Payout displays
Would screen displays of VGM payout statistics inform, confuse or deceive players?
Pub Date: 1/1/2003
A new video gaming machine concept incorporated in a game under development by U-1 of Bozeman has stirred considerable discussion between Gambling Control, machine manufacturers and operators. It has thus landed on the table of the GAC.
In essence, U-1 proposes to display on video screens theoretical payout percentages for the machine, but also for various betting scenarios.
They contend the information would allow players more complete knowledge of machine play, but would also serve as an advantageous marketing device to attract players to their machines because of perceived superior pay ratios.
Dave Kraft of U-1 said display of the information was in the interest of "disclosure" while council member Bill Thomas said he thought it could be characterized as deceptive by some.
Several operators said players would only be confused by these theoretical odds and payouts, and others could be misled into betting more than they should for theoretically higher potential wins.
They also said actual payouts could be considerably different than the theoretical payouts calculated by program engineers. The actual payouts can only be known after the game has cycled through millions of plays, the GCD stated in an issue paper. The paper said, "The display of payout does not rise to the level of being considered unscrupulous."
GCD's Huntington said there is currently no policy, rule or statutory authority giving the division the power to regulate payout rate disclosure. The state only regulates required minimum payouts (80 percent) while current actual machine payouts are running about 93-95 percent, said Rich Miller, executive director of the Gaming Industry Association (GIA).
Huntington also said he thought there were two distinct issues inherent in the debate: should the state regulate display of payout statistics'; and should there be a cap on payouts.
Miller said he believed his members would oppose any statutory maximum payout.
"This could be tough on marginal operators" with older, less competitive equipment, Tooke said. "And we don't want to make the operating environment too difficult for machine manufacturers," he added.
Some operators said if a machine display claimed a 95 percent payout, bettors who played $100 would expect to win back $95, which could happen but just as likely would not.
They said they already spend inordinate amounts of time explaining the operation of the machines, theoretical payouts versus actual, game randomness and other complex concepts. To display theoretical figures would only add further confusion for players and difficulty for operators, they said.
Staples said perhaps such information wouldn't rise to the level of "deception" but could certainly be considered "illusory." He noted some business marketing practices in other product fields have become the subject of litigation and he "would hate to see this industry in that world."
Ronda Wiggers, representing the Montana Coin Machine Operators Association (MCMOA), said, "We don't believe its deceptive. It is a conflict between manufacturers. This is a market-driven issue."
The division issue paper said the GAC could: do nothing (and allow the game with the on-screen theoretical potential payout percentages to be approved)'; develop educational materials that would attempt to explain "the math and myths" or could seek legislation regulating the display of potential paybacks.
However, Huntington speculated that should the division approve the game, it "would be litigated."
In the end, the council voted unanimously to seek the final option, preferring to avoid "heading down that slippery slope."
Councilman Nick Murnion, Garfield County Attorney, asked the division to prepare a legal analysis addressing why the conundrum needed to be addressed statutorily rather than by rule.
Huntington told the council and audience that recently computed video gaming tax collections amounted to $13.975 million for the second quarter (Oct.-Dec. 2005), an increase over the previous quarter and the same quarter one year ago.
Bingo licensees Mark Ehli of Billings approached the GAC to consider minor statutory changes to live bingo games that would allow for new card patterns and games to spice up the otherwise static game offerings.
Council member Pam Kennedy, Kalispell mayor, suggested other live bingo licensees be polled for their reaction to Ehli's proposals.
Earlier, the GAC heard opening remarks from Atty. Gen. Mike McGrath, and newly appointed Liquor Control Division administrator Shauna Helfert, who told attendees that licensing and distribution functions are now combined in a single division.
Helfert also said a court decision striking down Montana's statute limiting liquor and hence gaming licensure to state residents would require some statutory changes in the next legislative session and that revised processes for qualifying publicly traded companies for a license would be required.
Finally, she told the council, another court decision prohibiting states from allowing direct shipping of alcohol beverages from in-state producers directly to consumers unless the state allowed the same for out-of-state producers, might necessitate other changes in law.
The Advisory Council's next meeting has been tentatively set for April 21 in Helena.