In Louisiana, corruption, gambling are synonymous


NEW ORLEANS -- When it comes to corruption, it takes a lot to alarm the people of Louisiana. But the forces of gambling may have done it.

In the four years since the Louisiana legislature embraced casinos and video poker machines, the state has endured report after report of Mafia profit-skimming, insider dealing, political payoffs and possible State House bribery.

Today, a public backlash is short-circuiting political careers and may even force the repeal of some Louisiana gambling laws next year.

The state's troubles also are being examined closely across the country, threatening the casino industry's ambitious expansion plans in states such as Maryland.

"It's as bad as I could have expected it to be," says William Nungesser, a former member of the state casino control board who often found himself in a minority of one. "Believe me, it's the most corrupting, rottenest thing I've seen here. When you say that in Louisiana, that's saying something."

Sorely in need of revenue after the collapse of the oil industry in the 1980s, Louisiana looked to gambling for a fiscal fix. In only two years, the state legalized a lottery, video poker machines, river boat gambling and the world's largest casino.

Critics predicted that the state that produced Huey Long and a long list of unscrupulous politicians would have a hard time keeping the lid on gambling-related corruption and influence-peddling. They were right.

At the middle of many of stories has been Edwin W. Edwards, the colorful governor with a fondness for high-stakes poker games.

News accounts disclosed that several of the governor's friends and relatives had lucrative contracts to help others secure casino licenses. Among them was his son, Stephen Edwards, who pocketed at least $233,000 from four companies that won licenses.

The governor himself made no secret of his own involvement in licensing decisions by the state's riverboat casino commission and the state police. Some of those decisions benefited the governor's friends and associates.

Meanwhile, more than a dozen men with alleged ties to the

Genovese, Gambino and Marcello organized crime operations pleaded guilty in a profit-skimming scheme involving some of the thousands of video poker machines that now dot the state.

Voters learned that in the state capital of Baton Rouge, many lawmakers were getting an unprecedented flood of campaign contributions from casino interests -- more than $1 million in the past two years. Some were distributed by the president of the state Senate on the chamber floor.

And federal authorities recently disclosed a wide-ranging investigation of state legislators, complete with embarrassing wiretaps. The tapes suggest that some lawmakers were paid to kill a bill that would have let voters reject some gambling in their communities.

L So far, however, no legislator has been charged with any gam

bling-related wrongdoing.

"The whole thing is a squalid, sleazy mess," says Lynn Dean, president of St. Bernard Parish outside New Orleans, who is trying to capitalize on the controversies to unseat Sammy Nunez, the pro-gambling president of the Louisiana Senate.

Gambling has become a central issue in this fall's campaign for ** governor and legislature. Several pro-gambling lawmakers, including Mr. Edwards, 68, who says he would rather spend time with his family, decided not to even try for re-election,

After the election, it is clear there will be efforts to scale back gambling or at least to allow local referendums on the issue.

"We ought to either repeal the gambling or repeal the legislature," says C. B. Forgotston, a New Orleans business lobbyist and leading gambling opponent.

Louisiana's problems are being dissected in states such as Maryland considering casino gambling.

Former U.S. Sen. Joseph D. Tydings, who heads a Maryland task force studying proposed casino legislation, asked at least two witnesses about Louisiana's experience at a recent hearing in Frostburg. And anti-gambling forces have begun using Louisiana Exhibit A in their lobbying effort.

"The things that have happened in Louisiana have not been helpful to the industry," says Frank Fahrenkopf Jr., a former chairman of the national Republican Party and now head of the American Gaming Association, an industry lobbying group.

"The industry is the type where if there is a problem in one area that causes embarrassment, it hurts everybody."

Today, Louisiana, the self-proclaimed "Sportsman's Paradise," has emerged as the new gambling capital of America.

There's horse racing at four tracks, off-track betting at 125 locations and state-run lottery games, not to mention three booming casinos run by Indian tribes.

Homemakers, businessmen and truck drivers can be found at any hour feeding money into video poker machines, nearly 16,000 of which are scattered in about 3,850 locations -- from French Quarter restaurants to bayou country truck stops. The video poker machines are expected to produce a $540 million in profits for their owners this year.

The gaudiest additions to the scene are 12 riverboat casinos operating in four areas of the state. The floating casinos have had solid success, particularly in Shreveport and Lake Charles, which attract large numbers of players from Dallas and Houston.

But in New Orleans, where three boats once cruised the Mississippi River, only the pink-and-aqua Flamingo remains, and hundreds of employees have lost jobs.

The real test for gambling in the Big Easy will come next spring when the world's largest casino opens on prime real estate in the city's tourist district. At a cost of more than $800 million, Harrah's 200,000-square-foot gambling palace will feature 6,000 slot machines and 200 gaming tables.

Since May, Harrah's has operated a temporary casino in the old municipal auditorium, once the venue for Neville Brothers concerts and Mardi Gras balls.

The current location, on the northern edge of the French Quarter and bounded by rundown neighborhoods, has proven to be a bust, with revenues lagging more than 50 percent behind projections. The unexpectedly slow start cost 450 employees their jobs and created a potential state tax shortfall of some $50 million.

"We did not quite anticipate the challenge we had getting people to come to that site," says Ralph Berry, director of communications for Harrah's Entertainment Inc. However, the Memphis, Tenn., company remains "highly confident and excited" about the new casino, he said.

State and local officials will be watching carefully because, like Harrah's, they have a lot riding on gambling. Wagering of all kinds brings the state roughly $570 million in taxes annually. Such revenue accounted for only 1 percent of the state general fund in 1992. This year, it is 8 percent.

A poll this summer said 95 percent of voters believe the gambling industry has too much influence over the state's elected officials. And 58 percent of the electorate said they don't want a casino in their communities.

But if put to referendum, it's not clear how such votes would go, says Timothy P. Ryan, a University of New Orleans researcher who has followed Louisiana's casinos.

"Clearly the polls have indicated that the people are fed up with it," Dr. Ryan says. "But I'm not sure if they're fed up with gambling per se, or with the shenanigans surrounding it."

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