Gambling in AmericaAre states hooked on money from games?

Gambling was once illegal and widely regarded as

immoral in most of the United States, but today

it is a popular pastime, a $90 billion industry and

an important source of revenue for state and local

governments and Indian tribes. Lotteries in 43 states and the District

of Columbia collectively generate $18 billion in revenue for state

and local governments. Commercial casinos contribute $8 billion,

while Indian tribes negotiate payments to states for permission to

operate casinos on tribal lands. Casino companies promise jobs,

economic development and other payoffs, but critics say the

benefits are exaggerated and the social costs of gambling ignored.

Lottery advocates view the game as a politically palatable revenue

source, while critics warn against encouraging compulsive betting

by lower-income residents. The criticisms are having little impact,

and gambling may become more pervasive with the advent of

legal online poker and other games.

I

N

S

I

D

E

THE ISSUES ....................527

BACKGROUND ................534

CHRONOLOGY ................535

CURRENT SITUATION ........540

AT ISSUE........................541

OUTLOOK ......................543

BIBLIOGRAPHY ................546

THE NEXT STEP ..............547

THISREPORT

Ka-ching! A slot machine pays off at the Aria Resortand Casino in Las Vegas. Commercial and

Indian casinos in 38 states account for 65 percent ofthe revenue from gambling. Lotteries account for nearly 30 percent.

CQResearcherPublished by CQ Press, an Imprint of SAGE Publications, Inc.

www.cqresearcher.com

CQ Researcher • June 15, 2012 • www.cqresearcher.comVolume 22, Number 22 • Pages 525-548

RECIPIENT OF SOCIETY OF PROFESSIONAL JOURNALISTS AWARD FOR

EXCELLENCE � AMERICAN BAR ASSOCIATION SILVER GAVEL AWARD

526 CQ Researcher

THE ISSUES

527 • Are lotteries a goodway for states to raise revenue?• Do states benefit fromcasinos?• Should Internet gam-bling be legal?

BACKGROUND

534 Gambling DebatesLong-held objections inthe early 20th centurygradually yielded to re-laxed morality and rev-enue needs.

537 Betting on GamesIn the 1980s, states andtribes began turning tocasinos and lotteries forrevenue.

538 One More RoundInternet gambling explod-ed in the 21st century,while casinos and lotteriessteadily expanded.

CURRENT SITUATION

540 Competing for CustomersRivalry is especially fiercein New York and RhodeIsland.

542 Looking OnlineLawmakers in Californiaand New Jersey are ready-ing proposals to legalizeInternet gambling.

OUTLOOK

543 All About the MoneyGambling will becomeless dependable as a rev-enue source, experts say.

SIDEBARS AND GRAPHICS

528 Casinos Legal in MostStatesThirty-eight states have atleast one form of casino.

529 Compulsive Gambling’sWarning SignsSymptoms include lying andpreoccupation with betting.

530 Tribes Aim to Cash In onCasinos“There are haves and have-nots in tribal gaming.”

532 Casino and Lottery Revenues RoseCasinos accounted for 65 percent of the growthfrom 2000 to 2009.

535 ChronologyKey events since 1931.

536 Problem Gamblers Struggle to Beat Habit“Each day I make that commitment to not gamble today.”

541 At IssueDo lotteries take advantageof the poor?

FOR FURTHER RESEARCH

545 For More InformationOrganizations to contact.

546 BibliographySelected sources used.

547 The Next StepAdditional articles.

547 Citing CQ ResearcherSample bibliography formats.

GAMBLING IN AMERICA

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Gambling in America

THE ISSUESMega Millions fever

was sweeping thecountry when Merle

Butler stopped at a localconvenience store on theevening of March 28 in hishometown of Red Bud, Ill.,and put down $3 for threechances at the biggest jack-pot in U.S. lottery history. Theretired computer analyststuffed the ticket in his bill-fold without even glancing atthe randomly generated num-bers on his Easy Pick entry.Two days later, Butler was

watching TV with his wifePatricia when a newscast re-ported the six numbers onthe winning entry: 02, 04, 23,38, 46 and the 23 Mega Ball.After quickly jotting thenumbers down, But lerpulled out the ticket to check— and, then, to double-check.“After I looked at it for a

couple of minutes, I turned to my wife. . . and says, ‘We won,’ ” Butler told anews conference three weeks later. “Shekind of looked at me funny, and I says,‘No, we won.’ And then she started gig-gling, and she giggled for four hours.” 1

The Butlers were not alone intheir good fortune; they will sharethe $656 million prize with winnersin Kansas and Maryland who — un-like in Illinois — do not have to bepublicly identified under state law. TheButlers’ share is $218.7 million.Nor are the Butlers and the other

winners alone in winning or sharingnine-figure jackpots in the 10-year his-tory of the giant, 42-state lottery. Sinceits debut, Mega Millions has awardednine-figure jackpots 49 times, accord-ing to an unofficial count, includingthe previous record: $390 million sharedby two winners in March 2007. 2

Lotteries were illegal in Illinois andthe rest of the country when Butler,62, was coming of age in tiny Red Bud,35 miles southeast of St. Louis. Today,they are not only legal but officiallysponsored by 43 states and the Dis-trict of Columbia. The vast majority ofAmericans play at least occasionally,many of them obsessively: An esti-mated 100 million people bought tick-ets for the March 30 drawing. And theproceeds — about one-third of thetotal take — help finance state andlocal governments, to the tune of ap-proximately $17.8 billion in 2011. 3

Casino gambling was also illegalthroughout the United States for mostof the 20th century except in Nevada,which turned Las Vegas into a gamingmecca for slot machines and table gameplayers not only in the United Statesbut from around the world. Today,

casinos operated by privatecompanies or Indian tribescan be found in 38 states.(See chart, p. 528.) And they,too, contribute to state fi-nances. Gaming revenues forstate and local governmentsfrom commercial casinosamounted to $7.9 billion in2011, according to the Amer-ican Gaming Association, thetrade association for the com-mercial casino industry. 4

The spread of lotteriesand casinos attests to the dra-matic change in Americans’attitudes toward gamblingsince the mid-20th century. 5

Americans “like to gamble,”says Frank Fahrenkopf, theassociation’s president and chiefexecutive officer. Gross revenuefrom all forms of gamblingamounted to $89.3 billion in2009, according to ChristiansenCapital Advisors, a New York-based gaming industry watch-er. That represents a recession-related dip from the peak of

$92.2 billion the year before. (See graph,p. 532.)In the past, the love of gambling

— along with the hope of a winningnumber or a winning hand — waskept in check by other social forces,including moral or religious objectionsand fear of the social costs for gam-blers and their families as well as so-ciety at large. The moral objectionshave receded in the face of advanc-ing secularization and growing liber-tarianism in the United States. Con-cerns about the social costs of gamblinghave diminished as social safety netshave been established and law en-forcement has improved.The critical reason for gambling’s

increased acceptance, however, hasbeen its role in providing revenue forstate governments. “There’s a high ac-ceptance rate of lotteries throughout

BY KENNETH JOST

www.megamillions.com

Merle and Patricia Butler meet the press after acceptingtheir $218.7 million share of the $656 Mega Millions

jackpot on April 18, 2012, in Red Bud, Ill. For lawmakersand governors, gambling offers a revenue source morepolitically palatable than new taxes. But gambling

critics say the social costs — including the consequencesof marketing an addictive product — are unacceptable.

528 CQ Researcher

America,” says David Gale, executivedirector of the North American Associ-ation of State and Provincial Lotteries,in Geneva, Ohio. “Their primary role isto generate the revenues for those pro-grams and services that they have beenearmarked to support in the states.”State-sponsored lotteries — the first

in the modern era was established in1964 in New Hampshire — “seemedto make other forms of gambling lookmore acceptable,” wrote professorsPatrick A. Pierce and Donald E. Miller,of St. Mary’s College, in Notre Dame,Ind., in their book Gambling Politics.“Once the state engaged in the busi-ness of sin, gambling lost part of itsstigma.” 6

Fahrenkopf similarly stresses the fi-nancial contributions that casino gam-bling makes to states through taxes aswell as economic development. “We’rean industry that is taxed very, veryhigh,” Fahrenkopf says. Pennsylvania,for example, takes 55 percent of theproceeds from slot machines at the 10casinos in the state; combined with a16 percent tax on table game proceeds,the state took in nearly $1.5 billion fromthe casinos in 2011. 7

For lawmakers and governors, gam-bling offers a revenue source morepolitically palatable than new taxes.“It’s much easier to make an argumentfor expanding gambling than it is forincreasing the income tax or sales tax,”says Lucy Dadayan, a senior policyanalyst with the Rockefeller Instituteof Government at the State Universi-ty of New York-Albany.The role that gambling has come to

play in state government finance sits un-comfortably with those who worry aboutits social costs. “It’s trite to say that stategovernments have become addicted togambling, but it’s also true,” says KeithWhyte, executive director of the Na-tional Council on Problem Gambling inWashington, D.C.“It’s a revenue source that is un-

sustainable,” says Les Bernal, execu-tive director of the Washington-based

GAMBLING IN AMERICA

Casinos Legal in Most States

Thirty-eight states have at least one of the three types of casinos now in operation: commercial (land-based and riverboat) tribal and “raci-nos” (casinos at horse-racing tracks). Many states also allow card rooms and electronic gaming devices. Nearly 60 percent of the commercial casinos are in Nevada; a fourth of the tribal casinos are in Oklahoma.

Source: “State of the States: The AGA Survey of Casino Entertainment,” American Gaming Association, 2012, p. 4, www.americangaming.org/files/aga/uploads/docs/sos/aga_sos_2012_web.pdf

Number of Casinos by Type and State, December 2011

Land-based Racetrack Tribal Card Electronic State or riverboat casino casino room gaming casino deviceAlabama 0 0 3 0 0Alaska 0 0 2 0 0Arizona 0 0 25 0 0California 0 0 70 89 0Colorado 40 0 2 0 0Connecticut 0 0 2 0 0Delaware 0 3 0 0 0Florida 0 5 8 24 0Idaho 0 0 8 0 0Illinois 10 0 0 0 0Indiana 11 2 0 0 0Iowa 15 3 1 0 0Kansas 2 0 4 0 0Louisiana 14 4 3 0 2,159Maine 0 1 0 0 0Maryland 1 1 0 0 0Michigan 3 0 24 0 0Minnesota 0 0 38 2 0Mississippi 30 0 3 0 0Missouri 12 0 1 0 0Montana 0 0 13 288 1,549Nebraska 0 0 6 0 0Nevada 256 0 3 0 2,010New Jersey 11 0 0 0 0New Mexico 0 5 22 0 0New York 0 9 7 0 0North Carolina 0 0 2 0 0North Dakota 0 0 10 0 0Oklahoma 0 2 114 0 0Oregon 0 0 9 0 2,323Pennsylvania 4 6 0 0 0Rhode Island 0 2 0 0 0South Dakota 35 0 11 0 1,498Texas 0 0 1 0 0Washington 0 0 34 114 0West Virginia 1 4 0 0 1,552Wisconsin 0 0 29 0 0Wyoming 0 0 4 0 0

Total 445 47 459 517 11,091

June 15, 2012 529www.cqresearcher.com

organization Stop Predatory Gambling.“The only way you can increasegambling revenues is for more andmore people to lose more and moremoney.”For most of the past decade, more

and more people were in fact losingmore money in lotteries and in bothcommercial and tribal casinos. But theeconomic recession hit the casino in-dustry hard, according to EugeneChristiansen, chairman of ChristiansenCapital Advisors. “The recession was re-ally bad news because people startedreducing spending,” Christiansen says.In addition, the freezing of credit mar-kets hurt casino companies that hadtaken on debt to upgrade and mod-ernize facilities in an effort to attractcustomers in the increasingly competi-tive market for entertainment dollars.Today, Christiansen and Fahrenkopf

both say the gaming industry is onthe upswing again. “The good newsis that after a couple of very bad years,things seem to have flattened out andare on an uptick,” Fahrenkopf says.Christiansen says the industry is ex-periencing “a weak recovery.”Tribal casinos are also taking in more

money after experiencing a first-everdrop in 2009, according to an annualsurvey. The report, published by Casi-no City Press, a gaming industry re-search company, shows Indian casinoswith 44 percent of overall casino rev-enue in 2010, only slightly below the45 percent share for commercial casi-nos. “Racinos,” which combine horse-race tracks with casinos, account forthe remaining 11 percent. 8 (See side-bar on tribal casinos, p. 530.)Overall, revenue from lotteries has

continued to increase, according toGale, in part because the number ofstates offering lotteries has kept grow-ing. Arkansas became the 43rd stateto sponsor a lottery in 2009.Lotteries and casinos, however, may

be hard pressed to continue to grow,according to industry experts. “Lot-teries are maturing,” says Gale.

“There’s no doubt about it.” None ofthe seven states without lotteriesseems likely to join the club in theforeseeable future. *

Prospects for growth in the casinobusiness are also cloudy, according toChristiansen. “The map is filling up,”he says. Fahrenkopf is somewhat lessbearish. “The market will tell us whenthere are too many,” he says.One venue ripe for growth, how-

Compulsive Gambling’s Warning Signs

The American Psychiatric Association has recognized pathological gambling as a mental disorder since 1980. Symptoms listed in the association’s Diagnostic and Statistical Manual of Mental Disorders (the so-called DSM) include preoccupation with gambling, loss of control and commission of crimes to try to recoup losses. Individuals with at least one of the symptoms are defined as “problem gamblers.”

Source: “DSM-IV Criteria for Pathological Gambling,” National Gambling Impact Study Commission, June 1999, pp. 4-2, govinfo.library.unt.edu/ngisc/reports/4.pdf

Symptoms of Pathological Gamblers

Preoccupation — Preoccupied with gambling, such as by reliving past gambling experiences, planning next wagers or thinking about ways to obtain gambling money.

Tolerance — Needs to gamble with increasing amounts of money to achieve desired excitement.

Withdrawal — Restless or irritable when attempting to reduce or quit gambling.

Escape — Gambles to escape problems or relieve an unfavor-able mood, such as feelings of helplessness, guilt, anxiety or depression.

Chasing — After losing money on gambling, often returns another day to get even.

Lying — Lies to family members, therapists, others to conceal extent of gambling.

Loss of control — Has made repeated, unsuccessful attempts to control or stop gambling.

Illegal acts — Has committed theft, fraud or other illegal acts to finance gambling.

Risk to significant relationship — Has jeopardized or lost a significant relationship, job or educational or career opportunity because of gambling.

Bailout — Has relied on others to provide money to relieve desperate financial situations caused by gambling.

* States without lotteries are Alabama, Alaska,Hawaii, Mississippi, Nevada, Utah and Wyoming.

530 CQ Researcher

ever, is the Internet. A crucial factoris a Justice Department legal opinionin December 2011 that cleared the wayfor states to permit online betting ex-cept on sports on an intrastate basis.“That’s huge,” says Anthony Cabot,who heads the gaming law group ata Las Vegas law firm and also teach-es at the University of Nevada’s BoydSchool of Law. Meanwhile, critical ob-servers worry that the social costsfrom gambling are getting short shrift.“The benefits are easy to measure,”says Edward Morse, a professor atCreighton University School of Law inOmaha and co-author of a book onthe casino industry. “The costs areharder to measure, and politicians ex-ploit that over time.” 9

As lottery states work to boost sales,casino operators compete for customersand more states consider legalizingcasinos, here are some of the ques-tions being debated:

Are lotteries a good way forstates to raise revenue?The Arkansas state constitution first

prohibited lotteries in 1836. By 2000,more than 30 states were sponsoringlotteries, but Arkansas voters decisive-ly rejected a ballot initiative that wouldhave amended the constitution to per-mit lotteries as well as six casinos inthe state.Eight years later, however, the state’s

voters approved by a 25 percent mar-gin an amendment to permit lotteries

with funds earmarked for college schol-arships for Arkansas citizens. “It sound-ed too good to voters,” Jerry Cox, pres-ident of the anti-lottery Arkansas FamilyCouncil Action Committee, acknowl-edged after the election. 10

Lotteries were a common meansof public financing earlier in Ameri-can history but fell out of favor fromthe mid-19th until the mid-20th cen-tury. They regained popularity forone reason: money for state govern-ments. “Absolutely,” says lottery asso-ciation executive Gale. “Every lotteryin its original bill determines wherelottery funds are to be directed,”Gale explains — typically for edu-cation or, more recently, specificallyfor scholarships.

GAMBLING IN AMERICA

G amblers looking for the biggest casino in the UnitedStates need directions not to Las Vegas but to FoxwoodsResort Casino in southeastern Connecticut, midway be-

tween Boston and New York City. And the owner of the 6.7 mil-lion-square-foot facility — bigger than the Pentagon — is notany of the big names associated with Las Vegas like Harrah’s orCaesar’s but the Mashantucket Pequot Tribal Nation, a federallyrecognized Indian tribe with fewer than 1,000 members. 1

Native American tribes own almost as many casinos in theUnited States — 459 — as do private companies, which have492, counting horse track locations. Tribal casino revenues to-taled $26.7 billion in 2011, compared to $35.6 billion for com-mercial casinos. The décor may be different — more NativeAmericana at tribal facilities — and the locations more out ofthe way. But the slots and the games are much the same. And,just like the states, Indian tribes have one overriding reason forpromoting gambling on tribal lands: money.Gambling “gives [tribes] enough money to employ people

on the reservation, to generate economic activity on the reser-vation,” says Jason Giles, executive director of the National In-dian Gaming Association, in Washington. “That’s the primarygoal of having a gaming operation.” 2

“Gambling has usually been pushed and legalized insofaras it can be relevant to developing government resources,” saysKevin Washburn, a gaming-law expert and dean of the Uni-versity of New Mexico Law School in Albuquerque. “It’s simi-lar for tribes. They’ve built hospitals, roads and schools and in-creased the level of government services generally.”

Indian gaming has been controversial from the beginningof its modern era in the 1980s, when the U.S. Supreme Courtrebuffed an effort by state and local authorities to restrict bingogames at Indian reservations in Riverside County, Calif. Thecourt’s 6-3 decision in California v. Cabazon Band (1987) re-lied on the federal interest in promoting tribal self-sufficiencyto hold that states cannot regulate Indian gaming except aspermitted by federal law. Congress responded the next year bypassing the Indian Gaming Regulatory Act, which protects tribes’right to allow gambling subject to compacts to be negotiatedin good faith with state governments. 3

Today, 247 tribes — not quite half of the 554 recognizedtribes — operate gaming facilities in 29 states. Some are nearpopulation centers such as those in California, Connecticut,Florida and Oklahoma; others are more remote, like those inAlaska or Montana. Overall revenues have been steady, ac-cording to Giles, despite the 2008 recession and slow recov-ery since. But the overall figure obscures significant disparities.Forty of the casinos account for more than three-fourths of therevenue, he says, while “the vast majority” of tribes get no rev-enue from their gaming. “There are haves and have-nots intribal gaming,” Washburn says.Relations with state governments remain critical and con-

tentious. In Florida, the Seminole Tribe charged the state gov-ernment in the 1990s with bad faith in negotiations over agaming compact; the Supreme Court blocked the suit in a1996 decision. Only in 2010 did the Seminoles and the statefinally reach agreement on allowing full casino operations. The

Tribes Aim to Cash In on Casinos“There are haves and have-nots in tribal gaming.”

June 15, 2012 531www.cqresearcher.com

Critics find it unseemly, or worse,for state governments to depend ongambling for revenue, especially asmore promotion is needed to keep upsales. “The public voice of Americangovernment today is lotteries and casi-nos,” says Bernal with Stop PredatoryGambling. Apart from military recruit-ment, lotteries are virtually the onlyprogram that governments routinelyadvertise. “It’s a government programthat’s based on pushing citizens intodeeper personal debt and creatingaddiction to feed off it,” he says.“Lotteries have become quite ag-

gressive” in their marketing, accordingto Whyte with the problem-gamblingcouncil. “You would never see a bill-board saying buy another package of

Luckies because we need the rev-enue,” Whyte says. “But that’s exactlywhat you see on state lotteries, oper-ating and profiting from an addictiveproduct.”Morse, the Creighton law professor,

finds lotteries especially “pernicious” be-cause they draw players primarily fromthe less well-educated and the lesswell-to-do. “If you ask in an office, al-most none of the professional staff play,”Morse says. “The support staff playsalmost every week, and they spend alot of money.” Rockefeller Instituteanalyst Dadayan similarly calls lotter-ies “a very regressive tax.”Gale dismisses the criticisms. He em-

phasizes first that lotteries are strictlyvoluntary. “If you don’t pay your taxes,

what happens to you? They may comeafter you and haul you off to jail,” Galeexplains. “If you don’t buy your lotteryticket, what happens to you? Nothing.It’s a choice that people have.”Gaming industry executive Fahrenkopf

echoes the point. “Lotteries are a tax onthe willing,” he says.Gale also disagrees that lotteries

draw primarily from lower socioeco-nomic classes. “I don’t believe it’s thelower-income folks who are support-ing the games,” he says. “Pretty muchthe demographics of the lottery play-er tracks the demographics of the state’spopulation.” He acknowledges thatlower-income players may spend a larg-er percentage of their income on lot-teries than higher-income players do,

compact includes a provi-sion — as in most of thestate-tribal agreements —for the tribe to share rev-enue with the state gov-ernment.Until recently, the Pequots

were definitely in the “have”category. Foxwoods hasproduced billions of dol-lars in revenue for thetribe since full casino op-erations began in 1992.The proceeds allowed thetribal council to dispense annual stipends to adult tribalmembers exceeding $100,000 apiece. But the payments havebeen suspended since the casino hit hard times brought onby the recession, increased competition and overinvestment.Today, the casino is $2.3 billion in debt and trying to ne-

gotiate a severe refinancing with creditors. The tribal councilsays the community “is pulling together,” but a tribal elder wasless sanguine in a comment to an Associated Press reporter.“Our stress levels are very high up here,” Loretta Libby re-marked. “I just don’t know what’s going to happen.”Nationally, further expansion of Indian gaming may be

geographically limited, Washburn says. “There’s not a wholelot of undeveloped markets,” he says. “Most of the tribes thathave markets for gambling have been offering it already.”

The lagging economy alsoposes a challenge, according toGiles. “It’s a business that’s de-pendent on consumers and theirability to spend entertainmentdollars,” he says. “Until the econ-omy gets stronger, we’re goingto remain where it’s at.“There are plenty of tribes

with expansion plans, but themarket’s going to have to bemore secure for the tribes todo that.”

— Kenneth Jost

1 Background drawn from Michael Sokolove, “A Big Bet Gone Bad,” TheNew York Times Magazine, March 18, 2012, pp. 36ff. See also Michael Melia,“Conn. tribe sees fortune reversal amid casino woes,” The Associated Press,March 28, 2012.2 For previous coverage, see Peter Katel, “American Indians,” CQ Researcher,April 28, 2006, pp. 361-384, updated Aug. 5, 2010; “Indian Casinos Rake inBillions,” in Patrick Marshall, “Gambling in America,” CQ Researcher, March 7,2003, pp. 214-215.3 For a full account of legal background, see Kevin K. Washburn, “TheLegacy of Bryan v. Itasca County: How an Erroneous $147 County Tax NoticeHelped Bring Tribes $200 Billion in Indian Gaming Revenues,” Minnesota LawReview, Vol. 92, (2008), pp. 919 ff.

Bigger than the Pentagon, the Foxwoods Resort Casino inConnecticut, owned by the tiny Mashantucket Pequot Tribe,

is the nation’s largest casino.

Felix Stein

532 CQ Researcher

but he says the same comparison istrue for expenditures on groceries orother budget items.Overall, lottery money represents

only a small — and a declining —fraction of state budgets: “niche” rev-enue, as an expert with the NationalConference of State Legislatures onceput it. Net proceeds from lotteriesamounted to 1.19 percent of total staterevenue in 1997; by 2006, they amount-ed to only 0.97 percent of total staterevenue — midway between motor ve-hicle license taxes (1.07 percent) andtobacco excise taxes (0.82 percent). 11

For some states, the percentages arehigher — more than 7 percent in RhodeIsland, South Dakota and West Vir-

ginia, according to the nonpartisan TaxFoundation. 12 Whatever the amounts,gambling consultant Christiansen saysstate governments count on themoney. “If you’re a state treasurer, Iwill tell you that numbers like that aremeaningful,” he says.Advertising and promotion are “ab-

solutely” essential to keeping up de-mand, according to St. Mary’s politi-cal scientist Pierce. “Advertising isreally the only way for states to keeptheir lottery at their current level,” hesays. “If they didn’t do that, theywould probably see noticeable dropsin revenue.”Gale acknowledges as much. “Lot-

teries having a product to sell are no

different from Coke or Pepsi,” he says.“They have to maintain communica-tion with their players.” Bigger jack-pot games are one draw. “Yes, it’s ab-solutely a way to bring in newplayers,” he says.The odds against winning or shar-

ing in a nine-figure jackpot are near-ly astronomical, of course: 176 mil-lion to 1 in the March 30 drawing.But Gale emphasizes the availabilityof smaller prizes in the games aswell. “Lots of people are winning lotsof times on all the lottery games,”he says.Despite the efforts of governments

to boost gambling revenue, Dadayanwarns against relying too much on

GAMBLING IN AMERICA

Casino and Lottery Revenues RoseTotal gaming revenues rose nearly 44 percent, from $62 billion in 2000 to about $89 billion in 2009, the latest year for which data are available. They hit $92 billion in 2007 but then dipped during the next two years amid the nation’s steep economic downturn. Commercial and tribal casinos accounted for 65 percent — or $58 billion — of 2009 revenue. Lotteries accounted for 28 percent, or $25 billion.

Source: “Gaming Revenue By Industry: 2000 to 2009,” U.S. Census Bureau, September 2011, www.census.gov/compendia/statab/2012/tables/12s1259.xls

Card rooms Commercial casinos Charitable games and bingo Indian casinosLegal bookmaking Lotteries Pari-mutuel wagering

(in $ billions)Gross Gaming Revenues by Industry, 2000-2009

0

5

10

15

20

25

30

$35

2009

$89.2

2008

$92.1

2007

$92.2

2006

$91.0

2005

$84.4

2004

$78.6

2003

$73.0

2002

$68.7

2001

$65.1

2000

$62.1TOTAL

Getty

Imag

es/J

oe R

aedl

e

(in $ billions)

June 15, 2012 533www.cqresearcher.com

gambling for state budget needs. “Inthe long run, the revenues from gam-bling are much less than the pendingneeds,” she says. “States cannot counton gambling as a sustainable sourceof revenue for funding education andother services.”

Do states benefit from casinos?When the Iowa legislature autho-

rized riverboat casinos in 1989, it re-quired an initial vote in the countywhere the vessel was to be dockedand subsequent votes every eightyears for the operator’s license to berenewed. Two decades later, the legis-lature in 2011 amended the law to elim-inate the need for continuing referen-dums after an initial renewal.In urging the change, Sen. Jeff Daniel-

son, a Cedar Falls Democrat and floormanager for the legislation, noted thatcounties with existing casinos had rou-tinely approved gambling referendumsby margins of 70 percent or higher. Therenewal requirement made it harder forcasinos to borrow money, Danielsonexplained, because banks are reluctantto extend favorable rates to borrowerswho need voter approval every eightyears to stay in business. 13

Gaming association presidentFahrenkopf points to the developmentas evidence of the growing accep-tance of casinos in communities withgambling operations. Further evidencealong the same line comes from a pollof elected officials and civic leaders incasino states other than Nevada, pub-lished in the association’s most recentannual report.Eighty-three percent of those sur-

veyed said the overall impact of casi-nos on their communities has beenpositive, while only 13 percent said theimpact had been negative. And 88 per-cent said the feared negative impactscited by casino opponents — crime,prostitution and a bad image general-ly — had not materialized. 14

Industry consultant Christiansen saysthere has been “a huge historic shift”

in public opinion toward casinos.“Today, when casinos are proposed ina jurisdiction, the response is, ‘Every-body else does. Why haven’t we donethis already?’ ”Casino interests and supporters make

their pitch to voters and lawmakerson three major grounds: casinos bringjobs, promote economic developmentand pay substantial state and localtaxes. Overall, commercial casinos em-ployed 339,098 people in 2011 andpaid $12.9 billion in wages, accordingto the gaming association — both fig-ures slightly below the previousyear’s.* Total taxes paid to 22 statesamounted to $406.5 million, up 6 per-cent from the previous year. Total con-sumer spending at commercial casi-nos amounted to $958.7 million, upfrom the previous year. “We’re a main-stream industry,” Fahrenkopf says. 15

Critics respond by minimizing theclaimed benefits. They note, for ex-ample, that casino revenue may sim-ply “cannibalize” business from other,often locally owned, establishments.They also emphasize what they be-lieve are substantial social costs, chieflyincreased crime in casino jurisdictionsand increased personal bankruptciesamong casino patrons.The social science research cited by

the critics is sharply disputed by theindustry. “You can’t prove it conclu-sively to everybody’s satisfaction,” saysMorse, the Creighton law professor. 16

The leading academic on the issueis Earl Grinols, a professor of eco-nomics at Baylor University in Waco,Texas. In a book published in 2004,Grinols calculated that the social costsof gambling — chiefly, derived fromproblem and pathological gamblers —exceeded the social benefits by a ratioof 3-to-1. Grinols repeats that estimatein a fact sheet that summarizes testi-

mony he gave to Minnesota legisla-tors in 2011 on behalf of the FreedomFoundation of Minnesota, a limited-government advocacy group. 17

In Grinols’ analysis, the principalsocial cost derives from crimes com-mitted by pathological gamblers, esti-mated at more than $4,300 per indi-vidual. In his book, Grinols cited studiesshowing that a majority of gamblersin treatment and a majority of mem-bers of Gamblers Anonymous had com-mitted illegal acts as a result of theirgambling. He also notes a study usedby the congressionally created Na-tional Impact of Gambling Study Com-mission in its 1999 report that foundpathological gamblers three times morelikely to have been incarcerated atsome time in their life than individu-als who had not gambled.Other social costs cited by Grinols

include lost productivity and work time,bankruptcy, social service costs, illnessand family costs in terms of divorce,separation, child abuse and neglectand domestic violence. In addition, hecited an estimated $3,800 per patho-logical gambler in what he called“abused dollars” — in effect, incomeput at risk in gambling instead ofbeing used for essential needs.In a more recent overview, Douglas

Walker, an associate professor of eco-nomics at the College of Charlestonin South Carolina, says the crime es-timates cited by Grinols and othergambling industry critics are overstat-ed. He also questions the validity ofcounting gambling losses or bad debtsas a “social” instead of an individualcost. On the other hand, Walker alsosays the tax revenues from the gam-bling industry may be overstated. 18

Fahrenkopf bluntly rejects theclaimed social costs. Critics “are outthere arguing that the sky is going tofall, that it’s going to increase bank-ruptcy, that crime is going to increase,”he says. “That’s never proven true inany place where they’ve made that ar-gument.”

* Tribal casinos are not included; tribal casi-nos do not pay state taxes but typically agreeto share revenue with states in order to se-cure permission to operate.

534 CQ Researcher

GAMBLING IN AMERICA

Morse counters that social costs as-sociated with problem gamblers cannotbe denied. “To the extent that you makegambling easily accessible,” he says, “it’slikely that you’re going to exacerbate theproblems that problem gamblers have.”

Should Internet gambling be legal?Illinois lottery officials think they have

a sure-fire idea for boosting ticket sales:the Internet. Beginning on March 25,Illinois became the first state to allowresidents to buy lottery tickets online.Illinois Lottery Superintendent Michael

Jones calls the move the beginning of“a new era” that brings the lottery inline with the growing reality of e-com-merce. Northstar, the private companythat manages the Illinois Lottery, pre-dicts that online sales will attract600,000 to 1 million new customers,people who have grown up with theInternet but do not think to buy lot-tery tickets. The company promises user-friendly ticket buying and a registrationprocess that will inhibit underage andout-of-state play. 19

Illinois legislators approved Inter-net lottery sales three years ago, butthe move had been on hold pendingan answer from the U.S. Departmentof Justice on whether online saleswould violate the 1961 Interstate WireAct, which prohibits use of any “wirecommunication facility” for betting on“any sporting event or contest.” TheJustice Department replied in Decem-ber 2011 that the act applies only tosports betting. 20

The Illinois move holds out theprospect of increased sales for thestate’s 38-year-old lottery but is alsostirring concern among the existingnetwork of retail outlets, which fearreduced sales and commissions. Butthe Justice Department opinion hasbigger implications nationwide becauseit lifts what had been thought to bea broad federal prohibition against In-ternet gambling, including online poker.“This is hugely important,” says Las

Vegas gaming law expert Cabot. “It ef-

fectively says to the states that withthe exception of sports, you are freeto do whatever you want to do onan intrastate basis.”The enthusiasm within the gambling

industry is matched by concern amongthe industry’s critics, who fear that theInternet will add to the social costs ofproblem gambling. “Now the big pushis to open a lottery and a casino and alottery retailer in every home, office, dormroom and smart phone in America,” saysBernal with Stop Predatory Gambling.“Internet gambling will be open 24 hoursa day, seven days a week, right in yourhome or office or on your phone.”Online poker, offered by sites based

outside the United States, exploded by2005 into a $2.5 billion industry de-spite the Justice Department’s previousstance against Internet gambling anddespite concern on Capitol Hill. 21 Con-gress responded in 2006 by passingthe Unlawful Internet Gambling En-forcement Act, which made it illegalfor financial institutions to processpayments for online betting. 22

Some online sites closed down afterPresident George W. Bush signed themeasure into law on Oct. 13, 2006. TheJustice Department stiffened its stancein April 2011 by obtaining indictmentsagainst the operators of three offshorepoker sites, two based in Antigua andone on the Isle of Man, for allegedlyviolating the law. By January 2012,prosecutors had obtained convictionsagainst three of the 10 defendants. 23

The casino industry has historical-ly resisted Internet gambling, fearingcompetition but emphasizing concernsabout consumer protection. “Millionsof Americans have been going onlinewith no consumer protection whatso-ever, no jobs being created and notaxes being paid,” Fahrenkopf says.But he says the industry now supportsfederal legislation that would allowstates to permit online gambling withsufficient safeguards.With Internet gambling legislation

failing to advance in Congress, how-

ever, federal policy is uncertain, and theinitiative lies with the states. “The de-bate now is whether the feds will allowit or will leave it to the states,” indus-try consultant Christiansen says. “Thequestion is difficult to predict becausethe politics are extremely complex.”States are showing interest but ex-

ercising caution. The Iowa Senate ap-proved legislation in March to permitonline poker, but the bill was blockedin the House. California and New Jer-sey legislators are also studying theissue. Meanwhile, Nevada is alreadyaccepting applications for online casi-nos, with decisions expected by theend of the year. 24

Christiansen says lottery states likelywill look to Illinois’ experience with on-line sales before proceeding on theirown. New York, which began offeringa limited online lottery game in 2005,has plans in the works for two additionaljackpot games online.Despite the legal uncertainties, William

Eadington, director of the Institute for theStudy of Gambling and CommercialGaming at the University of Nevada-Reno,says there is “a degree of inevitability”about online gambling. And he discountsthe critics’ concerns that the Internet willadd to the social costs, noting that on-line gambling is already legal in Britainand several other European countries. “Theexperience in Europe suggests that it’snot going to ravage society,” Eadingtonsays. “The social costs are not going tobe that different.”

BACKGROUNDGambling Debates

G ambling reached its present levelof acceptance in the United States

only after long-held objections basedon religious views and social costs

Continued on p. 536

June 15, 2012 535www.cqresearcher.com

ChronologyBefore 1960Commercial gambling, lotteriesare illegal nationwide as 20th century begins.

1931Nevada legalizes casinos; Las Vegasbecomes tourist mecca for gamblers.

1950-1951Senate investigative committeedocuments links between organizedcrime, gambling.

•

1960s-1980First state-sponsored lotteries;New Jersey legalizes casinos.

1964New Hampshire becomes firststate in modern era to sponsorlottery. Three more states follow:New York (1967), New Jersey(1970), and Massachusetts (1974).

1971North American Association of Stateand Provincial Lotteries formed.

1972National Council on ProblemGambling founded.

1976New Jersey legalizes casinos in bidto revive Atlantic City.

1980American Psychiatric Associationrecognizes pathological gamblingas mental disorder.

•

1980s-1990sMore states sponsor lotteries,approve casino gambling; Indi-an tribes gain conditional

right to operate casinos ontribal lands.

1985National Indian Gaming Associationfounded.

1987, 1988Supreme Court says tribes can oper-ate gambling facilities on reservationsin states where gambling is legal(1987). . . . Indian Gaming RegulatoryAct requires states, tribes to negotiateover gambling operations (1988).

1994National Coalition Against LegalizedGambling founded; reorganized in2008 as Stop Predatory Gambling.

1995American Gaming Associationfounded.

1996Supreme Court rules that tribescannot sue state governments fordamages for refusing to negotiategambling compacts.

1997Poll finds that a majority of Ameri-cans — 52 percent — had playeda lottery within previous year.

1999National Gambling Impact StudyCommission calls for rollback in“convenience” gambling; recom-mendations not acted on.

•

2000-PresentMore state lotteries are launched;casino competition intensifies inNortheast; online poker booms.

2002Macau permits privately owned casi-nos; surpasses Las Vegas as world’sbiggest gambling center by 2007.

2005U.S. online poker revenue is estimat-ed at $2.5 billion, despite legal curbs.

2006Unlawful Internet Gambling Enforce-ment Act prohibits use of creditcards or online payment systems forInternet gambling in United States.

2007-2008U.S. economy falls into recession;gambling revenues drop.

2008Arkansas becomes 43rd state tolegalize lottery; ballot measure toearmark revenues for collegescholarships approved with 63 per-cent of vote.

2010Delaware, Pennsylvania permittable games at existing slots casi-nos. . . . Washington, D.C., quietlyapproves measure to permit onlinegambling; after controversy, mea-sure repealed in February 2012.

2011Massachusetts permits three casi-nos and one slots-only facility instate (Nov. 22). . . . Nevada Gam-ing Commission permits onlinepoker (Dec. 22). . . . Justice De-partment says states can permitintrastate online gambling, excepton sports (Dec. 23).

2012New York legislature gives initialapproval to constitutional amend-ment to legalize casinos. . . . Re-tired Illinois couple win $218 mil-lion share of record $656 MegaMillions jackpot in March 30 draw-ing; winners in Kansas, Marylandnot identified. . . . California, NewJersey legislatures consider onlinegambling bills. . . . Rhode Islandto vote on permitting table gamesat slot parlors (Nov. 6).

536 CQ Researcher

yielded to a relaxed morality and aninsistent drive by states and Indiantribes for new revenue sources. At thestart of the 20th century, every formof non-social gambling except bettingat horse racing tracks was illegal virtu-ally nationwide. Those bans fell over thecourse of the century — first in a fewstates and then in a rush to legalizationby the end of the 1990s. 25

Lotteries were a common means ofpublic financing in colonial Americaand in the first decades of U.S. inde-pendence. The colonies used lotteriesbecause England denied them any tax-ing powers. The earliest American uni-versities — including Harvard, Williamand Mary and Yale — were fundedin part through lotteries. After inde-pendence, states used lotteries be-

cause no other major tax mechanismshad been created. Recreational gam-bling was also common, especially inthe South and along the Western fron-tier. But there was also opposition,based on religious beliefs dating fromthe Puritan era and on more specificconcerns over time about crime andcorruption and the social inequity ofderiving funds from the poor by hold-ing out the promise of easy wealth.The opposition to gambling gath-

ered strength from the 1830s and be-came established national policy by theend of the century. States dropped andin many cases specifically banned lot-teries, whether public or commercial.The last of the legal lotteries, the state-chartered Louisiana Lottery Company,established in 1864, was so tainted withcorruption that Congress passed laws

in the 1890s to prohibit interstate mail-ing or transportation of lottery materi-als. In upholding the interstate trans-port ban in 1903, the Supreme Courtcondemned “the wide-spread pestilenceof lotteries.” 26 Meanwhile, profession-al gamblers had given recreationalgaming a bad reputation as well, thanksto sometimes shady practices and theseemingly inherent association with al-cohol and prostitution. Congress re-flected early 20th-century national sen-timent by requiring territorial Arizonaand New Mexico to prohibit casinosin order to gain statehood.The modern era of gambling began

in Nevada, a state with a history ofwidespread legal gambling until a legis-lated ban in 1909. The ban did noteliminate gambling but drove it under-ground. The legislature then lifted the

GAMBLING IN AMERICA

Continued from p. 534

Ted Hartwell began playing poker as a youngster, underthe tutelage of his father, a professor at Texas Tech Uni-versity. He played in college, earning enough to get his

own apartment, and he played more once he got a job in LasVegas. Eventually, Hartwell was playing video poker so often thathe lied to his family and coworkers about the time spent andthe money lost — and lied to himself about his ability to stop.Carol Hare began gambling two years after moving to Las

Vegas to help relieve stress from marital difficulties. The gamblingaccelerated after her divorce the next year. Video poker be-came the primary focus of her life. She lost jobs, lost friendsand lost time with her three young children. She wrote badchecks to get cash to keep playing, got an eviction notice andcontemplated suicide.Today, Hartwell and Hare are both recovering gambling ad-

dicts. Hare has not gambled for 21 years, Hartwell for five.Hare deals daily with the issue as executive director of theNevada Council on Problem Gaming, a private, nonprofit coun-seling and referral center. The issue is also constantly on Hartwell’smind. “Each day I make that commitment to not gamble today,”Hartwell explains, “recognizing that people who’ve had a lotmore time in recovery than I had have gone back.”Problem gamblers number in the tens of thousands in Neva-

da and in the millions in the United States. A study commis-sioned by the Nevada legislature in 2002 estimated that 2.1 per-cent of the state’s population met the definition of “pathological”

gamblers laid out in the American Psychiatric Association’sclinical guide. (See box, p. 529.) Another 3 percent met thebroader category of “problem” gambler. 1 Based on the state’scurrent population, that might mean 57,000 pathological gamblersand another 81,000 problem gamblers.Nationwide, Keith Whyte, executive director of the Na-

tional Council on Problem Gambling, in Washington, saysstudies estimate that 1 percent of the population meet thedefinition of pathological gambling — about 3 million peo-ple — with another 3 million to 6 million problem gamblers.The total social cost of problem gambling, Whyte says, is $7 bil-lion per year. 2

The resources for helping problem gamblers are greater thanwhen Hare began to face her problem in 1991. “There wereno billboards, no newspaper stories, no educational programs,”Hare recalls. She was guided into counseling by an observantbartender, himself a compulsive gambler.Today, casinos in Nevada are required by law to post in-

formation about the national gamblers hot line. And Nevada isone of 35 states with problem-gambling agencies financed inpart with public funds, according to Whyte. But he calls theoverall funding “a pittance” — about $60 million per year. InNevada, Hare says her council’s annual budget once was around$500,000, but the public funding was cut in half last year whenthe legislature diverted half of a $2-per-slot machine fee ear-marked for the agency to the state’s general fund.

Problem Gamblers Struggle to Beat Habit“Each day I make that commitment to not gamble today.”

June 15, 2012 537www.cqresearcher.com

ban in 1931 to allow the little deserttown of Las Vegas to profit from theinflux of thousands of constructionworkers building Boulder Dam (nowHoover Dam), about 30 miles to thesouth. Organized-crime figures pro-vided some of the financing and muchof the expertise for the first casinos.The town grew slowly at first, thenmore rapidly after World War II astourism boomed in economic goodtimes. With Reno and Tahoe its onlycompetition, Las Vegas rose to becomethe gambling capital of the nation and,to some extent, the world. 27

Legal lotteries returned to the Unit-ed States beginning in 1964, but onlyafter proposals were defeated or failedto come to a vote in several states —including Nevada — and in Congress.Low-tax New Hampshire debuted with

a sweepstakes-style lottery after the legis-lature authorized a referendum that wonapproval with 73 percent of the vote.Poorly run — too complicated, notenough outlets — the lottery netted only$2.7 million for state education, short ofthe projected $4 million. New York fol-lowed in 1967, but its lottery also fell shortof expectations. New Jersey is creditedwith launching the first successful mod-ern lottery in 1971, two years after gain-ing approval with 82 percent of the vote.New Jersey grossed $137 million in salesin its first year — more than five timesthe projected amount — thanks to ag-gressive marketing, widespread availabili-ty and frequent prizes. Eleven states fol-lowed suit by the end of the decade. 28

Casino gaming had failed to advance,in part because of congressional hear-ings in the early 1950s documenting the

link to organized crime. Proposals to le-galize casinos failed in several states, in-cluding New Jersey in 1974. Two yearslater, however, the state’s voters narrowlyapproved a proposal to allow casinos inAtlantic City, a once-prosperous shoreresort much in need of revitalization.The first of what would eventually be-come a dozen casinos opened in 1978,but Atlantic City’s hoped-for boom failedto materialize because of Las Vegas’sstronger appeal for fun-seeking touristsand the later legalization of state andtribal casinos elsewhere in the East andMid-Atlantic regions.

Betting on Games

G ambling grew in the 1980s and’90s as one state after another as

Scientific understandingof problem gambling hasalso advanced in the pasttwo decades. Today, gamblingaddiction is recognized ashaving a biological basis,according to Whyte. “Thefeatures that characterizesubstance abuse also char-acterize gambling addiction,”he says.Hartwell recalls how the

addiction felt. “It goes be-yond a pleasure point toan anesthetic effect,” he says.“I was completely checkingout when I was gambling compulsively.” Today, understandingthe physical sensations of addiction is a big help, Hartwell says.Despite advances in the science, the treatment options are

largely what they were two decades ago: cognitive therapy,group sessions and 12-step protocols. “There are no medica-tions approved yet,” Whyte say. “But there have been somepromising trials in the past decade.”Hare started volunteering with the Nevada council in 1993.

Somebody at Harrah’s, one of the big casino companies, heardher talk and helped get her hired for two years as a paid con-

sultant on what the companyshould do about problemgambling. Harrah’s decided tohelp beef up the council, andHare became a full-time staffmember in 1996.Today, she says the gaming

industry recognizes its respon-sibility to help with preventionand treatment of problemgambling. Frank Fahrenkopf,president of the American Gam-ing Association, says the in-dustry provides about $20 mil-lion per year toward the effort.Says Hare: “We would like for

them to do more.”“This is a mental health disorder,” she adds. “It’s in every-

body’s interest that more be done.”

— Kenneth Jost

1 Cited in J. Patrick Coolican, “Tony’s Story: The pull of a drug, the push tothe brink,” Las Vegas Sun, Nov. 22, 2009.2 For a comprehensive though dated overview, see “Problem and Patho-logical Gambling” in National Impact of Gambling Study Commission (1999),http://govinfo.library.unt.edu/ngisc/reports/4.pdf.

Casinos in Nevada are required by law to post informationabout the national gamblers hot line. Nevada is one of 35 states with problem-gambling agencies financed in part with public funds. Above, the Las Vegas “Strip.”

www.lasvegaslover.com

538 CQ Researcher

well as many Indian tribes bet on lot-teries or casinos for needed revenue.By the end of the century, lotterieshad become a commonplace activityfor a majority of Americans. Commercialor tribal casinos were operating in amajority of states. Tens of thousandsof electronic gaming devices (EGDs),including slot machines, video poker,video keno and so forth, had beeninstalled in bars, truck stops, conve-nience stores and other locations —legally in some states, more dubious-ly in others. And Internet gamblingwas rapidly increasing after debutingwith the birth of the World Wide Webin 1995. 29

The rapid spread of lotteries in the1970s continued in the next twodecades, with lotteries operating in37 states and the District of Colum-bia by 1997 and sales that year to-taling $34 billion. A national opinionpoll in 1997 found that 52 percent ofAmericans had played a lottery with-in the previous year; per capita an-nual spending on lotteries in stateswith legal games was put at $150. Toboost sales, states adopted more fre-quent prize drawings. To meet com-petition from large lotteries, six statesand the District of Columbia formedthe Multi-State Lottery Association in1987, joined by nine more, before itsPowerball game debuted in 1992.Despite the remote chance of a jack-pot, Powerball took in more than $1 bil-lion in the next few years.Casino gambling advanced less

rapidly, abetted by states’ desires forrevenue but slowed by still strong con-cerns about the social effects of com-mercial gaming. The nine states thatlegalized casinos from 1989 till the endof the century typically confined themto specific locations targeted for eco-nomic development, such as “historic”Deadwood in South Dakota’s BlackHills region (1989). States along theUpper Mississippi Valley — Iowa, Illi-nois and Missouri — approved river-boat casinos one after another specif-

ically to draw customers from the stateon the river’s other side. By 2000, com-mercial casinos’ gross revenue had risento $26.5 billion, according to Chris-tiansen Capital Advisors’ compilation.In a telling bow to revenue needs,Iowa legislators initially set a $5 limiton casino bets but lifted the restric-tion in 1994.Indian tribes entered the casino busi-

ness only after a legal and politicalbattle in the courts and in Congressover their power to allow casinos ontribal reservations. The Supreme Courtbacked tribes with a 1987 decision al-lowing them to operate casinos in statesthat permitted gambling; Congress gavethe states significant leverage the nextyear by passing the Indian GamingRegulatory Act to require tribes to ne-gotiate with state government over termsof operation. Some states balked, andthe Supreme Court in 1996 ruled thattribes could not sue a state for dam-ages for refusing to negotiate.Despite the difficulties, tribal gam-

ing spread, with 146 tribes operatingcasinos in 24 states by the end of thedecade; revenue ballooned from $212million in 1988 to $6.7 billion in 1997.Combined with legal states with notribal operations, casinos could nowbe found in 28 states altogether.In addition to lotteries and casinos,

stand-alone slot machines, video poker,video keno and other EGDs proliferatedin the 1980s and ’90s. South Carolina,which legalized cash payoffs from videopoker in 1991, had 34,000 machines inoperation in 1999, with $2.5 billion ingross receipts and licensing fees to thestate totaling $60 million. Even so, themachines were banned in 2001 after thestate supreme court blocked a proposedreferendum to determine their legality.Besides South Carolina, several other

states had at least 10,000 EGDs, in-cluding some such as Alabama, NewJersey and West Virginia, where ma-chines were labeled “for amusementonly” and cash payoffs were madesurreptitiously. “Such devices provid-

ed only minimal revenue and none ofthe claimed benefits in employmentand economic development. In addi-tion, video poker in particular waslastingly stigmatized by clinical psy-chologist Robert Hunter as “the crackcocaine” of gambling because of theaddictive nature of a rapid-fire gamewith the seeming prospect of skill-based payoffs. 30

By the mid-1990s, Congress hadgrown sufficiently concerned to cre-ate a commission in 1996 to study theimpact of gambling — much like onein the 1970s that had come up witha laundry list of recommendations, fewof which were adopted. The report bythe new National Gambling ImpactStudy Commission, released June 18,1999, set out 76 recommendations, in-cluding a moratorium on further ex-pansion of gambling. The report alsourged reduced advertising of state lot-teries, a ban on Internet gambling andexpanded research about and treat-ment for problem gambling. 31

Today, commission member RichardLeone, a senior fellow with the Cen-tury Foundation, a nonpartisan thinktank in New York City, credits the com-mission with encouraging research andhelping prompt Congress to ban useof credit cards for Internet gambling.Otherwise, he says he was “disappointedby the lack of impact.”

One More Round

G ambling gained legal status in afew more states in the 21st cen-

tury, leaving Hawaii and Utah as theonly states with no state- or tribal-sponsored or commercial gaming. In-ternet gambling, especially online poker,grew robustly, even in the face of thefederal government’s official positionthat using the Internet to bet acrossstate or national borders was illegal.The old forms of gambling — pari-mutuel wagering on horse or dog rac-ing and charitable games and bingo —

GAMBLING IN AMERICA

June 15, 2012 539www.cqresearcher.com

continued to decline,but the take for lot-teries and commer-cial and tribal casi-nos a l ike grewsteadily except for adip after the 2008economic downturn.State-sponsored

lotteries won ap-proval in four South-eastern states in the2000s after cam-paigns tied to edu-cation funding over-came religious-basedopposition. 32 SouthCarolina voters ap-proved a lottery in2000 by a comfort-able 54 percent to46 percent margindespite oppositionfrom the state Cham-ber of Commerce,NAACP and church groups. Tennesseevoters followed suit, with 58 percentapproval. In North Carolina, the legis-lature approved a lottery in 2005, witha tie-breaking vote cast by the state’sDemocratic lieutenant governor. Voterapproval of the lottery referendum inArkansas in 2008 left Alabama and Mis-sissippi as the only holdout states inthe Southeast. Religion was seen as themain barrier in Alabama, but in Mis-sissippi fear of competition with casi-nos was seen as a bigger factor.Meanwhile, casino gaming advanced

in the Mid-Atlantic region as neigh-boring states in the geographically com-pact area maneuvered either to cap-ture customers outside their bordersor hold on to gambling dollars fromtheir own residents. New Yorktouched off the border war in 2002by approving six new tribal casinosas well as slots at five horse-racingtracks — so-called “racinos.” Marylandvoters gave 59 percent approval in No-vember 2008 to a constitutional amend-ment allowing slot machines at five

sites. West Virginia approved tablegames for a horse track in CharlesTown, W. Va., late in 2009. Pennsyl-vania and Delaware both acted in Jan-uary 2010 to approve table games atexisting casinos. The movement reachedMaine in November 2010 as voters ap-proved a $165 million casino and re-sort in a small town near the NewHampshire border. 33

As lotteries and casino gamblingsteadily grew, betting on the Internetwas exploding despite mixed signalsas to its legality. In 2001, ChristiansenCapital Advisors estimated online pokerrevenues at $82 million. By 2005, thefigure had increased nearly 30-fold to$2.4 billion. An estimated 1.8 millionpeople were playing nightly, two-thirdsof them Americans. 34 Until Decem-ber 2011, the Justice Departmentclung to its position that all onlinegambling was illegal, not just sportsbetting, even in the face of a feder-al appeals court opinion in 2002 re-jecting the position.The government had no practical

way, however, to go afterthe estimated 23 millionpeople in the UnitedStates betting online orto shut down the offshoreInternet sites in suchplaces as Antigua, Bar-buda, Gibraltar and theIsle of Man. Congressgave the government atool with the 2006 credit-card transaction ban,which anti-gamblingsenators slipped some-what unnoticed into aport-safety bill with nopublic hearing. 35 But on-line poker continued togrow. Financial Timesestimated revenue in 2008at $5.9 billion, more thandouble Christiansen’s es-timate in 2005. Mean-while, Antigua was con-tinuing to contest the

validity of the U.S. ban before theWorld Trade Organization. The WTOhad issued a mixed ruling in April2005 that upheld the United States’right to restrict Internet betting butalso found the law discriminatory be-cause remote gambling on horse rac-ing was allowed. 36

U.S. gambling interests also facedanother economic threat from overseas:the rise of Macau and Singapore asmajor gambling meccas drawing notonly Asian but also U.S. customers.Macau, the former Portuguese colonythat China has overseen since 1999 asa separate administrative region, hadbeen a gambling center since the mid-19th century. By ending a monopolysystem for casino franchises, Macau’sgovernment opened the door in 2002to new operators; by 2007, the build-up enabled Macau to surpass Las Vegasas the world’s biggest gambling center.Meanwhile, Singapore was also ad-vancing as a gaming resort destination.By mid-2011, it too was being pro-jected to pass Las Vegas. 37

Online poker, offered by sites based outside the United States, explodedby 2005 into a $2.5 billion industry despite Justice Departmentopposition and concern on Capitol Hill. But last December thedepartment lifted what had been thought to be a broad federalprohibition against Internet gambling, including online poker. States are showing interest but exercising caution. So far, Nevada

is the only state with legal rules on the books to allow Internet gaming;online sites may be up and running by the end of 2012.

AFP/Getty Images/Karen Bleier

540 CQ Researcher

GAMBLING IN AMERICA

With overseas competition increas-ing, U.S. gambling interests took an-other hit as the country fell into a re-cession beginning in December 2007.Overall revenue from lotteries and com-mercial casinos fell in fiscal 2009 forthe first time since the late 1970s, ac-cording to the Rockefeller Institute. 38

In response, 10 states enacted mea-sures to expand gambling in fiscal 2010,according to the institute. By the endof 2011, the casino industry was strik-ing an upbeat pose after what it con-ceded had been “difficult” years. “Theslow and steady recovery of the com-mercial casino industry is well under-way,” according to the American Gam-ing Association’s annual report. 39

CURRENTSITUATION

Competing for Customers

T he competition for gambling pa-trons is heating up in the North-

east Corridor, with New York and RhodeIsland considering moves to legalizefull-service casinos to undercut gam-ing facilities in neighboring states.Rhode Island voters are being

asked to approve two referendums sub-mitted by the state legislature that wouldallow table games at the state’s exist-ing two slot parlors. The Twin Riverand Newport Grand facilities are bothlocated near the state’s border withMassachusetts, which is moving to-ward opening full-service commercialcasinos for the first time.New York is in an early stage of a

plan strongly pushed by Gov. AndrewCuomo to amend the state’s constitu-tion to permit as many as seven full-service casinos in the state. After initialapproval by the New York legislaturein March, the amendment needs a sec-

ond legislative vote next year andstatewide approval by voters to be adopt-ed. Currently, New York has nine com-mercial racinos and five tribal casinos.Rhode Island lawmakers are push-

ing the plan defensively to avert a po-tential loss of revenue after Massachu-setts opens what are expected to bethree “super-casinos” in the compactNew England region. The Rhode Islandslot parlors already face formidable com-petition from the giant tribal casino Fox-woods in southern Connecticut. 40

Gambling revenue amounts to slight-ly more than 10 percent of Rhode Is-land’s total revenue. Expansion of theexisting slot parlors is “an absoluteeconomic necessity,” says Gary Sasse,a former state revenue director andnow director of the Institute for Pub-lic Leadership at Bryant University inSmithfield. “We have to protect thateconomic base,” he says.Approval of the referendums is re-

garded as all but certain even thoughRhode Island voters rejected a pro-posal in 2006 to permit a full-scalecasino to be operated by the Narra-gansett tribe. But Leonard Lardaro, aneconomics professor at the Universityof Rhode Island in Kingston, calls themove “a quick fix” that will not pro-tect gambling revenue in the long termor address the state’s broader economicchallenges.“Once Massachusetts comes on line,

we’ll lose all the migration from thenorth of us,” Lardaro says. “My worryis that this is going to be seen as a sub-stitute for Rhode Island making thestructural changes if Rhode Island isgoing to be successful going forward.”In New York, Cuomo, a Democrat

in the second year of a four-year term,included expanded gambling as oneof a series of economic-improvementmeasures that he recommended to theDemocratic-controlled state Assemblyand Republican-controlled state Sen-ate in January. The New York Gam-ing Association, representing the ex-isting racinos, released a report the

same month saying that expanded gam-bling would result in $1.8 billion inconstruction and eventually generateabout $350 million per year in stateand local revenues. 41

New York’s gaming establishmentalready faces competition from casi-nos in three of the state’s biggestneighbors: Connecticut, New Jersey andPennsylvania, which legalized casinosin 2010. New York legislators gave ini-tial approval to the proposed consti-tutional amendment as the annual ses-sion drew to an end in late March.But Cuomo is now catching flak onthe proposal after The New York Timesdisclosed that the gaming associationhad contributed $2 million in Decemberto the Committee to Save New York,a business and labor coalition closelyallied with Cuomo. 42

Cuomo denied any connection be-tween the contribution and his supportfor expanded gambling. But Paul Davies,a journalist who writes the blog Get-GovernmentOutofGambling.org underthe auspices of the conservative-leaningInstitute for American Values, says thedisclosure indicates that “money andinfluence” are behind the push forgambling. “There’s not a whole lot ofdue diligence or cost-benefit analysisthat goes into trying to determinewhether states should get into thegambling business,” he says.With a statewide vote still at least

a year away, a Siena College poll takenbefore the legislative vote showedNew Yorkers almost evenly split on theproposal: 49 percent opposed, 48 per-cent in favor. A month earlier, sup-porters had the edge: 52 percent to44 percent. 43 Davies concedes that ifthe measure does get on the ballot,supporters, including gaming interestsand labor unions, will be able to out-spend any opposition groups that form.Meanwhile, Maryland is opening a

new stage in casino customer chasingwith the debut of a mega-facility at asuburban shopping mall popular with

Continued on p. 542

no

June 15, 2012 541www.cqresearcher.com

At Issue:Do lotteries take advantage of the poor?yes

yesLES BERNALEXECUTIVE DIRECTOR, STOP PREDATORYGAMBLING

WRITTEN FOR CQ RESEARCHER, JUNE 2012

a fter 40 years, only the willfully ignorant and the unin-formed still claim government lotteries do not prey onthe poor and least educated Americans.

Charles Clotfelter, a Duke University professor consideredone of the nation’s most respected lottery researchers, hassaid, “It’s one of the easiest things to measure. The lottery issomething for poorly educated and lower-income people.”And lottery researcher Ross Rubenstein of Syracuse Universityhas said there is no debate among scholars on whether lotter-ies prey on the poor. “There’s simply no disagreement aboutit,” according to Rubenstein.The only people who claim otherwise are the state lotteries

themselves, the gambling-interest groups that support themand the political leaders who approve of the schemes.It helps explain why in a state such as Massachusetts,

which operates one of the most profitable lotteries in America,the lottery’s own survey data showed that only 9 percent ofthe public agreed that “the lottery improves the quality of lifefor the state’s citizens.”To counter this reality, government lotteries have spent

enormous sums of public dollars promoting the deception thatthey are doing a “social good,” convincing the mass media topresent the lottery program as a great debate rather than as afailed policy in which evidence continues to mount that lotter-ies prey on low- to middle-income citizens.In 2008, The New York Times revealed lotteries extract 80 per-

cent or more of their profits from 10 percent of their players —money derived from lottery outlets that are heavily concentrat-ed in lower-income areas.Severe economic times provide lotteries the chance to fur-

ther intensify their profit making from America’s desperatepoor. Citizens play the lottery even more when times aretough, according to a study by Yale’s Emily Haisley in TheJournal of Behavioral Decision Making.Perhaps the biggest indictment of government lotteries is

that more than one in five Americans believe playing the lot-tery represents the most practical way to build wealth. Thesame 2006 survey by the Consumer Federation of Americafound the percentage was even higher among lower-incomeindividuals, with 38 percent of those who earn less than$25,000 pointing to the lottery as a solution.“No taxation without representation” was one of America’s

founding principles. After 40 years of government using lotter-ies to prey on its own citizens, the time has come to add theprinciple of “no taxation by exploitation” right beneath it.no

GORDON MEDENICAPRESIDENT, NORTH AMERICAN ASSOCIATIONOF STATE AND PROVINCIAL LOTTERIES;DIRECTOR, NEW YORK LOTTERY

WRITTEN FOR CQ RESEARCHER, JUNE 2012

m any myths about lotteries have survived for years.One of the more humorous is that the odds ofwinning the lottery are worse than getting hit by

lightning. The story gets retold by journalists who may onlyfocus on the odds of winning one of the top prizes in a big-jackpot game. In fact, roughly 1,000 people nationwide win atleast $1 million from lottery games every year, but only about250 get hit by lightning.Another myth is that only poor people play the lottery.

One reason many states started lotteries was to stop the illegalnumbers rackets that preyed on players and did nothing toraise money for good causes. By making the games legal,credible and honest, states helped both the players and theirlotteries’ designated good causes.But lotteries today offer many more games than just the

daily numbers games. We have big-jackpot games like MegaMillions and Powerball, local jackpot games like Lotto, social-environment games like Keno and dozens of instant “scratch-off” games at a variety of price points. The lottery industryhas become quite sophisticated at reaching all types of playerswith different kinds of games.The demographics of lottery players almost perfectly match

the demographics of the population at large. With so manypeople playing lottery games, it’s simply not possible for anyone segment of the population to dominate.Another myth is that lottery play is a “regressive tax on the

poor.” But “regressive” is an economist’s term for somethingthat costs a larger percentage of someone’s low income. Bythis definition, all consumer products, from milk to movies,are regressive. And lottery play is voluntary, not a tax.Playing the lottery is simply an inexpensive form of enter-

tainment. People play for a bit of excitement. Why is it thatlotteries are judged by financial standards instead of by theentertainment they provide? The press is filled with storiesabout “poor odds,” “bad investments” and “financial illiteracy”when discussing lotteries, but not when discussing other pop-ular entertainment.Lotteries provide a very secure, well-run form of entertain-

ment for the large majority of the population that enjoys play-ing. They also provide much-needed funding for many goodcauses, such as education, the environment, veterans, localmunicipalities, old-age programs and scholarships. Lotteriesraised almost $20 billion for good causes in North Americalast year; we are very proud of the contributions we makeevery day.

542 CQ Researcher

area residents and interstate travelers.Maryland Live! debuted on June 6 atthe Arundel Mills mall, about 15 milessouthwest of Baltimore, with about3,200 slots and other electronic gamesready for an anticipated capacitycrowd of 12,000. Plans call for 4,750machines in all when completed. Thecasino is believed to be the first to beplaced at an existing mall outside Neva-da, but plans are either in the worksor on the drawing boards for moregaming establishments to be placed inurban centers — making them moreconvenient to walk-in instead of drive-to customers. 44

Looking Online

L awmakers in California and NewJersey are moving ahead with pro-

posals to legalize Internet gambling intheir states even as bills to allow on-line gaming are failing to advance inother states. 45

Meanwhile, family-values advocacygroups are urging Congress to enact afederal ban on Internet gambling. A banwould effectively nullify the Justice De-partment’s late-2011 legal opinion clear-ing the way for states to allow onlinewagering on an intrastate basis. 46

So far, Nevada is the only statewith legal rules on the books to allowInternet gaming. The Nevada Gam-ing Commission approved regulationsfor online poker on Dec. 22, 2011,coincidentally one day before the Jus-tice Department opinion was publiclyannounced. Nevada had had a lawon the books for years to allow In-ternet gambling, but had been mark-ing time because of legal doubts andbecause of opposition from somemajor gambling companies. Onlinesites in Nevada may be up and run-ning by the end of 2012. 47

Both New Jersey and the District ofColumbia had moved earlier in 2011toward permitting online poker, but the

moves were thwarted. In New Jersey,Republican Gov. Chris Christie vetoeda bill on March 3 that would have le-galized online gambling in the state.Along with criticizing some specifics,Christie contended that a referendumwould be required to go beyond theterms of the 1976 ballot measure thatallowed casino gambling only in At-lantic City. 48

In Washington, an online gamblingmeasure was included with little pub-lic attention in a budget bill passedlate in 2010. The move provoked sharpcontroversy as D.C. officials begansteps to implement it in fall 2011. InFebruary, the D.C. City Council voted10-2 to repeal the measure. 49

The online gaming bills in Califor-nia and New Jersey both have strongsupport but also face political cross-currents. In New Jersey, the issue pitslawmakers who view online gaming asa way to bolster Atlantic City’s saggingcasinos against others who want to allowonline gambling at the state’s horsetracks. In California, the principal billwould allow tribal casinos, card clubsand horse tracks to offer online pokerimmediately and other games such as21 later; the state’s Indian gaming as-sociation wants to allow online pokeronly, in order to protect brick-and-mortar casinos, while some tribes op-pose the bill altogether.With an estimated 2 million online

poker players in the state, Californiarepresents a lucrative market for In-ternet gambling even on an intrastatebasis. State Sen. Roderick Wright, acoauthor of the legalization measure,said California is “the leading Internetgaming market in the world” but ismaking “no money” from the gamesand has “no [consumer] protections forour citizens who play.” 50

Wright, a Democrat from Los An-geles County, is cosponsoring the billwith the Senate’s Democratic leader,Darrell Steinberg of Sacramento. Bothmen are drawing scrutiny because ofcampaign contributions from gambling

interests: $170,000 in donations toWright since his 2008 campaign and$1.36 million in the past year to theDemocratic Central Committee, whichhelps finance the party’s legislativecandidates in the general election. Stein-berg says online gaming will bring inat least $200 million a year for the se-verely cash-strapped state government.The New Jersey legislation gained

approval from the state Assembly’sgaming committee on May 10 afterhaving been cleared in early March bythe Senate panel with gambling juris-diction. Democratic Assemblyman JohnBurzichelli, a sponsor, says onlinegaming will “rejuvenate our tourist in-dustry” and also increase “employment,capital investment and much neededurban redevelopment.” In opposing thebill, Assemblyman Ralph Caputo, alsoa Democrat, criticized limiting onlinesites to Atlantic City.Prospects for the bill are clouded in

part because of questions about theviews of Christie, often mentioned asa possible running mate for presump-tive GOP presidential nominee MittRomney. Christie’s decision to back outof an address before a state gamblingconference in May prompted specula-tion that he wanted to skirt what is ared-flag issue for some social conser-vatives. Romney has said he opposesInternet gambling. 51

Among other states, Utah has pro-tected its gambling-free status bypassing preemptive legislation to pro-hibit online gaming in the state. Re-publican Gov. Gary Herbert signedthe bill into law in late March aftera 62-10 vote in the state Assemblyand unanimous approval in thestate Senate. The measure includesa provision that calls for opting out,if possible, of any federal law thatgives blanket permission for Inter-net gaming. 52 Elsewhere, Internetgaming bills have failed in Hawaii— the nation’s only other gambling-free state — and in Iowa and Mis-sissippi.

GAMBLING IN AMERICA

Continued from p. 540

June 15, 2012 543www.cqresearcher.com

Despite the limited advances so far,some gambling experts see online gam-ing as all but inevitable. “If it starts togo on a state-by-state basis, it will rollacross the country just like lotteries did,”says Las Vegas attorney Cabot.

OUTLOOKAll About the Money

T he Minnesota Vikings wanted thestate to pick up most of the tab

for a new and much needed $1 bil-lion football stadium, but the state hadno readily available revenue source forits share. So, as part of a protractedpolitical fight, the state legislature hiton the same, pain-free solution thatlawmakers in other states have lookedto in recent decades to ease fiscalwoes: gambling.The deal, cleared by the legisla-

ture on May 10, allows the existing$1 billion charitable games industry— licensed to help fund nonprofit or-ganizations — to initiate electronicgaming on so-called pull-tabs gamesnow played on cardboard. * The hoped-for revenue boost from young, hipcustomers is intended to generate$348 million in additional state taxesearmarked for the stadium while alsoproviding more money to fund non-profit organizations. 53

Minnesota is following the exam-ple set by every other state and In-dian tribe that has legalized gamblingover the past 81 years. Whatever ap-

peal gambling has as entertainment,government officials view it primari-ly as a source of revenue. But ex-perts, including industry supportersand critics, are now warning that itis becoming harder for states to drawmore money out of Americans’ urgeto gamble.“Gambling is going to become an

increasingly less important source ofrevenue for governments,” says Uni-versity of Nevada professor Eadington.“There’s a cap on how much peopleare willing to spend on gambling.”Faced with lagging tax flows from

gambling, states turn — as in Min-nesota — to ideas for attracting newcustomers or drawing more moneyfrom existing customers, according toSt. Mary’s professor Pierce. The prospectof a decline “makes states desperateto do just about anything to maintainthe revenue,” he says.Anti-gambling advocates view the

states as partners in an unwholesomealliance with a profitable industry adeptat using its political influence to fur-ther its ends with little regard for thepublic interest. “The casino interestsspend a ton of money,” says Get Gov-ernment Out of Gambling bloggerDavies. “There really is no one on theother side that has the deep pocketsto wage a battle. And the media usu-ally doesn’t do a very good job ofdocumenting both sides.”Casino interests contribute heavily

to political campaigns for an indus-try of its size, according to data com-piled by Citizens for Responsive Pol-itics, a campaign finance monitoringgroup. Federal campaign contributionsfor the 2008 election cycle totaled$17.7 million, the group says, abouttwo-thirds to Democrats. For 2012,contributions are already at $20 mil-lion, about evenly divided betweenDemocrats and Republicans. 54

“These guys are some of the biggestfunders of political campaigns,” saysStop Predatory Gambling’s Bernal.“They give money to all sides.”

The critics say it is unwise for thegovernment to rely on gambling taxesas an important revenue source. “It’sa bad way to fund your government,”says Davies. Bernal goes further. “It’simmoral for government to prey onits own citizens,” he says. “Citizens arenot calling up legislators demandingmore places to lose money,” he adds.Gaming industry chief Fahrenkopf

dismisses the critics as out of step withthe public. “The people who opposethe gaming industry view it as an il-legal industry, as an immoral indus-try,” he says. “But the majority of peo-ple don’t view it that way.”As for preying on customers,

Fahrenkopf says gamblers do not har-bor illusions about the odds. “Mostpeople know that when they go to acasino, the odds are in favor of thecasino,” he says. Fahrenkopf insists theindustry does its part to control prob-lem gamblers on the floor and to helpfund research and treatment.The lottery industry also touts its

efforts on the issue. “The industry andthe individual states are trying to beresponsible, reminding people out therethat this is a game,” says lottery asso-ciation executive director Gale. The as-sociation’s home page features this mes-sage: “Remember to Play All LotteryGames Responsibly.”The critics are determined to dig

in. “The failed government policy ofpredatory gambling will be one of thebiggest issues of this decade,” saysBernal. Eadington disagrees. “The anti-gambling movement has lost its punch,”he says. “The war is almost over.”Meanwhile, the Mega Millions jack-

pot started over after the record-bustingpayout for the March 30 drawing. Somelucky winner or winners in Califor-nia, unidentified so far, are holdingthe ticket for the $32 million jackpotfrom the May 29 drawing. Drawingsare held Tuesdays and Fridays, everyweek, with winning prizes starting at$2. Overall, chances of winning a prizeare 1 in 40.

* A pull-tab is a gambling ticket with a set ofimages on the front and perforated windowson the back that conceal images; the playerwins, with an instant payout, if the images onthe back, once disclosed, match those on thefront. An electronic pull-tab adds images andsound and also eliminates the need to phys-ically remove tabs.

544 CQ Researcher

Notes

1 Quote taken from video clip of April 18news conference by the Belleville (Ill.) News-Democrat, posted on You Tube: www.youtube.com/watch?v=_-7VVpowVAY. For print cov-erage, see Stacy St. Clair, “The best-kept Megasecret in Red Bud,” Chicago Tribune, April 19,2012, p. C1; Nicholas J. C. Pistor, “A MegaMoment for Red Bud Retirees,” St. Louis Post-Dispatch, April 19, 2012, p. A1.2 See “Mega Millions Jackpot History,” www.megamillions.com/winners/jackpothistory.asp.3 “State Government Finances: Income andApportionment of State-Administered LotteryFunds, 2010,” U.S. Bureau of the Census,www.census.gov/govs/state/10lottery.html.4 “State of the States: The AGA Survey of Casi-no Entertainment, 2012,” American Gaming As-sociation, p. 2, www.americangaming.org/files/aga/uploads/docs/sos/aga_sos_2012_web.pdf.5 For previous CQ Researcher coverage, seePatrick Marshall, “Gambling in America,”March 7, 2003, pp. 201-224, and two re-ports by Richard L. Worsnop: “GamblingUnder Attack,” Sept. 6, 1996, pp. 769-792;and “Gambling Boom,” March 18, 1994, pp.241-264.6 Patrick A. Pierce and Donald E. Miller, Gam-bling Politics: State Government and the Busi-ness of Betting (2004), pp. 2-3, 4. Pierce is aprofessor of political science; Miller, now de-ceased, was a professor of mathematics.7 Cited in Michael Sokolove, “A Big Bet GoneBad,” The New York Times Magazine, March 18,2012, pp. 36ff. See “State of the States,” op.cit., p. 21. Revenues in Pennsylvania are di-vided between the state gaming fund andgeneral fund, horse racing industry, economicdevelopment and local governments.

8 For highlights, see “Casino City’s IndianGaming Industry Report,” 2012 edition, www.casinocitypress.com/gamingalmanac/indiangamingreport/. For coverage, see “AmericanIndian tribes’ casinos see turnaround,” TheAssociated Press, March 6, 2012.9 Edward A. Morse and Ernest P. Goss, Gov-erning Fortune: Casino Gambling in America(2007). Goss is a professor of economics atCreighton.10 Quoted in Charlie Frago and Michael R.Wickline, “Passage of all 5 ballot issues stunssome,” Arkansas Democrat-Gazette, Nov. 6, 2008.The 2008 measure was approved by a voteof 648,122 (62.83%) to 383,467 (37.17%); thevote in 2000 was 309,482 (36.24%) to 544,550(63.76%). See “Arkansas Secretary of State:Historical Initiative and Referendum Results,”www.sos.arkansas.gov/elections/Documents/Initiatives_and_Amendments_1938-2010.pdf.11 See “Lotteries as a State Revenue,” NationalConference of State Legislatures, www.ncsl.org/issues-research/econ/lotteries-as-a-state-revenue.aspx.12 “Lottery Revenue as a Percentage of Own-Source Revenue by States, Fiscal Year 2008,”Tax Foundation, March 25, 2010, http://taxfoundation.org/article/lottery-revenue-percentage-own-source-revenue-state-fiscal-year-2008.13 See William Petroski, “Senate passes pro-posal to study Internet poker,” Des MoinesRegister, April 21, 2011, p. B3.14 “State of the States,” op. cit., pp. 23-27.15 Ibid., pp. 5 (spending), 6 (revenue), 7 (em-ployment).16 See Morse and Goss, op. cit., chaps. 4(economic development), 5 (social costs).17 See Earl L. Grinols, Gambling in America:Costs and Benefits (2004); Earl L. Grinols, “Gam-bling Economics: Summary Facts,” April 29, 2011,www.freedomfoundationofminnesota.com/Websites/freedomfoundation/Images/Gambling%20Economics-%20Summary%20Facts%20by

%20Professor%20Earl%20Grinols,%204.29.11.pdf.18 See Douglas M. Walker, “Overview of theEconomic and Social Impacts of Gamblingin the United States,” in Leighton VaughanWilliams and Donald Siegel (eds.), Handbookon the Economics of Gambling (forthcoming),http://walkerd.people.cofc.edu/pubs/2012/OxfordCh_dist.pdf.19 See “Illinois Lottery Launches Internet Saleson Sunday,” press release, March 26, 2012,www.illinoislottery.com/content/dam/ill/documents/subsections/pr/InternetSales.pdf. Forcoverage, see Jim Jaworski, “Jackpot ticketsjust a click away,” Chicago Tribune, March 30,2012, p. 3.20 See “Whether Proposals by Illinois andNew York to Use the Internet and Out-of-State Transaction Processors to Sell LotteryTickets to In-State Adults Violate the Wire Act,”U.S. Department of Justice, Sept. 20, 2011,www.justice.gov/olc/2011/state-lotteries-opinion.pdf. The citation for the law is 18 U.S.C.§1084. For coverage, see Edward Wyatt, “WebGambling Given a Boost in U.S. Ruling,” TheNew York Times, Dec. 25, 2012, p. A1; somebackground drawn from article.21 See Brad Stone, “Going All In for OnlinePoker,” Newsweek, Aug. 15, 2005, p. 40, www.thedailybeast.com/newsweek/2005/08/14/going-all-in-for-online-poker.html.22 See Heather Timmons and Eric Pfanner,“U.S. Law Causing Turmoil in Online Gam-bling Industry,” The New York Times, Nov. 1,2006, p. C3; Eric Pfanner, “Online-GamblingShares Plunge on Passage of U.S. CrackdownLaw,” ibid., Oct. 3, 2006, p. C3.23 Matt Richtel, “Authorities Crack Down on3 Poker Sites,” The New York Times, April 16,2011, p. B1. For ongoing coverage, see Inter-net Gambling News, www.casinogamblingweb.com/main/other-gambling-news/internet-gambling-bill-news.jsp.24 See James Q. Lynch, “Online poker bill isdead, House speaker says,” Quad City Times,March 15, 2012, p. A1; Tom Jones, “OnlinePoker Moves Closer in Iowa After Senate Ap-proval,” Casino Gambling Web, March 14,2012, www.casinogamblingweb.com/gambling-news/gambling-law/online_poker_moves_closer_in_iowa_after_senate_approval_57735.html;See Richard N. Velotta, “Nevada approves na-tion’s first regulations for Internet poker play,”Las Vegas Sun, Dec. 22, 2011.25 For compact historical overviews, seeMorse and Goss, op. cit., pp 1-12; Pierce andMiller, op. cit., pp. 9-24; Roger Dunstand,

GAMBLING IN AMERICA

About the AuthorAssociate Editor Kenneth Jost graduated from HarvardCollege and Georgetown University Law Center. He is theauthor of the Supreme Court Yearbook and editor of TheSupreme Court from A to Z (both CQ Press). He was a mem-ber of the CQ Researcher team that won the American BarAssociation’s 2002 Silver Gavel Award. His previous reportsinclude “Celebrity Advocacy” and “Police Misconduct.” Heis also author of the blog Jost on Justice (http://jostonjustice.blogspot.com).

June 15, 2012 545www.cqresearcher.com

“Gambling in California,” California ResearchBureau, January 1997, chap. 2, www.library.ca.gov/crb/97/03/crb97003.html#toc.26 Champion v. Ames, 188 U.S. 321 (1903).27 For a recent history, see John L. Smith,Sharks in the Desert: The Founding Fathersand Current Kings of Las Vegas (2005).28 See Matthew Sweeney, The Lottery Wars:Long Odds, Fast Money, and the Battle Overan American Institution (2009), pp. 78-80(New Hampshire), 82-84 (New Jersey).29 Account drawn heavily from NationalGambling Impact Study Commission FinalReport (1999), chap. 2, http://govinfo.library.unt.edu/ngisc/reports/2.pdf.30 Hunter quoted in Bennett Liebman, “NotAll that It’s Cracked Up to Be,” Gaming LawReview, Vol. 9, No. 3 (2005), p. 446.31 For coverage, see Brett Pulley, “Commis-sion on Gambling Prescribes Broad Changes,”The New York Times, June 19, 1999, p. A9;Edward Walsh, “Panel Urges Pause in Spreadof Legalized Gambling,” The Washington Post,June 19, 1999, p. A2.32 For detailed accounts, see Randy Bobbitt,Lottery Wars: Case Studies in Bible Belt Poli-tics, 1986-2005 (2007).33 Some information drawn from Iver Peterson,“And They’re Off, as States Race to Add Gam-bling Sites,” The New York Times, Nov. 18, 2002,p. B1; Mark Scolforo, “Poker, blackjack nowlegal at Pa. slots casinos,” The Associated Press,Jan. 7, 2010.34 Cited in Stone, op. cit.35 See Frank Ahrens, “New law cripples Inter-net gambling,” The Washington Post, Oct. 14,2006, p. A1.36 See Fox Butterfield, “U.S. Limits on Inter-net Gambling Are Backed,” The New YorkTimes, April 8, 2005, p. C14; Paul Blustein,“U.S. Claims Victory on Web Betting Ban,”The Washington Post, April 8, 2005, p. E4.37 See Keith Bradsher, “High Rolling Right PastLas Vegas,” The New York Times, Aug. 28, 2007,p. C1; David Pierson, “Singapore bets big on casi-nos — and wins,” Los Angeles Times, June 22,2011, p. A1.38 See Lucy Dadayan and Robert B. Ward,“Back in the Black: States’ Gambling Rev-enues Rose in 2010,” Rockefeller Institute,State University of New York-Albany, June 23,2011, www.rockinst.org/pdf/government_finance/2011-06-23-Back_in_the_Black.pdf.39 “State of the States,” op. cit., p. 11.40 For coverage, see Philip Marcelo, “Spend-ing ramps up on casino issue,” ProvidenceJournal, May 1, 2012, p. 3.

41 “Racetrack Casinos in New York State: Cur-rent and Future Economic Impacts of Live TableGames,” Appleseed, January 2012, New YorkGaming Association, www.newyorkgaming.org/Libraries/Appleseed_Statewide_Final_Report_2-28-12/Appleseed_Final_Statewide_Report_2-28-12.sflb.ashx. The report was prepared byAppleseed, an economic development con-sulting firm.42 See Nicholas Confessore, Danny Hakin andCharles V. Bagli, “Gambling Group Gave $2 Mil-lion to a Cuomo Ally,” The New York Times,June 5, 2012, p. A1.43 Siena College Poll, March 5, 2012, www.siena.edu/uploadedfiles/home/parents_and_community/community_page/sri/sny_poll/SNY_March_5_2012_ReleaseFINAL.pdf.44 See J. Freedom du Lac, “Betting on a$500 million draw,” The Washington Post, June7, 2012; Alexandra Berzon, “Casinos ChaseBettor,” The Wall Street Journal, June 6, 2012,p. C3.45 For ongoing coverage, see Poker News Daily,www.pokernewsdaily.com/.46 Wayne Parry, “Groups in 13 states wantUS to block Internet bets,” The AssociatedPress, June 7, 2012.47 See Chris Sieroty, “Online poker site rulesapproved,” Las Vegas Review-Journal, Dec. 23,2011, p. 1D; Richard N. Velotta, “Nevada approvesnation’s first regulations for Internet poker

play,” Dec. 22, 2011. See also Pamela M. Prah,“Nevada Has Head Start as States React toFederal Gambling Decision,” stateline.org,Jan. 6, 2012, www.pewstates.org/projects/stateline/headlines/nevada-has-head-start-as-states-react-to-federal-gambling-decision-85899375377.48 See Megan DeMarco, “Christie vetoes legal-ized online gaming,” The Star-Ledger (Newark,N.J.), March 4, 2011, p. 13.49 Tim Craig, “D.C. web gambling law is re-pealed,” The Washington Post, Feb. 7, 2012,p. B1.50 Quoted in Patrick McGreevy, “Offering acut from Internet poker,” Los Angeles Times,May 15, 2012, p. AA1. Other background alsofrom story.51 See Suzette Parmley, “Politics may be be-hind Christie’s Internet gaming change ofheart,” The Philadelphia Inquirer, May 8, 2012,p. A1.52 Earl Burton, “Utah Becomes First State ToOpt Out Of Any Federal Online Poker Regu-lations,” Poker Daily News, March 25, 2012.53 See Jean Hopfensperger, “Minnesota is takingthe lead on e-gambling,” Star Tribune (Min-neapolis), May 20, 2012, p. 1A.54 “Casinos/Gambling: Long-Term ContributionTrends,” Center for Responsive Politics, www.opensecrets.org/industries/totals.php?cycle=2012&ind=N07 (visited June 2012).

FOR MORE INFORMATIONAmerican Gaming Association, 1299 Pennsylvania Ave., N.W., Suite 1175, Wash-ington, DC 20004; 202-552-2675; www.americangaming.org. The association, foundedin 1995, represents the casino industry.

National Council on Problem Gambling, 730 11th St., N.W., Suite 601, Wash-ington, DC 20001; 202-547-9204; www.ncpgambling.org. The council advocates forprograms and services to assist problem gamblers and their families.

National Indian Gaming Association, 224 2nd St., S.E., Washington, DC 20003;202-56-7711; www.indiangaming.org. The association, founded in 1985, representsorganizations, tribes and businesses engaged in tribal gaming enterprises.

National Indian Gaming Commission, 1441 L St., N.W., Suite 9100, Washington,DC 20005; 202-632-7003; www.nigc.gov/. The three-member independent federalcommission, established by Congress, regulates gaming activities on Indian lands.

North American Association of State and Provincial Lotteries, One S. Broadway,Geneva, OH 44041; 440-466-5630; www.naspl.org. The association, founded in 1971,represents 52 lottery organizations in the United States and Canada.

Stop Predatory Gambling Foundation, 100 Maryland Ave., N.E., Room 310,Washington, DC 20002; 202-567-6996; http://stoppredatorygambling.org/. The organi-zation, founded in 2008 as the successor to the National Coalition Against LegalizedGambling, seeks to end what it calls the “failed policy of predatory gambling.”

FOR MORE INFORMATION

546 CQ Researcher

Selected Sources

BibliographyBooks

Grinols, Earl, Gambling in America: Costs and Benefits,Cambridge University Press, 2004.An economics professor now at Baylor University calcu-lates that the social costs of casinos — including bankrupt-cy, crime, family costs and lost productivity — exceed by afactor of three the benefits, chiefly profits and taxes but ex-cluding jobs. The gambling industry sharply challenges theanalysis. Includes notes and 10 pages of references.

Haugen, David, Legalized Gambling, Facts on File, 2006.The book gives an overview of the history and current sta-tus of legalized gambling in the United States along with achronology, bibliography, glossary, list of organizations andagencies, guide to research and multiple appendices withpertinent statutes, reports and court decisions.

Light, Steven Andrew, and Kathryn R. L. Rand, IndianGaming and Tribal Sovereignty: The Casino Compromise,University Press of Kansas, 2005 (paperback edition, 2007).The co-directors of the Institute for the Study of TribalGaming Law and Policy at the University of North Dakotaexamine the history, laws and current politics of Indian gam-ing and set out recommendations for reform. Includes de-tailed bibliographical references.

Morse, Edward A., and Ernest P. Goss, Casino Gamblingin America: Governing Fortune, University of MichiganPress, 2007.The book traces the evolution of casino gambling in theUnited States through the first years of the 21st century, withchapters on the economic benefits, tax revenues and socialcosts associated with gaming and a detailed description ofthe regulatory environment at the federal, state and triballevels. Morse is a professor of law and Goss a professor ofeconomics at Creighton University. Includes detailed notes.

Pierce, Patrick A., and Donald E. Miller, Gambling Pol-itics: State Government and the Business of Betting,Lynne Riener, 2004.The book focuses on the politics behind the growth of le-galized gambling in the United States, especially in regard tothe states’ role in promoting gambling as a revenue source.Pierce is a professor of political science at St. Mary’s Collegein Notre Dame, Ind.; Miller was a professor of mathematicsat St. Mary’s until his death in 2008.

Skolnik, Sam, High Stakes: The Rising Cost of America’sGambling Addiction, Beacon Press, 2011.The deputy editor of the National Law Journal and an ad-mitted gambling addict uses his personal experience as the back-drop to informative chapters on, among other topics, the states’reliance on gambling revenues, problem gambling among Asian-Americans and the rise of online poker. Includes notes.

Smith, John L., Sharks in the Desert: The Founding Fa-thers and Current Kings of Las Vegas, Barricade, 2005.A veteran Las Vegas journalist traces the city’s history as agambling mecca from its initial ties to organized crime to itspresent-day dominance by corporate moguls.

Sweeney, Matthew, The Lottery Wars: Long Odds, FastMoney, and the Battle Over an American Institution,Bloomsbury, 2009.Sweeney sketches the rise and fall of lotteries from colonialAmerica through the mid-20th century and then turns a criti-cal eye to the pros and cons of their use as a revenue sourceby state governments. Includes chapter-by-chapter bibliography.

Wolfe, Alan, and Erik C. Owens, eds., Gambling: Mappingthe American Moral Landscape, Baylor University Press,2009.Essays by 21 contributors from various disciplines cover thepolitics and policy of gambling, individual behavior and so-cial impact, theology and gambling, and the place of gam-bling in American culture. Includes detailed notes, 41-pagebibliography. Wolfe is a professor of political science andOwens an adjunct assistant professor of theology at BostonCollege and, respectively, director and assistant director ofthe Boisi Center for Religion and American Public Life.

Articles

“Bottoming Out: Gambling Addiction in Las Vegas,” TheLas Vegas Sun, Nov. 22-24, 2009, www.lasvegassun.com/gambling-addiction/.The three-part series by reporters J. Patrick Coolican andLiz Benston profiles compulsive gamblers, examines the physi-ology of gambling addiction and explores the role of gamedesign in the phenomenon. The Web version includes ad-ditional multimedia resources.

“Slot Machines: The Big Gamble,” CBS News, “60 Min-utes,” Jan. 9, 2011, www.cbsnews.com/video/watch/?id=7228424n.Correspondent Lesley Stahl reports on the proliferation ofslot machines in the United States — 850,000, more than thenumber of ATMs — and the increased potential of modern,coinless machines to promote gambling addiction.

Reports and Studies

“Final Report,” National Gambling Impact Study Com-mission, June 18, 1999, http://govinfo.library.unt.edu/ngisc/index.html.Although dated, the 240-page report by the congressionallycreated commission provides comprehensive backgroundinformation about the history and recent development ofgambling in the United States. Includes references, contactinformation, glossary and other appendix material.

June 15, 2012 547www.cqresearcher.com

Casino Legalization

Bagli, Charles V., “Rivals Ready Onslaught to Sway CasinoDebate,” The New York Times, Feb. 8, 2012, p. A22, www.nytimes.com/2012/02/08/nyregion/legalizing-casinos-leads-to-fighting-among-factions.html?pagewanted=all.Democratic New York Gov. Andrew Cuomo says the stateshould legalize full-scale casino gambling.

Hill, David, “Maryland Struggles to Cash in on Gambling,”The Washington Times, Jan. 17, 2012, p. A1, www.washingtontimes.com/news/2012/jan/16/maryland-struggles-to-cash-in-on-gambling/?page=all.Because of a lack of interest from qualified developers,Maryland has struggled to develop slots casinos.

LeBlanc, Steve, “Casino Industry Spent Millions Lobbyingin Mass.,” The Associated Press, Feb. 20, 2012, boston.cbslocal.com/2012/02/20/casino-industry-spent-millions-lobbying-in-mass/.The casino industry has spent more than $11 million lobby-ing for the legalization of casinos in Massachusetts.

Internet Gambling

Bedell, Anita, “Internet Gambling Would Provide More Waysfor You to Lose,” Rockford (Ill.) Register Star, Jan. 6, 2012,p. A15, www.rrstar.com/opinions/x735286242/Guest-Column-Internet-gambling-would-provide-more-ways-to-lose.The problems associated with legalizing Internet gamblingfar outweigh the benefits, says a church group.

Cooper, Michael, “Mired in Debt, States Pursue WebGambling,” The New York Times, Jan. 18, 2012, p. A1,www.nytimes.com/2012/01/18/us/more-states-look-to-legalize-online-gambling.html.Several states are thinking about trying to plug budget gapsby legalizing, licensing and taxing Internet gambling.

Garcia, Oskar, “World’s Richest Casino Exec OpposesOnline Wagers,” The Associated Press, Dec. 7, 2011.Sheldon Adelson says he opposes online gambling to preventyoung people from wagering.

Lotteries

Ford, Beverly, “Dwindling Lottery Dollars Put MunicipalBudgets At Risk,” Lowell (Mass.) Sun, March 25, 2012.Massachusetts cities and towns are relying more and moreon a thinning pool of lottery revenues.

Reitmeyer, John, “Mega Lottery Pays Off for N.J.,” TheRecord (Bergen County, N.J.), April 5, 2012, p. A1.

New Jersey collected more than $40 million from its cutof the record-breaking Mega Millions jackpot in March.

Smith, Rick, “Iowa Lottery Is Watching Illinois’ New On-line Sales,” The Gazette (Cedar Rapids, Iowa), March 29,2012, thegazette.com/2012/03/29/iowa-lottery-is-watching-illinois-new-online-sales/.The Illinois Lottery is the nation’s first to permit the onlinepurchase of lottery tickets.

Social Costs

Boyd-Barrett, Claudia, “Training to Address GamblingProblems,” Toledo (Ohio) Blade, March 21, 2012, p. B4,www.toledoblade.com/local/2012/03/20/Seminar-to-help-with-gambling-addiction.html.Officials in Toledo, Ohio, are hosting a specialized trainingsession on preventing compulsive gambling.

Keilman, John, and Art Barnum, “Priest’s $300,000 TheftPuts Spotlight on Gambling Addiction,”Chicago Tribune,June 12, 2011, articles.chicagotribune.com/2011-06-12/news/ct-met-gambling-priest-0612-20110611_1_gambling-addiction-earl-grinols-regan.A Chicago-area priest has stolen nearly $300,000 from hischurch’s collection plate to fund his gambling addiction.

Taylor, Gary, “More in State Seek Help, But Gambling-Hotline Funds Cut,”Orlando (Fla.) Sentinel, Nov. 3, 2011,p. A1, articles.orlandosentinel.com/2011-11-02/news/os-gambling-helpline-stats-20111102_1_gambling-problems-compulsive-gambling-treatment-for-problem-gamblers.More and more Floridians with gambling problems are reach-ing out for help, but the state has cut funding for its helpline.

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