Will Md. Fall for a Bad Bet? Gaming Interests Lobby Glendening, Assembly for Casinos

THE BALTIMORE SUN

They call riverboat gambling "the cruise to nowhere" because the passengers' destination is a roulette wheel or blackjack game or slot machine.

Since most of the players lose, "nowhere" has another meaning, one that could have some significance for the many states, including Maryland, now considering legalization of casinos and floating gambling halls.

With the state's well-honed appetite for gambling, hundreds of miles of shoreline, a handful of scenic rivers and the usual economic development needs, it was only a matter of time before the riverboat and casino interests landed here.

Last week, several gaming industry lobbyists said they want to legalize riverboats and casinos during the 1995 General Assembly session. If not this year, they said, then certainly by 1996.

The men from Harrah's in Reno and Harvey's in Las Vegas have been around for months, working quietly, sending a competitive scare into Maryland's racing industry and looking for political allies. As usual, they don't have to look hard.

Gov.-elect Parris N. Glendening and Assembly leaders were cautious in their reactions to the onslaught, but they seemed to welcome it nevertheless.

"I don't think we should be trying to solve serious financial problems of the state by forever expanding gambling," said Mr. Glendening. "On the other hand, I am a realist about what's going on all around us. And if every other state, for example, has alternatives that are not available in Maryland, Maryland funds will simply be drained out of the state."

Critics say this sort of fear-generated thinking can lead states to the same "nowhere" that riverboats deliver for individuals.

The stated destination of the gambling industry is prosperity: Jobs, more tourism, more money in circulation, more revenue for political leaders who must balance budgets while standing clear of increased taxation. The salesmen will warn that a state must have its own gambling industry as protection against the flight of money to casinos in adjoining states.

Driven heavily by all of these forces, gambling has become a $30 billion U.S. industry, growing between 1982 and 1990 at twice the rate of personal income. Government has been its greatest promoter.

"This once officially criminal activity is now being chosen by businesses and community leaders as a linchpin for economic development," observes a 1994 study by Robert Goodman, director of the United States Gambling Study. His report is highly critical on the whole of state-sponsored gambling as economic development.

The study, based on more than 50 interviews with gambling experts and economists, attempts to analyze the potential costs and benefits of gambling as a tool for stimulating job growth -- and the associated direct and indirect costs. Paid for by the Ford Foundation and the Aspen Institute, the study has been welcomed because it was not underwritten by the gambling industry or its opponents.

Such a study was important because states often embrace gambling with no idea where they are going, why they're going there or the costs, Mr. Goodman says.

His analysis found that most studies were misleading and unbalanced, accentuating the benefits and ignoring the costs imposed by crime or addiction or weakened businesses.

'Decline of jobs'

"The gambling industry has indeed created many jobs in gambling enterprises as well as those in related businesses like hotels," the study says. "But by diverting consumer dollars into gambling, it has also been responsible for the decline of jobs and revenues in other businesses. . . . When a person spends $20 for keno tickets, he or she may not buy a $20 shirt."

In Minnesota, total wagers amounted to $558 for each man, woman and child in 1991 -- more than was spent in Minnesota stores specializing in home furnishings, appliances, clothing and shoes.

And now the salesmen -- in the form of lobbyists for the big Reno and Las Vegas casinos -- are coming to Maryland. Authorize riverboat gambling, they will say, bow to the inevitable: Gambling is a fact of life. Act now, or watch the bucks fly to Philadelphia.

3 states reject it

Similar siren calls were rejected during the last election in Florida, Rhode Island, Massachusetts and elsewhere.

But the promotion of big profits and big payoff for government remains in states such as Maryland. The first wave of money will be promotional, coming from gambling interests anxious to achieve local acceptance and authorizing legislation.

Between January and June of 1993, casino developers spent $2.36 million lobbying the Connecticut legislature -- unsuccessfully so far -- though casinos already exist on the Pequot Indian reservation in Ledyard.

Though the revenue and job-producing power of these places is often exaggerated, no one doubts their fabulous money-making potential. A $70 million riverboat could be paid for in less than a year, Mr. Goodman said.

A Las Vegas casino promised Connecticut $90 million a year in tax revenue if the facilities proposed for the depressed cities of Hartford and Bridgeport were approved. To head this off, Connecticut's governor, an opponent of gambling, agreed to permit slot machines at the Pequot casino in exchange for $100 million. The Las Vegas man quickly upped his bid to $140 million.

$464,000 to promote it

In Maryland this year, the promotional budget for just one outfit that hoped to sell riverboat gambling would have been $464,000, including $140,000 for legislative schmoozing, $10,000 for a newsletter and $25,000 a month for consultants.

In addition to legislative expenses, $50,000 would be provided to deal with "site specific" concerns of local officials in the potential locations:

Port Deposit, Cambridge ("with waterfront locations just waiting for something to happen"), Chesapeake Beach ("There is a tradition of entertainment and gambling in resort areas") Betterton ("a short drive time from promising locations").

A prospectus for this campaign says a "partnership" would have to be established between the local officials in such venues and the casino interests. The hearts, minds and votes of legislators from these areas would be needed as well.

Familiar arguments

For its case, the casino interests unfurl many of the arguments used years ago to win approval of state-sponsored lotteries: The money will go to education; the money is being wagered illegally so why doesn't the state take it instead; criminal activity will be reduced, and so on.

Gambling could make sense "in the short run," Mr. Goodman says, only "if you have a situation where there is a small economic base to begin with."

If casinos are introduced in areas where the economy is distressed, "all you're doing is making it worse." At the same time, his study shows that gambling increases crime, neighborhoods fall into decline and more Americans become addicted to cards, slot machines or roulette wheels.

The cost of addiction treatment goes well beyond the cost of therapy, he says.

"It's people who don't pay their debts, money lost by lenders, people who engage in fraud, write bad checks, embezzle, insurance paying off -- enormous increases to process people through the courts, costs of added parole and probation, and impacts at home."

More spent on lottery ads

In 1991, the Goodman report says, all the states combined spent $50 million to provide technological assistance to small manufacturing businesses, one of the most innovative and job-creating sectors of the economy. By contrast, lottery states typically spent six times that sum to advertise gambling. Maryland's budget that year was $8.6 million.

The Goodman report takes a hard look at Atlantic City, N.J., where casinos opened in 1976.

* The number of restaurants there declined from 243 in 1977 to 146 in 1987. One reason: Casino restaurants offer low prices to keep the players as close to the tables as possible.

* In the three years after the opening of its casinos, Atlantic City went from 50th in the nation in per capita crime to No. 1.

* Property values fell sharply: Speculation led to fluctuations in property values. If land was considered a possible casino site, speculators bid up the price. As a result, taxes on this property increased. In neighborhoods where casinos would not be built, higher crime associated with casinos caused housing prices to drop. Homeowners lost money, and so did the city as tax revenue fell.

When it was first approved, New Jersey law referred to casino gambling as "a unique tool of urban redevelopment . . . facilitating the redevelopment of existing blighted areas, and the refurbishing and expansion of existing hotel convention, tourist and entertainment facilities."

"However," the Goodman report found, "despite the approximately $6 billion in private investment, Atlantic City has become virtually two cities -- one of extravagant casinos manned by a largely outside work force, and the other a city of boarded- up holdings, of a predominantly minority population that suffers large-scale unemployment, that has been given easy access to gambling."

Moreover, if gambling venues proliferate, the casinos will turn more aggressively to local players. Players came to Atlantic City from a wide area in the early years. As gambling opportunities increased elsewhere, however, the take was increasingly from New Jersey residents.

"The more gambling there is, the worse it will be for local economies," Mr. Goodman says.

C. Fraser Smith is a reporter for The Baltimore Sun.

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