Its stigma gone, gambling enjoys broad support

By DOUG CANTOR and MARTA HUMMEL ~ Medill News Service - 9-2-03

WASHINGTON

urderer, rapist, racketeer and ladies man Benjamin “Bugsy” Siegel helped turn the desert wasteland of Nevada into a gambling empire and a bastion of organized crime in the years before World War II.

And for many Americans, the charming, blue-eyed sociopath came to symbolize what gambling was all about: crooked games, smoke-filled casinos, loose women, violence and corruption. In a word, sin.

Fast-forward to Washington and a meeting with the new face of gambling in America. In walks Frank J. Fahrenkopf Jr., a dapper, 64-year-old lawyer with carefully coifed graying hair, stylish red suspenders and cufflinks bearing the White House seal. A former Republican Party national chairman and confidante of presidents, he exudes a manner that fairly shouts: “I’m an insider.”

Indeed, he is - and so is the industry he represents.

As head of the American Gaming Association, Fahrenkopf is spokesman and chief lobbyist for 432 commercial casinos in Nevada and 10 other states. He is also a symbol of the transformation of gambling into a $65.7 billion-a-year industry that extends from coast to coast, enjoys widespread government support, and projects an image that is more Disneyland than gangland.

Today, some form of legalized gambling exists in 48 states, ranging from state-sponsored lotteries to Indian casinos and the increasingly popular racinos - casinos installed at racetracks. And almost 85 percent of Americans say gambling is “an acceptable entertainment option for themselves or others,” according to a poll of 1,001 people conducted for the gaming association this spring by Peter D. Hart Research Associates and The Luntz Research Cos.

Even such a conservative avatar of virtue as Bill Bennett, former secretary of education and author of “The Book of Virtue,” said in an MSNBC interview this year, “Theologically, I don’t regard gambling ... as wrong itself.”

Bennett, who vowed to quit gambling after it was disclosed he had lost millions of dollars playing slots, added that it’s only a problem “when you do too much of something, as I was doing at that high-level amount. Then you should stop.”

In both political and economic terms, gambling has become a force to be reckoned with.

In one sign of its clout and acceptance, the gambling industry has increased its contributions to political campaigns tenfold since 1992 to $14.2 million in the 2001-02 election cycle.

And the economic allure of jobs and government tax revenue has overwhelmed opponents of gambling at almost every turn.

In 1997, spurred by the explosion of commercial casinos, Indian casinos, state lotteries and other forms of gambling, Congress created the bipartisan National Gambling Impact Study Commission and gave it a $5 million budget to study legalized gambling and the social problems growing in its shadows.

Two years later a comprehensive commission report raised warning flags about a host of issues, including the personal and societal impact of compulsive gambling, rising demands for government services, uneven government supervision, and the tendency of lotteries and other forms of so-called “convenience” wagering to prey on the poor.

The commission called for a moratorium on expansion of legalized gambling to permit more research into its consequences. But four years later the report has been largely ignored and the expansion of gambling has continued unabated.

The report did conclude that casinos at resort locations offer certain economic advantages, such as job creation, a fact that Fahrenkopf cites in speeches and in the association’s literature.

But John W. Wilhelm, a commission member and president of the Hotel Employees and Restaurant Employees Union, said, “most jurisdictions that have considered gambling have paid little attention to what (the report) says.” Too frequently, he said, state and local governments usher in convenience gambling - installing slot machines or other electronic gambling devices in bars and restaurants, for example - rather than establishing resort-style gambling that creates more jobs and is less prone to problem gambling.

“The most serious consequences when we look back on it 20 years from now will be ignoring the commission’s recommendation on the destination resort issue,” he said.

Fahrenkopf, in an interview with Medill News Service, acknowledged some opposition to gambling persists, but talked expansively about how perceptions have changed.

“While there still are some people who disapprove of gambling on moral grounds, when you have government actually running gambling, it’s a sign in more and more states that some of the stigma ... in this country is going by the boards,” he said.

Click to see graphic showing the growth of casino gambling

In addition to commercial casinos, the U.S. already has Indian casinos in 29 states, lotteries in 39 states and the District of Columbia, and horse racing or dog racing in 43 states.

From 1910 to 1931 gambling was illegal everywhere in the United States. Desperate to offset the impact of the Great Depression, Nevada broke the line and became the first state to legalize gambling. For three decades Las Vegas and its sister cities stood alone as meccas for legal gambling. Then in 1963, New Hampshire - a state famous for its low taxes - authorized the first modern state lottery.

That burst the dam. Since then, lotteries, casinos and other forms of gambling have spread so far and so fast that now only Utah and Hawaii are free of legal gambling.

Society’s acceptance of gambling today is a far cry from 1938, when a Gallup survey showed 51 percent of Americans thought “government lotteries would produce an unwholesome gambling spirit in this country.” And from 1951, when another Gallup poll showed 55 percent of Americans opposed legalizing “such forms of gambling as betting on races, lotteries, numbers ... throughout the country.”

The spread of public acceptance may have been eased by a subtle shift in semantics.

The use of the term “gaming” has been part of the gambling industry’s public relations drive to shake off what Fahrenkopf calls “the myths and stereotypes” still associated with gambling in some quarters. The lobbying arms for the commercial casino and Indian casino industries both use “gaming” instead of “gambling.”

“There is a real significance to the word gaming,” says the Rev. Richard McGowan, an economics professor at Boston College and former member of the Massachusetts and Rhode Island gambling commissions. “Most Americans think gambling is bad. But gaming is fine. When you think of a game you think baseball or football.”

Casino representatives insist the word choice reflects historical tradition. “If it’s skill, it’s gaming. If it’s just a game of chances, gambling. I think the better word would be wagering. It’s all wagering, whether or not it’s gambling or gaming,” Fahrenkopf said.

Since the average casino dedicates 60 percent - at a minimum - of floor space to slots, and casinos outside of Las Vegas derive 75 percent to 90 percent of their revenue from them, most casinos should be called “gambling” houses, according to William Eadington, director of the Institute of Gambling and Commercial Gaming at the University of Nevada.

Nearly half of all Americans played the lottery in 2002 and more than a quarter visited casinos, according to the Hart/Luntz poll for the gaming association. The poll also showed that about a quarter of Americans gambled on sports, 7 percent bet on horse or dog racing, while 1 percent used the Internet to place bets.

With 46 states slogging through budget crises, halting expansion of legal gambling - regardless of the social costs - seems as likely as members of Congress voting to lower their salaries. Tennessee just passed a law establishing a state lottery, and 11 states have been considering turning racetracks into “racinos” with slot machines.

Rhode Island is one of six states that now have racinos. The first slots were installed at Lincoln Park in 1992. There are 1,700 slot machines there now, generating $800,000 a year in revenue. The track makes another $70 million on off-track betting on races around the country. The dog racing at Lincoln Park generates $30 million a year.

In 2002, casinos nationwide paid $4 billion in taxes to states and municipalities, $400 million more than in 2001. Lotteries made $13.7 billion for the states in 2002, up 17 percent from 2001, according to the North American Association of State & Provincial Lotteries.

Connecticut receives 25 percent of the slot machine revenue from its two Indian casinos, Foxwoods and Mohegan Sun. That amounted to $387 million in 2003, up from $30 million a decade earlier.

And in South Dakota, nearly 15 percent of the entire state budget comes from gambling taxes.

Some states have become so dependent on gambling taxes that they are protective of an industry politicians once shunned. “(In) what other industry,” asks Boston College’s McGowan, “does the state care whether your business has been successful or not?”

This series was reported and written by six students from the Medill School of Journalism at Northwestern University in Chicago, under the supervision of Jack Nelson, former Washington bureau chief for the Los Angeles Times, and Ellen Shearer, co-director of the Medill News Service.