Stepping Up to the Table : Gaming Industry Exerts Clout With Lobbying Efforts, Political Donations

Like many losing bets, it seemed a sure thing at the outset.

President Clinton’s welfare reform experts reckoned that a 4% tax on gambling revenue would be a good source of financing for expanded job training and other new programs for welfare recipients. Tax increases are always politically touchy, but Clinton’s aides were confident that the public would accept a new “sin tax” on casinos. The potential payoff: $3.1 billion over five years.

But only days after the tax proposal was floated, a group of Democratic lawmakers whose districts include gambling operations trooped to the White House to raise objections. Casino owners launched a fierce lobbying effort of their own. The Administration quickly folded, with the President promising to find other funding sources for welfare reform.

From slot machine super-plexes to riverboat casinos, America’s gaming industry has literally hit the jackpot. Legal gambling is now a $30-billion-a-year business, and Wall Street analysts estimate it will double in size in just three years. Once limited to Las Vegas, Reno and Atlantic City, the industry is breaking ground on projects from coast to coast. Casino gambling, on land or riverboats, is authorized or running in half the states; parimutuel betting is legal in 42.

Along with gambling’s explosive economic and geographic growth has come a corresponding increase in political influence. Nevada casinos have long been important lobbyists in Washington. But now the industry is operating at a new level, filling campaign war chests with contributions, hiring well-connected lobbyists and mounting savvy public relations campaigns to overcome or neutralize the opposition.

“The emerging trend in the gaming industry is to pay more attention to federal issues,” said Alan Feldman, a vice president of Mirage Resorts Inc., which operates casino-hotels in Las Vegas and Laughlin, Nev. “We have, as an industry, national interests, and we should be participating in those.”

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Besides battling proposals to enact a federal gambling tax--an idea that may resurface as lawmakers look for ways to offset lost tariff revenues under a new global trade agreement--casino operators say they are concerned with more mundane legislative issues. As a major service-sector employer, the industry wanted its two cents’ worth to be considered in the debate over health care reform. And it is a vigorous advocate of federal, state and local programs that promote tourism and travel.

In addition, gaming executives say they want to improve the industry’s image. They point out that in the 48 years since gangster Bugsy Siegel opened Las Vegas’ first resort casino, the Flamingo, gambling has evolved into a legitimate big-business enterprise, with some casino chains making the lists of the nation’s largest public companies.

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In terms of lobbying clout, the gambling industry still trails such traditional heavyweights as the National Rifle Assn. and the American Assn. of Retired Persons. But it appears intent on rapidly muscling its way into the ring.

“We’re a big industry,” said Charles N. Mathewson, chairman of International Game Technology, a Reno-based slot machine maker. “But we’ve never been properly represented in Washington.”

According to an analysis of 1993-94 Federal Election Commission records by the nonpartisan Center for Responsive Politics, three of the top 10 contributors of “soft money” political donations are closely tied to the gaming industry.

( Soft money is a term used to describe contributions to national political party organizations for election-related activities. Unlike donations to individual candidates, soft money is exempt from contribution limits.)

Among the big contributors:

* The Mashantucket Pequot tribe, which runs the highly profitable Foxwoods casino in Connecticut. It has given the Democratic National Committee $215,000.

* Frank J. Fertitta Jr., former owner of the Palace Station Hotel-Casino in Las Vegas. He gave the Republican National Committee $230,000 in soft money last fall, followed by $24,000 in restricted donations, according to the CRP analysis.

* Mirage Resorts’ Golden Nugget casino in Las Vegas, which chipped in $230,000 to the GOP, and the company’s chairman, Steve Wynn, who gave $20,000.

Some of the largest contributions to the GOP came after Republican National Committee Chairman Haley Barbour solicited financial support last October at a meeting with casino executives at Mirage’s Shadow Creek resort in Las Vegas.

Besides these big donations, an independent computer analysis of FEC records by The Times reveals many smaller contributions, both restricted and unrestricted, during the 1993-94 election cycle:

* $105,000 to the Republicans from Marnell Corrao Associates, a construction company headed by the chairman of the Rio Hotel and Casino in Las Vegas.

* A $60,000 gift to the Democratic Party from Bally’s Casino Holdings.

* $37,750 to the two national parties from Mike Sloan, general counsel for Circus Circus Enterprises Inc., and his wife.

* $19,000 to the parties and their subsidiaries from William G. Bennett, former chairman of Circus Circus, and his wife.

* $24,000 to Democratic Party committees from John E. Connelly, chairman of President Riverboat Casinos, and his wife. They donated another $20,000 to the victory fund of House Majority Leader Richard A. Gephardt (D-Mo.).

* $24,000 to the GOP from Las Vegas’ Lady Luck casino.

The industry is also a rich source of funds for individual campaigns. Circus Circus, which has its own political action committee, has spread $49,500 among Democratic and Republican office-seekers in 10 states. Caesars World Inc. has given $22,071 to candidates in four states.

“The industry is trying to be more politically savvy,” one lobbyist said. “They are giving in the areas where they can be the most help.”

Some of the money finds its way back to the states. The Republican National Committee sent $50,000 to the Nevada GOP after receiving the Shadow Creek contributions, according to FEC records. In New York, a Republican state senator called for a federal investigation into allegations that a $100,000 donation from the Mashantucket Pequots to the state Democratic Party was intended to persuade Democrats to block a GOP bid to legalize gambling in the state.

Casino executives say the industry does not favor one party over another, but some acknowledge that the Clinton Administration jeopardized its relations with them by proposing a gambling tax.

One Democratic Party official said the large contributions generated by the Shadow Creek meeting suggest that the industry leans toward the right. Executives who attended the session, many of whom are Democrats, scoff at the idea--though they concede that their drive for greater influence in Washington is a broad-based effort.

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Indeed, more than mere dollars figure in the gaming companies’ growing political presence. Many are signing up some of the nation’s most sophisticated lobbyists--a sign of an interest group’s coming of age in Washington.

GTech, a Rhode Island-based lottery company, has hired Akin, Gump, Strauss, Hauer & Feld, one of Washington’s premier law and lobbying firms. (The company also contributed $109,543 in soft money to the two parties during the 1991-92 election cycle.) MGM Grand is represented by Black, Manafort, Stone & Kelly, another high-powered lobbying firm.

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Several Native American groups that operate casinos have retained representatives in Washington. The Mashantucket Pequots have hired Patton, Boggs & Blow. The Seminole tribe of Florida is represented by the Jefferson Group. California’s Morongo Band of Mission Indians has hired Winston & Strawn.

The 120-plus groups that operate gambling establishments have their own Washington trade organization, the Indian Gaming Assn. Las Vegas interests, led by Promus Cos. and International Game Technology, plan to launch their own trade group, the American Gaming Assn., early next year. But industry sources say its development has been slowed by the traditional rivalries of gambling proprietors.

Gaming executives have agreed that they want a big name to head up the Washington trade group. Among the possibilities mentioned so far: Fay Vincent, the former baseball commissioner, and Tony Hope, chairman of the Interior Department’s Indian Gaming Commission during the George Bush Administration.

One industry lobbyist, who requested anonymity, said the person chosen to lead the new trade group will need a thick skin, because “we could become a sin tax target here.”

The organization “is going to be well-funded,” said another lobbyist, who compared its potential influence to that of the tobacco lobby. “They want to be a big force. They want to be very visible. And they want to be able to protect their interests.”

Although they are relative newcomers in Washington, casino operators already have plenty of political battle scars. Many have waged fierce state-level fights with church groups determined to keep gambling illegal. They are likely to face heavy opposition at the national level as well.

“You’re seeing a snow job on the part of state and national representatives who are trying to promote this industry,” said Mike Russell, a spokesman for the Christian Coalition, religious broadcaster Pat Robertson’s political organization.

Arguing that gambling contributes to a variety of social ills, Russell said the Christian Coalition plans to track gaming industry political donations and include information about gambling in its voter guides.

Industry officials are well aware of what--and whom--they’re up against, but they are confident that they have simple economics on their side.

“The moral question is fairly easily diluted by the message of revenue and job creation,” one executive said. “If you talk to representatives who come from states that now have gambling, if they ever had a problem (with opposition on moral grounds), they don’t now.”

The foray into national politics comes at a key point in the industry’s development.

Las Vegas is adding several new multimillion-dollar casinos. Native American tribes are scrambling to build casinos on their lands. For the first time, casinos, racetracks, riverboat operators and tribal councils that traditionally viewed each other with suspicion are joining forces.

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But even as gaming proliferates across the country, some states and localities that have already opened their doors to the industry are having second thoughts.

Part of the problem appears to reflect the industry’s explosive growth. Casinos and riverboats have saturated some areas of the country, leaving profits and revenues lower than expected. Casino operators in some Southern and Midwestern states complain that they have become stuck in regulatory quagmires.

To industry executives, the image-building exercise in Washington means they must abandon their traditional low profile. Relative to its wealth, the gaming industry has been among the nation’s least visible corporate entities.

Sen. Harry Reid (D-Nev.), who served as head of the Nevada Gaming Commission for five years, said the industry has been “behind the times” in establishing its political credentials.

“There was a sense that we kind of kept things to ourselves,” Reid said. “We didn’t bother anyone and they didn’t bother us.”

From this point on, those bets are off.

Full House

Desperate for new sources of revenue and anxious to compete with their neighbors, the states have rushed to embrace gambling in its varied forms. Of the 50 states, 48 allow some form of wagering, if only bingo or charity casino nights. And 26 either have--or have authorized--casino gambling, at least in a limited form.

Ala: casino, bingo, charity, lottery, parimutuel Alask: bingo, charity Az: casino, bingo, charity, lottery, parimutuel Ark: parimutuel CA: lottery, casino, bingo, charity, parimutuel CO: bingo, charity, casino, lottery, parimutuel CT: casino, bingo, charity, lottery, parimutuel D.C.: bingo, charity, lottery DEL: charity, casino*, lottery, parimutuel FL: charity, lottery, parimutuel GA: lottery Hawaii: none Id: bingo, charity, casino, lottery, parimutuel Ill: bingo, charity, casino, lottery, parimutuel Ind: bingo, charity, casino, lottery, parimutuel Iowa: casino, bingo, charity, lottery, parimutuel KS: bingo, charity, lottery, parimutuel Kent: bingo, charity, lottery, parimutuel LA: casino, bingo, charity, lottery, parimutuel ME: bingo, charity, lottery, parimutuel MD: bingo, charity, lottery, parimutuel MASS: lottery, parimutuel, bingo, charity MI: bingo, charity, casino, lottery, parimutuel MINN: bingo, charity, casino, lottery, parimutuel MISS: bingo, charity, casino MO: bingo, charity, casino, lottery, parimutuel Mont: bingo, charity, casino, lottery, parimutuel NB: bingo, charity, lottery, parimutuel Nev: bingo, casino, parimutuel NC: bingo ND: casino, parimutuel NH: casino, bingo, charity, lottery, parimutuel NJ: casino, lottery, parimutuel NM: bingo, charity, casino, parimutuel NY: bingo, charity, casino, parimutuel, lottery OHIO: bingo, charity, lottery, parimutuel OK: bingo, charity, parimutuel ORE: casino, bingo, charity, lottery, parimutuel PA: bingo, charity, lottery, parimutuel RI: bingo, charity, lottery, parimutuel, casino. SC: none SD: bingo, charity, casino, lottery, parimutuel TENN: parimutuel TX: bingo, charity, lottery, parimutuel UT: none VT: bingo, charity, lottery, parimutuel VA: bingo, charity, lottery, parimutuel WASH: bingo, charity, casino, lottery, parimutuel WIS: casino, bingo, charity, lottery, parimutuel WVA: bingo, charity, lottery, parimutuel WY: bingo, charity, parimutuel * Slot machines only

Table Games

Nine states had operating casinos last year, not including Native American gaming operations. Chart ranks states by gross casino revenues for 1993, in millions of dollars.

1. Nevada: $6,089.4 2. New Jersey: 3,301.3 3. Mississippi: 789.8 4. Illinois: 605.7 5. Louisiana: 327.9 6. Colorado: 259.9 7. Montana: 182.3 8. Iowa: 45.2 9. South Dakota: 43.3

Source: Christiansen / Cummings Associates, Salamon Bros.

The Biggest Players

The biggest gambling industry companies include casino operators and manufacturers of equipment for lotteries and slot play. Chart ranks firms by 1993 revenue. All figures are in millions.

Hilton Hotels Revenue: $1,394 Earnings: $103

Promus Revenue: $1,252 Earnings: $92

Caesars World Revenue: $1,103 Earnings: $93

Circus Circus Enterprises Revenue: $959 Earnings: $126

Mirage Resorts Revenue: $953 Earnings: $67

GTech Revenue: $607 Earnings: $52

International Game Technology Revenue: $541 Earnings: $115

Boyd Group Revenue: $444 Earnings: $17