Overview

In a relentless pursuit for revenue, many state governments are serving as the chief partner and enabler of Big Gambling. The swift rise of this unholy alliance has occurred with scant public scrutiny of the policy implications or the intertwined relationship between politicians and gambling interests.

With little public input, the government has used its power and influence to allow gambling to become more convenient and addictive to average Americans, especially senior citizens, minorities, and the working class.

The gambling class used to be a small, self-selected group of Las Vegas denizens and racetrack goers. But today’s gamblers resemble a cross section of Wal-Mart shoppers, pumping their paychecks into slot machines and state lottery terminals. Indeed, gamblers with household incomes of less than $10,000 bet nearly three times as much on lotteries as those with incomes above $100,000.

The democratized gambling culture also brings more social costs. Wherever casinos open, there have been increases in crime, bankruptcy, and divorce.

Four new casinos in Ohio are projected to produce 107,100 problem and pathological gamblers, according to an analysis by the Cleveland Plain Dealer.

The rise in problem gamblers is likely to only get worse. Studies indicate that new high-tech slot machines can be highly addictive. The American Psychiatric Association recognizes pathological gambling as a medical disorder with elements of addiction similar to alcohol and drug addiction.

Rather than weigh the social costs, elected officials and casino operators ignore or downplay the impact. In Pennsylvania, state lawmakers legalized slot machines in a late-night vote just before the July 4th holiday weekend in 2004.

In no time, the slots measure that was initially designated just for race tracks morphed into full fledge, free standing casinos with table games like blackjack and roulette. Two of the 11 initial casino licenses were awarded to convicted felons, including one who was later indicted for lying to state officials about his alleged ties to the mob.

A state grand jury recently found the Pennsylvania Gaming Control Board neglected public policy aims and failed to protect against illegal gaming practices. No charges were filed but the grand jury recommended 21 changes designed to restore public confidence in the state’s oversight of the gaming industry. There is little support among lawmakers or gambling interests for any reform, an indication they like the benefits of the flawed system.

The partnership between government and gambling was on full display at a recent conference in Atlantic City known as the East Coast Gaming Congress.

There Jim Whelan, a state senator from New Jersey, was introduced as a longtime “friend of the industry.” Whelan then boasted about recent legislation passed in Trenton that would reduce regulation and oversight of casinos and save operators millions of dollars a year. Linda M. Kassekert, the chair of New Jersey’s Casino Control Commission, told casino operators: “We won’t be an obstacle to industry.”

Gambling operators seem intent on entering states even when they are not welcome. Texas lawmakers have rejected efforts to legalize casinos. Timothy Wilmot, the president of Penn National Gaming Inc., which operates casinos in 12 states, said the company still bought an ownership stake in three racetracks in Texas.

Despite opposition to gambling, Wilmot seemed confident it was just a matter of time before enough Texas lawmakers buckled. Wilmot should know. For years, Ohio voters and lawmakers rejected attempts to legalize gambling. But Penn National and other casino operators spent $50 million to influence public opinion, which resulted in a slight majority of voters finally approving casino gambling.

For decades, citizens and elected officials understood the downside of gambling and would not support it. Thirty years ago, only a handful of states had a lottery, and casinos only existed in Las Vegas and Atlantic City. Today, 43 states have a lottery, every state but two has some form of legalized gambling, and there are 500 casinos in 27 states.

Each year the gambling gold rush continues to spread. Americans lost $91 billion on all forms of gambling in 2006, the most recent figure available. More money was spent on gambling than on recorded music, theme parks, video games, spectator sports and movie tickets combined, according to the National Gambling Impact Study Commission.

The Commission – which was created by Congress and approved by the president – was so concerned about the growth in gambling that it recommended a “pause” in any expansion to allow federal, state and local governments time “to survey the results of their decision and to determine if they have chosen wisely.”

That was in 1999.

Instead of a pause, gambling has continued to metastasize, just as the Commission warned. “A likely scenario would be for gambling to continue to become more and more common, ultimately omnipresent in our lives and those of our children, with consequences no one can profess to know,” the Commission’s study said.

The Commission rightly noted that federal, state, and local governments were responsible for the rapid growth in gambling across the country. That’s because state governments are essentially in partnership with casino operators, overseeing the industry and pocketing up to half of the lost gambling wagers in the form of tax revenues. The broader policy implication of this joint venture has never been analyzed.

“Virtually every aspect of legalized gambling is shaped by government decisions,” the Commission said. “Yet, virtually no state has conformed its decisions in this area to any overall plan, or even its own stated objectives. Instead, in almost every state whatever policy exists toward gambling is more a collection of incremental and disconnected decisions than the result of deliberate purpose.”

If anything, states have made it easier for those who can least afford to gamble to do so. There has been an increase in the number of so-called “convenience casinos” popping up in smaller, often struggling, markets, where it is easier to sell the jobs and tax benefits. The proximity to homes and businesses of round-the-clock casinos makes it easy for locals to gamble several times a week.

Isle of Capri Casinos Inc. operates 15 casinos in small towns in Mississippi, Iowa, Colorado, Florida and Missouri. Chief Executive Virginia McDowell said the casinos cater to locals by serving good food, cold beer and live area music. “It’s where you go on a Friday night,” she said during a presentation at the gaming conference in Atlantic City.

But the revenue pouring into convenience casinos is money that would have been spent on other goods and services, including meals and entertainment. The Federal Reserve Bank of Boston said “convenience casinos” do not bring outside money into the economy and may have no net ancillary economic impact.

In effect, the benefits of casinos don’t outweigh the costs. The spread of gambling is a bad bet. This Website –http://www.GetGovernmentOutOfGambling.org is dedicated to shining a light on the impact of gambling on society and the government’s role as the chief enabler of this industry. It is hoped that through more education and research, the public will realize that government should get out of the gambling racket.