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Statement on Sports Betting

May 19, 2008 Public Hearing on S-143, A-1909, S-1488 and SR-12

Statement of Donald F. Weinbaum, Executive Director,
Council on Compulsive Gambling of New Jersey, Inc.

Good Morning Chairman Whelan, Vice Chairman Gordon and Committee Members:

On behalf of The Council on Compulsive Gambling of New Jersey, Inc., I would like to extend our appreciation for the opportunity to share information with the Committee regarding the proposed legislation permitting wagering at casinos and racetracks on results of professional sports events, subject to voter approval. The Council is a not-for-profit (501c3) corporation, created in 1982 at the behest of the New Jersey Department of Health.  The Council conducts education, prevention, outreach and referral services for people affected by compulsive gambling and has been actively involved in serving New Jersey’s citizens for more than 25 years.

The Council on Compulsive Gambling of New Jersey, Inc. is neutral on gambling: we do not oppose it or support it. Rather, our mandate is to advocate for compulsive gamblers in New Jersey and for those who are affected by their gambling.  The Council owns and operates the 1-800-GAMBLER© HelpLine, which is available 24 hours a day/7 days a week to gamblers, their families and persons seeking information on treatment and other resources. The Council also created and maintains the www.800gambler.org website, which received almost 1 Million hits last year.

Today, most of my testimony will focus on compulsive gambling, its impact on New Jersey’s citizens, and how legislative changes might affect their health and well-being.

It is recognized that New Jersey is in a financial crisis, and the current legislative proposals might be seen as potential remedies. However, we have also noted that the Office of Legislative Services was not able to estimate the fiscal impact of A-1909. Some of the non-financial consequences of the proposed legislation appear more self evident and are worthy of consideration. Gambling research has reflected that any time a new form of gambling is introduced the immediate impact is to increase all forms of gambling. Should legalized sports betting become a reality in New Jersey, there will be many people who are not presently frequenters of Atlantic City who will make the pilgrimage in order to bet on sports games, and the same is true for racetracks. Once there, they are likely to play casino games and the horses as well. This will certainly add to the number of compulsive gamblers in the state. There is a direct correlation between accessibility and availability of gambling and the number of compulsive gamblers. This becomes an important concern because compulsive gambling is costly, not only for the individual but for society as a whole.

Incidence of New Cases
The Council’s helpline received 15,223 calls in 2007.  In excess of 2,200 of these calls were from compulsive gamblers and/or their families who were in crisis, which led to intakes being conducted by our helpline staff. These individuals were referred to Gamblers Anonymous meetings and treatment professionals with expertise in gambling.

The Unlawful Internet Gambling Enforcement Act of 2006 made on-line sports betting illegal. Our helpline statistics reflect a recent decrease in callers identifying themselves as sports betters. In 2002 18% of callers identified themselves primarily as sports betters; by 2007 this figure had dropped to 7%, the lowest it has been since the Council began keeping statistics. We believe that at least a portion of this steady decrease results from the illegal nature of sports gambling.

To put these numbers in context, 30% of callers identified slot machines as their primary form of gambling and 26% identified casino table games as primary – a total of 56% of all callers with casino gambling as their preferred activity.  That means 1,248 individuals with a major casino gambling problem sought help last year, and it is only the tip of the iceberg.  Helpline data also support the commonly held belief in the research community that slot machines are a highly addicting form of gambling, with a rapid progression from recreational into problem gambling. Introducing new patrons, who are attracted by sports betting to the casinos, could increase the number of individuals with a real vulnerability to compulsive gambling.

Treatment
The Council oversees treatment for compulsive gamblers through fee-for-service grants with 12 treatment providers.  At present, funding is not sufficient to sustain the demand for services. From experience in New Jersey and elsewhere, we know that additional forms of gambling will create more compulsive gamblers. The Council is funded through legislation which calls for specific amounts of money to be paid. The first $600,000 of casino penalty collections is dedicated to support compulsive gambling. If and when such penalties are imposed, the funding is transferred into the General Fund and partially offsets the annual appropriation of $742,000 for compulsive gambling.  An additional $200,000 comes from assessments against Off Track Wagering permit holders.  Only $301,000 of this State funding is allocated for support of treatment. And, unfortunately, there are no provisions in place to increase treatment funding as gambling activity and revenues grow. The Council is concerned that expansion of gambling, as contemplated by the pending bills, will increase the need for gambling treatment while not providing any additional funding to account for same. The Council believes that any expansion of gambling should include language addressing the need for compulsive gambling prevention, education and treatment.

Pathological gambling (the technical name for compulsive gambling) has been recognized by the American Psychological Association as a mental health disorder since 1980 and presently appears in the DSM IV (Diagnostic Statistical Manual) as an impulse control disorder. It is not viewed to be biologically based, and thus many insurance companies will not cover pathological gambling. However, there is ongoing research examining the biological correlates of gambling. There are at present no Federal moneys directed towards compulsive gambling services, and therefore the State grant to the Council is the only source of funds for gambling treatment. It is the nature of the disorder that compulsive gamblers do not have money for treatment. This is why we are so concerned that the need for services has surpassed the treatment dollars available and why there is a pressing need to earmark more money towards gambling treatment. If the question of sports gambling goes to a public referendum, it is important that the voters understand that there are no provisions for increased funding of gambling treatment.

It has been forecast that in fiscal year 2009 the state revenues derived from casino gambling will be $425.8 million. It is undisputed that these moneys are used for a commendable purpose; the money is required to be spent on assisting senior citizens and disabled residents off the State.  None of these earmarked amounts have been used to support gambling intervention or treatment services, despite the fact that the senior population has been found to be vulnerable to development of gambling problems.  A 2006 Fairleigh Dickinson University survey of New Jersey residents over age 55 reported that 2% were compulsive gamblers, 4% were problem gamblers and an additional 17% were at risk gamblers. 15% of callers to our Helpline are seniors over age 55.

The Social Costs of Compulsive Gambling
The Council has previously spelled out the social costs associated with problem gambling. Suffice it to say compulsive gambling dramatically impacts individuals, families, businesses, the legal system and communities.  Each of these sectors of society pays the price through losses of productivity, crime, and other financial impacts.

Research has demonstrated that expansion of legalized gambling in the 1980s and 1990s was followed by significant increases in problem gambling in the United States. Proximity to the gambling establishment has been shown to be directly related to the incidence of compulsive gambling. Based upon the emerging research, the Council firmly believes that every expansion of gambling opportunities needs to be accompanied by increases in funding for compulsive gambling services.

Noting the number of seniors who have gambling problems, a strong case can be made for allocating a portion of current Casino Revenue Fund moneys to provide them with compulsive gambling services.  Similarly, a portion of future increases in casino revenues, such as those from sports wagering, might be dedicated to providing services to those affected. Such an approach does not require an exact projection of revenues and makes good economic sense.

In summary, compulsive gambling in New Jersey cuts across all sectors of the population and all forms of gambling.  It is a hidden cost and has a significant impact on individuals, families and communities. Addressing it will be a challenge, but it is one that can be met with adequate resources and the support of the Legislature.

The Council on Compulsive Gambling of New Jersey is committed to serving our state’s residents and will be pleased to help in any way needed.
Donald Weinbaum
Executive Director
Council on Compulsive Gambling of New Jersey, Inc.