In Israel's State-sponsored Casinos, a Legal but Devastating Racket

The one-armed bandits operated by the national lottery are very efficient at separating players from their money.

Lotto slot machines: What happens in Kiryat Ekron doesn’t stay in Kiryat Ekron.
Ofer Vaknin

It’s midday in Kiryat Ekron and I’m looking for the local Mifal Hapayis booth. My phone’s navigation app balks at locating the address I copied from the national lottery’s website; maybe it’s not built to withstand temperatures over 35 degrees Celsius. It’s the second day of a sharav, and the bone-dry desert blast reminds me of high summer in Las Vegas.

My destination — the back room of the shop, where the slot machines are — also evokes memories of Nevada. I think of the fancy hotels, walking into one of the vast air-conditioned spaces filled with hundreds of slot machines being played by thousands of Americans on their annual gambling vacations.

I don’t get how I never realized that exactly the same sort of machine exists at 150 Mifal Hapayis sales points in Israel. Why would anyone pay thousands of dollars for flights and hotels to go to Vegas, when you can walk over to the nearest Payis booth and do pretty much the same thing?

Actually, some Israelis may have to drive. According to the official Payis list of its outlets, there aren’t any in the wealthy suburbs of Savyon, Kfar Shmaryahu or Omer. But the machines are readily available to residents of Kafr Kara, Umm el-Fahm, Or Akiva, Netivot, Ofakim and Kalansua.

I enter. At first I don’t find what I’m looking for, but then I see a door leading to a back room — and that’s where the slot machines prove to be. Instead of the tokens I remember from Vegas, these machines use prepaid cards that the cashier charges with any amount up to 50 shekels ($13). You can buy as many of the cards as you want.

Not quite Las Vegas

I start small, putting 10 shekels on a card. The place is clean, tidy and above all, air-conditioned — but smoking is allowed, despite the law. There are no female croupiers with plunging necklines, no magicians, no “Lion Habitat” in the middle of the casino, as at the MGM Grand in Vegas. There is, however, a big cage with a small parrot inside, busily pecking at a lottery form. Two men in paint-stained work clothes are at the machines. No accountants in suits and ties, just laborers relaxing after a day’s work.

Once upon a time, slot machines had handles. Today there’s just a button. The fingers of the players ahead of me dance rapidly over the keyboards. I have difficulty keeping track of what they’re doing, then it’s my turn.

The machine offers nine games with names like “Greenbacks,” “Las Vegas” and “Horoscope.” At least their context is clear. Games named “Tutti Frutti” sound more like children’s video games. This place offers no challenges to the mind, just various types of electronic lotteries.

It takes me time to find the machine’s keys, which are covered in plastic cards discarded by disappointed gamblers. When I figure it out, I pretend to be professional and, without hesitating, choose “Las Vegas.” I press keys swiftly, not that I quite understand the rules.

A virtual scratch card appears on the screen, and is automatically scratched. My combination lost. Within three seconds, my game is over, profitlessly. I do not judge myself harshly. In the two days I spent at two stations, here and in Rehovot, I never saw anybody win. As in Vegas, the house always wins.

My attempt to look as if I belong fails. The other players ask if I’m an income-tax inspector. I explain my purpose. “Hey, it’s about time somebody wrote about this,” says one. “People wipe out whole salaries here. I’ve already lost about 2 million shekels here. Just this morning I lost 5,000.” I can’t figure out if he’s complaining or bragging.

Gambling is illegal in Israel, except through Mifal Hapayis and Sportoto, the Israel Sports Betting Board. “The reason that Mifal Hapais (the Israel State Lottery) exists at all, is to raise funds from the public, through lotteries and games of chance, in order to achieve public goals and improve the quality of life for the population of Israel in the fields of education, health, community sport, art and environmental quality,” the website says.

“What the state is doing here is like taking a child, putting toys in front of his face and saying, ‘Gamble, but not too much,’” says another player.

“It’s a casino for poor people. I’ve only known about it for two months but I can already tell you, it breaks up families. If Las Vegas is a once-in-a-lifetime thing, and when you go there to gamble you at least enjoy yourself, here it’s something else. Anyway, it sucks, because they don’t let us win enough. They don’t give customers something to have fun with. Look, there went my 50 shekels. That’s enough,” he says, and gets up, as if to prove to me that he can control his losses, but he stays. Maybe he’s waiting for me to leave so he can keep playing.

Eventually the owner, whose income is a function of the volume of the gambling, tells me, “Leave them alone. Ask me — it’s annoying the customers.”

‘The biggest cheats in the country’

Mifal Hapayis is a legitimate government enterprise but nobody is willing to be photographed for this article, or to be named. Officially, the slot machines are in a back room in order to keep them away from children and innocent passersby. In practice, it allows the gamblers to hide, so spouses or acquaintances won’t see them waste their salaries.

One of Mifal Hapayis’ official slogans is “Playing Responsibly,” and its website boasts of the contributions to sports, education, culture and the arts that the lotteries fund. It should really be “We promote poverty and social gaps in Israel” or “The right place to bury your paycheck 10 minutes after you get it.”

If progressive taxes are designed to reduce income inequality, and regressive taxes means lower-income earners pay a higher proportion of their income in taxes, what are taxes that are paid mainly by the poor?

Eitan Bracha, who owns a falafel stand next door, says that for around a dozen years he owned a few illegal gambling stations. He says he stopped mainly because he became fed up “with the people, the alcohol, the cigarettes” than because of harassment from the police.

“The biggest cheats in the country are Mifal Hapayis. No. 2 after them are the kashrut” inspectors. “On the other hand, if not for Hapayis’ donations, we wouldn’t have a country,” he adds.

So why are they cheats?

“Because they take a lot from the public and give back nothing,” Bracha answers, explaining that the station owners have to reach certain turnover goals or they lose their machines. But people lose huge sums and wind up borrowing on the gray market, then it never ends.

Today he just sells falafel.

I used to play Sportoto. On Thursday I’d go to the local Hapayis/Sportoto station and buy two or three forms. Each lists upcoming league soccer games: You fill in how you think each game will end — win, lose or draw. I’d sit with friends over pizza and we’d argue for hours over how we thought the games would play out. We would wait impatiently for Saturday night, for the games to end. Sometimes we would also buy lottery forms. The weekly lottery was held on Tuesdays.

There’s no pretense of knowing anything about soccer, and the result isn’t known for days. Adrenaline, straight to the vein. Some of the players at the stations I visited remind me of junkies hoping for “someone” to take responsibility and rescue them from their addiction. Others see the problem with the gamblers around them but believe they have everything under control.

“Did you come here to ruin my business?” complains the owner in Rehovot when I enter. It’s morning. A woman in her 50s enters after me. “Is a machine available?” she asks and buys two cards, putting 35 shekels on each. She goes into the back room, which has five machines. Five minutes later returns to buy more cards.

The place is otherwise empty. But on Sunday, the owner tells me, after the monthly government benefits payments, the place was packed. Welfare, unemployment, disability and other benefits are paid on the 28th of each month in Israel.

Does anyone ever win?

“In the last two days I paid out 30,000 shekels.”

Poor customers, rich managers

Unlike the weekly national lottery, if you win at the machines, you can’t quit your day job. Mifal Hapayis’ last available financial statement shows that its revenues in 2014 amounted to 6.4 billion shekels, of which 60% went to pay winnings; 11% to payments to concessionaires and others. Its profit, from which it spends on public works, is about 25%.

Last week Or Kashti reported in Haaretz that 9% of Hapayis’ revenues come from slot machines, which account for a quarter of its profits. It’s a growth company, too. This year revenues should reach 7 billion shekels, but profit returned to the community is expected to decline to 22.2%, from 26.7% in 2012.

Meanwhile the average wage at the company has grown 30% from 2008.

CEO Eli Dadon, who recently announced his retirement, and chairman Uzi Dayan, earn 53,000 shekels a month each. They probably don’t play the machines, but their names appear in the appointment books of the mayors to whose cities the enterprise donates money. It is nicer to deal with the spending side of Mifal Hapayis than the shady side of its income.

People will gamble anyway, whether it’s legal or not, goes the establishment’s logic; better they do it under supervision under cover of the law, not in criminal dens.

I’m not sure that everyone who comes to gamble at the stations would have descended into underground dens if they couldn’t gamble legally. After all, one doesn’t stop by en route home from work to drop 500 shekels at unofficial casinos.

The government chooses not to wield the same logic when it comes to marijuana, for instance, or prostitution. Perhaps the business potential in the case of gambling is clearer, even if the gain the gamblers make is a lot less clear.