Thank you for that very kind introduction.
Of course, I have to question Bob Faifs’ sincerity in introducing me since I’m certain, I heard him asking someone a few moments ago, “Should we let our friends enjoy themselves a little longer, or should we have Frank’s speech now.”
Seriously, I am extremely pleased to be here because it gives me the opportunity to announce the release of a new casino industry economic study just completed by the prestigious international accounting firm, Arthur Andersen. It also gives me the chance to launch a very important undertaking by the American Gaming Association. An undertaking, in which all of you need to play a very important role.
But before I start, I do want to tell you that as I look out across this huge crowd, I find myself amazed at the growth of our industry.
Even though, for nearly 18 months now I have been traveling the country speaking on behalf of the gaming-entertainment industry, nothing brings home the importance of my job and the work of the American Gaming Association more than being among the people who make our industry work.
And you have done an incredible job.
Just as millions before you in a myriad of other industries, you have taken the American dream and made it come to life.
Which reminds me of a story that I believe applies to what has been accomplished in the last decade by our industry and points to what we must do to meet the new challenges we face.
As most of you know, I am a Nevadan. I went to high school and the university in Reno. I attended law school at Berkeley, then came back to Nevada and spent 17 years practicing law—a good deal of my practice involved gaming. What you may not know is that I was born in Brooklyn and spent my first 10 years there. In those days Brooklyn was galvanized by new immigrants.
Having seen the attitude those new citizens had about their new country, I have no trouble believing the story I heard recently.
Several decades ago, an elderly man arrived in America from Europe and after being processed at Ellis Island, he went into a cafeteria in New York City to get something to eat. He sat down at an empty table and waited for someone to take his order. Of course, nobody ever did. Finally, a man with a tray full of food sat down opposite him and told him how things worked.
“Start at that end,” he said, “and just go along and pick out what you want. At the other end they’ll tell you how much you have to pay for it.”
“I soon learned that’s how everything works in America,” the new immigrant later related. “Life is a cafeteria here. You can get anything you want as long as you’re willing to pay the price. You can even get success, but you’ll never get it if you wait for someone to bring it to you. You have to get up and get it yourself.”
That “get up an get it yourself” attitude is what makes me proudest of being a part of this industry. From the smallest casinos in Elko and Gardnerville, Nevada to the mega-resorts we’re building in Atlantic City and here in Las Vegas, to the riverboats along the Mississippi and the new casinos we may build in Detroit. The men and women of the gaming industry have demonstrated a willingness and ability to get up and get it themselves.
But there are great challenges before us and it will take that same attitude if we are to continue to prosper.
Yes, in less than a decade, the gaming-entertainment industry has become one of the nation’s most successful entertainment ventures, but with that phenomenal growth has come very serious challenges.
Some in the federal government see our industry as a rich tax source and a candidate for regulation. Moralists see us as, well, as evil incarnate. Legitimate questions about the Internet, Native American gaming and gaming on air carriers exist. All of these questions and others have resulted in the creation of the federal commission to study gaming. As I have said before I believe this Commission provides great opportunity once and for all to dispel many of the myths and stereotypes that have doggedly held up in the public perception.
As a means to resolve the myriad of economic questions concerning the industry, the AGA retained a national consulting firm with impeccable credentials to provide an in-depth, but succinct, economic analysis of our industry and its place in our national economy. We are releasing that study to the press and public today.
In the face of all the attacks upon our industry, it continues to grow. The Arthur Andersen study shows the casino industry’s revenues have doubled since 1990 and casinos alone generated upwards of $25 billion in total revenue in 1995. The number of visits to casinos rose from 125 million in 1994 to 150 million in 1995.
Every day of the year tens of millions of dollars are spent on building new casinos or expanding old ones.
While expansion into new jurisdictions has slowed somewhat compared to the early 90’s, primarily because of economic forces, the industry is healthy and continuing to grow.
All would seem well with the world.
Well, that is not necessarily so.
Our economic success is unassailable. The popularity of gaming as a form of entertainment is unquestionable.
However, while those signs and every survey taken in recent years demonstrates that the overwhelming majority of the public supports legalized gaming, a look within the survey numbers and into recent expansion referenda shows how soft that support is and how vulnerable the industry is to age-old criticisms. What that means is, that while those morally opposed to gaming are a clear minority, their arguments still resonate with a many Americans.
Even those who support legalized gaming, frequently are uneasy in that support.
Gaming’s colorful past and the nation’s puritanical history provide the foundation upon which critics use myths, stereotypes and misinformation to build unease.
Nothing has brought this lesson home more clearly to me than the year-long battle we have just completed over the creation and make-up of the national gaming commission. Yes, in the end Congress created a commission that should allow a fair and balanced study of the industry, but it was no certain thing. And believe me, our allies were few and very difficult to find at times.
We learned many lessons.
We always knew that there is a very real, strong and vocal opposition to our industry, but we learned how politically powerful they can be. Many believed that the power of our contributions to the economy were all that we needed, we learned, however, that groups with strong voter blocks and political influence are more important.
We knew over the last few years that our opponents were spreading half-truths and outright lies about the industry, but learned that even when those half-truths and outright lies were exposed, the media didn’t always get or deliver the correct message. The industry was so late in putting together an organization like the AGA that, even today any reporter that researches our industry on the Internet gets mostly negatives.
We had a recent example of that lesson just this weekend when Terry Lanni and I represented the industry on Face the Nation. I have known CBS’s Bob Schieffer for years and consider him to be one of the nation’s preeminent journalists, but he asked questions based upon outdated, discredited statistics propagated by opponents of gaming.
Governor George Voinovich of Ohio used other off-the-wall statistics and arguments to support his anti-gaming case. In fact, his support of the economic substitution theory is among the most ridiculous of positions taken by our opponents. Unfortunately, I didn’t have the opportunity at the time to use the new Andersen study to refute.
(You may have noticed 30 minutes with six people on a show doesn’t always provide for the opportunity to correct every factual error.)
Let me take a moment now to say what I would have said Sunday had we had time. First of all, those who support this substitution effect theory, (i.e. that there is no economic benefit from casino gaming since money that is spent on casino gaming by consumers is necessarily not spent on other goods and services) never explain how a dollar spent on gaming entertainment is different from a dollar spent on say, a baseball game, a movie or a Broadway play. Furthermore, the Andersen report says inherent in this argument is the premise that the economy is fixed and that real personal incomes do not grow over time. Extending this premise to the conclusion that casino gaming is simply a reallocation from other consumer spending is problematic and wrong for four reasons:
First, the size of the U.S. economy is not fixed; rather, it tends to naturally expand over time and has grown each year over the last 50 years.. Additionally, per capita disposable income has also increased leading to substantial increases in personal consumption expenditures.
Second, at the macroeconomics level, the industries which some maintain have been affected by consumer spending on gaming have grown concurrently with the gaming industry. You need only to review sales tax revenue increases in the appropriate jurisdictions to prove this point.
Third, economists have known for centuries that for an economy to grow, it must produce the goods and services which consumers prefer.
Fourth, casino gaming relies more heavily than most industries on domestic labor and domestic supplies (including capital) - further, spending by foreigners in U.S. casinos also represents an export activity for the domestic economy.
In other words, the economy is expanding as it has for every year over the last 50 years, the areas of consumer spending that we are supposedly hurting are growing (even in the areas where casinos exist)—just examine statewide sales tax revenues, they prove the point–, we’re providing a service the consumer wants and we’re using domestic labor and suppliers to do it. Ergo. We are helping the economy not hurting it.
The Andersen study will help us deliver that message, but it will still be a long time before we successfully get the message out. Not because the Bob Schieffers and George Voinovichs deliberately use fabricated statistics, but because we have so much bias and misinformation to overcome.
I truly believe the national gaming commission provides us the opportunity to deliver the message, but we cannot afford to wait and the AGA cannot do it alone.
The enemy we face is not the religious zealots who oppose our industry, nor is it the politicians who may seek to gain political advantage from pandering to those morally opposed to gaming.
The enemy we face is a serious lack of understanding of the gaming-entertainment industry and a failure to appreciate what the industry means to the economic well-being not only of the cities and states with casinos, but to the hundreds of other communities who provide supplies and services to the industry. Communities that are scattered across the nation.
That is the bad news. The good news is that we have an incredible story to tell.
We must put as much energy into bringing that message to opinion leaders, elected officials and the public as we have in building this great industry.
We must carry our version of who the gaming-entertainment industry is as aggressively as our opponents have carried their anti-gaming message.
Let us begin to put the emphasis on the industry in gaming-entertainment industry. We have done a marvelous job of marketing and promoting the gaming and the entertainment component. And that is as it should be. After all that is what we are selling to the customer. And, as I said, they are buying it in record numbers. Yes, gaming entertainment is what we are. It is what we are selling, but is not who we are.
We, my friends, must begin to shine the light on the “industry” part of the gaming-entertainment industry. We are men and women who are carpenters and dealers; chefs and waiters; carpet makers and dancers; ranchers and croupiers and. You get the picture.
It is time we began to put a face on the gaming-entertainment industry. The data contained in the Andersen study will serve as a spring board for the AGA’s “Putting A Face on the Industry” campaign.
As it stands today, it is far to easy for political leaders to listen to our opponents. After all, to their minds the gaming industry is made up of only high rollers who can afford it.
In our new campaign, we will show our audiences the many faces of the industry, with special emphasis on our employees, the non-gaming companies and employees that serve gaming and our loyal customers.
The Andersen study found that the casino industry (excluding Native-American casinos) alone had 284,100 direct employees and that another 425,000 in-direct jobs were created by the industry in 1995. That is 709,000 jobs created by the casino industry alone. When Native American casinos, lotteries, cruise ship gaming and para-mutual gaming are included there are more than one million jobs put in danger by gaming critics.
That is one million men and women who have jobs and provide for their families because of the gaming-entertainment industry. We need to make certain decision makers and those to whom they listen, including the voters, see that these are people just like them. It is also essential that the industry is tied to other more “traditional” industries. These relationships demonstrate gaming has a far reaching impact. Emphasizing the corporate nature of the industry addresses many of the outdated images of who owns gaming companies. We need to make it crystal clear that this is a business owned by stockholders. (In many cases a majority of stock is held by institutional investors), managed by superb corporate leaders and operated on a day-to-day basis by hard-working Americans.
What else did the Andersen study tell us about who the casino gaming industry?
Well, we pay good wages. The average casino gaming wage, across the nation, was $26,000 last year. Compared to $20,000 in other amusement and recreation industry sectors; $16,000 per year in the hotel/motel industry and $22,000 in the motion picture industry. In all we paid, $10 billion in direct wages in 1995. And another $11 billion in wages was paid as a result of the indirect jobs created because of the industry.
We create more jobs per million dollars in revenues than many other well known industries that provide discretionary products or services. For every $1 million in revenues generated 13 jobs are created by our industry. That compares with seven jobs per million in the video industry, five jobs per million in the cellular phone and cable TV industries and three jobs per $1 million in revenues for the soft drink industry.
We are also creating jobs in other sectors. Casino construction and capital expenditures contribute 125,000 construction level jobs.
We are putting our profits back into the business. The entire casino industry spent $12.8 billion on capital investments from 1993 through 1995 and the 30 largest casino companies invested more than three times their combined net incomes in 1995 of $1.8 billion. That is a phenomenal number. As a point of comparison, just last weekend the Washington Post ran a front page article which trumpeted a little more than $1 billion in capital investment in new sports stadiums nationally.
And unlike many other major industries that rely on foreign labor—the casino gaming industry creates jobs in the United States.
And, we have a better balance of trade than the U.S.. Bringing in $1 billion a year in revenues from foreign gamers and guests.
The 19th century writer/humorist Josh Billings once said: “Life consists not in holding good cards, but in playing those you hold well.” Not to quarrel with Mr. Billings’ witty statement, but playing good cards well always beats playing bad cards well.
And, we have the good cards it is now up to us to play them well. The AGA intends to do its part through our putting a face on the industry campaign.
We will soon undertake a nation wide analysis to show us exactly where those 400,000 plus indirect jobs are located. There are what most of us call casinos in 25 states, but we reach into practically every part of the country. The Andersen study, just for the sake of illustration, lists different occupations in all 50 states . From the leather worker in Montana to the textile worker in Alabama; from the brewery supervisor in Wisconsin to the flight attendant in Hawaii; and so on and so on.
The $25 billion in revenue our industry generates and the 150 million visits to casinos all mean jobs.
Jobs that are held by people. Jobs held by people who vote. We intend to enlist them in our cause and introduce them to their elected officials and to the American public.
All of you need to help us do that.
As I said earlier, the gaming-entertainment industry must do as good a job of telling the public the story of who we are as we have done in selling what we are. When we do that then we will have come a long way toward protecting this industry we all care so much about. When we do that it will be much easier to overcome the half-truths and full lies that too many people believe about our industry.
Let me conclude with a tale of two visions of the gaming industry.
The tale comes from my experience in politics and both visions are provided by a fictitious political candidate asked to express his views on gaming. Being a typical politician he hedged his bets and said:
“I had not intended to discuss this most controversial subject at this particular time. However, I want you to know…I take a firm stand on every issue…regardless of how I feel about it. Now gambling, brother, here’s where I stand on this burning question.
“If you mean playing a high-risk game of chance with all your moral fiber, betting the house, going for broke, shooting craps with two-time losing saps, cutting the cards with your loving and unknowing family in the balance, getting your thumbs broken by wiseguys with crooked noses, sporting a new pair of concrete goulashes in the bottom of the river, coming up lemons, losing your shirt along with your morals and Christian ways, spinning Satan’s wheel, squandering all your money next to a Playboy bunny, screaming “all or nothing” at the top of your lungs knowing full well that if you win you won’t buy barefooted baby those new pair of shoes but will shout “let it ride” in the next breath—then, sir, I am against this devil’s playground known as a casino and the heathen’s game of high stakes with all my worldly power.”
“However, if you mean a little friendly wager, a gentlemen’s bet, dealing a few hands with some good time Charlies, harmlessly hazarding a guess, spinning the wheel of fortune, pulling on the lever to happiness, clapping as old ladies yell “jackpot” with such cheer in their hearts, letting the chips lie where they may, hanging a pair of fuzzy dice from your rearview mirror, engaging in an innocuous little game of chance that generates billions of dollars worth of revenues into the good old U.S. of A’s economy, revenues that are used to provide tender care for little crippled children, our blind, our sick and to build highways, hospitals, schools—then brother, I’m for it. After all, isn’t our own precious God-given life a gamble.”
“This, sir, is my stand. I will not…retract one word, nor will I compromise. You asked for my stand on this issue. There it is.”
Today, it is the first vision of gaming that predominates. We must convince that politician that he has no reason to hedge his position.
By putting a face on the industry we will show who the gaming industry is. That we are mothers and fathers who must put food on the table, buy school clothes and save for the future. We raise families, go to church, buy TVs and refrigerators and contribute to the community.
What we are is a truly great entertainment value. Who we are the people who make it all happen. When the American public sees both the what and the who we will all profit.
As an industry we are in an outstanding place right now. But as Oliver Wendell Holmes said: “The great thing in this world is not so much where we are, but in what direction we are moving.”
I leave here today determined to move forward. Are you with me?