Monday, June 11, 2007

Skill, Secrecy and the Games Gamblers Play

Today’s Dispatch runs a lengthy, info-packed story giving background to the ongoing “skill games” controversy.

Briefly, gambling industry is trying to skirt the laws of the states that don’t allow casino gambling by making games that allow payouts based in the “skill” of the players. One company took Ohio to court arguing that their games aren’t gambling devices

Attorney General Marc Dann reached a settlement agreement under which a pre-selected consultant will evaluate whether or not a given machine’s operation is “51% skill.” The consultant’s word is final.

To throw a little more political drama into the mix, the righty blogs have been on Dann for making the decision after taking campaign contributions from skill machine manufacturers.

Then late last week papers started requesting the consultant’s reports under the public records laws. The one skill game maker that has submitted machines for evaluation moved to block disclosure of the reports. The company argued that the report includes information that is proprietary and that would enable people to break the machine. Dann has suggested that if the reports are not released, the settlement is off:

    Attorney General Marc Dann might call off a deal to legalize wagering machines in Ohio if their manufacturers succeed in their bid to keep reports on the machines' operations private, a Dann spokesman said yesterday.
This plugs into something I was wondering about “skill games” – how do the makers and operators stay in business without house odds?

The basic business model of a casino is set up games whose odds favor the house. There will be losses but statistically speaking, over the long haul the house will come out ahead. If a skill game truly has a skill component, presumably that means that a good player can consistently win. And if someone consistently wins, that person can make tons of money at the expense of the game parlor.

But this from today’s Dispatch story caught my eye:
    Last year, then-Attorney General Jim Petro issued a ruling opposite Dann's. Petro concluded that the games' outcome is "largely by chance rather than a player's skill," making them illegal.
    He hasn't changed his mind as an attorney in private practice.
    Petro said the machines are manufactured so that players, no matter how skilled, can't win every time. A governor controls the number of times the machine can have a winner, he said.[emphasis added]
I’m wondering about that bolded part. If Petro’s reference to a “governor” is another way of saying that the skill is impossible, it’s one thing. But if the machines include a true governor – a component that keeps track of payouts then makes further payouts impossible, that’s, well, cheating.

Meanwhile, the reports have to be public. They just do. How these machines work is a matter of public import. If someone can end run around state law then hide information about how they did it behind a veil of trade secret, they will set a precedent that will spill all over state regulation, particularly where environmental regs are concerned.