CNN - Gambling: boom or bust?

January 6, 1996
Web posted at: 12:30 p.m. EST

From Correspondent Kathleen Koch

WASHINGTON (CNN) -- The gambling industry has been on a roll in the United States. Casinos, once only legal in Nevada and New Jersey, have sprung up in 24 states. Thirty-seven states have okayed lotteries, with 17 allowing wagering on dog tracks and 37 on horse racing.

Legal betting ballooned from a $17 billion industry in 1976 to $480 billion in 1994. But in 1995, gambling's luck began to run out.

In New Orleans, two riverboat casino operations folded after just nine weeks, throwing 1,800 people out of work. In New Mexico, the state has ordered gaming tribes to close their casinos by January 15 because the state Supreme Court has nullified electronic and video gambling devices.

Last November, voters in Massachusetts, Indiana, Missouri and Washington said no dice to casino proposals. A state panel in Maryland and the Connecticut senate followed suit the next week.

Gambling corruption scandals saw lawmakers convicted in four states -- and it all has Congress wondering, with some calling for a national commission to study the impact of gambling.

"One state after another has said that they simply did not have adequate information when they adopted the gambling situations they now have," said Sen. Richard Lugar of Indiana, a Republican presidential candidate.

One concern is whether gambling's promises of quick tax revenue and jobs pay off. Some argue that many gambling operations actually cannibalize local economies.

"You're basically depending on local residents for the gambling," said Professor Robert Goodman, author of "The Luck Business. "And when you do that, all you're doing is shifting money around in the economy."

But gambling's top lobbyist, American Gaming Association president Frank Fahrenkopf, disagreed.

"Go to Tunica County, Mississippi, the poorest county in the poorest state in the union, which has now seen unemployment drop by two-thirds, has seen welfare roles cut," Fahrenkopf said. "It's just not the case." (111K AIFF sound or 111K WAV sound)

Another worry is compulsive gambling. In Iowa, the problem more than tripled after the state legalized riverboat gambling. Some casinos now keep counselors on hand to help bettors who can't stop.

Crime is yet another concern. Critics point to Atlantic City's three-fold increase in law enforcement and crime and 25 percent decline in retail sales.

But gambling supporters point to Las Vegas.

"Nevada is not riddled with crime," said Rep. John Ensign, R-Nevada. "In fact, so-called organized crime in the gaming industry is virtually non-existent."

The gambling industry does approve examining the competition -- casinos in cyberspace. Often based overseas, the 200 Internet gambling sites warn Americans they can't play because betting over communications wires is illegal here. But lawmakers say the online emporiums operate fast and loose.

At its annual summit, the gambling industry insisted it is misunderstood -- a victim of a religious right that wants to outlaw gambling.

"The Christian Coalition, with their friends in high places, have decided that 82 percent of the U.S. population who gamble are sinners," said Steve Wynn, chairman and CEO of Mirage Resorts.

Industry leaders predict a continued growth in casino gambling.

"For one dominant reason," said Glenn Schaeffer, CEO of Circus, Circus. "Consumers like it." (119K AIFF sound or 119K WAV sound)

But new operations will likely see smaller profits as the gambling market becomes saturated. Project financing could also be a problem with some casinos' poor performance making lenders wary.

It all seems to be leaving an increasing number of Americans in some quarters sentimental for the days before gambling rolled in.

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