Testimony Before the Rhode Island Special House Commission to Study Gambling

Mr. Chairman and members of the commission, I appreciate the opportunity to address you today. My name is Frank J. Fahrenkopf, Jr., and I am president and CEO of the American Gaming Association, the national trade organization representing the commercial casino segment of the gaming industry, which consists primarily of publicly held casino companies listed on the New York and NASDAQ stock exchanges, including most of the names consumers are most familiar with in our industry: Harrah’s Entertainment, MGM MIRAGE, Park Place Entertainment and many others.

I’d like to state upfront that I am not here to advocate for additional gaming in Rhode Island; that is for the people of this state to decide. The AGA’s mission is to represent our industry on federal legislative and regulatory issues and, more relevant to our discussion here today, to serve as an information resource addressing the many misperceptions that exist about our industry. The reason I am here today is to respond to claims that have gone unanswered in too many of the debates over gambling expansion in our states. But I don’t expect you to just take my word for it. Numerous independent scholarly and governmental studies have been conducted to investigate these allegations, and in my time here today I would like to share some of the findings from these studies.

Overview of the Gaming-Entertainment Industry

Economic development is a top of mind concern for policy-makers today, so I’d like to begin by providing you with an overview of the gaming industry today, specifically the contributions made by the commercial casino industry in providing quality jobs, economic development and capital investment in the communities where we operate.

The gaming industry in this country has grown dramatically during the past few decades. There are now state-run lotteries in 38 states plus the District of Columbia; some form of pari-mutuel betting in 40 states; commercial casinos in 11 states; Native American Class III casinos in 23 states; and charitable gaming in 46 states and the District of Columbia. The entire industry employs, directly and indirectly, more than 1 million Americans, and in 2001 had gross income of just over $63 billion.

These numbers are indicative of the popularity of gaming among Americans. The National Gambling Impact Study Commission report issued in 1999 sums it up best, noting:

It is clear that the American people want legalized gambling, and it has already sunk deep economic and other roots in many communities. Its form and extent may change; but gambling is here to stay.

(NGISC Final Report, Executive Summary and Chapter 1: Overview)

The federal commission also stated:

As it has grown, it [gambling] has become more than simply an entertainment pastime: the gambling industry has emerged as an economic mainstay in many communities and plays an increasingly prominent role in state and even regional economies.

(NGISC Final Report, Chapter 3: Gambling Regulation)

The commission’s view is consistent with nationwide public opinion polls:

A 2001 survey conducted for the AGA by Democratic pollster Peter Hart and Republican pollster Frank Luntz found that nearly 80 percent of Americans approve of casino gambling for themselves or others.

Creating Jobs and Strengthening the Economy

The commercial casino segment of the industry directly employs approximately 365,000 people, who earned $11.5 billion in 2001, including benefits and tips. Those figures do not include the more than 450,000 construction-related and indirect jobs generated by casinos from local purchases of goods and services.

The commercial casino industry contributed $25.7 billion in total revenues to the economy in 2001. Although we don’t have more recent figures, a 1997 PricewaterhouseCoopers study commissioned by the AGA found that from 1993 to 1995, our industry spent almost $13 billion for construction and purchases of property, furniture and equipment, including improvements and refurbishments. The investment-to-profit ratio for the major casino companies is often as high as 3-to-1. In Atlantic City alone, casino gaming generated investment of more than $6 billion since its inception in 1978. In Mississippi, more than $7 billion has been invested in construction of casinos, hotels, restaurants, showrooms, retail outlets, golf courses and other amenities. As you can see, this industry has a significant impact across the entire economic spectrum.

Generating Tax Revenue for Community Improvements

Along with creating jobs and generating capital investment in our communities, the commercial casino industry pays its fair share of taxes, which help fund education, urban renewal, infrastructure improvements, benefits for the disabled and the elderly, historical renovation and other programs.

In 2001, commercial casino companies paid $3.6 billion in gambling privilege taxes to federal, state and local tax governments, which doesn’t include the income, real estate and other normal taxes paid by all businesses, nor does it include the billions of dollars in taxes paid by our employees.

As the federal commission report indicated:

The National Gambling Impact Study Commission heard from a number of local officials in jurisdictions where casinos are located. Among those who informed the commissioners with their testimony were Elgin, Ill., Mayor Kevin Kelly, Mayor Scott King from Gary, Ind., as well as mayors from Bettendorf, Iowa, and Alton, Ill. The commission also heard from Mayors A.J. Holloway, Bobby Williams, Bob Short and Eddy Favre of Biloxi, Tunica, Gulfport and Bay St. Louis, Miss., respectively. Without exception, these elected officials expressed support for gambling and recited instances of increased revenues for their cities. They also discussed community improvements made possible since the advent of gambling in their communities and reviewed the general betterment of life for the citizenry in their cities and towns.

(NGISC Final Report, Chapter 7: Gambling’s Impact on People and Places)

Even with all the benefits that can come from casinos in the form of tax revenue, a delicate balancing act is required in order to sustain that growth. Governments that establish unreasonable tax rates cannot expect local businesses to thrive; for some it threatens their very existence. Since virtually all of the large casino operators are now public companies, they must answer to shareholders, so exorbitantly high tax rates or excessive tax increases usually result in fewer jobs created and less capital investment.

While other businesses can simply pass along cost increases to customers, casinos cannot, creating an uncertain environment that is unattractive to investors.

Providing Social Benefits and Second Chances

Beyond creating jobs and contributing tax revenue, our industry helps improve quality of life for hundreds of thousands of employees and their families by elevating job skill levels, most of which are transferable to other types of employment. In addition, we provide special education and training, along with benefits such as top-notch health care and day care programs.

Because of historically high rates of unemployment and underemployment in many of the communities where we operate, we also have been able to give many of the people there a second chance.

The final report of the federal commission confirmed what we in the commercial casino gaming industry already knew: Casinos have been especially effective in economically depressed communities. The commission stated in its recommendations that:

…state, local, and tribal governments that (when considering the legalization of gambling or the repeal of gambling that is already legal)…should recognize that especially in economically depressed communities, casino gambling has demonstrated the ability to generate economic development through the creation of quality jobs.

(National Gambling Impact Study Commission Final Report, Recommendation 7.1)

One of the best indicators of success in this area is the number of people on public assistance. As the research initiated by the commission found, “unemployment rates, welfare outlays, and unemployment insurance decline[d] by about one-seventh” in gaming communities.

And although income in those communities stayed the same, more came from paychecks and less from government checks than before.

A 1997 industry study documented similar drops in the welfare rolls in the three new gaming jurisdictions it examined - Joliet, Ill.; Biloxi/Gulfport, Miss.; and Shreveport/Bossier City, La. The study found that in Joliet, Ill., after a steady increase in the first five years of the 1990s, the number of AFDC recipients has dropped by more than 14 percent since 1994, and the number of food stamp recipients in Will County has dropped 14 percent since 1993.

In Shreveport/Bossier City, Aid to Families with Dependent Children (AFDC) benefit payments decreased 14 percent in 1995 - a year after the introduction of gaming - and fell another 15 percent in 1996. In 1994, the average number of food stamp recipients was 56,000. By 1995, the number of recipients had fallen 15 percent to 48,000.

In Mississippi, the average number of AFDC recipients in the Biloxi/Gulfport area dropped steadily every year since casinos opened in 1992, as did benefit payments. And the number of people using food stamps declined from 25,000 averaging $22,000 in benefits during 1992, to 21,000 using an average of $19,000 in benefits during 1996.

In a separate study of Tunica County, Mississippi, results showed that since casinos opened in 1992, AFDC payments dropped 55 percent, food stamp distribution declined by almost 80 percent and child support payments doubled. (Gaming’s Economic Impact on Tunica County, Tunica Convention and Visitors Bureau; p. 6)

The PricewaterhouseCoopers survey of employees in the commercial casino industry mentioned earlier also found a number of important indicators related to social impact. Among those findings are the following:

• More than 8.5 percent of employees responding to the survey reported that they have left welfare as a result of their employment.
• Approximately 63 percent of employees surveyed indicated their jobs in the casino gaming industry provided improved access to health care benefits. Virtually all of the companies surveyed offered health care to their employees.
• Approximately 43 percent have better access to day care for their children.
• About 78 percent indicated that their employer provided them with training to perform their job.
• Gaming employees contributed more than $58 million to charitable organizations in the year prior to the survey.
• And finally, approximately 884,000 hours of volunteer time is given every month to local charitable organizations and community organizations by more than 92,000 employees.

As an industry, we are unparalleled in our ability and our determination to hire large numbers of unemployed individuals and to provide those new employees with job and life skills training to ensure that they succeed in their efforts.

This is a good place to note that we in the gaming industry offer greater opportunities for all Americans than do most other businesses in this country. A very high percentage of jobs in gaming are held by minorities and women. According to the same industry survey I referred to earlier in my remarks, minorities constituted 21 percent of the casino work force in Joliet, Ill., and 58 percent were women. In Bossier City, La., minorities constitute 56 percent of the work force at the casinos. And women comprise more than half the work force. In Biloxi, Miss., 35 percent of the casino employees are minorities and 60 percent are women, which is considerably higher than the average for this area.

Businesses owned by women and minorities also benefit greatly from procurement by casinos, which consistently exceeds minimum percentage rates set by government authorities. Through an industrywide Diversity Task Force, the AGA is working to improve these numbers further.

We have made a special effort to include the disabled in our work force. In Atlantic City, N.J., for example, 8.2 percent to 12.3 percent of casino employees are disabled. A study of the industry’s hiring practices reported:

… the conclusion must be that the percentage of disabled persons employed at the Atlantic City casinos compares favorably with the percentage of persons in the labor pool, no matter how that pool is determined.

(Bureau of Economic Research at Rutgers University, Limitations in the Workplace: A Survey and Study of Atlantic City Casinos, Report to the New Jersey Casino Control Commission, October 1998, p. 4)

We have a talented, diverse work force. We are proud of our employees and pleased to be able to provide them with the benefits they deserve. We are also proud of what they give back to the community.

An Engine of Economic Growth

The bottom line shows that the commercial casino gaming sector is a dynamic, growing contributor to economic growth in this country, and it provides solid, meaningful employment to hundreds of thousands of Americans. I’m not providing you with information that has been developed by an economic model. This is not a theoretical discussion concocted in an ivory tower. I’m presenting you with hard, solid, irrefutable evidence available from the many studies I’ve mentioned.

The generation of hundreds of thousands of jobs, billions of dollars in tax revenues and massive commercial development by the casino gaming sector translates into generous social benefits for many Americans … and not only those who work directly for the industry.

The extent of those benefits can vary depending on the type of facility allowed in your state. The federal commission was clear and unequivocal in stating that “destination type resorts,” which would include hotels, restaurants, shopping, entertainment and other amenities, offer major economic advantages and benefits compared to “convenience-type gaming,” which don’t provide a comparable number of good-quality jobs or economic development.

Weighing Benefits and Costs

Now that I have provided you with an overview of the benefits we provide to our communities, let me next address the claim of enormous social costs associated with our industry. Again, I will cite the federal commission’s research.

The NRC found that ‘[G]ambling appears to have net economic benefits for economically depressed communities.” Adam Rose, a professor at Penn State University who also conducted research for the commission, found that “… a new casino of even limited attractiveness, placed in a market that is not already saturated, will yield positive economic benefits on net to its host economy.” And NORC determined that “[t]hose communities closest to casinos experienced a 12% to 17% drop in welfare payments, unemployment rates and unemployment insurance.’ Its community database analysis also found that spending on social services was no different in places closest to casinos than in places further from casinos.

While opponents of our industry have made outlandish claims about social costs of $200 billion annually, the commission-funded research conducted by NORC placed the annual cost to society of pathological gambling - from casinos, lotteries, pari-mutuel wagering and charitable gaming, as well as illegal gambling - at about $5 billion. While $5 billion is not an insignificant number, it is helpful to keep it in perspective with the annual cost for alcohol abuse, which is $166 billion, and the annual cost for heart disease, which is $125 billion.

As the University of Maryland found in a 1997 study of the impact of casinos on crime and other social problems, social costs on the Gulf Coast area of Mississippi and in St. Louis have seen little change due to the advent of gaming. Interviews with social service agencies indicated modest increases in the demands for their services. In fact, the principal agency providing mental health services in the Gulf Coast area reported that, ‘[N]o more than 1 percent of its caseload involved gambling problems; nor did the officials believe many cases had even an indirect relationship to gaming activities.” In St. Louis, the local family service agencies did not experience an increase in caseloads, as they had expected, and … expressed their surprise at how little indication they had of any effect from casinos.’ (The Impact of Casinos on Crime and other Social Problems: An Analysis of Recent Experiences; by Peter Reuter; School of Public Affairs, University of Maryland, College Park; January 1997; p. V)

Addressing Problem Gambling

I’d like to address a very legitimate concern, and that is about disordered gambling. First and foremost, it’s important to remember that the vast majority of people - 99 percent -gamble for entertainment and set a budget. As the National Gambling Impact Study Commission stated in its 1999 final report, ‘[T]he vast majority of Americans either gamble recreationally and experience no measurable side effects related to their gambling, or they choose not to gamble at all.’

That said, we recognize that a small percentage of the population does not gamble responsibly. Despite opponents’ exaggerated claims that have been as high as 11 percent, we now have the facts before us. The prevalence of pathological gambling is estimated to be between 0.6 percent, according to the federal commission’s research, and 1.29 percent, according to a 1997 industry-funded study by Harvard Medical School’s Division on Addictions. With the National Research Council of the National Academy of Sciences estimating the prevalence at 0.9 percent, the consensus is that about 1 percent of the U.S. population has a clinically diagnosable mental health disorder known as pathological gambling. Let me be blunt: None of our companies wants customers with gambling disorders.

Since our organization was founded nearly eight years ago, we have had a commitment to addressing disordered gambling. This has been a commitment in words and deeds, as I will outline later in my remarks.

Adding to the complexity of this disorder is that, according to the nation’s top scientific experts, a majority of those who are pathological gamblers also experience other problems, such as mood disorders, substance abuse and behavioral disorders. As a result, it’s very difficult to gauge the extent of this problem, or even to know whether it’s a distinct disorder. This is what the federal commission concluded said on this topic in its final report:

Just as only net economic and social benefits should be included on the positive side of legalized gambling’s ledger, only net social and economic [costs] should be tallied on the negative side. Determining net costs associated with pathological gambling, for example, requires an understanding of what researchers call ‘co-morbidity,’ described as ‘the occurrence of two or more disorders in a single individual.’

Reviews of the literature indicate that substance use disorders, mood disorders such as depression, suicidal thoughts, antisocial personality disorder, and attention-deficit hyperactivity disorder may often co-exist with pathological gambling. To the extent that researchers can isolate the effects of pathological gambling on, say, marital stability from the effects of co-existing conditions like drug abuse can researchers determine the net negative effects of pathological gambling on marriages.

This task is challenging. As the NRC explains, ‘Evaluating studies of conditions that [co-occur] with pathological gambling requires careful formulation of research questions such as: Does gambling precede the onset of other disorders? Do certain disorders exacerbate pathological gambling? Is there a pattern of symptom clustering? Is the severity of one disorder [related] to the other? And is a standard assessment instrument used to collect data for both gambling and the comorbid condition? Very few pathological gambling studies have addressed even one of these questions.’

(NGISC Final Report, Chapter 7: Gambling’s Impact on People and Places, p. 4)

Against that backdrop, I’d like to discuss some of the allegations that have been made about casino gambling and the extent of disordered gambling.

There is often an assumption that increased availability of casino gambling will lead to an increase in pathological gambling. Despite all the accusations by gambling opponents and reports by the media, the scientific evidence does not support that position. For example, a government study that compared prevalence rates in Connecticut in 1991 versus 1996 reached the following conclusion: “…probable pathological gambling rates may actually have fallen in Connecticut, and have certainly not risen, during a period in which one of the largest casinos in the world was opened in the state.” Similar results were found in follow-up studies conducted in South Dakota, Louisiana, Michigan, Minnesota, Oregon, Texas, Washington, British Columbia, New Zealand and South Africa. Nationally, the 1976 federal gambling commission found that the number of “probable compulsive gamblers” was 0.77 percent of the U.S. adult population, virtually identical to the findings of the latest federal commission, despite the significant growth of gambling opportunities during that time.

If pathological gambling prevalence rates increased along with gambling availability, it would seem logical to see an increased demand for social services in communities with casinos. However, as I indicated earlier, the federal commission’s community database analysis found that spending on social services was no different in places closest to casinos than in places further from casinos.

Another erroneous assumption about our industry is that the more people gamble, the more likely they are to become pathological gamblers. In fact, the NORC research found that while many more people have gambled at least once in their lifetimes (68 percent in 1975, compared to 86 percent in 1999), the number of people who have gambled in the past year has remained relatively unchanged (61 percent in 1975, versus 63 percent in 1999). As the Public Sector Gaming Study Commission pointed out in its final report issued this year, ‘[T]hese findings mean that Americans have become much more likely to have experimented with gambling, but this experimentation has not turned them into people who gamble regularly or routinely.’

Gambling opponents also claim that a high percentage of our revenue comes from pathological gamblers. While some of these unfounded claims have gone as high as 50 percent, I again point you to the commission report’s research findings. NORC estimated that 5 percent to 15 percent of the industry’s gross revenues were from pathological gamblers, with the higher number attributed to pari-mutuel facilities, not casinos. Our companies have said it time and time again. We don’t want customers who bet over their heads, and we have put in place extensive programs to educate our customers and employees.

Industry Initiatives

As I indicated earlier, the commercial casino industry is committed to working for the development and implementation of education, prevention and treatment programs to address disordered gambling. Our actions have been taken in consultation with scientific experts, who have told us that our role should be one of education and funding research to learn more about gambling disorders in order to improve prevention and treatment. Our dedication is demonstrated by our actions, which I’d like to describe for you now.

One of the first initiatives undertaken by the AGA when it was founded in 1995 was to create an independent organization that would fund peer-reviewed research on disordered gambling. The National Center for Responsible Gaming (NCRG) was established in 1996 and since then has awarded $3.7 million in research grants to more than 20 prestigious academic institutions and research organizations. In 2000 it awarded a $2.4 million contract to Harvard Medical School’s Division on Addictions to establish the Institute for Research on Pathological Gambling and Related Disorders to carry out the research initiatives first established by the NCRG. The research conducted by NCRG investigators - at the direction of an advisory board composed of scientific researchers and treatment experts - is helping the scientific community gain a better understanding of the causal factors related to disordered gambling, improve diagnostic methods and identify empirically valid prevention and treatment programs. Casinos, vendors and suppliers, a foundation and a union have committed more than $7 million to the National Center since its inception just seven years ago.

The National Gambling Impact Study Commission acknowledged in its final report that, ‘… the largest source of funding for research on problem and pathological gambling is the casino industry.’ (National Gambling Impact Study Commission Report, Executive Summary)

Beyond funding research, the AGA also has developed public and employee education programs to raise awareness of disordered gambling and promote responsible gaming. Let me interject here that these activities are nothing new for the commercial casino industry. Our member companies have a history of encouraging and instituting responsible gaming practices. Harrah’s Entertainment, Inc., pioneered responsible gaming programs in the 1980s with its two now widely used programs, Operation Bet Smart and Project 21. Since the AGA was formed in 1995, we have built on those programs, spearheading a Responsible Gaming National Education Campaign to encourage the establishment and promotion of responsible gaming practices industrywide.

As a key component of this program, our industry developed and adopted comprehensive, voluntary guidelines to address all aspects of disordered and underage gambling. The AGA also has adopted voluntary guidelines for missing and unattended children, as well as advertising and marketing. The advertising and marketing guidelines are part of an overall program we are developing to ensure appropriate advertising and marketing of casino gaming to adults and avoid content that specifically appeals to children and minors.

The AGA has spearheaded numerous events to focus employee and public attention on this issue. Every year, the first week of August is designated ‘Responsible Gaming Education Week.’ During this annual event, companies devote activities to increasing awareness about disordered gambling and the importance of responsible gaming.

The AGA also has conducted seminars and workshops for employees. The AGA has sponsored responsible gaming certification training, and, in collaboration with third parties, including the National Center for Missing and Exploited Children, state problem gambling councils and Harvard Medical School’s Division on Addictions, we have conducted workshops on issues of mutual concern. Just last year we launched two new initiatives: the Responsible Gaming Quarterly newsletter and a new lecture series, which brings experts to different gaming jurisdictions to speak to casino employees, regulators, clinicians and others on responsible gaming topics of interest to that community.

The AGA has developed a variety of print materials intended to teach gaming industry employees about disordered gambling and how the problem should be addressed. These materials include a comprehensive Responsible Gaming Resource Guide, which is a collection of industry best practices, as well as the PROGRESS Kit, which includes sample brochures, posters and training curricula.

I might add that our responsible gaming activities have spurred some states to adopt creative new ways to address this problem. In Missouri, for example, the casino industry has forged a diverse coalition involved in the gaming industry in that state to raise public awareness of responsible gaming. The Missouri Alliance to Curb Compulsive Gambling, whose members include the Missouri Riverboat Gaming Association, Missouri Lottery, state department of mental health, Missouri Gaming Commission and Missouri Council on Problem Gambling Concerns, should be a model for other states to follow.

If you decide to allow casino gambling in Rhode Island, I would encourage you to follow the lead of other states - and a recommendation of the federal commission - in dedicating a portion of tax revenue toward disordered gambling research, education and treatment programs. In doing so, I would also encourage you to treat gambling disorders as you would any other public health issue, and conduct a needs assessment to determine the necessary allocation.

Other Alleged Social Costs

Opponents of our industry link gaming with a host of other alleged social costs, none of which has been proven by independent government studies. In fact, the opposite is true, although you won’t hear gaming opponents discuss these findings. As with pathological gambling, it is important for you to weigh this information about alleged social costs.

Bankruptcy

With a concurrent growth in legalized gambling and bankruptcy filings, opponents of our industry have added bankruptcy to their list of social ills caused by gambling, despite the fact that the evidence proves them wrong.

The most compelling evidence to date refuting an alleged link between gambling and bankruptcy is a study issued in 1999 by the U.S. Treasury Department, which made the following conclusions:

• There is no connection between state bankruptcy rates and either the extent of or introduction of casino gambling.

These findings support research conducted for the federal commission. A study found that ‘… the casino effect is not statistically significant for any of the bankruptcy … measures.’ (Meaning the level of bankruptcies in cities closest to casinos is no greater than the level of bankruptcy in places further removed from casinos)

(National Opinion Research Center at the University of Chicago, Gemini Research, The Lewin Group, Gambling Impact and Behavior Study, Report to the NGISC, April 1, 1999, p. 70)

The state of Indiana created its own gambling impact study group in 1998, and it too evaluated the bankruptcy issue. Its consultants concluded in December 1999 that ‘(t)here is no evidence…that persons who file bankruptcy are more likely to engage in gambling or to have problems with gambling than a random sample of adults.’ Indeed, most bankruptcy petitioners in Indiana who gamble did not believe that gambling contributed to their bankruptcy.

The State of Louisiana also prepared a comprehensive evaluation of the costs and benefits of gambling in 1999. Its bankruptcy study attempted to determine if gaming losses could be identified as a contributing cause of the increase in personal bankruptcy filings since casinos opened in Louisiana in 1994, an increase that in fact was experienced nationwide. Less than 2 percent of petitioners for bankruptcy indicated any losses to gaming during the period immediately preceding filing for bankruptcy. Interviews with bankruptcy trustees and bankruptcy attorneys “were unanimous” in identifying the ease of qualifying for and accessing consumer credit as the primary cause of bankruptcy in the state. None of the surveyed trustees or attorneys listed the presence of gaming opportunities as a primary cause of bankruptcy.

Most recently, economists at the University of Louisville and the University of Kentucky investigated the relationship between the introduction and proliferation of pari-mutuel wagering and casino gaming opportunities to personal bankruptcies in Illinois, Iowa and Missouri, using county-level data. The economists concluded in their April 2002 study that access by individuals to pari-mutuel or casino gaming facilities has no statistically significant impact on personal bankruptcy filings. What does predict bankruptcy? Personal bankruptcies are related to population, personal income, age, race, divorce rates, unemployment rate, and the ratio of debt to disposable personal income.

While some studies do show a modest relationship between casino gaming and bankruptcy, they tend to be methodologically weak - focusing on just a few communities that may be outliers, rather than large or nationally representative samples of counties and states; or dealing inappropriately with the bankruptcy outcome measure (failing to use its log to normalize the distribution of the variable) and thereby exaggerating any bankruptcy effect.

If the academic studies aren’t persuasive enough, keep in mind the following facts:

• The majority of states with the highest personal bankruptcy rates are those without casino gaming.
• Among the 10 states with the largest growth in bankruptcy filings over the last decade, only one (Mississippi) has casino gaming.
• Of the 24 counties in the United States with the highest personal bankruptcy filing rates, none has casino gaming.

Crime

Our opponents also are fond of claiming that the presence of gambling increases the incidence of crime. That, too, is just flat wrong. There is nothing inherent in the nature of casino gaming - or in the collective character and behavior of millions of Americans who enjoy this form of recreation - that causes crime.

When crime does go up in new gaming jurisdictions, the explanation is more often than not that any city that hosts thousands of new tourists daily is likely to experience an increase in petty and street crime. Look at Orlando, Fla., after the opening of Disney World for a graphic example. Crime went up, and it certainly wasn’t due to an increase in gaming. Same story with Branson, Mo., when the attractions in that city opened.

The fact of the matter is that in the majority of new gaming jurisdictions, crime has decreased over time and dropped well below the rate it was prior to the arrival of gaming.

The NORC study conducted for the National Gambling Impact Study Commission measured index crimes that reflect the public safety and security, such as murder/manslaughter, forcible rape, robbery, aggravated assault, burglary, larceny/theft, motor vehicle theft and arson - Part I crimes reported to the Federal Bureau of Investigation - and reported that:

[T]he casino effect is not statistically significant for any of the…crime outcome measures….
(Meaning the level of crime in cities closest to casinos is no greater than the level of crime in places further removed from casinos)

(National Opinion Research Center at the University of Chicago, Gemini Research, The Lewin Group, Gambling Impact and Behavior Study, Report to the NGISC, April 1, 1999, p. 70)

The National Gambling Impact Study Commission report included the following:

All of the evidence presented to the Commission indicates that effective state regulation, coupled with the corporate takeover of much of the industry has eliminated organized crime from the ownership and operation of casinos.

(National Gambling Impact Study Commission Report, Gambling Regulation)

Other federally funded research confirms this finding. A recent study by the National Institute of Justice found ‘few statistically significant changes [in crime levels comparing] pre and post casino periods. The expectation that crime rates would rise as a result of the advent of casino gambling in the communities under study was not borne out.’

Suicide

While opponents of gambling use anecdotal evidence to prove a link between gambling and suicide, recent studies contradict their assumptions.

A 1997 report from the Centers for Disease Control (CDC) found that suicide rates are a regional phenomenon and do not mirror the availability of legalized gambling. The CDC study pointed out that suicide levels in the West are 70 percent higher than in the Northeast.

A study by the University of California-Irvine, published in 2000 in Population Research and Policy Review, showed that gaming communities have ‘no higher risk’ of suicide than non-gaming communities. In fact, the study concluded suicide levels in gaming communities ‘are about average’ and noted, ‘the risk of suicide for visitors to gaming areas is no higher than the risk faced by visitors to non-gaming areas.’

Christian Marfels of Dalhousie University in Nova Scotia conducted another study on suicides, looking specifically at Las Vegas. This study found that gambling problems were not factors in the overwhelming majority of the visitor suicides reported in Las Vegas. Dr. Marfels examined eight years’ worth of actual suicide files from the Clark County coroner’s office and found:

In 163 of the total 206 adult visitor suicides during the period under review, a cause for the suicide could be established. Whenever there was an indication of a gambling problem or the potential for a gambling problem in the files, this indication was given special attention.

The suicide files indicate that in 94 percent of the cases gambling was not the determinant factor for the suicide.

(‘Visitor Suicides and Problem Gambling in Las Vegas: A Phenomenon in Search of Evidence,’ Christian Marfels, Ph.D.; Gaming Law Review, Volume 2, Number 5; p. 471.)

As has been demonstrated through research on pathological gambling, individuals who are pathological gamblers often suffer from other disorders; a simplistic approach linking gambling with suicide cannot explain away a decision this complex.

The conclusions drawn by opponents of our industry have no basis in fact, as the overwhelming evidence from these recent studies has indicated.

Improving Quality of Life

In closing, I recognize that there is a belief among some observers that casinos may detract from the quality of life in a community. My response to that is simple: Nothing will improve quality of life better than a job with a steady paycheck and health benefits, access to day care, or the ability to further your education. Beyond the employee impact, the purchasing power of a new 2,000-person work force can have a dramatic, positive impact on an entire community, particularly an economically depressed community, because income allows people to buy homes, cars and major appliances, as well as dine out in restaurants and contribute to local charities.

But you don’t need to trust me. All you need to do is ask those who already know about our industry first-hand. According to a nationwide poll of casino county residents conducted in 2001 by pollsters Peter Hart and Frank Luntz, Americans who live in counties with casinos not only have a favorable impression of casinos but also can point to specific ways the casinos have improved their quality of life - spurring tourism; creating job opportunities; funding improvements to roads, schools, hospitals and other projects; and improving the overall economy.

If poll results don-t provide adequate evidence for you, you have the most compelling case of all in Iowa, where citizens on Election Day had the opportunity to throw out all the casinos after eight years. Instead, all 11 counties voted overwhelming in favor of keeping their casinos, with margins of victory ranging from 63 percent to 81 percent. Why? Despite the dire pronouncements of gambling opponents about the long-term impact of casino gambling, Iowans recognized that none of those predictions had materialized. What they’ve seen is that casinos have created jobs, increased tourism, provided entertainment and generated more funding for charitable causes than any other organization in the state.

When I first testified before the National Gambling Impact Study Commission, I asked the panel to follow the lead of my old boss Ronald Reagan, who often said in reference to his dealings with the Soviet Union during the Cold War, ‘Trust, but verify.’ In most cases, the federal commission did just that. Despite the fact that the majority of commissioners, including the chairman, were personally opposed to gambling, they still concluded that the commercial casino industry provides quality jobs, promotes capital investment and generates economic development.

We applaud you for taking the time to carefully evaluate the pros and cons of casino gambling to determine whether or not it’s right for Rhode Island. Every form of economic development –whether it’s a new industrial plant, a theme park, shopping mall or a casino - will bring with it benefits and costs, and it’s important to weigh all the information. In doing so, however, I hope you will rely on the considerable amount of independent, government-funded research that is available today. Perhaps former U.S. senator Daniel ‘Pat’ Moynihan of New York said it best: ‘Everyone is entitled to their own opinion, but not to their own set of facts.’ As you move forward in your deliberations on this issue and others, I hope that you will make your decisions based on facts, not anecdotes; science, not theories.

Thank you for inviting me to present information about our industry before this commission.