Win, profit and a front-man: Finding the correct words By Ken Adams, CDC Gaming Reports June 5, 2019 at 5:57 pm The casino industry gets its fair share of media coverage. At times, the coverage is very good and factually correct. The newspapers in Las Vegas, Atlantic City, Springfield, Massachusetts, Hartford, Connecticut and in the major cities in California have become expert observers of the industry. In other locations, the coverage is less consistent and often misleading. Even in major gaming markets reporters new to the industry are constantly being assigned to cover gaming. Experienced gaming reporters understand and use the appropriate terms when writing about the gaming industry. Casinos report revenue monthly to state regulatory authorities for the purposes of taxation; the number is the gross gaming win. The win is the amount of money the casino retains after paying all winning bets; casinos pay a gaming tax on the win. The win is not profit; it is gross revenue before expenses. However, inexperienced reporters choose words that reflect a misunderstanding of the terms. They misuse the terms, which can be confusing. It is also common to read that the casinos “raked in” the money or even “hauled in the dough. The implication is clear, casino revenue is the result of a nefarious, barely legal, sleezy, money-grubbing activity. Another confusion comes between wagers and win. Handle, sales or coin in is the gross amount wagered. Handle is not revenue. That mistake has become more common now with the spread of sports betting. The numbers are larger and make for more attractive headlines. The handle is important in analyzing business volume, but it is not a revenue number or an indication of cash flow. There was an article recently from New York stating the lottery was the first in the nation to top $10 billion. The article stated VLTs recorded $2.08 billion in 2018 and the lottery $8.2 billion, a record! Now that is an impressive number, except the $8 billion is sales not win and the $2 billion is win. If the reporter had used comparable terms, the VLT coin-in was $39.9 billion. After paying expenses, the lottery passed $3 billion on to the state, which would suggest the lottery win was probably between $4 and $5 billion. The headlines could easily have read, New York Lottery tops $48 billion, or New York Lottery reports $8 billion in gross gaming revenue. Industry insiders understand the nuances, but the majority of readers are confused. Most people form their opinions of the gaming industry from such misleading statements. The misleading and misunderstood terms can also lead to some humorous outcomes. In a last-minute rush to expand gaming in Illinois and get bills on the floor of the state legislature, a wrong word crept into a bill. The bill had to be pulled back and corrected by its sponsor. As originally written, the bill proposed some additional riverboat casinos. However, that is not what the sponsor wanted. He wanted land-based casinos. The person drafting the bill thought all casinos are on riverboats, so to him riverboat was the correct term. No harm, no foul, the mistake was corrected. The damage was to the bill’s sponsor who was more than a little embarrassed. Those examples are minor compared to a recent article from the Las Vegas Sun. In the Sun article Bryan Horwath interviewed Kenny Epstein of the El Cortez casino in downtown Las Vegas. Horwath wrote about the upgrades the El Cortez was making to its casino and hotel. The article outlined the property’s history and the history of Epstein’s involvement with it. All-in-all, it was not a bad story, except for one very unfortunate choice of words. Horwath called Epstein a front-man for a group of investors. I don’t know how old Horwath is or how much he knows about the history of Las Vegas. But it is clear he does not understand the word in the context of Las Vegas and organized crime. A front-man in the days of the mob, was a person that could be licensed while the mob remained unseen behind the curtain. While in truth, the mob really owned the casino and took its share of the cash off the top, before paying taxes. The front-man was portrayed as the owner to the public, a savvy businessman who operated the casino. In some cases, he may have been the casino operator, but never the owner. Kenny Epstein is the CEO of the El Cortez and the majority owner. He is not a front for anyone. The Sun not only implies that Epstein is a front, a figure head, it implies the ownership group is somehow hidden. Hidden ownership was a fact in the mob days, but that was a long time ago, as is the skimming they practiced. Since the 1970s the Nevada casinos have been very strictly regulated. All key personnel have to be licensed and the process is intense. Organized crime figures from Chicago don’t slip in unnoticed. And since the 1970s, casinos are guided by a system of internal controls. The counting of the money is done under tightly controlled circumstances. Nevada demands and gets its tax money first. If the owners of a casino want to distribute cash among themselves, they cannot before the state’s share is counted. The improperly used word suggests that Epstein is involved in suspicious acts and that Nevada and its casinos are still living in the mob past. Nothing could be farther from the truth.