chapter 6
CASINOS, PART 4: THE EFFECTS OF CASINOS

NATIONAL PUBLIC OPINION

According to a 2002 poll conducted for the American Gaming Association (AGA) by Peter D. Hart Research Associates, Inc., and the Luntz Research Companies, Americans in favor of casinos in their communities outnumber those who disapprove of local casino gambling. Of those with an opinion, 49% indicated some degree of favor, while 40% indicated disfavor. A 2004 AGA poll showed that about two-thirds of people polled believe that casinos bring widespread economic benefits to other industries and businesses in their region.

Proponents of casino gambling consider it part of the leisure/entertainment sector—like amusement parks or movie theaters. In a casino, participants exchange their money for a good time. Those who support casino gambling generally do not see it as a moral issue.

Those who are opposed to casinos are less unified in their opinions. Some disapprove of gambling. Others are wary of an industry that was associated with mobsters, swindlers, and corrupt politicians throughout much of this country's history. Still others believe that casinos are a bad idea because they provide a place for those who are prone to problem gambling to act on those urges. Easy accessibility to casinos might also encourage some people to gamble who otherwise would not and should not. Many social reformers believe in protecting people from their own bad judgment.

There is also the so-called NIMBY factor, which stands for "not in my backyard." Some people support casinos in theory and may even visit them on vacation, but they do not want one in their hometown, for whatever reason. According to the AGA in 2004 State of the States, four out of ten Americans do not want a casino in their own neighborhood, although just over five out of ten feel casino gambling is perfectly acceptable for anyone. Local residents and politicians are often opposed to casinos because they fear increased traffic and crime and may want to protect their community's image. Also, many state governments are running lotteries and do not want competition from casinos for their residents' gambling dollars.

THE EFFECTS OF NATIVE AMERICAN TRIBAL CASINOS

Native American tribes who encounter opposition to their casino plans attribute some of the opposition to the issues described above and some of it to racism. On the other hand, some critics of tribal casinos believe that they encourage a cycle of dependence. These critics claim that tribe members who were formerly dependent on the federal government are now dependent on their tribal government.

The Pros

In 2004 the National Indian Gaming Association (NIGA) published Indian Gaming: Final Impact Analysis, a study of the economic and social effects of tribal gaming. The report notes the following advantages that tribal gaming and associated businesses have brought to Native Americans:

• Generated revenues of nearly $18 billion in 2003
• Created nearly 500,000 jobs
• Paid wages of approximately $5 billion to employees of tribal governments and economic development enterprises
• Contributed to substantial development in Indian-owned small businesses during the late 1990s
• Provided millions of dollars to nongaming tribes through special trust funds
• Provided a means for trade and commerce between gaming and nongaming tribes, for example, through purchasing of goods and services
• Resulted in contributions of more than $100 million in 2003 from tribal governments to charities and non-profit organizations
• Funded essential tribal programs, such as schools, hospitals, water and sewer systems, roads, police and firefighting programs, infrastructure needs, and cultural and social projects

The report concludes that "gaming has given Tribal leaders the opportunity to acquire the knowledge, skills and self-confidence needed to build strong Tribal governments and, for the first time in generations, provide for the health, education, and welfare of their people."

A study published in April 2000 (Jonathan B. Taylor, Matthew B. Krepps, and Patrick Wang, The National Evidence on the Socioeconomic Impacts of American Indian Gaming on Non-Indian Communities, Chicago: Lexecon) found that Native American casinos had substantial economic and social benefits to surrounding communities and that these impacts were greater than those from non–Native American casinos. This was because Native American casinos were more likely to be in areas suffering from severe economic depression.

The researchers examined a hundred communities across the country including twenty-four in which commercial casinos had been introduced and sixteen in which tribal casinos had been introduced. Analysis of thirty indicators of socioeconomic health revealed no harmful impacts associated with the introduction of tribal casinos. The casinos were praised for benefits including infrastructure improvements, economic growth, higher employment, better social programs, greater indigenous language retention, and all-around community vitality.

The Cons

Critics of tribal gambling claim that tribal casinos unfairly compete against local hotels, restaurants, and pari-mutuel operators; hurt state lottery sales; place an increased burden on states to address problems resulting from pathological gambling; introduce opportunities for money laundering and organized crime; and hurt the culture and political stability of the tribes.

An editorial by the staff of the Wall Street Journal (April 4, 2002) made three major claims against the tribal casino industry: that it is underregulated, linked with organized crime, and rife with political scandal. The editorial cited the relatively low budget of $8 million under which the National Indian Gaming Commission (NIGC) operates as proof that the industry is underregulated. The NIGC, which is responsible for oversight of hundreds of tribal casinos, employs fewer than thirty full-time auditors and inspectors, while in contrast, the New Jersey gaming authorities employ more than two hundred auditors to oversee only twelve casinos. The editorial cited reports from other newspapers linking tribal casinos in Minnesota, Florida, and California with known Mafia figures. Finally, the editorial accused politicians of misusing the federal recognition process to give tribal status to "groups of dubious lineage" so that these tribes could open casinos.

The journal Indian Country Today called the editorial "generalized fiction" and insisted that tribal gambling is more regulated than other gambling enterprises in the country. Comparison of the NIGC budget to those of state gaming commissions is inaccurate because the NIGC is not the primary regulatory authority over Class III gambling. The tribes spend more than $100 million per year on their own regulatory structures.

Furthermore, the states that enter compacts with tribes have input in how tribal gaming is conducted, and no states have complained about problems with underregulation. The magazine reports that there have been isolated incidents of organized crime figures trying to infiltrate tribal gaming operations, but that the wrongdoers have been ferreted out and caught. The article cited a statement by the chief of the Organized Crime and Racketeering Section of the U.S. Department of Justice, who in 2001 reported to a Senate committee that there had been isolated incidents but no systematic infiltration by organized crime figures.

In general, state and local authorities associate tribal casinos with increased regulatory, law enforcement, and infrastructure costs, but also with savings on welfare assistance payments. Increased costs can be offset by licensing fees collected from the tribes as dictated in state-tribal compacts.

THE LACK OF BALANCED DATA

Assessing the overall effects of casinos on society is a difficult task. There are many factors to consider. Most relate to economics, but some relate to quality of life and moral issues. The latter are difficult to gauge in quantitative terms.

In 1996 Congress created the National Gambling Impact Study Commission (NGISC) to study the economic and social impacts of legalized gambling. The commission included nine members and conducted hearings during 1998 in Las Vegas, Nevada; Atlantic City, New Jersey; Chicago, Illinois; San Diego, California; and Biloxi, Mississippi. The NGISC's final report was published in 1999.

The report's findings on the local impact of casino gambling can be summarized as follows:

• Casinos are associated with increased per capita income in the construction, hotel, lodging, recreation, and amusement industries but decreased per capita income for those working in local restaurants and bars.
• The economic benefits of casinos are particularly impressive in economically depressed communities.
• Casinos create full-time entry-level jobs that are badly needed in areas suffering from chronic unemployment and underemployment.
• Unemployment rates, welfare payments, and unemployment insurance declined by approximately one-seventh in communities close to newly opened casinos.
• In terms of income, health insurance, and pensions, casino jobs in the destination resorts of Las Vegas and Atlantic City are better than comparable jobs in the service industries.
• Small business owners located near casinos often suffer from loss of business.
• Tribal casino workers have complained about lack of job security, an absence of federal and state antidiscrimination laws, and the lack of workers' compensation benefits.
• Elected officials from casino towns expressed support for casinos because they improved the quality of life in their towns and funded community improvements.
• Problems with pathological gambling increased in seven of nine communities surveyed.
• The AGA is the largest source of funding for research on pathological gambling.
• Many casinos train management and staff to identify problem gamblers among customers or employees.
• Many tribal casinos contribute money to nonprofit groups dealing with problem gambling.

The report concluded that lack of objective research data on gambling issues was a major hurdle in determining the extent of its effects on society.

PURE ECONOMICS

American casinos took in nearly $44 billion during 2003, making the casino industry a very big business. From an economic standpoint, most casinos have been a huge success for their investors. Commercial casino investors range from middle class stockholders in major corporations to billionaires like Donald Trump and Steve Wynn. Most tribal casinos have been economically successful as well, bringing unimagined wealth to Native Americans, many of whom were at the very bottom of America's economic ladder only a decade ago.

Also, casinos are labor-intensive businesses that employ hundreds of thousands of people. These employees support their families, pay taxes, and buy goods and services—factors that contribute to the economic health of their communities.

The economic effects of casinos on local and state governments in terms of taxes and fees are also significant. Commercial casinos pay billions of dollars every year to government agencies in the form of application fees, regulatory fees, wagering taxes, and admission taxes. These monies fund programs that improve the quality of life of people in the immediate vicinity or same state as the casinos. In turn, governments incur increased costs for more police, roads, sewers, and so forth when casinos open in their jurisdictions. Tribal casinos, though exempt from state and local taxation, pay billions of dollars each year to compensate states and municipalities for regulatory and public-service expenses.

Economic factors alone do not justify or vilify an industry. One could argue that the steel industry benefits society by providing many economic benefits (jobs, marketable goods, corporate taxes, and so forth) and harms society by creating pollution. Benefits and harms must be weighed against one another. In addition to crime, bankruptcy, and suicide rates, important issues that are affected by the presence of casinos include employment, tourism, domestic problems, compulsive and underage gambling, and politics.

DIRECT GOVERNMENT REVENUE

From Commercial Casinos

According to the AGA study 2004 State of the States, commercial casinos generated tax revenues of $4.32 billion in 2003, up from $4 billion in 2002. Nevada generated the greatest tax revenue in 2003 ($776.5 million), followed by Illinois ($719.9 million) and Indiana ($702.7 million). Racetrack casinos generated tax revenues of $765.6 million in 2003, up from $718 million in 2002.

According to a 2003 AGA survey, 70% of Americans believe that legalized casino gambling is a good way to generate local and state revenues without having a general tax increase. However, respondents seemed uncertain as to where those gaming tax revenues go. Only 58% of those polled agreed that such revenues have helped pay for local roads, schools, hospitals, and other projects.

Gaming revenue taxes can be a substantial portion of a state's revenue. In Nevada in fiscal year 2003, gaming taxes and the casino entertainment tax accounted for 37% of the state's total budget. In July 2003 the Las Vegas Sun estimated that the gaming industry actually contributes 50% of the state's budget, when associated property and commercial taxes are considered ("Gaming Takes It on Chin During Session," by Jeff Gorman, July 5, 2003). Nevada legislators increased the maximum gaming tax rate from 6.25% to 6.75% during 2003, the first increase in years. The move was driven by a severe state budget crisis.

During 2002 and 2003 the state of Illinois raised gaming taxes on its casinos in an effort to ease state budget woes. The AGA complained that the increase caused the casinos to raise prices, lay off employees, and limit their capital investments, thus hurting the industry in the long term. Legislators in other casino states are increasingly considering raising gaming taxes to ease their budget problems.

According to statistics published on the Web site of the Mississippi Gaming Association (www.mississippigaming.org) the state's casino industry contributes about 10% of the state's total budget. In Mississippi in 2001, gaming revenue taxes were greater than the combined corporate taxes paid by all other corporations in the state.

According to statistics provided by the Mississippi Gaming Commission (www.mgc.state.ms.us), the number of people receiving food stamps in Tunica County dropped 56% between June 1992, when the first casinos opened there, and August 1997, while the assessed value of personal property rose from $16 million to $566 million. The tax rate dropped from 11.4 cents per $1,000 assessed value to 4.2 cents per $1,000. The county improved its roads and sewers and built new schools and a medical center.

From Native American Casinos

As described in Chapter 5, the Indian Gaming Regulatory Act requires that net revenues from tribal gaming be used in five general areas:

• To fund tribal government operations or programs
• To provide for the general welfare of the tribe and its members
• To promote tribal economic development
• To donate to charitable organizations
• To help fund operations of local government agencies

Figure 6.1 shows the tribal government services funded by tribal casinos during 2003. This breakdown was compiled by the NIGA based on a survey of its member tribes.

The revenues earned by tribal casinos are not taxable, because the casinos are operated by tribal governments. Just as the federal government does not tax the states for revenue earned from lottery tickets, the federal government does not tax tribal governments for revenue earned from casinos. Therefore, tribal casinos generate less tax revenue than commercial casinos. Tribe members who live on the reservation and are employed at tribal enterprises (such as casinos) are not subject to state income taxes. On the other hand, tribe members do pay federal income tax, FICA, and social security taxes on their wages, even if earned at tribal enterprises. Wages paid to tribe members living off-site and to nontribe employees are subject to state income taxes.

FIGURE 6.1

The NIGA says that tribal casinos and associated business generated $4.7 billion in federal taxes during 2003. This includes employer and employee Social Security taxes, personal and corporate income taxes, and excise taxes. Indian Gaming: Final Impact Analysis estimates that jobs created by tribal casinos reduced federal unemployment and welfare payments by $1.2 billion during 2003.

According to the NIGA report Indian Gaming: Final Impact Analysis, tribal governments spent more than $200 million during 2003 on casino regulatory costs. They gave another $50 million to their home states and $9 million to the NIGC to offset oversight expenses. The report also notes that tribal casinos and associated businesses paid $1.6 billion to state governments during 2003 and $100 million to local governments.

EMPLOYMENT

At Commercial Casinos

According to the AGA in 2004 State of the States, commercial (nonracetrack) casinos employed more than 350,000 people in 2003. Although this number is up slightly from 2002, it is down from the nearly 365,000 people employed in 2001. Nevada accounted for 192,812 of commercial casino jobs in 2003, or 55% of the total. Racetrack casinos in Delaware, Iowa, Louisiana, New Mexico, Rhode Island, and West Virginia employed nearly 13,000 people during 2003. This number is up substantially from 8,000 employed during 2001.

At Native American Casinos

The NIGA reports that tribal gambling directly employed 205,000 people during 2003. (See Figure 6.2.)

FIGURE 6.2

Approximately 155,000 of these jobs were at tribal casinos. The remainder were in directly associated businesses and tribal government enterprises. Another 75,000 jobs were attributed to the indirect effects of tribal casinos, for example, businesses at which casino workers spent their wages. The NIGA estimates that tribal casinos were indirectly responsible for another 170,000 jobs by purchasing goods and services from various businesses around the country. Capital construction projects (for example, casino building) were associated with creation of another 45,000 jobs. In total the NIGA credits tribal gaming with employing 495,000 people during 2003.

In 1999 the NGISC reported that the great majority of employees in tribal casinos were not Native Americans. In 2001 the NIGA concurred, estimating that tribal casino employees were roughly 25% Native Americans and 75% non-Native Americans. This discrepancy is due at least in part to the fact that some tribes have fewer members than employees.

The applicability of federal labor laws to tribal casinos is a controversial subject. Tribes are expressly excluded from Title VII of the Civil Rights Act of 1964 and Title I of the Americans with Disabilities Act of 1990. Some court cases have held that Occupational Safety and Health Administration (OSHA) requirements, the Fair Labor Standards Act, and the Employee Retirement Income Security Act do apply to tribal businesses conducted on the reservation. The National Labor Relations Act exempts government entities from the requirement that employees be permitted to form unions and bargain collectively with their employers. The National Labor Relations Board and a federal court have both ruled that a tribe is a government and therefore exempt from the act. Because tribal governments are sovereign, they are not subject to state labor laws. Instead, tribal labor laws apply.

A May 2002 article in the Wall Street Journal accused tribal casinos in California of using their sovereignty to avoid federal labor laws, unions, and costly worker benefits and lawsuits. Under the Indian Gaming Regulatory Act, tribes are required to follow federal minimum wage and safety provisions. They also are prohibited from hiring felons to handle money. State compacts determine whether tribes must follow state employment laws. However, day-to-day enforcement is left up to tribal gaming agencies. Lawyers complain that tribes fire sick and injured workers to avoid paying workers' compensation and also dismiss those who advocate unionization.

The Hotel Employees and Restaurant Employees Union (HEREU) accuses tribes of abusing and firing casino employees at will. HEREU alleges that casino managers warn workers not to discuss unionization during their breaks. Tribal-state compacts negotiated in California, Wisconsin, Connecticut, and New York recognize the right of tribal casino employees to be represented by a union as their collective bargaining agent. HEREU plans to focus its organizing campaign on the 60,000 workers employed in California's tribal casinos. It complains that wages and working conditions at these casinos are "generally substandard." It also claims that HEREU has been blocked from organizing casino workers at the Foxwoods and Mohegan Sun casinos in Connecticut.

The Gaming Industry: A New Career Choice

The booming casino market has introduced a new career choice for many young people. The University of Nevada at Las Vegas (UNLV), only 1.5 miles from the Strip, has included gaming courses as part of its curriculum since it opened in 1967. Courses offered include Casino Operations and Management, Protection of Casino Table Games, and Mathematics of Casino Games. The UNLV International Gaming Institute is part of the William F. Harrah College of Hotel Administration. It includes a casino and a surveillance room.

Michigan State University's business school offers courses in casino operations and management that reportedly have waiting lists. Students are drawn to the unique nature of casino careers and the perceived excitement and fantasy aspect. Students at Central Michigan University, which is located near the Soaring Eagle Casino and Resort operated by the Saginaw Chippewa Indian Tribe of Michigan, can take upper-level courses at UNLV.

The Casino Career Institute, which includes a large mock casino, is a division of Atlantic Cape Community college in downtown Atlantic City, New Jersey. When it

TABLE 6.1

opened in 1978 it was the first gaming school in the country affiliated with a community college.

In the summer of 2001 the Bureau of Labor Statistics, an agency within the U.S. Department of Labor, featured casino gaming in Occupational Outlook Quarterly. The article describes the duties, qualifications, necessary training, and earnings of casino workers. (See Table 6.1.) In general, gaming workers need excellent communication and customer service skills, personal integrity, and the ability to maintain composure when dealing with angry patrons. A high school diploma or GED is usually required for all entry-level jobs.

All employees must be at least twenty-one years old and have a license from the appropriate regulatory agency. Obtaining a license requires a background investigation. Requirements for education, training, and experience are up to individual casinos. Most casino work is physically demanding, requiring standing for long periods. Exposure to cigarette, cigar, and pipe smoke and to loud noises is common. The employment outlook for the industry is good, as increasing competition should result in more jobs for gaming workers. Prospects are best for those with a degree or certified training, previous experience, and superior interpersonal skills.

Many gaming employees must be licensed by the state in which they work, especially dealers, cashiers, and others dealing with money, slot repairmen, security personnel, and supervisors and managers. A background check is usually required to obtain a license. People can be disqualified from casino employment for a variety of reasons, including links to organized crime, the commission of felonies, and gambling-related offenses.

TOURISM

According to a poll conducted for the AGA by Peter D. Hart Research Associates, Inc., and the Luntz Research Companies, 76% of those polled in 2003 believed that casinos can play an important role in a community's entertainment and tourism options.

Las Vegas

Certainly, no destination better represents the marriage between gambling and tourism than Las Vegas, Nevada. In the early 1990s the city began a drive to make itself more family friendly. Focus shifted from an adult playground to a family destination. This change was driven by a steep decline in revenues. According to abcnews.com, the city's gambling revenues dropped by nearly $500 million in 1992 in the face of competition from legal gambling on riverboats and tribal casinos. During the 1990s the casinos spent $12 billion to refurbish almost every hotel on the Strip to include entertainment. Theme hotels became the big draw

During this shift to family entertainment, the Las Vegas Convention and Visitors' Authority focused advertising on families. Topless shows along the Strip gave way to magic shows, circus events, and carnival rides. The result was a huge increase in visitors. However, casino owners noticed that the change did not bring in more gambling revenue. Children distracted their parents from gambling or were left unattended.

During the late 1990s, the city's image began to change again. According to USA Today, the casinos began getting serious competition from strip clubs located off the Strip, which were bringing in millions of dollars from conventioneers. Adult entertainment along the Strip made a comeback. Casino/hotels began offering more topless and nude shows. This shift back to adult entertainment was why the MGM Grand shut down its family theme park in 2001. "We pretended to be a family destination," said the president of the MGM Grand in an interview in February 2002. He indicated that the new focus on the Strip would likely be gambling, drinking, and sex. However, casino managers insist that the nudity presented at their casinos is tasteful and artistic. They are anxious not to offend shareholders of their parent corporations or alienate women, potential gamblers who make up nearly 60% of Las Vegas visitors.

Besides its image problems, Las Vegas faces other challenges as well. The city is much more dependent on air travelers than many other gambling enterprises and was hard hit by the travel slowdown following the September 11, 2001, terrorist attacks. In addition, Las Vegas casinos rely heavily on visitors from California. With the advent of tribal gaming in California, Las Vegas casinos face stiff competition in their own backyard.

Mississippi

According to Mississippi officials, tourism contributed more than $6 billion to the state's economy in 2000. The tourist industry created more than 94,000 jobs and contributed $482 million to Mississippi's general fund tax revenues. The state's casinos are a major weekend destination, particularly for those within driving distance.

A 1999 study conducted by D.K. Shifflet & Associates found that casinos were the top activity attracting visitors to Mississippi that year. Gaming was selected by 46% of respondents, compared to other entertainment options (32%), dining (25%), shopping (21%), and sightseeing (15%).

Atlantic City, New Jersey

Tourism in Atlantic City, New Jersey, was improved by the introduction of casino gambling, but not as fast or to such a degree as people had hoped. From the 1880s to the 1940s, Atlantic City was a major tourist destination, particularly for people living in the Northeast. Visitors came for the beaches and to walk along the town's board-walk and piers, which featured carnival-like entertainment. During the 1950s and 1960s, the town suffered a severe slump in tourism as people began traveling south to warmer beaches in Florida and the Caribbean. Because tourism had always been the town's major industry, it went into an economic depression.

Casino gambling was legalized in 1976 in the hopes that the city would recapture its former glory and rival Las Vegas as a tourist destination. Progress was slow through the 1980s and early 1990s. The casinos in Atlantic City were not as flashy or as popular as those in Las Vegas. Although visitors began to come to Atlantic City, they mostly came by bus or car and stayed only for a day or two. In 1984 the state established the Casino Reinvestment Development Authority (CRDA) to revitalize the city using the funds from a 1.25% tax on casino revenues.

The economic troubles that had ravaged the town's businesses before legalized gambling were not easily overcome. The casinos were surrounded by vacant lots, buildings in disrepair, and housing projects. The overall atmosphere was not particularly appealing to vacationers or convention-goers. A reporter for a West Paterson, New Jersey, newspaper described the city in 1993 as "trapped in a web of poverty and blight" (Mike Kelly, "Gambling with Our Future: City Poised to Hit Jackpot, or Lose Everything," The Record, July 1, 1993). At that time, the typical visitor was a retiree who arrived by bus and stayed only for the day. According to Kelly, Atlantic City's thirty million annual visitors actually represented about five million people making multiple trips.

In the late 1990s initiatives by CRDA and other groups began to pay off as hundreds of new homes were built and commercial businesses were established. A thirty-one-acre convention center, one of the largest in the country, opened in May 1997. The city's image began to improve, and tourism showed a moderate surge. City and casino officials cite three factors as limiting tourist growth in Atlantic City:

• Lack of a major airport
• Lack of usable land
• Cold winters

The president of the Casino Association of New Jersey was quoted in 2001 as saying, "While we can never be a worldwide destination like Las Vegas, we can become a regional destination" (William H. Sokolic, Courier-Post, July 15, 2001).

CRIME

Officials must realize that legal gambling will attract an unsavory element that can jeopardize the safety and well-being of the city's residents and the many visitors who come to gamble.

—FBI Law Enforcement Bulletin, Federal Bureau of Investigation, January 2001

The Early Link between Casino Gambling and Organized Crime

Casino gambling in its earliest years was largely run by mobsters, gangsters, and Mafia families. After gambling was legalized in Nevada in 1931, the first casinos were small, rather plain establishments operated by families and small companies. Nevada law kept corporations out of the casino business by requiring that every shareholder obtain a gaming license.

Ironically, this law, which was designed to safeguard the integrity of the casinos, gave organized crime a huge advantage. The nation was in the midst of the Great Depression, and building a flashy casino/hotel was a very expensive undertaking that required a large amount of money. Few legitimate businessmen had the cash needed for such an enterprise, and banks were reluctant to loan money for what they saw as a poor investment. Organized crime groups had made fortunes selling bootleg liquor during Prohibition and were able to make the large capital investments needed to build and operate lavish casino/hotels that attracted visitors.

The marriage between casinos and organized crime in Nevada lasted for decades but was eventually ended by gaming officials and law enforcement. Today, there is no strong evidence of organized crime activity in the casino industry, but regulatory agencies keep a watchful eye on casinos to make sure mobsters and their associates do not gain a new foothold in the industry.

Other Unsavory Elements

Casinos incorporate a number of measures into their daily operations to minimize the potential for crime by patrons and employees. The casino floor is constantly monitored by a host of security guards and cameras. Observers watch dealers and patrons at the gaming tables and all money-counting areas. Some casinos use high-tech facial recognition programs to scan incoming patrons and quickly identify any known felons or other undesirables.

Still, criminals do enter casinos. In September 2000 security guards at Harrah's casino in Las Vegas tried to arrest a man on the casino floor. The officers had identified the man from a photo of a suspected thief, but when they tried to arrest him, a gun battle erupted and an innocent thirty-year-old woman from Hawaii was caught in the crossfire and killed. The woman's parents sued the casino, alleging that it had used insufficient security precautions to handle the matter. A jury denied the claim, ruling that the casino was not liable for the woman's death.

Crimes can also be committed by casino employees. Although the industry does not release data on crimes committed by casino employees, analysts estimate that employee crime accounts for millions of dollars in losses each year due to theft and embezzlement. Vice-type crimes also occur, particularly prostitution. In 2002 the Belterra Casino in Indiana was fined $2.26 million by the Indiana Gaming Commission for hiring prostitutes to entertain high-stakes gamblers at a casino-sponsored golf tournament in June 2001. The casino's license was also suspended for sixty-six hours.

In November 2000 a study called Effects of Casino Gambling on Crime and Quality of Life in New Casino Jurisdictions was published. The study was sponsored by the National Institute of Justice, the research and development branch of the U.S. Department of Justice. The study assessed the impact of casino gambling in eight areas that initiated casino gambling during the 1990s:

• Alton, Illinois
• Peoria, Illinois
• East Peoria, Illinois
• Sioux City, Iowa
• St. Joseph County, Missouri
• St. Louis, Missouri
• St. Louis County, Missouri
• Biloxi, Mississippi

Researchers compared official crime statistics from four years prior and four years subsequent to the initiation of casino gambling in these jurisdictions. The study concluded that results were mixed. Three of the jurisdictions—Peoria, Sioux City, and Biloxi—experienced a significant increase in certain crimes. However, crime in Alton and the city and county of St. Louis significantly decreased. Researchers decided that there was no single effect of casino initiation on crime.

The study also assessed the opinions of residents and community leaders in the eight areas on the effects of the casinos on crime and other quality-of-life issues. Attitudes about crime differed depending on who was asked. In general, residents associated casinos with increased crime, while community leaders felt that casinos improved the quality of life and economy. A majority (59%) of community leaders asked were in favor of the casinos, with 77% of leaders believing that the casinos had a positive effect on the local economy and 65% indicating that the casinos had a positive effect on the quality of life in the community. Those leaders in economic development positions were almost unanimous in their belief that casinos were a positive economic influence (95%) and that they improved the quality of life (86%). Fewer community leaders in positions concerned with providing social services (60%) felt that casinos enhanced the quality of life in their communities.

Tribal Casinos

A May 2002 article in Indian Country Today said that 225 criminal cases related to tribal gambling were referred to the Department of Justice between 1992 and 2000. Most of the cases involved theft from tribal casinos by patrons or employees. According to the FBI, theft and embezzlement are the most common crimes associated with casinos.

Biloxi, Mississippi

The article "When Casino Gambling Comes to Your Hometown" (FBI Law Enforcement Bulletin, January 2001) was written by the police chief of Biloxi and an FBI agent. Mississippi law requires that 20% of casino revenues turned over to local officials must be used to support public safety budgets. The Biloxi police department reported in the article that their department's budget more than tripled after casinos began operating. It used the money to build a new public safety building, hire more officers, and increase starting salaries.

The Biloxi police department also enacted personal-conduct rules for its employees to reduce gambling-related problems. It prohibits police officers from working at the casinos during off-duty hours. Officers in uniform are not even allowed to take meal breaks at the casinos. Officers who frequent the casinos are barred from conducting criminal investigations at them. Within a year of the casinos' opening, the number of pawnshops in Biloxi doubled. Over the next four years, the number doubled again. The police department increased monitoring to ensure that stolen property was not being pawned at these shops.

Crime statistics show that reported crimes in the Biloxi community increased after the first casino opened in 1992—mostly robberies, check and credit-card fraud, property crimes, domestic abuse, and alcohol-related violations. There were also more violations in traditional vice crimes, such as prostitution, pornography, loan-sharking, and extortion. However, the increase is attributed in part to a population increase, from 46,319 in 1990 to more than 53,400 in 2000. The city police department developed a task force with the FBI and other agencies to target organized crime groups involved in check and credit-card fraud, prostitution, money laundering, and pornography in and around the casinos.

TABLE 6.2

There were also minor problems associated with casinos, including increased traffic, nighttime construction noise, and flashing lights on business signs. However, the report describes the overall benefits of casinos as being "undeniable." The attraction and retention of more qualified police officers is noted as one of the chief benefits.

Missouri

According to the Missouri Gaming Commission Annual Report to the General Assembly: Fiscal Year 2003, commission agents filed more than 1,200 charges between July 1, 2002, and June 30, 2003, as shown in Table 6.2. The total includes charges for acts committed at the casinos as well as arrests made for criminal activities that did not occur on casino property.

Michigan

In July 2002 the Detroit News reported that at least five people had been arrested in Michigan during the previous year for robbing banks in order to get money to pay their large gambling debts or to make up gambling losses. The accused included an elementary school teacher, an electrical engineer, and even a dealer at the Greektown casino. Law enforcement officials reported that most of the people had no prior criminal records but turned to crime after charging the maximum allowed on their credit cards and exhausting other sources of credit (such as loans).

Counselors who work with compulsive gamblers say that those who turn to crime do not have the typical mind-set of criminals but delude themselves into believing that the money they take is a short-term loan that they will repay. The newspaper cites a report from the University of Nevada at Reno that found that seven cities across the country experienced a sharp increase in theft, abuse, and drug crimes following the introduction of casinos. Another study from a University of Illinois economist indicated that such crimes begin to increase approximately three to five years after casinos are introduced in a community. This time frame is thought to reflect the amount of time it takes compulsive gamblers to exhaust their financial resources and resort to criminal actions.

SUICIDE

In January 2000 an off-duty police officer shot and killed himself at a high-stakes blackjack table at a Detroit casino after losing more than $15,000 in one afternoon.

The possible link between casino gambling and suicide rates has been the subject of much study over the years. A study done in 1997 at the University of California at San Diego concluded that cities with casino gambling had suicide rates that were four times those of comparably sized cities without casino gambling. However, researchers at Dalhousie University in Halifax, Nova Scotia, reported in 2000 that only 3% of the suicides that occurred in Las Vegas between 1990 and 1999 were directly related to gambling. The study concluded that mental, emotional, and physical health issues were more likely the major factors.

Nevada, a state in which gambling is widely practiced, has the highest suicide rate in the nation. According to the Centers for Disease Control and Prevention, the suicide rate in Nevada in 1999 was 22.3 suicides per 100,000 population. (See Table 6.3.) This is more than twice the national average of 10.7 per 100,000 population. However, many mental health experts attribute Nevada's high suicide rate to the huge inflow of new residents who lack a support system of family and friends. Loneliness and despair are more likely to overwhelm such people than those who have an emotional safety net in place. In general, suicide rates are higher in the western states than in any other region. Even Utah, which allows no legal gambling, was among the fifteen states with the highest suicide rates in 1999, with a rate of 13.2 suicides per 100,000 population.

A study published in July 2002 (Suicide and Life-Threatening Behavior) found little to no correlation between suicide rates and the presence of casino gambling in U.S. communities. The study, which was performed by epidemiologists at the University of California at Irvine, compared the 1990 suicide rates of 148 metropolitan areas in different regions of the country. The results indicated that the presence of casinos could account for only 1% of the regional differences in suicide rates. Researchers also compared "before and after" suicide rates for cities in

TABLE 6.3

which gambling had been legalized. Although increased suicide rates were noted in Atlantic County, New Jersey, and Harrison County, Mississippi, after the advent of gambling, the increases were not considered statistically significant. In fact, suicide rates experienced a significant drop in Lawrence County, South Dakota, after casino gambling was introduced in the town of Deadwood.

BANKRUPTCY

A gambling problem and bankruptcy are like baseball and hot dogs.

—James Houston, a compulsive gambler

Establishing a definitive link between gambling habits and bankruptcy is difficult. A study published in 2001 by SMR Research Corporation of Hackettstown, New Jersey, attributed 14.2% of U.S. bankruptcy filings to gambling problems. The researchers compared bankruptcy filing rates during 2000 for more than three thousand counties. They found that the 244 counties in which casinos operated had a bankruptcy rate that was 13.5% higher than those counties without a casino. The president of the AGA disputed the report's findings, pointing out that other factors had not been considered—mainly liberal bankruptcy laws and the ease with which credit cards can be obtained.

Examination of personal bankruptcy filings for 2002 shows that the five states with the highest number of filings per 100,000 population were Missouri, Indiana, Nevada, Utah, and Oklahoma. There were no casinos operating in Utah in 2002. The other four states did have casino gambling.

According to the Council on Compulsive Gambling of New Jersey, Inc., the bankruptcy rate in Atlantic City more than doubled between 1994 and 2000, increasing from 5.28 to 11.68 per 1,000 adult population. During the same time period, the bankruptcy rate for the rest of the state rose from 3.83 to 5.99 per 1,000 adult population.

Researchers at the University of Nevada at Reno compared the bankruptcy rates in eight towns without casino gambling with those in areas that initiated casino gambling during the 1990s, namely Alton, Illinois; Peoria, Illinois; East Peoria, Illinois; Sioux City, Iowa; St. Joseph County, Missouri; St. Louis, Missouri; St. Louis County, Missouri; and Biloxi, Mississippi.

The study, sponsored by the National Institute of Justice, chose the control communities to mirror the casino communities as closely as possible in terms of demographics and social and economic factors. Results indicated that there was a statistically significant increase in the bankruptcy rate in five of the eight communities with casino gambling. The communities in which casinos had operated the longest tended to show the largest increase. However, the bankruptcy rate in one of the communities—Biloxi, Mississippi—actually decreased significantly. The decrease was attributed to the unique nature of the casino industry in that town—namely, that casinos had greatly enhanced tourism there. This positive effect had economic benefits that outweighed any financial problems that local residents might have incurred due to overindulgence at the casinos.

DOMESTIC PROBLEMS

In its final report the NGISC briefly addresses the relationship between casino gambling and domestic problems, such as abuse and neglect. The NGISC relied on the report Gambling Impact and Behavior Study: Report to the National Gambling Impact Study Commission, conducted by the National Opinion Research Center (NORC) at the University of Chicago. NORC examined the rates of domestic problems in ten casino communities and found that six of the communities reported an increase in domestic violence after the introduction of casinos.

The NGISC also heard testimony from domestic violence counselors and law enforcement officials regarding specific problems in casino communities. A domestic violence shelter in Harrison County, Mississippi, reported a 300% increase in the number of requests for help after casinos opened in the county. A large majority of the women seeking refuge at the shelter stated that gambling by their spouses had contributed to the abuse. The attorney general of Rhode Island reported a "significant increase" in the number of domestic assaults that occurred in the town of Westerly, Rhode Island, after the Foxwoods Casino opened in nearby Connecticut.

The NGISC's report also mentions numerous cases in which children were locked in cars or were unsupervised for long periods of time while their parents or babysitters gambled at casinos. In a 1997 case, a seven-year-old girl was raped and murdered in a bathroom stall at a Las Vegas casino while her father gambled during the early-morning hours.

One NGISC member was Dr. James Dobson, founder and president of the nonprofit organization Focus on the Family. The group's mission is to spread the Christian gospel and help preserve traditional values, and it opposes gambling for moral, religious, and ethical reasons. On its Web site (www.family.org), Focus on the Family describes some of the detrimental effects of casino gambling on families.

Both the NGISC and Focus on the Family cite statistics showing that children and spouses of compulsive gamblers are more prone to suffer abuse and neglect. The NORC study found casino communities that reported increased cases of child neglect attributed the increase at least in part to parents leaving their children unsupervised at home, in casinos, or in casino parking lots while they gambled. However, these communities did not report any noticeable increases in cases of child abuse or infant mortality after casino gambling was introduced.

Casino officials insist they do all they can to discourage people from leaving children unattended on casino grounds. According to the NGISC, the Foxwoods casino posted signs in its parking lot warning that children left alone in cars would be reported to the police. Industry spokespeople also point out that similar cases of child neglect occur at places unrelated to gambling, such as at shopping malls, and should be blamed on irresponsible parents, not on casinos.

COMPULSIVE GAMBLING

In the AGA's 2003 State of the States: The AGA Survey of Casino Entertainment survey, participants were asked to indicate who they thought bore the most responsibility for addressing the problem of compulsive gambling in the United States. The majority of respondents (63%) said that gamblers themselves should be held most responsible. Another 15% thought that society at large should take the most responsibility, and 10% put the burden on the owners of gambling facilities.

Self-Exclusion Programs

Many states that allow commercial casino gaming operate self-exclusion programs in which people can voluntarily ban themselves from the casinos. For example, Missouri's voluntary exclusion program was created in 1996 after a citizen requested that he be banned from the riverboats because he was unable to control his gambling. As of August 2003 more then 5,800 people were on the exclusion list. The Missouri Gaming Commission requires that the casinos remove self-excluded persons from their direct marketing lists, deny them check-cashing privileges and membership in player's clubs, and cross-check for their names on the list before paying out any jackpots of $1,200 or more. The casinos are not responsible for barring listed people from the casinos, but anyone listed is to be arrested for trespassing if he or she violates the ban and is discovered in a casino. Excluded people can enter the casino for employment purposes, however.

Programs in other states are similar. A self-excluded person discovered in an Illinois casino is to have any chips and tokens in his or her possession taken away and their value donated to charity. The Illinois self-exclusion program runs for five years. After that time, people can be removed from the program if they provide written documentation from a licensed mental health professional that they are no longer problem gamblers.

Self-exclusion in Michigan is permanent; a person who chooses to be in the program is banned for life from Detroit casinos.

The New Jersey Casino Control Commission also offers a program in which people can voluntarily suspend their credit privileges at all Atlantic City casinos. The commission maintains a list of those who have joined the program and shares the list with the casinos.

Hotlines

All of the states operate gambling hotlines that either refer callers to other groups for help or provide counselors over the phone. According to the Mississippi Council on Problem and Compulsive Gambling, 54% of the callers to their hotline obtained the number through a casino.

Hotlines, Treatment, and Loss Limits in Missouri

Missouri operates a twenty-four-hour gambling hotline (1-888-BETS-OFF) that received an average of 335 calls per month during the first half of 2004. Since its inception, the hotline has received more than six thousand calls.

Missouri also offers free treatment to residents suffering from problem gambling and to their families. The program is administered by the Department of Mental Health through a network of private mental health providers that have been certified as compulsive gambling counselors. Until July 2001 the program was funded by communities hosting gambling activities. Passage of Senate Bill 902 means that the state can allocate to the program up to one cent of each $1 admission fee paid to the state.

Iowa's Problem Gamblers Prefer Slot Machines

Iowa's Department of Public Health tracks statistics on clients admitted to its gambling treatment program. Table 6.4 shows the types of gambling that clients had primarily

TABLE 6.4

engaged in for the six months prior to their admittance to the program. Data for fiscal years 1998 through 2003 show that slot machines were the game of choice for a majority of the gamblers, accounting for 69% of those admitted to gambling treatment in 2003. Table games were the second most often played games by problem gamblers.

Recent AGA Educational Efforts

In 2004 the AGA published the American Gaming Association Code of Conduct for Responsible Gaming. The booklet describes the actions that AGA members pledge to take to ensure that responsible gambling is conducted and encouraged at casinos. These actions include proper training of employees and promotion of responsible gambling at company Web sites and through brochures and signs posted at the casinos. AGA members also agree to provide opportunities for patrons to self-exclude themselves from casino play.

UNDERAGE GAMBLING

The legal gambling age in all commercial casinos in the United States is twenty-one, and in tribal casinos it varies from eighteen to twenty-one.

AGA's 2003 State of the States survey asked participants about who they thought bore the most responsibility for addressing the problem of underage gambling in the United States. Survey respondents indicated that the owners of gambling facilities should be held most responsible (39%), followed by gamblers themselves (24%) and society at large (22%). When asked to rate the job that the casino gaming industry was doing in preventing underage gambling, a majority (65%) rated the casino industry as doing a fairly good or very good job. The reputation of the casino industry in doing a good job in preventing "underage use of their product" was superior to that of the tobacco (30%), alcohol (38%), and gun (42%) industries.

TABLE 6.5

In 2000 the Nevada Gaming Commission banned slot machines with themes that were "derived from or based on a product currently and primarily intended or marketed for use by persons under twenty-one years of age." The so-called "slots for tots" regulation is supposed to prevent the introduction of slot machines displaying cartoon characters that might appeal to children. The issue receives particular attention in Nevada because the state's casinos allow escorted children to walk through the casino. Most states prohibit the passage of minors through the gambling area.

The Michigan Gaming Control & Revenue Act of 1997 requires the Michigan Gaming Control Board to compile information regarding casino contacts with minors. Table 6.5 shows this information as reported by the three Detroit casinos for calendar year 2003. In total, 6,691 minors tried to enter the casinos, but were denied entry. Twenty-nine minors were caught on casino premises and escorted off the premises by casino personnel. Another sixteen minors were taken into custody by law enforcement agencies.

POLITICS

Casino gambling and politics have always been linked. Concerns about influence peddling and bribery are major issues to many people. Some states prohibit casino applicants from making political contributions to state and local candidates. For example, the Michigan Gaming Control & Revenue Act of 1997 prohibits political contributions to state and local candidates and committees from "certain persons with interests in casino and supplier license applicants and licensees."

State Political Influence

In May 2000 Governor Edwin Edwards of Louisiana was convicted of racketeering, extortion, and fraud for extorting $3 million from people seeking riverboat casinos licenses. The number of licenses available for riverboats in Louisiana is set at fifteen, so there are a very limited number of casino opportunities available in that state. Mississippi has not set a limit on the number of casinos that can be built. That state's politicians claim this will prevent the bribery, extortion, and favoritism that plagued Louisiana's licensing process.

Local Political Influence

Political issues can be local as well. The city of Hammond, Indiana, inserted a clause into its contract with the Horseshoe Casino that allows the city to borrow money from the casino at extremely low interest rates. In 2001 the city borrowed $3 million to fund an environmental reclamation project. The loan was repaid, but in June 2002 the city decided to borrow nearly $3 million more from the casino at 5% interest to be paid back over six years. The money is to be used to develop golf courses near George Lake. Critics complain that the financial relationship is improper and gives the casino excessive influence in city politics.

Tribal Casinos and Politics

Politics is even more of a concern when it comes to tribal casinos. Critics say that financial backers of tribal casinos use their political pull to push recognition petitions.

A three-member tribe called the Buena Vista Rancheria of Me-Wuk Indians in California received national attention in 2002 as the center of alleged influence peddling in Washington, D.C. Articles published in the New York Times and Washington Post during the spring and summer of 2002 describe the tribe, which was thought to have disappeared 150 years ago. In 1958 the tribe was disbanded by the federal government and its land turned over to the two remaining members—Annie and Louie Oliver. In 1983 the tribe achieved federal recognition again following a federal lawsuit filed by numerous small tribes.

The tribe's rancheria occupies sixty-seven acres near Sacramento. As of late 2002, two women were fighting over leadership of the tribe. The first, Donnamarie Potts, lives on the rancheria and was willed the land by the Olivers' daughter, to whom she was related by marriage. Potts also claims to be the illegitimate daughter of an Oliver descendent. In 1998 Potts signed an agreement with Cascade Entertainment to build a $150 million casino on the land. The company had already invested $10 million in the project when a second woman, Rhonda Pope, filed suit to stop the project, presenting documents proving that she was a lineal descendant of the Olivers. A federal court halted the casino project while the BIA investigated. In May 2002 the BIA ruled that Pope was entitled to organize the tribal government. Potts then appealed both the BIA decision and the court decision. As of 2004 the two women remained locked in a legal battle for control of the rancheria, though Potts was recognized as the tribe's spokesperson.

During the heated legal wrangling in 2002, a top official at the BIA, Wayne Smith, was fired amid allegations that his prior partner, Philip Bersinger, was using Smith's name to solicit business from Native American tribes. Time magazine reported that Bersinger had been offering to help tribes in California (including the Buena Vista Rancheria) gain access to Smith in exchange for large consulting fees. Smith, on the other hand, claims that he was fired for complaining to his superiors that an unnamed source at the White House was pressuring him to push pro-casino interests.