Gaming execs, analysts blase about fed study

Gary Thompson and John Wilen

Friday, June 18, 1999 | 11:30 a.m.

Gaming executives and analysts today reacted favorably to the federal study that, in general, reflected favorably on the industry.

But they warned that gaming opponents in politics and the media are likely to continue their assault on an industry the federal study concluded provides major economic benefits to many Americans.

"Once and for all, it puts to rest all the anti-gaming myths and rhetoric regarding crime, social problems and negative economic impacts," said Ralph Berry of Harrah's Entertainment Corp.

"The National Gambling Impact Study Commission's report shows that this is a well-regulated, responsible industry."

"The best news is that there's no federal income taxes or regulation recommended, except for Indian gaming," said Joe Coccimiglio of Prudential Securities. "I think the industry looks more upstanding because they cited the economic benefits of destination gaming, which certainly benefits Las Vegas.

"I do think conservatives will focus on negative parts of the report and use them to introduce punitive legislation, but I don't think they'll be successful," he said.

One conservative has already made such a move. Rep. Frank Wolf, R-Va., has proposed a 1 percent federal tax on gaming revenues, prompting a heated reaction from federal panel member Terry Lanni, who is also chairman of MGM Grand Inc.

"Frank is not a very honest person, in my opinion," Lanni said.

Noting Wolf has asserted Lanni's support of the federal panel's report is "an admission of gambling's dark side," Lanni commented: "We do have a dark side, and it is Frank Wolf. He doesn't tell the truth."

Lanni said Wolf is wrongly suggesting that the commission report calls for a federal gambling tax and warned that critics will "cherry pick" the report for anecdotes and facts that support their views.

"I think Wolf has a better chance of hitting Megabucks than he does of getting a gaming tax passed," Coccimiglio said.

"This is a very positive report card for the gaming industry," said Andrew Zarnett of Ladenburg Thalmann & Co. "A lot of the claims made by the industry have been reconfirmed by the panel, and the claims made by anti-gaming folks have been investigated but were found to be insignificant."

One such claim the report debunked was that pathological gambling was rife throughout the country. The report said less than 1 percent of Americans are afflicted with the disorder and that the social cost is $5 billion annually. By contrast, the report said, alcohol abuse costs the country $166 billion a year.

"Maybe Wolf should spend his time focused on the alcohol problem in this country, where the cost to America is 33 times larger than the cost of pathological gambling," Zarnett said.

"There's going to be much smoke and little of substance coming out of this report," said Harry Curtis of BancBoston Robertson Stephens. "The smoke will be created by politicians and the media."

Lanni, meanwhile, said the Commission's report is fair and balanced and poses no threat to the gaming industry. "Substantially, I feel very comfortable with it," he said.

But there were recommendations about sports betting and Internet gambling that could prove nettlesome.

David Wolfe of CIBC Oppenheimer said the proposal to ban on sports betting isn't realistic.

"The intent was to be positive, because they wanted to avoid point shaving and betting by college students," Wolfe said. "But a ban will simply force bettors to go to illegal bookies, making that one recommendation that's just silly."

Prudential's Coccimiglio was equally skeptical about the proposed Internet gaming ban.

"As a practical matter, how do you stop it?" he asked. "Do you establish a giant regulatory agency to police the Internet? They haven't been able to stop more damaging Internet content like pornography."

"Anyone who thinks this is the end of the debate is fooling themselves," Harrah's Berry said. "As long as there are gaming opponents, there will be debates and proposals and legislation. But ultimately, as in the past, when you look at all the facts and figures, logic will prevail.

"One thing that hit home to us was the whole look at marketing. It began as, 'Gosh, they must be doing something wrong.' But when you read the report, it says marketing techniques practiced by gaming are just the same as those practiced by other industries.

"It says we're a mainstream consumer industry that exists and acts just like others based on the desires of its customers."