A Look at the Future of Gaming

Thank you for being with us this afternoon. Last year I welcomed 54 member companies to our annual meeting. When the American Gaming Association opened its doors a little more than two years ago we had 14 members consisting exclusively of casino companies and gaming equipment manufacturers. Today, we have well over 100 members and the diversity of our membership has expanded to include financial and professional services, suppliers and vendors, state associations and publications.

This phenomenal growth reminds me of a line from the movie “Jaws.” You might recall the scene where one of the characters is chumming for the shark and suddenly this huge fish bolts out of the water—its mouth nearly the size of the boat—gobbles up the scraps, and disappears. The man who was chumming turns to the others and declares, “We’re going to need a bigger boat.”

The growth of the AGA is satisfying for a number of reasons. First and foremost, it demonstrates the industry’s commitment to representing its interests.

It shows our allies and foes alike that we are a formidable force in this country, a force that must be considered whenever matters of importance to the gaming—entertainment industry are raised. It also shows that we will stand shoulder—to—shoulder as a united force.

I think the best place to begin today is where I left off in my report at last year’s annual meeting. I noted at that time that we had a full agenda ahead of us. At the top of the agenda was the need to bring our positions before the National Gambling Impact Study Commission to make certain our views are recognized, and fully and adequately presented. We’re on task. From the minute the gavel came down opening the Commission for business, we have been vigilant in our efforts to make sure the gaming—entertainment industry has a voice in the process.

In this regard, when the Chair of the Commission announced her intention to nominate an executive director who was on record as being opposed to gaming, we made our extreme dissatisfaction known. The members eventually rejected this nominee. And when the Commission opened its hearings and invited public testimony we made sure our industry was well represented.

More than a dozen casino employees appeared before the Commission, some coming from as far away as Mississippi. These people were fine witnesses telling Commission members that jobs and benefits in the industry have made it possible for them to lead full and rewarding lives. The Commission also heard how employment in the gaming—entertainment industry has allowed many to get off welfare and unemployment. All in all, it was quite a day and we can all be very proud of the way these people represented us.

I also announced at last year’s annual meeting that the AGA would be sponsoring the development of white papers and studies that would help us counter the biased data that is trotted out and cited by opponents. To this end, late last year we released the results of a study conducted for AGA by Arthur Andersen. Entitled Economic Impacts of Casino Gaming in the United States, this study analyzed the macro—economic impacts of casino gaming and cited the tremendous contributions our industry makes to the national economy.

Among other things, the study found that casino gaming revenues have doubled since 1990. In 1995, the casino gaming industry reported between $22 billion and $25 billion in total revenues, according to Arthur Andersen. And for every $1 million in revenues, the industry creates 13 direct jobs. Furthermore, casino gaming companies are investing more than they make. The investment—to—profit ratio was 3—to—1 for major casinos in 1995. The study also reported that revenues resulted in payments of an estimated $2.9 billion in federal, state and local taxes.

This spring we issued Volume 2 of the Arthur Andersen study. The second volume is a micro—study that looked at three geographically—separate areas and examined the local economic impacts arising from the introduction of casino gaming in these areas.

The micro—study reported that thousands of new jobs were created in each area surveyed, and these jobs pay good wages and provide full benefits. It discovered also that a high percentage of the jobs are held by minorities and women. For every $1 paid in wages, the study documented that another 60 cents went to state and local taxes.

The hundreds and millions of dollars in tax revenues that casinos pay to cities and states each year are helping to lower taxes and pay for many basic civic needs. According to the micro—study, the introduction of casinos leads to growth in almost all areas, including retail sales, commercial and housing construction, and restaurants. And the creation of jobs by the casinos causes the number of people on public assistance to drop significantly.

None of this is a big surprise to those of us who have worked in the business, but now we have sound, hard facts to make our case.

Bolstering that information is another study conducted for the AGA that we released just this morning. Coopers & Lybrand conducted the first, comprehensive national survey of employees in the gaming industry. This Gaming Industry Employee Impact Survey focused on three principal areas: direct employment, job benefits and community impact. In each of these areas we find very positive results.

The survey indicated that direct employment in the industry has grown by approximately 16 percent on a national basis since December 1995.

That compares to 2 percent job growth in the nonagricultural sector and 3.5 percent growth in the services sector. In round numbers this means we have about 46,000 more people working in this country thanks to our business.

The survey also found that 63 percent of those surveyed indicated that they have been able to get better health care because of their jobs in the casino gaming industry. Of those who left prior jobs to take one with their present employer, 27 percent say they now have access to health care which wasn’t available at their previous job.

Approximately 43 percent surveyed have better access to day care. Sixty—five percent responded that they have been able to develop new job skills as a result of their jobs in the gaming industry. Seventy—eight percent indicated that their employer provided them with training to perform their jobs.

Perhaps most revealing were those findings relating to the community impact of employment in the industry. During the past year alone, gaming industry employees have purchased a projected total of 66,000 homes, 173,000 major appliances and 176,000 cars.

That’s a lot of money being injected into local economies. And that’s not all of it. The survey found that on average gaming industry employees and their families purchase, each month, approximately 840,000 meals in local restaurants; 1.4 million fast food, take—out or delivered meals; and make 1.3 million visits to entertainment venues, such as movies, sporting events and concerts. Survey responses show further that gaming industry employees contributed more than $58 million to charitable organizations during the past year.

And approximately 884,000 hours of volunteer time were donated to local charitable and community organizations by 92,000 employees, each month. That’s more than 10 million hours a year.

The results of these two studies should go a long way toward opening some eyes, and dispelling a lot of misleading and plain scurrilous information that is floating around about what our industry means to the economic and social welfare of this great country. I am very proud of what these studies show They show that we are part of the mainstream of America.

That we are solid citizens who pay taxes—a lot of taxes—which contribute to the progress of our communities. They show that we are the backbone of many communities.

I also spoke last year about our continuing commitment to represent the industry with regard to such issues as responsible gaming. We have done that. AGA was the driving force behind the foundation of the National Center for Responsible Gaming, the first nationwide funding source for scientific research on problem and underage gambling.

The Center is the result of a unique partnership between the industry and academia, and includes counsel from leading scientists and health experts, including governing Board Member Louis Sullivan, former Secretary of Health and Human Services.

A total of $4.5 million has been pledged to support the National Center for the next decade and it is succeeding in attracting the best researchers in the fields of biomedicine and social science.

This year, grants totaling $279,000 have been awarded to projects that will examine the differences in genetic make—up and brain chemistry between compulsive gamblers and non—compulsive gamblers. A $140,000 grant is supporting a study by Harvard Medical School that is looking at the larger question of who is at risk for gambling disorders. This groundbreaking project will produce the first reliable national estimates of the disorder among both adults and adolescents.

I’m sure many of you attended the AGA Responsible Gaming Certification Course that we offered yesterday when the AGA’s Responsible Gaming Task Force showcased its benchmark underage gambling prevention program. The Certification Course presented state—of—the—art responsible gaming programs of AGA members, provided information on problem and underage gambling, and offered attendees an opportunity to discuss their plans for and concerns about establishing and improving responsible gaming programs within their operations.

Last year, I reviewed various legislative and regulatory activities the AGA was involved with and mentioned that I expected a busy time in 1997. And so it has been.

On the legislative front we have been up to our necks in tax issues. The recently approved tax bill signed by President Clinton included a provision sponsored by Senator Richard Bryan allowing casinos to take full tax deductions on employee meals. We worked closely with Senators Bryan and Reid, and with Congressman Ensign on this.

The AGA also worked with several senators to oppose an amendment proposed in the Senate that would have eliminated current provisions relating to the deductibility of gaming losses. The amendment was ultimately withdrawn. And a tax bill that would have imposed a 35 percent tax on Indian tribes’ commercial ventures, including casinos, met with bipartisan opposition and never made it out of committee.

On other legislative matters, the AGA has been working with Senator John Kyl on the “Internet Gambling Prohibition Act of 1997.”

This measure would not only prohibit gambling over the Internet, but would also restrict certain non—gambling activities. A version of the bill has also been developed on the House side.

Activities in the regulatory arena have also kept us busy. We were involved in more than a year of negotiations with the US Treasury Department that resulted in the Department issuing new rules governing Currency Transaction Reports for Casinos. The new CTRC incorporates many of the elements recommended by the AGA’s Treasury Working Group.

AGA’s Treasury Working Group was also involved in the Treasury Department’s proposal for mandatory regulations regarding Suspicious Activity Report filings outside Nevada. The Treasury Department approved a Nevada regulation that requires filing a SARC report if a casino knows of an activity that is suspicious in the judgment of the casino. We also contributed to the thousands of comments on the proposed revisions to air standard quality for buildings. This activity convinced the American Society of Heating, Refrigerating and Air Conditioning Engineers to withdraw their proposed revision to the current standard.

This provision would have had profound and costly effects on gaming facility owners and operators.

Last year I also told you the AGA would be hosting an annual conference and trade show…which brings me up to the moment. The AGA is a co—sponsor of the World Gaming Congress and we have adopted it as the venue for our official annual meeting and exposition. Indeed, it has been a full 12 months of activity and accomplishment since many of us last met and the stage is set for a still busier year.

This brings to mind another story. It seems the great jurist Oliver Wendell Holmes found himself on a train but was unable to locate his ticket. The conductor—who recognized Holmes—hovered nearby as he searched through his luggage. Finally, when it became obvious that Holmes was not going to find his ticket, the conductor spoke up. “Mr. Holmes,” he said, “no need to bother yourself further. Your ticket is probably back in your office or in another suit of clothes. When you find it, just send it to the office.” Holmes turned to the man and replied in disgust, “The question is not where is my ticket. The question is where am I going?”

As we look ahead I believe it is vitally important for us to remain active…proactive in our efforts to put a face on our industry. We have made a good start in that direction with the studies I have mentioned and with the aggressive manner in which we have represented ourselves before the National Gambling Impact Study Commission. In the process, we have made those most directly involved with our industry—the media, lawmakers, regulators, opinion—makers—aware of information and issues that many have not had provided to them before.

This has also helped us relay our story to a wider audience and we must continue to pursue opportunities to do that wherever we find them.

We must also put our full and unqualified support behind the National Center for Responsible Gaming. This is an ideal vehicle with which to gain credibility and demonstrate our dedication to fighting problem gambling and to eliminating underage gambling altogether.

As always, the AGA’s attention will continue to be focused on state houses and on Capitol Hill where our success often fosters attention we can live without.

Gazing into my crystal ball at events just around the corner, I urge everyone to attend the member reception following this meeting, and I invite everyone to our seminars tomorrow. And please make plans to attend the Hall of Fame Dinner. After all, all work and no play makes for a very dull convention.

Thank you.