Gambling Surges, and Backlash Grows
Long seen as a vice by many, it's becoming entertainment to most
| LAS VEGAS, NEV.
Once viewed as a vice to be lectured about in church, gambling is undergoing a revival in America. Surveys show that more than 80 percent of Americans now believe it is an acceptable form of entertainment. And more than 60 percent are not shy about putting their bets down.
But as gambling's popularity has grown, so has a backlash against it. And across the country, in community after community, quiet, fierce battles are raging over whether to continue gambling's spread or stop it.
Between state lotteries, tribal casinos, high-stakes riverboats, and the new and "family friendly" Las Vegas, Americans now spend more than $480 billion a year - nearly half a trillion dollars - on the chance they may get lucky. That's up from $22 billion in 1976, according to government studies.
It's also more money than Americans spend on all professional sports, more than they spend going to the movies, theater, and other cultural events, and more than they give to charity each year.
"I don't think it's bad, but it sure does waste my money," says Melissa Windholz of Denver, Colo., with her four-year-old in tow at the Circus Circus casino in Las Vegas.
Others take a stronger view. "Gambling's something you used to do on the other side of the tracks until they 'main-streeted' it, or tried to," says Tom Grey, an eloquent Methodist minister who rallies Christian conservatives and urban liberal activists under the umbrella of the National Coalition Against Legalized Gambling (NCALG). "What we're doing is kicking it back to the other side of the tracks."
The sudden, rapid rise of legalized gambling has also caught the attention of Congress. This summer, the Senate is expected to join the House and authorize the first major government study since 1976 to scrutinize the social and economic impact of what has become one of the country's fastest-growing industries.
"It's time to take stock," says Sen. Paul Simon (D) of Illinois, the chief sponsor of the bill in the Senate. "Local communities and state officials deserve more than the industry's glossy brochures to be able to make informed decisions."
Voting with their feet
To its formidable supporters, those brochures tell a true story of the gambling industry as an engine of growth in an age of downsizing.
"The gaming industry is expanding and reviving struggling economies," says Frank Fahrenkopf, the former head of the Republican National Committee and the current president of the American Gaming Association (AGA), the industry's new lobbying arm. "And Americans are voting for it with their feet and with their pocketbooks."
Mr. Fahrenkopf says the new casinos have revitalized communities, bringing lower tax rates, higher revenues, and lower unemployment rates. In Illinois, the opening of riverboat casinos has netted the city of Joliet more than $64 million in tax revenues since 1992, according to the AGA. In South Dakota, the number of welfare recipients in counties with casinos declined, while it was up 2 percent in the rest of the state.
But to the growing, vocal antigambling movement, such tales of economic success are an illusion, an economic wolf in sheep's clothing that may devour the nation.
In those same communities, opponents see social decay in the form of more compulsive gamblers, more crime, more suicides, and a long-term drain on economic health.
"The social costs will be borne by us, and the casinos will skate to the bank with the money and leave us the bodies," says Mr. Grey from a borrowed car phone somewhere in North Dakota, a state he calls the front line. On June 11, voters there will decide whether to allow video lottery machines in bars and restaurants.
A former infantry captain in Vietnam, Grey operates on a shoestring budget as he travels from state to state in a beat-up old car "lighting fires," he says, "with the truth about gambling." In the past two years, he and other antigambling forces have defeated 31 efforts to introduce or expand legalized gambling in referendums, state legislatures, and the courts. They have lost only twice.
"Gambling's not good economics, it's not good public policy, and it's not good for the quality of life," Grey says. "Whether you gamble or not, is not the question."
To the casino industry, such arguments are misleading nonsense. They contend the record gives them the economic and moral high ground. They, in turn, question their opponent's motives.
"Tom wants to repeal gaming," Fahrenkopf says, referring to Grey. "He wants to roll it back, whether the people want it or not. If people want gaming, they're 'ill-informed,' from his point of view; if state legislators or governors vote to support it, then they must be corrupt. That's the attitude, which is really unacceptable."
During the past decade, the casino industry has strived to overcome its mob-tainted origins and emerge as an acceptable form of entertainment, an important source of development, and a respectable gamble on Wall Street.
Most of the major Las Vegas casinos are now owned, 70 to 80 percent, by institutional investors ranging from Fidelity Management to the New York State Teacher's Retirement Fund. Their return is high and their cachet is growing. This year, Fortune magazine named Steve Wynn's Las Vegas-based Mirage Resorts as one of America's 10 most admired companies.
States count on revenue
The industry also counts as its allies many state and local governments that are now dependent on gambling revenues. In 1995, casinos paid more than $1.9 billion in taxes to state and local governments, according to the AGA. Lotteries contributed $11 billion to state budgets, says the North American Association of State and Provincial Lotteries.
To the antigambling forces, that's nothing to boast about.
"The state is a compulsive gambler; it's addicted to the money," says Grey, who also attacks the industry for lavishing decisionmakers with campaign contributions.
Since 1993, the industry has given more than $3 million to both Republicans and Democrats, according to analyses by Common Cause and the Center for Responsive Politics, two Washington-based public-interest research groups. That puts it in the same league as Washington's most powerful lobbies.
The casino industry makes no apologies for opening its coffers to the political elite. They say they are simply taking advantage of the current political system to gain access, as do most industries.
"Our view is that every state and jurisdiction ought to have the right to make a decision" on gambling, Fahrenkopf says. "My job is to be sure they do it with the correct set of facts."
Each side has an arsenal of statistics and a bevy of experts to bolster it, but gambling experts and academics who have studied the issue say the truth is somewhere in between.
"Gambling is always a mixed bag," says John Smith, a Las Vegas columnist and author of "Running Scared: The Life and Treacherous Times of Las Vegas Casino King Steve Wynn" (Barricade Books, 1995). "That's part of the problem: There's so much ignorance about it."
Las Vegas grows
Whatever impact the introduction of gambling has had on other communities, it's turned Las Vegas into a boomtown. And the city's transformation is emblematic of gambling's rehabilitation around the country.
Almost a dozen cranes poke awkwardly above Las Vegas's glittering, flashing downtown strip. They are part of the building boom that started in 1989 and hasn't slowed. Six major casinos are under construction, and all reflect the new Vegas: an extravagant fantasy land designed to transport you (and, if you choose, your family) to a larger-than-life escape.
New York, New York is rising out of the desert as a cartoonish vision of the nation's largest city, complete with a less-creaky replica of Coney Island's famous Cyclone roller coaster. The Monte Carlo will be a lower-cost but glamorized version of Europe's famous gambling city. And the Bellagio will embrace an upscale fantasy inspired by the elegant Italian town with classical gardens, tree-lined parks, and a 12-acre man-made lake.
"We come once a year with the kids," says Lee Malone of Pasadena, Calif. "We're not actually big gamblers, and so many of the hotels are not just gambling oriented now."
Mrs. Malone's two children are enchanted with the MGM Grand's Emerald City, with its yellow brick road, Dorothy, the Tin Man, the Cowardly Lion, and the Scarecrow. There is a theme park, magic shows, live white tigers at the Mirage, talking camels at the Luxor, and the new Stratosphere Tower with its roller coaster more than 1,000 feet in the air.
Casino king Steve Wynn began Las Vegas's redefinition from gambling haven to full-service vacation spot in 1989, when he opened the 3,000-room Mirage as a destination resort hotel that happened to have a casino. Designed to be a "South Seas oasis in the desert," it has a rumbling, erupting mechanical volcano, cascading waterfalls, and a lush tropical forest. The hotel includes an upscale spa, a swimming pool lined with palm trees, and another pool with live dolphins.
While dozens of traditional gambling palaces still line the strip, most of the major hotels have taken Mr. Wynn's lead and now try to cater to the 85 percent of Americans who like to vacation with their children.
"Gambling is certainly the engine that drives the city," says Jack Leone, a vice president of the MGM Grand. "But a lot of people are seeking a well-rounded destination resort experience. The city has adjusted to what the public wants."
It appears to have succeeded. Since 1989, the number of visitors to Las Vegas has jumped from 18 million to more than 30 million, according to the Las Vegas Convention and Visitors Authority. The number of people accompanied by someone under the age of 21 is still relatively small, but it has almost doubled - from 6 to 11 percent - during the seven-year period.
"There are facilities and amenities that cater to everyone, but we don't specifically market to bring families here, per se," Mr. Leone says. But Leone acknowledges that, in the past there had been a much more aggressive effort to sell Las Vegas as "family friendly," with a resulting backlash.
'They're backing off'
The MGM, which opened in 1993, is already doing a $250 million "re-theming" that will replace its "Land of Oz" with a more adult-oriented Hollywood theme. Its 33-acre amusement park is being scaled back, and more convention space will be added.
"The fact is, they're backing off," Grey says. "Americans, by and large, are not willing to expose their kids to this kind of thing."
But only a few of the more than a dozen families interviewed here felt uneasy about acres of slot machines and black-jack games that their children must walk through to get to the more family-oriented entertainment.
"It kind of bothers me, because you don't want them exposed to that too soon," says Lisa Denny of Dallas. "In Las Vegas, it is everywhere - the grocery stores, the airport. They could start thinking of gambling as a way of life."
But most of the parents seemed to have no problem exposing their children to the constant clinking of the slot machines.
"Look, it's life," says Bre Viveros of La Quinta, Calif. "They might as well be with you when they're exposed to it. My husband and I aren't really gamblers; I think we've pulled one slot machine since we've been here."
Other adults used the experience as an education. "I explained to her how these people put the money in the slot machines, they lose it, then the companies build these big hotels," says Carol Lark, a school principal from Las Vegas who was showing around her eight-year-old niece from Kansas. "We talked about it, because I think it's important Hannah understand it's kind of stupid."
But the antigambling forces see more than that at work. They see a destructive hypocrisy.
"This is the unholy trinity: sex, power, money. That's what goes on here," says David Orlov, a dealer who's made his living, on and off, for almost 20 years in the casinos and now has joined the antigambling crusade. "For them to try to make it family-oriented, let's call it what it is: We have 24-hour drinking, 24-hour gambling, legalized prostitution 50 miles outside of town. Let's not be hypocritical about it."
But many financially strapped communities look to Las Vegas and see only hope. The crime rate is relatively low, property taxes are low, employment is high, and the community can't build churches and schools fast enough for the growing population.
"Las Vegas is the quintessence of what casinos can do - the big splash," says columnist Smith. "All you have to do is give a community 50 years and a steady stream of income."
It's that kind of economic boost many communities hoped for when they welcomed casinos in the past seven years. But results have been mixed nationwide.
In New Orleans, two of the three riverboat casinos docked along the Mississippi have gone bankrupt in the past year. Just down the street, a gaping hole stands where "the world's largest casino" was to be built. The project is also in bankruptcy. The FBI is investigating the state Legislature for allegedly taking bribes to approve video poker, and some local police report crime and petty theft related to gambling are on the rise.
"But it works in Tunica, Miss. They've had a revitalization," says William Thompson, a professor of public administration at the University of Las Vegas. "But goodness, they've only got 2,000 to 3,000 people, and they've got 10,000 employees" in the gambling industry there.
The 'bathtub theory' of gambling
Professor Thompson has developed what he calls the "bathtub theory" of gambling. If a community with a casino gets more than 50 percent of its customers from out of town, it should provide economic development. That's because the tourists bring money from outside and pour it into the local economy. The bathtub just keeps filling up with money. Las Vegas is the perfect example: It gets an estimated 90 percent of its customers from out of town.
They come with money, spend it, and leave, taking their problems with them. But if a community depends on locals for the gambling, Thompson says a different scenario unfolds: Not enough money is poured into the community to make up for what leaks out.
Thompson has just completed a study in Illinois and found that many of the communities with riverboat casinos are losing money, because approximately 65 percent of their customers are locals. Another 20 percent are in-state, non-locals. The rest are from out of state.
"For every dollar lost to gambling, the local community loses 18 cents," Thompson estimates. A big factor is taxes: Twenty percent of the money spent gambling goes to the state, another 10 percent goes to Washington. Casino owners take out 20 percent in profits, he says.
"The dilemma in Illinois is that they set up casinos in depressed areas, then they have a 20 percent gaming tax," Thompson says. "What they end up with is depressed people gambling and supporting other areas of the state."
Although casino-industry officials have not seen Thompson's study, they doubt his conclusions.
"Joliet's been an amazing success," counters Fahrenkopf of the AGA. "How do you explain the fact that they've been able to cut property taxes, rebuild downtown? They've built a new police department and improved the fire department. Obviously, there's money staying somewhere."
Thompson agrees the city government is reaping a windfall in tax revenues, but his study found business at local shops is down, and money is being drained from residents' income.
"Then you have to consider how many of those 83 percent of the locals are going to develop compulsive gambling problems and the crime that's related," Thompson says, noting that experts predict that 4 to 6 percent of the population are potential compulsive gamblers.
Both sides in the gambling debate agree that the amount of crime will rise when a community introduces a casino. The dispute is over whether the casino is the cause or simply the tourist influx.
"The crime rates, by any measure, are higher in Anaheim [Calif.] and Orlando [Fla.] than they are in Las Vegas," says Alan Feldman, a Mirage spokesman, citing the two communities where Disney theme parks are located. "I would no more suggest to you that Mickey Mouse causes crime than a black-jack table would."
Many criminologists agree. Early studies that showed a dramatic rise in crime in Atlantic City, after casinos were introduced were later reassessed.
"If you look at the population that comes in - the half a million visitors and the tourists - and factor them in, you find there was not an increase in the crime rate," says Henry Lesieur, a professor of criminal justice at Illinois State University in Normal.
Other criminologists point out that the kind of crime people are most scared of - muggings, rape, and assaults - are committed mostly by 16- to 24-year-olds.
The typical casino patron is in his or her mid-40s, says Jay Albanese, chairman of the department of criminal justice at Virginia Commonwealth University in Richmond. "These people don't roam the streets at night, which tends to be the case with a younger crowd."
The antigambling forces don't buy that analysis. They contend that a community with no problems of prostitution, vagrancy, or high rates of larceny will develop them if a casino opens up. Although they acknowledge that each resident's risk of being a victim of crime may be lower because of the huge influx of tourists, they argue that the fabric and nature of the community will be changed forever.
"Gambling establishments attract crime, and we all suffer from it, whether we're gamblers or not," says Bernard Horn, political director of the NCALG.
The criminologists also admit white-collar crimes usually associated with compulsive gambling - fraud, embezzlement, forgery, and tax evasion - are extremely difficult to track. They often go unreported and thus are seriously underreported in crime statistics.
"In that respect, in all probability crime does go up, but we can't demonstrate it statistically," Professor Lesieur says.
Gambling addiction addressed
For years, the gambling industry, with a few exceptions, denied that compulsive gambling was a problem. But in the last year, for the first time, the industry as a whole has publicly acknowledged that 4 to 6 percent of the population are at risk of becoming addicted, out-of-control gamblers with the potential to destroy themselves and devastate their families.
"The critics who said we were a little late at getting at it, they're probably correct," says the AGA's Fahrenkopf. At his urging, the industry is setting up the National Center for Responsible Gaming in Kansas City, Mo. It will grant $2 million over the next 10 years to academics and physicians to study the problem.
For many experts who have worked with compulsive gamblers for decades, the industry's sudden goodwill is welcome, but also a little hard to swallow.
"It's a bunch of bull," says Valerie Lorenz, executive director of the Compulsive Gambling Center in Baltimore. "If they're so concerned about it, why didn't they so something 30 years ago? This is nothing but a publicity strategy to gain acceptance."
The casino industry says a legal, regulated gambling environment is the best place for experienced staff to spot problem gamblers and get them help.
Opponents counter that the more available gambling becomes, the more people will try it, and the more compulsive gamblers will develop.
As Grey puts it, "Why would I let a predator come in and open a casino in my town and give me four casualties in my congregation?"