Thursday, Jan. 25, 2001 | 10:39 a.m.
Internet gambling
Jack Shaw, an author and expert on the digital economy who addressed Preview 2001 Wednesday, says Nevada should leverage its gambling expertise and dominate the Internet gambling industry.
Shaw, who said Internet gambling offered by offshore casinos and Australia-based operations will grow to an $11 billion to $15 billion industry by 2003, said lawmakers "should stop futile efforts to prevent Internet gaming."
Shaw's comments came on the heels of remarks by Harrah's Entertainment Inc.'s Gary Loveman, who said his company uses the Internet strictly as a marketing tool and not as an Internet casino.
A Harrah's executive says the future is bright for the gaming industry, despite the "potential threat of odd and irrational regulatory intervention."
Gary Loveman, chief operating officer and a member of the executive office of the president of Harrah's Entertainment Inc. of Las Vegas, kicked off Preview 2001 Wednesday with a slap at the regulatory environment in which the gaming industry operates.
Preview, an annual event presented by the the Las Vegas Chamber of Commerce and the Nevada Development Authority, offers a slate of speakers addressing the economic outlook for Las Vegas in the year ahead.
Loveman said most gaming industry speakers that have addressed Preview events in the past have focused on the impact new resorts would have on the city. But since there are no megaresort openings planned in 2001, Loveman said he chose to address "the software of our industry instead of the hardware," including "the hysterical rhetoric and regulation" surrounding casinos.
The critics of the industry are leading the charge for more aggressive regulation, Loveman said, and the ammunition they take to policymakers has been repeatedly disproved.
Many of the industry's critics, he said, say there are higher crime rates in cities that have allowed casinos to be built, that gaming produces greater financial distress on families in those cities and that the industry is unwilling or unable to moderate problem gambling.
"But nothing could be further from the truth," Loveman said.
He said numerous studies have proved that there is no correlation between the gaming industry and crime or personal bankruptcy filings and he said his company is a leader in efforts to avoid marketing to problem gamblers.
He said only 1 percent of the people who patronize casinos are characterized as having pathological gambling behavior, "which means 99 percent have absolutely no problem."
The majority of people who go to a casino do so for entertainment, he said.
"They do it to get the feeling when you pull the handle on the slow and see the first two 7's come up and you're waiting to see if the third one comes up," Loveman said. "They do it for the feeling you have at the blackjack table when you have an ace turned up or when the dealer turns up a 6."
Most players, he said, don't feel they're being suckered into giving up their money -- they look at it as the price they pay for the entertainment.
The average player loses $56 in Kansas City, just under $100 in New Orleans and $116 in Las Vegas.
"It would be no different for us to charge a $56 admission in Kansas City and assure people they wouldn't lose," he said.
Yet the gaming industry "is the most regulated industry outside nuclear energy," he said.
He said when he became a gaming executive, he and all his records were scrutinized by "mostly retired law enforcement officers" from 16 states to determine his suitability as a casino operator. He said every loan he ever applied for was examined and regulators interviewed his former employers at Harvard University and all his friends and neighbors about what kind of a person he is.
Loveman also ridiculed regulations in states that oversee riverboats, where people board a boat and get pushed out into a waterway to meet the requirements of a law. Sometimes, he said, the waterway has to be scrutinized to determine if it is a river or just a tributary.
"Think about just how ridiculous this is," Loveman said. "Would you like to set sail on Cinema 14? Would you go to a Nordstrom store on a barge?"
He said in New Jersey, Harrah's plans for a hotel had to be examined by an agency that specifically reviewed hotels -- and nuclear power plants. "I was a little worried about our radiation levels," he quipped.
While casinos are carefully scrutinized for their methods of making money, Loveman said no one questions when a retailer offers $10 off on a purchase and gladly issues a credit card for purchases that must be paid back at 20 percent annual interest.
The regulation of casinos, normally a state responsibility, is expected to hit the federal spotlight in weeks ahead when the Senate debates a proposal to ban amateur sports betting, including collegiate football and basketball. Loveman steered clear of that debate in his presentation.
But despite that controversy and the laundry list of regulations the gaming industry must follow, Loveman is upbeat about the industry's future, particularly in Las Vegas, even though there are no megaresort openings on the horizon.
Speaking for Harrah's, Loveman said the company has disproved the myth that a casino can only make money by completely renovating the property every few years.
The company, which has 21 properties in 16 states, had 10 percent same-store sales growth in 1999 and expects growth to be more than 12 percent for 2000. The company attributes the growth to its slot club program, Total Rewards, which can be used in any of its properties to build brand loyalty.
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