The Gaming Industry: Looking Toward 2000

Just 20 years ago, the casino gaming industry operated only in Nevada, with Atlantic City just opening its doors. Since then, the entire industry has become a national economic force, with revenues in 1997 topping $50 billion. Casinos — commercial or Native American — operate today in 26 states. Lotteries exist in 37 states plus the District of Columbia. Pari—mutuel wagering is legal in 41 states. And 42 states allow charitable gaming. Only Utah, Hawaii and Tennessee, as of June of this year, have no forms of legal gaming.

As gaming becomes one of the nation’s leading leisure—time options, Americans continue to voice their approval of legalized gaming by an overwhelming majority — 92 percent believe that casino entertainment is acceptable for themselves or others, according to a 1997 survey by Yankelovich Partners, Inc., a leading national polling firm.

These overwhelmingly favorable views of gaming were reflected in the results of the latest elections, when voters were presented with many gaming issues on their state ballots. The people of Missouri, Arizona and California — directly in initiative votes — and Alabama, Massachusetts, New Hampshire and South Carolina — indirectly in governors’ races — expressed their support for some form of gaming in their states. Since we have always believed gaming is a “states’ rights” issue, it would be hypocritical for us to call this a national referendum on gaming. However, we do believe there was a national message in these election results: that the overwhelming majority of Americans resent those who would impose their own view of morality on others.

The remarkable growth of gaming has not only brought widespread acceptance, but has, unfortunately, also spurred a vocal minority that is morally opposed to gaming. As the next millennium approaches, we will have to remain vigilant of the efforts of these moralists — a minority that has emerged as a national political force. In fact, according to Fortune magazine, the Christian Coalition, a gaming opponent, is now the seventh—most powerful lobbying organization in Washington, D.C.

Moral opponents of our industry have received tremendous support from the national media. The Washington Post, the daily morning newspaper of the 535 members of the U.S. Congress, has editorialized on this issue at least 40 times in the past three years. It has written more than 1,300 stories that mentioned casinos during this same time frame. Just a few weeks ago, The Post published an op—ed by James Dobson critical of the industry, Sen. Richard Bryan and me. In the past month alone, The New York Times and Los Angeles Times have run front—page stories focusing on the gaming industry. Let me give you a flavor for the vehemence and tactics of some in the media by reading you my letter to the editor to The Post, which they printed on Nov. 14:

“Since 1995 your paper has sermonized on legalized gambling at least 40 times on its editorial pages — averaging more than one editorial a month. Gambling is supported by an overwhelming majority of Americans: Ninety—two percent of U.S. adults believe that gambling is acceptable for themselves or others, according to a recent survey conducted by Yankelovich Partners, Inc., and some form of legalized gaming exists in 47 states. Despite this public support, your paper has published only a few op—eds or letters to the editor reflecting an opposing view.

“But your paper reached a new low when it published a story Oct. 30 about a suspected cause of the Swissair Flight 111 plane crash. The sub—headline on the front page, headlines on Pages A14 and A15 and the text of the story all said that a ‘gaming’ system was being investigated as a possible cause of the plane crash. No other major daily newspaper or wire service pointed the finger at gaming. Most reported that the suspected defective wiring was part of the ‘in—flight entertainment system,’ which provides audio, video and children’s games, as well as gaming services. In fact, only USA Today even used the words ‘gaming’ or ‘gambling,’ and only in the body of the story when describing the full range of capabilities of the system.

“This is not the first time your paper has misled readers with biased coverage related to gaming. In another front—page story printed Aug. 6, readers learn in the lead that a man responsible for killing his entire family and himself had ‘$10 million in gambling and other debts.’ Two paragraphs later, also on the front page, a similar statement is made: ‘[He] had written nearly $2 million in bad checks in an attempt to cover mounting debt totaling more than $10 million, some of it from gambling losses at Atlantic City casinos.’ Only after following the story to Page A8, near the end, did the reader discover that only $2,440 of the $10 million debt could be attributed to gambling.

“Your paper does its readers a disservice by perpetuating old, inaccurate stereotypes about gaming and depicting gaming as the catch—all cause of unrelated, tragic events.”

Despite opponents’ efforts to downplay benefits the industry brings, new casino gaming jurisdictions across the country — many of which are formerly economically depressed communities — are thriving. The casino profession provides more than 300,000 stable, well—paid jobs, with another 400,000 created indirectly. All told, more than 1 million people in the United States are employed today because of the gaming industry, in all its manifestations. In new casino gaming venues such as Bossier City and Shreveport, La.; Biloxi, Gulfport and Tunica, Miss.; and East St. Louis, Elgin and Joliet, Ill., among others, thousands of new jobs have been created, many of which have gone to minorities and women. Casinos have been the leading creators of new jobs. The number of people on public assistance has dropped significantly. And hundreds of millions of dollars in gaming taxes and state and local taxes have helped stimulate commercial and residential construction, boost retail sales, improve schools, develop local infrastructure, and strengthen law enforcement efforts, among numerous other significant community improvements.

Just as casino gaming has spurred growth in these depressed communities, it is expected to stimulate the economy in Detroit when casinos open there next year. When they do, Michigan will become the 11th state in the nation to allow commercial casino gaming. Citizens there will discover, as they have in places like Tunica, Miss.; Joliet, Ill.; and Shreveport, La., that the industry can provide good jobs at good wages, reduce welfare dependency, and generate additional tax revenue for education, public safety, infrastructure and other important public programs.

Another significant development in the final years of this century is the National Gambling Impact Study Commission’s report on the impact of gaming. Given the dramatic growth and changes this industry has undergone during the past 20 years, it was important to examine and document that impact. The report, which will be presented to the president, U.S. Congress and state governors in June of next year, should provide a clear picture of the overall positive impact this industry has had on this country, given the large volume of data it has received documenting that fact. Again, because moralists opposed to gaming can be expected to put tremendous pressure on the Commission to reflect their views, we will continue to follow the Commission’s actions to ensure that accurate facts are heard throughout the process. There’s one thing we can be sure of: congressional critics of gaming will selectively use the report to continue to push their own narrow agenda.

One thing that is clear is that the Commission report will focus on the issue of disordered gambling and may well recommend increased spending on research and treatment. We are proud to say that the casino entertainment industry has been the driving force behind the establishment of an independent foundation and grants organization that has already brought a dramatic improvement in the quality and quantity of research on disordered gambling. The National Center for Responsible Gaming was established two years ago as the only national organization devoted exclusively to funding peer—reviewed research focused on disordered and underage gambling. In its first year of operation, the National Center awarded nearly $1.5 million in support of investigations into every aspect of this disorder. One of those studies, a meta—analysis (compiling the results of all the prevalence studies conducted over the past 20 years) conducted by Harvard Medical School’s Division on Addictions, is now considered the benchmark for gambling addiction research. In September, the National Institutes of Health responded to these initiatives undertaken by the private sector, issuing its own request for proposals relating to this disorder, which, to—date, had been under—funded and under—studied by federal and state government.

As a demonstration of just how far this field has come in just a few years’ time, the National Center will host a conference in February along with The George Washington University in Washington, D.C., to discuss “New Directions in Gambling Addiction Research.” Researchers currently funded by the National Center will make presentations on “The Neurobiology of Disordered Gambling” and “Behavioral and Social Science Research on Disordered Gambling Behavior.” The director of the National Institute on Drug Abuse (part of the National Institutes of Health) will give the keynote address — “Addiction is a Brain Disease and It Matters.” The conference will also include workshops on other issues currently being studied by National Center—funded investigators, such as youth gambling.

As I said before, the one thing I believe will come from the Commission’s final report is a recommendation that additional funds be dedicated to this type of research on disordered gambling. We can expect the report to focus not only on the casino entertainment industry, but also on the federal government (through the National Institutes of Health), state governments (which run lotteries) and the entire gaming industry, including the pari—mutuel industry and Native American casinos.

In Washington, many of the same issues the industry has tackled in previous years can be expected to return with the 106th Congress, which convenes next month. Tax issues affecting our member companies, employees and customers will always be one of our top legislative priorities. Whether a tax initiative takes shape as part of an opponent’s agenda, or because a tax—writing committee is seeking new sources of revenue to finance general tax cuts, we will continue to emphasize to policy—makers that our industry is already one of the most heavily taxed in the country.

Despite our success this year in crafting a legislative solution to the employee meals tax issue — working side—by—side with the Nevada congressional delegation, the Culinary Union and others — the IRS continues to pursue regulatory channels that would treat the value of employer—provided meals as taxable income for employees. This means that we will be revisiting this issue next year, working diligently with industry tax professionals and the union to ensure that the IRS does not distort congressional intent through unworkable and ill—founded guidelines.

Beyond tax issues, a proposal to ban Internet gambling, which passed the Senate overwhelmingly this year and was considered in the House, is expected to receive renewed attention next year. We did not oppose the bills because we agree that unregulated Internet gambling undermines the integrity we have achieved in this industry through extensive state regulation and a strong law enforcement presence. We also believe that decisions about gaming should be a “states’ rights” issue. Our concern about this issue, which we will continue to monitor next year, is unnecessarily broadly worded legislation interfering with legitimate uses of the Internet by the gaming industry. These legitimate uses would include those that do not involve actual bets or wagers, such as marketing sites on the World Wide Web, progressive slot machines linked by computers and common pool wagering.

Consumer bankruptcy reform also is likely to be a top issue next year. In the last Congress, both houses passed differing versions of legislation to make it more difficult for individuals to file for bankruptcy. Unfortunately, the warring sides on the bankruptcy issue — credit card companies on one side, consumer groups on the other — dragged the gaming industry into their battle. To deflect criticism of their marketing and lending practices, the credit card industry tried to paint the spread of gaming as one of the primary reasons for the rise in bankruptcies. Consumer groups responded, attacking credit cards, ATMs and other sources of credit for gambling purposes. While this year we defeated an amendment to treat gaming—related debts differently from other consumer debts, we expect the whole bankruptcy issue to return with the next Congress. This time, lawmakers could be fueled by recommendations from the Commission.

Just as we faced high—stakes battles over taxes, Internet gambling and bankruptcy reform this year, the gaming industry will need to defend itself in the next Congress against any unjust recommendations by congressional critics stemming from the Commission’s final report — whether they involve federal legislation or not. With that in mind, we continue to expand our congressional support beyond Nevada and New Jersey to encompass the newer markets in the Midwest and South.

The challenges the gaming industry can expect in the immediate future are not vastly different from those of the past several years. For every issue cited by our critics without credible research backing their claims, we will continue to seek the assistance of credible third—party researchers to investigate their claims and determine the validity of their results. For too many years, undocumented claims have gone unchallenged, later becoming commonly accepted beliefs.

One such case involved a purported link between suicide and the presence of gaming. This commonly held — but not scientifically documented — belief was reinforced in a 1997 study by a professor at the University of California—San Diego. Upon further examination, however, a research team at the University of California —— Irvine found serious flaws in the methodology of the original study — serious enough to invalidate the results. On the contrary, the UC—Irvine study, which was released in September, found no link between the presence of suicide and gaming, either for residents or visitors to gaming communities. Instead, it pointed to a pattern of high suicide rates in the West, which would account for high rates in both Nevada and Utah, one of only two states in the nation that doesn’t allow any form of gaming. (For a copy of this study, please fax a request to the American Gaming Association at 202—637—6507. The study is free to AGA members; the cost to nonmembers is $10 each.)

So what can we expect for the gaming industry in the last two years of this century? And what can we expect as we look toward the new millennium? It can be said that we will always have a battle to wage against a minority of the population that would like to see gaming eliminated altogether; this has been the case throughout history. This is not a battle to convince opponents to change their minds. For us, it’s a battle to demonstrate the positive impact of our industry on the majority of the population, which supports gaming, or at least supports the principle of personal choice and personal responsibility. As I have said consistently over the past three years, gaming may not be right for every community. It is not a magic economic silver bullet. But if it’s part of a carefully crafted economic plan, gaming can help revitalize communities and allow them to offer their citizens a higher standard of living and quality of life.

In conclusion, let me say that our industry has accomplished a great deal in the last few years. But it reminds me of a story about one of my favorite heroes, Winston Churchill, who as you know was rumored to imbibe a great volume of scotch every day. As the story goes, after one of his speeches at a campaign rally, he was approached by one of the leaders of the temperance movement, who said with a snarl, “Mr. Churchill, if this room were filled with the scotch you have drunk in the last year, we would be this high [hand gesture] in scotch.” At this point, Churchill looked at the level she indicated, looked at the ceiling, and said: “So much accomplished, so much left to do.”