare and Recreation budgets of local bases, supporting swimming pools, movie theaters, and concerts. Estimates are that on-base gambling brings in between $100 and $150 million dollars in revenue each year. That’s a lot of movies and popcorn.
Negatives of On-Base Slot Machines
There are also a lot of reasons why DoD sanctioned gambling is a bad idea.
Easy access has been proven to increase the number of problem gamblers. John Kindt is a University of Illinois business professor who has studied the gambling industry and focused on the military in recent years.
These troops, they’re Type A personalities,” he said. “They’re naturally drawn to risk and adventure, and that’s the group most vulnerable to gambling problems.
We’ve seen civilian studies where populations with easy access to slot machines have nearly doubled the number of problem gamblers,” he said. “The slots are easy and highly addictive.
If they got rid of the machines, there would still be some with serious problems who go off base or get involved in back-room poker games. But just having them there, you get some people addicted who never would have had a problem otherwise.
Not Just Slots
Bingo is a popular form of entertainment on many military bases, and much if it is run by the Department of Defense through it’s MWR departments. The National Council on Problem Gambling claims that Army bingo was a $45 million dollar business in 2005.
A quick internet search on “army bingo” shows that Hunter Army Airfield currently runs bingo games six nights a week, and I’ve seen prizes as high as $42,000. Holy Cow! Heck, Bingo at HAAF has it’s own Facebook page! Fort Gordon even has it’s own Bingo Palace.
For me, I don’t care if the military wants to support gambling. I DO care if they are inconsistent with their own rules, and I think it is pretty clear that things are inconsistent when it comes to gambling.
I’d love to hear your thoughts, experiences, and opinions.
I’ve used a lot of sources for this post. In no particular order…
photo by: ddesk
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The gaming industry is big business in the U.S., contributing an estimated US$240 billion to the economy each year, while generating $38 billion in tax revenues and supporting 17 million jobs.
What people may not realize is that slot machines, video poker machines and other electronic gaming devices make up the bulk of all that economic activity. At casinos in Iowa and South Dakota, for example, such devices have contributed up to 89 percent of annual gaming revenue.
Spinning-reel slots in particular are profit juggernauts for most casinos, outperforming table games like blackjack, video poker machines and other forms of gambling.
What about slot machines makes them such reliable money makers? In part, it has something to do with casinos’ ability to hide their true price from even the savviest of gamblers.
The price of a slot
An important economic theory holds that when the price of something goes up, demand for it tends to fall.
But that depends on price transparency, which exists for most of the day-to-day purchases we make. That is, other than visits to the doctor’s office and possibly the auto mechanic, we know the price of most products and services before we decide to pay for them.
Slots may be even worse than the doctor’s office, in that most of us will never know the true price of our wagers. Which means the law of supply and demand breaks down.
Casino operators usually think of price in terms of what is known as the average or expected house advantage on each bet placed by players. Basically, it’s the long-term edge that is built into the game. For an individual player, his or her limited interaction with the game will result in a “price” that looks a lot different.
For example, consider a game with a 10 percent house advantage – which is fairly typical. This means that over the long run, the game will return 10 percent of all wagers it accepts to the casino that owns it. So if it accepts $1 million in wagers over 2 million spins, it would be expected to pay out $900,000, resulting in a casino gain of $100,000. Thus from the management’s perspective, the “price” it charges is the 10 percent it expects to collect from gamblers over time.
Individual players, however, will likely define price as the cost of the spin. For example, if a player bets $1, spins the reels and receives no payout, that’ll be the price – not 10 cents.
So who is correct? Both, in a way. While the game has certainly collected $1 from the player, management knows that eventually 90 cents of that will be dispensed to other players.
A player could never know this, however, given he will only be playing for an hour or two, during which he may hope a large payout will make up for his many losses and then some. And at this rate of play it could take years of playing a single slot machine for the casino’s long-term advantage to become evident.
Short-term vs. long-term
This difference in price perspective is rooted in the gap between the short-term view of the players and the long-term view of management. This is one of the lessons I’ve learned in my more than three decades in the gambling industry analyzing the performance of casino games and as a researcher studying them.
Let’s consider George, who just got his paycheck and heads to the casino with $80 to spend over an hour on a Tuesday night. There are basically three outcomes: He loses everything, hits a considerable jackpot and wins big, or makes or loses a little but manages to walk away before the odds turn decidedly against him.
Of course, the first outcome is far more common than the other two – it has to be for the casino to maintain its house advantage. The funds to pay big jackpots come from frequent losers (who get wiped out). Without all these losers, there can be no big winners – which is why so many people play in the first place.
Specifically, the sum of all the individual losses is used to fund the big jackpots. Therefore, to provide enticing jackpots, many players must lose all of their Tuesday night bankroll.
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What is less obvious to many is that the long-term experience rarely occurs at the player level. That is, players rarely lose their $80 in a uniform manner (that is, a rate of 10 percent per spin). If this were the typical slot experience, it would be predictably disappointing. But it would make it very easy for a player to identify the price he’s paying.
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Raising the price
Ultimately, the casino is selling excitement, which is comprised of hope and variance. Even though a slot may have a modest house advantage from management’s perspective, such as 4 percent, it can and often does win all of George’s Tuesday night bankroll in short order.
This is primarily due to the variance in the slot machine’s pay table – which lists all the winning symbol combinations and the number of credits awarded for each one. While the pay table is visible to the player, the probability of producing each winning symbol combination remains hidden. Of course, these probabilities are a critical determinant of the house advantage – that is, the long-term price of the wager.
This rare ability to hide the price of a good or service offers an opportunity for casino management to raise the price without notifying the players – if they can get away with it.
Casino managers are under tremendous pressure to maximize their all-important slot revenue, but they do not want to kill the golden goose by raising the “price” too much. If players are able to detect these concealed price increases simply by playing the games, then they may choose to play at another casino.
This terrifies casino operators, as it is difficult and expensive to recover from perceptions of a high-priced slot product.
Slot Machines In The U.s Military Bases
Getting away with it
Consequently, many operators resist increasing the house advantages of their slot machines, believing that players can detect these price shocks.
Our new research, however, has found that increases in the casino advantage have produced significant gains in revenue with no signs of detection even by savvy players. In multiple comparisons of two otherwise identical reel games, the high-priced games produced significantly greater revenue for the casino. These findings were confirmed in a second study.
Further analysis revealed no evidence of play migration from the high-priced games, despite the fact their low-priced counterparts were located a mere 3 feet away.
Importantly, these results occurred in spite of the egregious economic disincentive to play the high-priced games. That is, the visible pay tables were identical on both the high- and low-priced games, within each of the two-game pairings. The only difference was the concealed probabilities of each payout.
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Armed with this knowledge, management may be more willing to increase prices. And for price-sensitive gamblers, reel slot machines may become something to avoid.