Consider Shirley Cotton.
A resident of Hobart, Indiana, Cotton frequented the Harrah’s riverboat near her home because of all the exciting drawings and promotions, which she viewed as chances to be lucky. One winter Tuesday afternoon in 2004, Cotton visited Harrah’s East Chicago on a day that the casino was abuzz with a joint promotion between Harrah’s and Hasbro, the maker of Monopoly.
Hundreds of gamblers stood in line, holding vouchers that had been mailed to their homes. They stopped at a desk in the lobby to pick up a Monopoly game and register for a Harrah’s drawing to win prizes, including cash and trips to other Harrah’s casinos. Gamblers love chances to win things.
Shirley Cotton spent the day by a $1 Sizzling Seven slot machine hoping to hear her name called. Her neck, below her short-cropped gray hair, was draped in green and gold “Total Rewards” Mardi Gras necklaces that Harrah’s hands out by the caseload.
Cotton was grossly overweight and, she quickly disclosed, diabetic.
The disease explained her bare feet, encrusted with ulcers, which she had propped on the slot stool beside her. Her shoes lay on the casino’s vibrant carpet. She sat with her arms crossed over her T-shirt, which was decorated with teddy bears and cherries, and across her round belly. “I’m waiting for the drawings. That’s why I’m here,” she said with a frank and friendly smile.
Cotton wasn’t gambling. She had no money left. A sixty-three-year-old former U.S. Postal Service employee, she said she lived primarily on $967 a month in government disability payments. “Now, that sounds like a lot, but it’s not,” she said. “My house payment is three hundred dollars.”
To save money to pay for eye treatments for her diabetic retinopathy—a progressive eye disease—she had canceled phone service to her home. “I only brought ten dollars with me today because I have to make the bank payment for my house,” she said. “But I played yesterday: eighty-eight dollars.”
Having lost ninety-eight dollars in two days, she was now hoping to win a car or one of the cash giveaways, whose results Harrah’s announced periodically over a loudspeaker.
It was late afternoon, but Cotton planned to wait for the big ten-p.m. drawing. This meant making the twenty-mile drive home to Hobart in her 1978 Cadillac with no headlights. The car had headlights when she had purchased it for $1,500. Now that they were out, she said, “I don’t know what I’m going to do about that.”
Cotton said she received enough cash vouchers and other offers from Harrah’s and other casinos that she had begun to figure out their system. “When you stop going, that’s when they send you stuff,” she said. Once she was even invited to spend the night at Harrah’s. “They let me spend the night in the hotel one time. ‘Oh!’ I asked them, ‘am I ever going to be able to stay in the hotel again?’ They said I have to come [to the casino] more.”
There was something odd about Shirley Cotton’s mouth. Her lips folded in, wrinkling slightly, and when she spoke, she sucked on her words.
She had lost her dentures.
Admitted to the hospital a few weeks before, she said she had left her hospital room to undergo some medical tests. She had returned to find her room cleaned and her dentures missing.
They must have fallen in the trash, Cotton figured. She and the nurse had looked everywhere for those teeth.
This is a side to gambling that is less noticeable on the Las Vegas Strip, where the casinos make more of their money from show tickets, restaurants, and hotel rooms than from gambling. Steve Wynn and Kirk Kerkorian, with their disdain for riverboat gambling markets, serve a prettier clientele.
That’s not to say they don’t cater to addicts. But the Shirley Cottons of the world can’t afford to fly to Vegas for the weekend. They’re found by the masses at their local gambling joints, the ones that are spread all over the country, like Harrah’s. With his cerebral focus on selling gambling to low-rollers, Loveman had opened himself wide to the anti-gambling crusaders.
Chapter Twenty-one
VICE
No one was more surprised than we were.
—JIM MURREN
Tunica, Mississippi, was a quiet old cotton town, surrounded by farm fields that ran down to the edge of the Mississippi River—until the state legalized casino gambling there in 1990. Thereafter, cotton fields began to be plowed under and tall hotel towers sprouted from the rich, black soil.
It was a good bet that the fine citizens of Tunica County wouldn’t be filling the new casinos with either patrons or employees. The population of Tunica was only 8,164 in 1990, according to the U.S. Census, and they were a downtrodden bunch. More than half the county’s residents lived below the federal poverty level, and their median household income was $10,965 a year. Three-quarters of the county was black. Of the residents over twenty-five years old, 30 percent had no schooling beyond the eighth grade.
Yet it turned out that, from the middle of nowhere, Tunica became the middle of everywhere.
Across the river lay the state of Arkansas. Memphis was a half hour’s drive to the north up U.S. Highway 61. People drove in from Jackson, Mississippi; from Birmingham, Alabama; even Atlanta. It wasn’t long before Tunica had become one of the world’s biggest gambling destinations. From $11 million in 1992, Tunica County’s gambling revenues rose to $848 million in 1997 and to $1.2 billion in 2005 (the Las Vegas Strip’s revenues, by comparison, were $6 billion).
Former tractor drivers were now driving stretch limousines for casinos. Farm employment dropped precipitously.
A decade after the first Splash Casino opened there, the two-lane road south from Memphis widened at the Tunica County border into a broad, $50-million superhighway “built to resort standards,” according to a county brochure. More was spent on the new roads to bring gamblers in than was spent on school improvements for the poorly educated citizens—$35.9 million of the county’s share of gambling taxes went to schools over the same period.
With its broad cross-section of Americans, Tunica represented a perfect test market. Soon, propeller heads like Rich Mirman and David Norton were studying gamblers there in their real-life laboratory.
“This is the most information-intensive business in the world,” Mirman said after a year of information gathering. “We’re trying to apply science to try to find out ways to run this business optimally.”
Gary Loveman was stimulated by the intellectual challenge of applying his academic theories to an industry as backward as gambling. Some propeller heads, in carrying his vision out, came face-to-face with the customers more regularly than their leader. Loveman’s strong belief that gambling is a personal choice—and a healthy one for most people—was sometimes harder to apply in practice than in theory. Propeller heads were faced with some tough decisions about their new chosen professions.
At first, Mirman loved the mathematics of it all. Over breakfast one morning at Harrah’s Tunica, he grabbed a pencil and scribbled several Greek mathematical symbols—a sort of algebraic equation. “This is what my life boils down to on a granular level,” Mirman said. He sought the variables that correlated to the number of trips people made to the casino and the number of hours that they played.
“This is a game-theoretic problem,” he said another day. “You have all sorts of customers who have all sorts of information that they’re giving to you. So you have to decide on a set of actions that are going to lead to a response that you want.
“I hate to use the word ‘opponent,’ but it’s about what the other team is going to do.… This is game theory.… Right now, I’m just a punky kid having fun.”
When Mirman left his management-consulting job at Booz Allen Hamilton to join Harrah’s in 1998, a senior partner from Booz Allen called him aside to talk about the gambling industry.
“Are you comfortable with the morals of this?” the partner asked Mirman.
“I’ve worked in subprime-lending marketing,” Mirman shot back, referring to his work for lenders to the poor and bankrupt. “Casinos at least are open about what
they do. I’m totally comfortable.”
Yet Mirman didn’t really see his move as joining the casino industry per se. He was attaching his star to Gary Loveman. Unlike most casino executives, who spend their careers in a succession of casino jobs, Mirman saw no future for himself at any other casino company. Privately, he worried that future A-level employers would look askance at his employment in gambling.
Later, other propeller heads would believe this was the case. David Norton noticed by 2005 that, after several years working at Harrah’s, he had received a few outside offers, “But not as many as I expected,” he said. Casinos were beginning to seek outside talent, but the flow to a great extent was one-way. Corporate America wasn’t—isn’t—seeking talent from casinos.
Harrah’s, like any company that loans money to its patrons, had access to all sorts of banking and financial information on its customers. Phil Satre mandated that Harrah’s not use this information for marketing. This avoided thorny issues. The company could claim it didn’t know if a gambler couldn’t afford to make that next bet.
Mirman was relieved to be barred from access to gamblers’ financial condition. “If I had that information, I’m afraid I’d make the right decision and the wrong decision” to go after more of gamblers’ disposable income, he said.
He loved to adjust the gears of his machine to send the right offers—coupons, discount meals—to the customers who were most motivated by them. Coupons were tracked with bar codes, gambling on slot cards.
Mirman rejoiced when roughly 75 percent of the “coin in”—a term that represented the total bets made on a Harrah’s slot machine—came from loyalty-club members. That meant that Mirman could “watch” every move made by those gamblers: when they made their bets, how much, how fast, when they took breaks, when they moved from machine to machine…
“I am watching everything. I see it all,” Mirman said.
Harrah’s littered its print and television ads with subliminal gambling messages, such as a pair of dice hanging from a rearview mirror or showing a gambler in that tense split second prior to winning. Mirman compared this to Nike ads that show sweaty athletes in that explosive instant just as they push beyond their physical limits. “There is nothing more exciting than the moment the two sevens are lined up and the third reel is spinning—that is a great moment,” Mirman said.
With the Internet revolution came e-mail—a cheaper and faster way to deliver offers to customers. Harrah’s made its Total Rewards loyalty program completely national so that points earned at one casino finally equaled points at another and could be spent like cash on anything from a hotel room to a Coach handbag—especially a Coach bag, as Loveman served on Coach’s board and was eagerly importing aspects of the handbag company’s famous customer-service strategy.
To launch the new national Total Rewards card, Mirman and his crew of mathematicians created a “pot o’ gold” promotion. Each property would have a prize, some sort of pot o’ gold. “The more you play, the better your chances of winning,” Mirman said, his voice rising in excitement.
“Now, you notice that not at one point have I told you what the prize is. We’ve tested this! People get more excited by the description of how they’re going to win than about what they’re going to win.”
His desk was littered with Slinkys, dice, and travel cups imprinted with the Total Rewards logo.
By early 2000, Loveman and his crew had established, in great detail, that the players who hit the button the fastest were of far higher value than the slow-hitters. The average slot player hit it six times per minute. They delved deeper. Which denomination machine and what type of game produced the most valuable gamblers?
One week in Tunica in November 1999, Rich Mirman sat down with me and several of the casino’s best customers for a Wall Street Journal article. This was his first chance to talk freely—outside of a closely managed focus group—with high-value customers.
There was Linda Maranees, a cheerful Diamond card–holding retiree from Memphis, Tennessee, whose blouse was embroidered in gold-colored thread with the word JACKPOT.
Near her sat Tina Montgomery, a real-estate agent from ninety miles away in Oxford, Mississippi, who drove to Harrah’s in Tunica about twice a month. She was often accompanied by her husband, who didn’t care for gambling but stayed alone in the hotel room the casino provided while his wife gambled through the night downstairs. It was nearly as easy for Montgomery to drive to the casinos in Shreveport, Louisiana, as Tunica, but she aspired to work her way up to diamond level from platinum at Harrah’s. “They just keep sending me those little hellos,” Montgomery said.
A diamond-card holder named Robbie Ratliffe said she particularly liked the Red White Blue $10 machines. “If you put a card in here, there’s someone coming by saying, ‘Hello, Robbie, how are you, have you eaten yet?’ You don’t tell anybody who you are—they know who you are.”
Maranees nodded. “Harrah’s has a secret none of the other casinos know about.” A technician would lock down a machine for her—not allowing anyone else to play at it—whenever nature called.
Ratliffe said she hadn’t bothered gambling at all for the first year or so after casinos came to Mississippi. Then she started visiting some of the new places, and pretty soon, she was a regular at the Treasure Bay, the Horseshoe, and Harrah’s. By the fifth year of her gambling, she had decided to concentrate most of her business with Harrah’s. “At Harrah’s, everybody knows my name,” she said.
Ratliffe said she made the drive to Harrah’s two to three times per week, often going after work, gambling all night, and then driving back to work in a sleep-deprived stupor the next morning. Harrah’s employees would check in to see if they could bring anything to her, so that she wouldn’t have to go off in search of food or drink. “There have been times when I have been at the machine and the phone has rang,” she said, her voice full of awe. “‘Robbie, do you need anything?’ It’s the truth.”
Maranees, a retired hotel manager, had needed to earn extra money, so Harrah’s had hired her in its Memphis travel-services office. The company scheduled her hours around her gambling, she said, allowing her to work from nine thirty a.m. until two thirty p.m.—in time to head to Tunica for the evening. Harrah’s even allowed her to go on a two-week leave of absence so she could play a slot tournament as a non-employee, since Harrah’s employees are barred from participating in the tournaments.
The group launched into a discussion about the way they liked to gamble—in marathon sessions, lasting nearly a day in some cases.
“I don’t have a gambling habit,” Maranees said in a later interview by telephone. “I was down there last weekend, but prior to that, it had been two weeks since I’d been.” She sorted through the pile of the current week’s offers from Harrah’s alone:
SATURDAY, JAN. 22: Laughlin, Nevada—Airfare, hotel for two days.
MONDAY, JAN. 24: Lake Tahoe—Airfare, hotel, for three days for $299.
WEDNESDAY, JAN. 26: Tunica—Win a House on the House
WEDNESDAY, JAN. 26: Tunica—Valentine dinner, invitation to “Nothing Says We Love You Like a Free Harrah’s Slot Tournament.”
Mirman was quieter than usual during this meeting. His round eyes looked worried.
“I know that these people will gamble at other places. I’m trying to get them to gamble more at Harrah’s,” he said later, his brow furrowing. “I think that makes me a smart marketer. Not an exploitive marketer.”
He conceded that he was walking a fine line in enlisting patrons to gamble more at Harrah’s without encouraging them to wager more overall. “I think about it a lot,” he said. “I am trying to beat my competitors. I’m not competing with customers. I’m competing with competitors.”
What about retirees who gamble all night, then work part-time jobs to make ends meet?
“I don’t know what I think,” Mirman said. He gave a long, pensive pause. “I have a very strong pedigree. I don’t want it to be tarnished by my associati
on with the casino industry.”
Several months later, Mirman attended an opening of an exhibit of Salvador Dalí’s early work at the Las Vegas Art Museum. Located out on Sahara Boulevard in a suburban community called Summerlin, the museum had a grand, new modernist building but little in the way of collections. A few miles away on the Strip, Steve Wynn was buying up a world-renowned collection of masterpieces. Few of Las Vegas’s wealthiest businesses—its casinos—supported the museum, so the collection of people at this opening included other business leaders and politicians, including the ruddy-faced, gin-drinking new mayor, Oscar Goodman.
Mirman seemed to have banished the doubts that had assailed him in Tunica. “I’m out there training thirty-five thousand people right now. That’s way cool, man,” he said. “That’s way damn cool. I’ve been out of school for five years.”
He said he was sure that his methods led people to consolidate their gambling with Harrah’s, rather than gamble more overall. “I’m comfortable with that. I’m comfortable with that,” he said. “I’m satisfied that I’m a consolidator. I don’t know the people I market to. I don’t see their faces. I’m the masses guy.
“I don’t know how you tell if someone’s addicted,” Mirman added. “My job is to capture a larger share of their wallet and the way to do that is to give them a set of aspirations for them to aspire to.”
Despite his self-assured words, Mirman was struggling with moral and ethical questions. Once, returning from a business trip, Mirman approached a colleague named Jan Jones about his growing uneasiness. “Are we doing the right thing? Is it right to incent people to gamble?” he asked her.
Jones is Harrah’s chief political operative—a lobbyist, strategist, and communications head all in one. She had been Las Vegas’s mayor for eight years in the 1990s, prior to a failed run for Nevada governor. It was the savvy Jones who thought of reaching out to Harrah’s best source of gamblers—retirees—by sponsoring Meals on Wheels trucks in retirement communities. The delivery vehicles were emblazoned top-to- bottom with Harrah’s purple-confetti-and-Mardi-Gras-mask logo.
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