Gaming Panel’s 3-Year Inquiry a Study in Politics, Insider Clout

Three years ago, critics of legal gambling’s rapid spread across the country persuaded President Clinton and the Republican Congress to launch a blue-ribbon inquiry into its social and economic consequences.

Now, the National Gambling Impact Study Commission, which wrapped up its deliberations in San Francisco on Thursday, is preparing to submit its final report June 18.

There will be calls to end state lottery advertising that targets the poor, demands to tighten supervision of Indian casinos, requests to curb political contributions by gaming enterprises and pleas to devote some gaming revenues to helping pathological bettors.

The commission will also call for curbing the spread of video poker and other so-called “convenience gambling” into neighborhood stores, as well as raising the minimum gambling age to 21 in states where it is now 18.

But none of the recommendations will be binding. And from the beginning, the commission has been so divided and so buffeted by lobbyists and industry advocates that reformers’ efforts to achieve more far-reaching changes or brake gambling’s proliferation became exercises in frustration.

The story of what happened to a commission born because of calls to take a long look at legal gambling before it becomes universal is a tale of politics and inside maneuvering. It is also a tale of changing American attitudes and appetites.

‘The American People Want Gambling’

Even commission member James C. Dobson, the prominent Christian conservative leader who has said that he receives thousands of messages a month from people ruined by gambling, has bowed to the inevitable.

“The American people want gambling,” he said in a recent interview. “As long as they do, it would be foolish for this commission to tell them they can’t have it.”

Since the last big government study, state and local jurisdictions across the land have become dependent on the $18-billion annual cornucopia of “free” money from gambling. Large majorities of voters in California and elsewhere have expressed support for expansion.

And even before commissioners began their work, industry lobbyists were using their insider skills to smother the drive for change. They shaped the inquiry to assure attention to the benefits of legal gaming. Then they marshaled dozens of witnesses and research papers to spotlight the jobs and economic growth gambling can bring, especially to poor areas, and to play down the problem of pathological gambling.

Dobson and other gambling critics feared that their report would have little effect if the panel splintered. But with the commission so evenly divided between friends and foes of gaming, the search for consensus led to continual compromises.

In the end, Frank Fahrenkopf Jr., the former Republican National Committee chairman who heads the American Gaming Assn., no longer views the commission with concern.

“I want a report,” he said recently, “because I think the research that’s been done [under the commission’s auspices] supports what we’ve been saying.”

Fahrenkopf has argued that gambling brings harmless entertainment to most customers and jobs to unskilled workers. Where problems exist among what they see as the relatively small number of compulsive gamblers, industry leaders say they should be helped--but not by restricting the industry.

What triggered the original demand for a national commission was the explosive spread of legal gambling. In 1976, when the last national commission studied the issue, only 13 states had lotteries, there was no legal casino gambling outside Nevada and only Nevada and New York permitted off-track betting.

Since then, the gaming industry has grown tenfold. Thirty-seven states have lotteries, 21 states have casinos and slightly more have off-track betting. Wagering of some sort takes place in every state except Utah, Tennessee and Hawaii.

Between 1976 and 1997, revenues from legal wagering increased 1,600%. Last year, bettors lost an estimated $50.9 billion, five times the amount lost in 1980.

In addition, two profound changes occurred in the nature of gambling.

First, reversing half a century of public policy, government went from regulating and often suppressing gambling to operating, promoting and benefiting from it.

Second, the technology of gambling has changed. Previously, slot machines, roulette wheels and other gaming devices were expensive and highly specialized. Today, these and other forms of gaming can be offered on the equivalent of small computers. Proliferation has become easier, policing tougher and--given the flexibility of computer programs--the distinctions between different forms of gambling harder to maintain.

California is in the vanguard of almost all the trends and controversies.

With its lottery, card rooms, Native American casinos, more than 30,000 video poker games and uncounted thousands of unauthorized slot machines, the state is a potential competitor to Nevada as a gambling mecca. And the 1998 legal battle over Proposition 5, which permits the tribes to operate their casinos with little state supervision, as well as Gov. Davis’ negotiations with them, reflect issues that also beset many other states.

It was against this background that the national commission was created. As recently as last month, commissioner Richard C. Leone, a former New Jersey state treasurer and critic of rapid expansion of gaming, told his fellow commissioners: “The reason we exist as a commission is because some people are troubled by the vast increase in legalized gambling.”

Gaming Interests Represented

Commercial gaming got three seats on the commission: J. Terrence Lanni, CEO of MGM Grand, the huge hotel and casino corporation headquartered in Las Vegas; John W. Wilhelm, president of the Hotel Employees and Restaurant Employees International Union, which represents 75,000 casino employees, and William A. Bible, a former chairman of the Nevada Gaming Control Board and longtime state official.

Robert W. Loescher, a Juneau, Alaska, businessman and leader of the Tlingit/Haida Indian tribe, also served on the panel. He defended tribal gambling and opposed most restrictions. Four other seats reflected the loose alliance between liberals and religious conservatives: Leone, now head of the 20th Century Fund; Dobson, president of the Focus on the Family organization in Colorado Springs; commission chair Kay C. James, a conservative activist and former dean at Pat Robertson’s Regent University, and former California Lt. Gov. Leo McCarthy, a Democrat.

Frequently allied with them was Paul H. Moore, a Mississippi radiologist with close ties to Senate Majority Leader Trent Lott (R-Miss.).

The commission’s final report will bristle with recommendations--almost all so general or watered down that they pose little threat to the industry. While calling for a ban on Internet gambling, for instance, commissioners acknowledged that enforcement would be almost impossible.

State Lotteries to Be Chided

Tellingly, many of the commission’s strongest proposals are aimed at groups that were not represented on the panel. State lotteries, which had no direct representative on the commission, will be chided--for allegedly targeting low-income gamblers and for advertising that entices customers without adequate warning of the long odds against winning.

And the commission is calling for tighter federal supervision of Indian gambling operations, though Native Americans complain that the proposal is primarily inspired by commercial casinos out to protect their market share.

But dozens of recommendations for more aggressive restrictions were turned aside or watered down, including a proposal for far-reaching limits on political contributions from gambling interests.

Last week, the commission voted, 6 to 3, to urge states to restrict contributions from gaming entities, but shied away from a stronger proposal to curb donations at the federal level or from individuals.

Similarly, while commissioners deplored the dearth of good information on gambling, detailed proposals by McCarthy to enlist the National Institutes of Health in a comprehensive research program met surprising resistance.

Sources close to the commission said the gaming industry was uneasy about making NIH the lead agency: If future findings proved adverse, its prestige would give them higher credibility.

A weary McCarthy accepted a compromise that diluted his proposal.

Reformers could not even hold the line on proposals to ban or restrict ATMs at gambling facilities. The machines make it too easy for players, in the heat of the moment, to lose more than they can afford, advocates argued.

But former gaming official Bible and his allies held a trump card: Many gambling facilities offer opportunities to shop.

At this, James joined the opposition. Interfering with her right to shop was unthinkable, she said, only half-joking.