Gambling commission chairwoman warns industry execs

Robert Macy

Tuesday, Jan. 12, 1999 | 4:25 a.m.

LAS VEGAS - Legalized gambling - a $600 billion annual industry that has spread to 48 of the 50 states - must tend to its own ills or the federal government may do so, the head of a national panel said Tuesday.

"Fix your own problems," Kay Coles James, chairwoman of the National Gambling Impact Study Commission, told gambling industry executives meeting in Las Vegas. "The federal government isn't the answer."

James, who identified herself as a Reagan conservative, said she does not believe the federal government has a solution for every problem.

"But I do know that the government often acts when others fail to and the 'cure' is usually far worse than the problem," James told the two-day Gaming, Lodging and Leisure Summit, which concludes Wednesday.

"There are many who believe that the record tobacco settlement could have been avoided if the industry had acknowledged the problem and taken proactive steps to address it."

She challenged industry leaders to take on issues such as compulsive and Internet gambling.

Congress approved the nine-member commission in 1996 to study the sociological and economic impact of legalized gambling. The commission is scheduled to present a report to Congress in June.

Frank Fahrenkopf Jr., president of the American Gaming Association, the industry's lobbying arm, told summit attendees the report would be "the greatest challenge we face in the 106th Congress."

James said most Americans believe that gambling is strictly regulated by the government, "but outside of the casino industry, that is not necessarily true."

James said when the commission visited Las Vegas in November, the last stop on a multi-city tour to study the industry, Mayor Jan Jones took her to neighborhood stores where people gambled while grocery carts sat unattended. At one location, a McDonald's playland was only a few feet away, she said.

"To those who say this does not create an environment in which children are encouraged to gamble, recent studies ... and common sense suggest otherwise," she said.

"I know that some of you believe that Las Vegas should avoid marketing to families and I applaud that," James said. "This is, and should be, a destination resort for adults."

Jones has led a campaign to ban or restrict slot machines in neighborhood grocery and drug stores.

James said staff research had shown that state lotteries are "the most widespread form of gambling in the United States." She said such lotteries are "administered and regulated by governments as monopolies and they offer the lowest odds of winning and the highest profits."

The chairwoman said there have been discussions nationally "about potential product-liability for gaming operators regarding pathological gamblers."

"Some have gone so far as to suggest that this will be the 'tobacco issue' of the new millennium."

She said such talk should concern casino operators, but should be of even more concern to states engaged in lotteries, especially those that use "slick, misleading campaigns" to draw from those least able to afford it.

James said too many poor people are led to believe that "lady luck" is the only way out of poverty "and the best alternative to hard work, education and patience."

She praised J. Terrence Lanni, Steve Wynn and Peter Boynton, the top executives of MGM Grand, Mirage Resorts and Caesars, for their role in fighting problem gambling. Lanni is a member of the gambling commission.

Fahrenkopf said the AGA was "proud that not a single piece of anti-gaming legislation was enacted into law (by Congress) in 1998."

But he warned that might not be the case with the new Congress, as the gambling commission presents its report "and anti-gaming forces on and off Capitol Hill plot their next moves."

He cited a bankruptcy reform bill that surfaced in the last Congress which included an amendment that would have barred creditor claims for debts incurred for gambling. The House and Senate failed to agree on competing bills.

Fahrenkopf also blasted immigration reform legislation that would require the Immigration and Naturalization Service to record the departure of every foreign visitor and match that information with arrival records. He said the bill was designed to cut back on illegal immigrants, but would end up impeding tourism.

Other issues the AGA is watching include Indian gambling, Internet gambling, money laundering laws, casino smoking regulations, sweepstakes marketing and taxation of casino employee meals.