Slot clubs cause privacy, problem gambling concerns

David Strow

Friday, Feb. 2, 2001 | 11:05 a.m.

With unified, targeted slot clubs, such as Harrah's Entertainment's "Total Rewards" and Station Casinos' "Boarding Pass," casinos are learning more than ever before about the playing habits of their customers.

Such programs not only encourage greater play, they give casinos valuable data that can be crunched and put to the casino's advantage. Harrah's has been a leader in that category, sending tailored comps and promotions to customers based on their individual gambling habits and their demographic categories.

Which raises privacy concerns and the question: Could a plaintiff's attorney hit the casino industry with a lawsuit, claiming such programs target problem gamblers and encourage their behavior?

Harrah's Chairman and Chief Executive Phil Satre said it's an issue Harrah's lawyers have examined. He's confident Harrah's is on solid legal ground.

"There's a plaintiff's attorney for just about everyone in the U.S.," Satre said. "But our information at this point says this isn't a program that appeals to people with that kind of problem."

Problem gamblers would shy from a program like Total Rewards, Satre said, precisely because the company would know a great deal about how the person gambled.

"They prefer not to be recognized, not to have a record of their gambling," Satre said. "They're ashamed of their gambling. Based on everything we know, this isn't appealing to someone with problem or pathological gambling. I haven't seen any empirical data that says, 'Problem gamblers are influenced by these kind of incentives.'

"The difference between our industry and tobacco is ... we've said this isn't a sport for everybody, you shouldn't be doing this if you have a problem. If we had denied such a thing (problem gambling), it would be a different story."

But Bo Bernhard, director of operations at the Problem Gambling Center of Las Vegas, said the problem gamblers at his clinic use slot cards just as much as other players.

"I've never heard that (they don't use slot cards) anecdotally from them," Bernhard said. "Slot club cards are important to our patient base, because 90 percent of them consist of machine players."

But Bernhard also says the cards and their perks are not a factor in driving the problem gambler's behavior. An addicted gambler, Bernhard said, could play video poker on a summer day in a searing parking lot or in a driving windstorm without budging.

"To the normal recreational individual, absolutely it's an enticement," he said. "But to the people we see, it isn't an issue."

But what's impossible to tell at this point, Bernhard said, is what factors cause the recreational gambler to slip into problem gambling -- and whether or not slot cards and their perks contribute to that. What is known at this point is that problem gamblers start as recreational gamblers -- and that it's likely that biological and genetic factors make it more likely that certain recreational gamblers will degenerate into problem gamblers.

At this point, gambling legal experts believe there isn't enough evidence to support a lawsuit against the industry on the grounds that slot cards help encourage problem gambling. But they won't rule out the possibility a suit could be filed anyway.

"Any fool can sue, and if he has the money, he can find a lawyer to take the case," said Shannon Bybee, executive director of UNLV's International Gaming Institute. "(But) I'm not sure there's meat for a lawyer to get a hold of. If someone is a compulsive gambler, you have to establish that the house is aware of that."

Even if a casino company could make that conclusion from looking at data, it's unlikely they'd want them as customers, Bybee argued.

"Once they get to that stage, the serious compulsive gambler goes broke, and they've lost them as a customer," Bybee said. "You want to be like a dairy and milk the cow every day, instead of a slaughterhouse, where you kill them once and that's it."

Nelson Rose, law professor at California's Whittier College and American Bar Association gambling law expert, says defining a problem gambler is the real challenge -- particularly if the patron denies it.

"How do you know, if you ask and they say they're not?" Rose said. "If a person gambles every day and loses, it doesn't mean they're a problem gambler. Even if you know their income, you don't know what their assets are.

"I don't think they've got enough information to make a call based on statistics that indicate play, any more than credit card companies. There are more compulsive shoppers than gamblers, but you couldn't tell by looking at credit card records."

Bernhard agrees that the data gathered by a slot card -- frequency of play and amount gambled -- can't, by itself, be used to identify a problem gambler. Still, he believes there is an opportunity for the cards to be used as part of an effort to identify and weed out problem gamblers.

"It should be viewed as an opportunity to work with problem gambling specialists to get at these (problem gamblers)," Bernhard said. "I really do think these people realize ... this is not a customer base they want to tap into."

But acquiring the data necessary to make this call -- items like a gambler's financial situation and family situation -- creates another legal problem.

"Then you get into a situation where you're potentially infringing on privacy," Bernhard said.

That could create a dilemma for a casino if it has been told by a friend or family member that a patron has a gambling addiction, Rose said.

"If someone says, 'This person is a compulsive gambler,' and they do nothing, and continue to solicit, there's a bigger chance of some civil liability than if they investigate (and are sued for) invasion of privacy," Rose said.

It's unlikely, however, that casinos could be sued for invasion of privacy for the slot clubs alone, because patrons voluntarily sign up for the cards, Rose said. Both Harrah's and Station say the information gathered by the cards is kept strictly confidential, and is never sold to third parties. Such sales of personal information have caused controversy in other industries, particularly banking.

Harrah's spokesman Phil Levine said a number of safeguards exist to protect data gathered by Total Rewards. Firewalls are in place on Harrah's Internet site, access to the data is restricted to a small group of employees within the company and management tracks every employee who has seen the data, Levine said.

"We understand it's important, and we've devoted a lot of time and effort to the issue of privacy," Levine said.

But in certain cases, it's conceivable a casino could be forced to divulge data on a patron's gambling habits, Rose said.

"What if someone sued a patron, claiming embezzlement, then they subpoena Harrah's records?" Rose said. "I would think Harrah's would have to turn those over. It would show when he was there, how much he was gambling (with embezzled money).

"I don't see a way casinos can protect their own privacy."

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