By Frank J. Fahrenkopf, Jr.
As 1999 came to a close, our agenda for the final session of the 106th Congress was becoming clear. Gaming opponents already were gearing up with new, unfounded attacks on our industry, ignoring or distorting many of the findings from the National Gambling Impact Study Commission to continue their campaign to restrict the rights of Americans who enjoy casino entertainment.
Armed with the federal commission’s findings about pathological gambling among youths, the National Collegiate Athletic Association (NCAA) launched an unfounded attack against Nevada’s legal sports books to address the problem. The NCAA last fall began soliciting support from members of Congress for legislation to repeal the exemption that permits Nevada to offer legal wagering on college sports. While no such legislation was introduced then, several senators were actively considering the NCAA’s request. The NCAA already has joined forces with various anti-gaming groups to advance its misguided proposal.
Unfortunately, this effort—which is expected to become a major issue in this session of Congress—will do nothing to address the real issue of illegal gambling on college campuses. The fact is that young people who gamble do so largely with each other, whether playing cards or making sports bets, not by gambling at casinos. The federal commission’s report confirmed these facts.
If every sports book in Nevada were to close, it would not eliminate or even put a dent in illegal wagering on college campuses, in office pools or at the corner tavern. The federal commission’s report cites estimates between $80 billion and $380 billion for illegal wagering of all kinds in 1998. This amount dwarfs the relatively meager amount wagered legally with sports books in Nevada, which was only $2.3 billion in 1998—only 1 percent or 2 percent of all sports wagering.
In addition, point spreads come from a variety of independent sources that would continue to be available even if Nevada’s legal sports books did not exist. Despite this reality, the NCAA continues to maintain that newspapers would not publish point spreads on college games and there would be little or no illegal gambling if it were not for Nevada’s legal sports books.
The truth is, it is the NCAA and their member colleges and universities that are in the best position to address this problem. Their students are gambling illegally on their campuses (not in Nevada, where you must be physically present to place a bet), and the games on which students are wagering illegally usually are contests between college teams conducted under the auspices of the NCAA. The NCAA has attacked Nevada’s resorts for, in their words, “making money on the backs of teenagers.” At the same time, the NCAA signed an 11-year contract with CBS for the broadcast rights to the men’s college basketball tournament in exchange for $6 billion. Who is really making money off the backs of America’s teenagers?
The U.S. Congress made the fair and equitable decision in 1992 when, concerned that lotteries might introduce games based on college and professional sports, it passed legislation prohibiting states from sponsoring or authorizing such wagering, but did not apply the new ban to those states where it was already legal. The irony is that should Congress re-open that decision as the NCAA now proposes, states such as New Jersey that might want to allow sports wagering would be given an opportunity to amend the federal statute to permit them to do so.
Should Congress choose to reopen this debate, a broader range of countermeasures should be considered. For example, a recent article in one college newspaper said there were no sources of gambling counseling available on campus. Congress should establish minimum standards for colleges and universities to meet in terms of education, prevention and treatment of gambling disorders as a condition for the receipt of federal education funds.
The problem of youth gambling cited by the federal commission is being used as a justification for another baseless attack of the casino industry in Congress. Nearly two dozen individuals from various organizations late last year called for congressional committees to investigate the use of cartoon characters and television-show themes on slot machines, suggesting that they are part of an effort to market casino gaming to children.
Four of those who signed the letter seeking federal intervention formerly served as members of the National Gambling Impact Study Commission, which less than a year ago unanimously recommended that, except for Internet and Native American gaming, states (not the federal government) are best equipped to regulate gambling within their own borders. State gaming regulators, who must approve all new gaming devices, were looking into this matter well before this request for federal intervention.
While youth gambling is a serious issue that needs to be addressed, the federal commission determined that most of the gambling by minors involves illegal betting on cards and sports, not betting at casinos. The research found that casino gambling was ranked at the very bottom - seventh out of seven forms of gambling—among youth in terms of participation, and adolescents were “notably absent from casino play.” Among various forms of legal wagering, casino gambling is well below racetracks, bingo and lotteries in terms of participation among youths.
Despite these findings, the letter to congressional committees insinuated the opposite. It jumped immediately from a summary of the themes proposed for use on some gaming devices to statements about the extent of youth gambling problems. While it stated without justification that Las Vegas is expanding its marketing to families, only 10 percent of all visitors there bring children with them.
Unlike the products of other industries, these gaming devices are used by adults in a controlled and heavily monitored setting where it is illegal for those under 21 to loiter, much less wager. In most commercial casino states, the casino floor is physically separate from the rest of the hotel, and only those of legal age are permitted to enter. State regulators are equally strict in holding operators accountable for even the slightest technical violation of the rules, imposing heavy fines when violations occur.
While the commercial casino industry recommended to the federal commission that the legal gambling age be raised to 21 nationwide, at least one of the principal signatories of the letter has publicly opposed this!
Because these machines are sold to casinos where customers must be 21 years of age or older, it would make no business sense to develop games and market them to those who cannot legally use them. Adults enjoy the board games, television game shows and programs, and movies that are featured on these slot machines, which are designed to appeal to Baby Boomers, Generation Xers and other segments of the population of legal age.
The bottom line is that there is no simple formula to determine appropriate content for slot machines. The best course of action—and that recommended by the federal commission—is to leave the matter up to state regulators to decide on an individual, case-by-case basis.
The controversy over slot machine content is not the only issue on which opponents of our industry are seeking federal intervention, ignoring the overarching recommendation from the commission that most gaming matters should be left to the states. A bill to ban ATMs from the immediate area of gaming establishments is pending in the House Banking Committee and is expected to be debated this year. The commission made a similar recommendation, but it was directed at states, not the federal government.
While the highly visible federal commission ended last year, opponents of our industry obviously won’t let the facts that came from it interfere with their crusade. The fact that the federal commission left decisions about all gambling issues (except Internet and Indian gaming) to the states has been disregarded. The fact that none of these initiatives will solve the real problems of youth gambling or pathological gambling is not an issue for these groups. Although the casino industry may be a high-profile target, we are not going to be the scapegoat for complicated national problems that require constructive solutions, not finger-pointing to advance the agenda of gambling opponents.