Legislators, experts address gambling’s effect on states

By Liz Benston

Monday, Jan. 12, 2004 | 10:53 a.m.

At a conference of legislators in Las Vegas over the weekend, officials from about a dozen states gathered to bemoan the lack of reliable studies on the effects of gambling and to tackle some of the most controversial topics facing the casino industry, from the expansion of Indian casinos to gambling addiction.

While casino advocates told legislators about how gambling has helped local economies and raised tax revenue for needy states, anti-gambling forces vowed to mount opposition to the continued spread of Indian casinos and the process by which the federal Bureau of Indian Affairs authorizes casino land for tribes.

"This is where the battle will be waged in the coming year," the Rev. Tom Grey, director of the National Coalition Against Legalized Gambling, said of Indian casino expansion. "If we don't do something now, we'll look back and say 'we blew it.' "

The Friday through Sunday conference marked the first meeting in Las Vegas for the National Council of Legislators from Gaming States, a group founded in 1995 by Florida State Sen. Steven Geller to gather and exchange information on gambling expansion and other related issues. About a third of the roughly 50 people attending were legislators and another third were regulators and researchers. A few casino lobbyists and officials from gambling companies also attended.

"Casino expansion is widespread enough now," Geller said. "There should be empirical studies to show" the effects of gambling and casinos. "If there are empirical studies, tell us what they show."

Les Bernal, chief off staff for Massachusetts state Sen. Susan Tucker, said gambling studies have become "entirely political" and that legislators lack impartial data to be able to make informed decisions. "There are studies funded by casinos and anti-casino groups. How do you come up with an impartial study?" he said.

Bill Eadington, professor of economics and executive director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, warned lawmakers to "beware of phony numbers" in analyzing the effects of gambling.

"There's a lot of bad information that is passed around in the heat of debate," he said.

Eadington also told legislators not to depend on gambling to plug holes in their budgets.

"We cannot gamble ourselves to prosperity," he said. While a few areas like Nevada and Mississippi have dramatically improved their wealth through widespread gambling, the influence of gambling in most other states has been limited.

"The ability of gaming to be an economic panacea is limited. At best it's going to be a minor contributor to state (budgets)," he said.

While the public's acceptance of casinos continues to rise, an improving economy and the coming election year will mean an uphill fight for gambling expansion, Eadington said.

The casino industry's chief federal lobbyist, Frank Fahrenkopf of the American Gaming Association, said the commercial casino industry has "lived up to our end of the bargain" by creating jobs and improving economies but is being hurt by "unfair and unreasonable" tax rates exacted by some state governments.

"What we have experienced over the last few years is that the pressures of a struggling economy, coupled with the always highly charged public debate over gambling, caused a lot of legislators to forget Economics 101," said Fahrenkopf, the AGA's chief executive. "While the industry can and will pay more under certain market conditions, such as limited licenses or proximity to large population areas, rates set too high will serve as a barrier to entry."

While the ramifications of gambling expansion remain at the forefront of the group's discussions, the expansion of tribal casinos and the emergence of tribes seeking land off their reservations for casinos have emerged as top issues for debate, legislators said.

Among the states represented were Texas and Kansas -- both areas where tribes are pressing government officials in attempts to build casinos.

Debate is raging in Kansas about plans by two of the state's existing gaming tribes to offer a destination resort in Kansas City, while another tribe with roots in the Northwest -- along with officials in various cities -- is seeking land in trust for a casino. Recurring proposals also have pressed for slots at the state's race tracks -- viewed as a quicker way to reap revenue for the state. The state has even considered running future casinos.

"I'm opposed to expanded gambling but we're looking more favorably" at a casino resort, state assemblyman William Mason said. Licensing a single resort is a way to limit gambling near big casinos across the Missouri border and could benefit the state as well, he said.

Texas Rep. Talmadge Heflin, who opposes the expansion of gambling and chairs the state's House Appropriations Committee, said he is committed to understanding "factual information" about the casino industry rather than voting down gambling initiatives.

The Texas Legislature may consider legalizing slots at racetracks to revamp its school funding and reduce property taxes, Heflin said. The state Attorney General shut down two of three casinos in the state, though casinos remain part of the gambling debate, he said.

"I think if we (legalize slot machines) in racing venues, then casinos are a dead issue in Texas," he said. "We already have the lottery and have expanded into multistate games. It's nice to have the (gambling) money but it doesn't fund education. It's just one piece."

"I don't think people are looking at (gambling) as a goldmine," he said.

Officials from the National Indian Gaming Association, a trade group representing gaming tribes, said tribes are focusing on enhancing existing properties and improving their communities rather than expanding.

"Expanding is not the priority right now," NIGA Chairman Ernie Stevens told legislators. "We're just getting things that many Americans take for granted like pavement, schools and health care."

Former bingo operator and restaurateur Dave Anderson, the Bureau of Indian Affairs' new chief, "isn't going to let the Indians expand wherever they want," said Stevens, a member of Wisconsin's Oneida tribe. "He's a man of integrity. He's not going to ... come in there and cause some explosion" of casinos.

Only three tribes have so far been able to build casinos off their reservations, said Mark Van Norman, NIGA's executive director. Roughly 200 of the 341 federally recognized tribes in the lower 48 states have gambling and most of those operations are small, local operations. Some Indians now seeking casinos are "landless" tribes that were kicked off their ancestral lands, while many others have been trying for years to use gambling to raise them out of poverty but have faced government opposition, said Van Norman, a member of the Cheyenne River Sioux tribe.

Grey, whose coalition opposes gambling expansion but doesn't fight existing casinos, said tribal gambling is undergoing a "major expansion" with casino proposals by tribes in more than 20 states and more than 100 tribes seeking federal recognition as a first step to operating casinos.

Grey said he expects to mount a protest at the federal level that will seek explanations for the process by which tribes have been able to open casinos in recent years.

"We are seeking a moratorium on new recognitions and there's controversy about whether the original recognition process was accurate," Grey said. "The Bush administration needs to speak up about accountability at the BIA."

He charged other tribes with going on "fishing expeditions" for potential casino sites and for serving as fronts for deep-pocketed casino developers.

"The process is no longer controllable," Grey said.

Grey predicts defeats of planned or potential voter initiatives this year in Rhode Island and Ohio, where governors are opposed to gambling and where business and civic interests may band together, as they did in Maine, to kill a well-funded casino plan. Opposition also is gathering steam in other upcoming states including Kentucky and Florida, he said.

But some legislators said political infighting -- especially involving an issue that cuts across party lines -- and a grab for gambling dollars helped defeat casino plans more than organized opposition.

"I think most legislators know that it's easier to kill something than pass something," said Dean Hesterman, a legislative liaison for Harrah's Entertainment Inc. "The acceptability of gaming is at an all-time high."

Conference attendees were generally in agreement that gambling addiction not only deserves state funding but more study into what causes the condition.

"Publicly funded gambling treatment programs do work and are accountable," said Jeffrey Marotta, manager of Problem Gambling Services for the Oregon Department of Human Services. "The evidence is clear from looking at the data that treatment is better than no treatment."

Arnie Wexler, a New Jersey-based problem gambling counselor for Caesars Entertainment Inc. and other gaming companies, said casinos need to do more to help.

"This is not anecdotal information. These are people who are sick," said Wexler, a recovered compulsive gambler.