Risk vs. Reward: Montana’s Gambling Habit

Gambling is a popular activity that provides millions in benefits to the government budget. But it can also create problem gamblers who have few resources and treatment options.

By Dillon Tabish

From its Old West roots to today’s vast landscape of virtual games, gambling has remained a widely popular pastime in Montana.

An estimated 78 percent of Montanans wagered a bet in the past year, according to a study commissioned by the state in the late 90s. The social acceptance and prevalence of betting has grown drastically over the last four decades, driven largely by the emergence of video gaming as the most popular — and lucrative — form of gambling.

As the wagers increase, so do the revenues for local and state governments, which benefit from a 15 percent tax on all machine receipts. It adds up to tens of millions of dollars. Kalispell, one of the cities to collect some of the most gambling revenues, has received over $2 million annually in recent years.

But with the great reward comes sizeable risk.

Last year over 4,000 Montana residents participated in treatment groups for addicted gamblers.

Critics claim the state is not providing ample resources to help those who develop dangerous gambling habits.

The debate recently rose to the forefront in Kalispell after the city council reviewed a proposed gas station with an attached casino on the north end of town. Developers were seeking approval to renovate a former church and build a 7,900-square-foot casino attachment, which would be Kalispell’s first casino north of Idaho Street and give the city 37 casinos overall.

The proposal sparked a two-hour discussion in City Hall on April 6 involving a dozen residents who opposed the casino, as well as 16 letters or emails and a petition to the city decrying the development.

“I believe in personal responsibility, but I also believe that if there is less temptation fewer people will succumb to it,” said local resident Jenny La Sorte.

When asked if the owners would consider building the gas station and convenience store without the casino, the developer said the business would not be cost efficient. By eliminating the casino, the site would not be able to support itself, Dan Simpson, a construction and development manager at Town Pump, Inc., told the council.

Councilor Jim Atkinson agreed that the city should follow its “core values” and take a stand against heightened gambling in the community.

The council narrowly approved the casino by a 4-3 vote and agreed to review the city’s regulations, and other cities’ strategies, regarding gambling oversight in the future.

Meanwhile, the Confederated Salish and Kootenai Tribes have announced plans to replace the existing Gray Wolf Casino and Hotel and build a $27 million casino resort in Evaro in the coming months. Earlier this year the CSKT Tribal Council approved the 40,000-square-foot development after debating whether the economic benefits would outweigh the environmental and social concerns.

The new casino is being touted as a future resort destination for gaming with over 300 machines planned.

In a news release announcing the project, the tribes stated, “Three feasibility studies have supported expansion at Gray Wolf to capture millions in untapped revenue.”

Gaming machines at a casino in Kalispell. Beacon File Photo

In the 1970s, Montana was the first state — besides Nevada and New Jersey, where it was never prohibited — to legalize machine gaming by allowing virtual keno and bingo.

The number of machines proliferated after the state Legislature passed the Video Poker Machine Act in 1985, allowing bars and restaurants to operate up to five poker machines. (The limit was later raised to 20 machines per liquor license in 1991).

In 1986, the state issued 2,887 licenses to businesses to operate video poker machines. That same year, voters approved the creation of the Montana Lottery.

Today there are 15,756 video gaming machines across the state. In fiscal year 2014, Montana’s machines grossed over $379 million with each machine earning nearly $23,000, according to statistics from the Montana Department of Justice Gambling Control Division.

The Montana Lottery reported $53.1 million in ticket sales in FY14 and announced plans to introduce 50 new Scratch games and add a new online game. By growing its lineup of gambling options, the Montana Lottery now has drawings every day of the week at gas stations, convenience stores and other certified outlets across the state.

As one of the most populated regions in the state, Flathead County has become one of the most popular sources of gambling in Montana. In the last 12 months, video gaming machines in the Flathead grossed nearly $30 million, the fourth highest amount in the state behind Yellowstone, Missoula and Cascade counties, according to DOJ statistics.

As the economy improves, the amount of money pumped into local — and statewide — machines continues to rise. From 2013 to 2014, Flathead County posted the largest gain in gaming revenues among the top seven counties with a 7.3 percent increase.

That trend appears to be continuing into 2015 with the most recent quarterly data showing another nearly 2 percent revenue increase in Flathead County and a 7.5 percent rise statewide compared to the same period last year.

No doubt, gaming machines take millions of dollars from customers but also provide a significant amount of money to local and state governments. As video gambling took off in the late ‘80s, the Legislature passed a 15-percent tax on gross income from machines. One-third of the collections go to the state’s general fund and the remaining two-thirds are divvied up between local governments.

A total of $58.45 million was collected in taxes across Montana in the last 12 months, according to DOJ stats. Last year Kalispell received $2.7 million in gambling revenues from tax collections. Whitefish received over $500,000 and Columbia Falls received nearly $700,000. These funds are distributed to the cities’ general funds.

Statewide video tax collections peaked in FY 2008 at nearly $68 million but tumbled when the recession hit, dropping to $49 million in FY 2011. Since then, like the gross income, the tax revenues have begun to creep back up.

As state and local governments reap the benefits of gambling tax revenues, there are those who believe more funds need to be designated for treatment resources.

While other states take a portion of their gambling revenues and pay for public treatment and resources, Montana does not.

According to Rick Ask, the state’s administrator of the Gambling Control Division who has been with the agency since 1989, lawmakers have historically shied away from devoting funds for public treatment centers or services.

“First thing, it’s very difficult to define problem gambling,” Ask said. “No one asserts that it doesn’t exist, but it’s harder to count.”

Ask said another key reason is because industry groups have stepped up to address the need.

Three industry organizations — the Montana Gaming Group, the Montana Tavern Association and the Montana Coin Machine Operators Association — each commit $44,000 annually to the Montana Council on Problem Gambling, a nonprofit organization dedicated to alleviating gambling problems within the state. Also, Town Pump, Inc., which is developing the new casino in Kalispell and operates dozens across Montana, commits $44,000 annually to the nonprofit council. The state’s lottery vendors have historically committed $25,000 annually.

According to Neil Peterson, executive director of the Montana Gaming Group and a board member with the Montana Council on Problem Gambling, these funds allow hundreds of Montanans to access help.

The council helps fund a hotline for gamblers and also reimburses professionally licensed counselors across Montana who provide one-on-one and group services for problem gamblers. Last year there were 26 providers across the state that conducted 799 group sessions, according to Peterson. A total of 4,338 people participated in those sessions. (The figures could include participants who attended multiple meetings).

The previous year there were 38 providers who conducted 995 sessions.

Peterson attributed the decline in providers to the difficulty in finding and retaining licensed professionals. He said the council continues to actively recruit new counselors.

“Our program has worked well. It’s a very, very small percentage of folks that get into problems with gambling,” Peterson said, citing research that estimates 5-7 percent of gamblers nationwide have some level of gambling addiction.

“But if it’s one person and one family, that’s a significant problem. I’m not trying to minimalize it at all. Folks get in trouble and by the time their friends and family realize they have a problem, they are in pretty dire financial straits.”

Peterson said the industry continues to encourage casinos to be responsible operators and pay attention to their customer’s potentially unhealthy habits.

Both Ask and Peterson believe Montana has responsible gambling regulations compared to surrounding states that permit blackjack and other games allowing the casinos to act as banks, meaning the house has an advantage.

The state requires all machines to have a minimum payback of 80 percent on credits won versus credits played over time, Ask said. There are also $2 bet limits on all machines and the maximum payout that can be won at one machine is $800.

With these regulations in place, “It’s much harder to lose a lot of money,” Ask said. “That doesn’t mean there aren’t people who don’t lose a lot of money. But it’s harder to do that at $2 a time than in Vegas.”

“Gambling is an entertainment activity. It’s enjoyed by a lot of folks and it’s done with disposable income, hopefully,” Peterson said. “There are a lot of people who hunt and enjoy hunting. I enjoy playing golf. Everybody has their entertainment. Unfortunately some folks just don’t believe gambling is good across the board. I happen to disagree with that.”

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There appears to be a lack of statewide resources, though. In the Flathead Valley, there is only one licensed professional addiction counselor certified through the Montana Council on Problem Gambling.

But in recent months that lone counselor, Vim Tesar, has been in Texas receiving medical treatment, leaving the valley without a sanctioned source of professional help.

Tesar has worked as a counselor for over 15 years, leading free sessions with Flathead Valley residents. She has worked with a steady stream of people seeking help for a gambling addiction. She has heard harrowing stories of people gambling away everything while pursuing their “fantasies,” whether it’s gaining approval as a successful person or avoiding a painful reality at home.

“They’ve taught me a great deal,” she said recently from Texas.

“I will tell you, as an addiction counselor who has worked with a lot of people, gambling actually ruins more lives in my opinion than alcoholism,” she said. “And that’s because of the financial concerns.”

According to national studies, gambling tends to prey on lower-income families, senior citizens and Native Americans more than other demographics. Another study, conducted by the state’s Gaming Commission, estimated that gamblers are more likely to be divorced or separated and experience more than double the average rate of bankruptcies. It also found that gamblers were far more likely to resort to illegal means to support their addiction.

In Tesar’s absence, a new group has organized in Kalispell to help problem gamblers.

Nearly two months ago, a pair of middle-aged women gathered on a Friday evening at the Alano Club, a self-described recovery site inside an old-fashioned brick building in downtown Kalispell. The tightly packed space is a regular host of Alcoholics Anonymous meetings, which draw large crowds of men and women coping with addiction.

Sherry, who asked to be identified by only her first name, has spearheaded what is now the one and only Gamblers Anonymous group in the valley.

She herself is a recovering addict.

“I was in my 40s when I first walked into a casino,” she said. “I walked in with a dollar with no idea that I would ever become addicted.”

She returned several weeks later and put $20 in a machine. From there it slowly progressed and she developed a habit. Her routine didn’t change until she was involved in a serious vehicle accident and was diagnosed with cancer shortly afterward.

“I started gambling to find an escape,” she said.

Sitting in front of a video gaming machine inside dimly lit casinos became her preferred source of self-medication during her recovery. Except it became unhealthy. In less than one month, she estimates she went through almost $4,000. Instead of recovering, she felt herself fall into a tailspin of depression and dependence. Thoughts of suicide crept into her mind.

“You don’t think about who you’re hurting, like your family and your friends and yourself,” she said. “It’s very hurtful to a lot of people, and it costs thousands.”

Sherry reached a crossroads and decided she needed to make a change. She left Kalispell and fled to New Mexico to live with a friend of hers, who was a recovering compulsive gambler. She studied the 12 steps of recovery laid out in Gamblers Anonymous, a program similar to Alcoholics Anonymous.

After a few months, Sherry had tackled her addiction and returned to Kalispell hoping to help others. The word has slowly spread throughout the valley that a recovery group is available for problem gamblers and there are now five to seven people who regularly meet weekly in the Alano Club on Friday evenings to share their stories and provide support for each other. The participants include men and women ranging in ages. Almost everyone has stayed away from gambling for fewer than 90 days.

“To me gambling is a hidden disease,” Sherry said. “It could happen to anybody without them even realizing it.”

Tesar, the counselor, is happy to see others step up in her absence and take on a “serious situation” by forming a Gamblers Anonymous program. She said she hopes the group will raise awareness within the community and show that there can be another, uglier side to the mainstream popularity of gambling.

“We have casinos on nearly every street corner in the major thoroughfare in Kalispell. These are triggers for gamblers,” she said. “When you’re not a gambler, which I am not, you don’t notice it. But if you take a hard look, in our community we’re surrounded by invitations to gamble.”

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