Untold Millions of Americans See Gambling as Their Personal Ticket to Financial Freedom

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After 16 years of marriage, Steve and Kate never had a lot of extra money. It was a struggle at times, but the couple and their two children lived in a modest home in Collinsville, Ill., and they were getting by. Like clockwork, Steve gave Kate $338 to make the monthly house payment.

Until February 1, 1995. That was the day Kate dropped the kids off at school, drove to a mall parking lot, climbed into the back seat of her Oldsmobile and killed herself with a .357 magnum revolver. Later that day, sheriff’s deputies arrived at the house to deliver an eviction notice because Kate hadn’t made a house payment in 17 months.

Steve, then 45, was a refinery worker. Kate, 40, was a volunteer teacher and a gambling addict. Steve knew his wife liked a little gambling action. He knew she would drop a few dollars on lottery tickets, and then there were Kate’s twice-weekly bingo outings and occasional trips to the racetrack. But Steve believed it was the gaming tables and jangling slot machines aboard the Casino Queen, a riverboat casino in nearby East St. Louis, that was Kate’s fatal attraction. (To protect his children, Steve asked the media not to disclose the family’s identity.)

It wasn’t until after Kate’s suicide that Steve learned the depths of his wife’s addiction. Barely $800 remained of their $8,000 savings. A $5,000 tax refund had disappeared and most of the family’s bills had gone unpaid. Kate had even pawned her wedding rings. “She was a master of disguise,” Steve told the St. Louis Post-Dispatch. “I was never aware of this until the day she committed suicide. My life went from a bed of roses to black nightmare in 30 minutes.”

Untold millions of Americans view lotteries and casinos as their personal ticket to financial freedom. Legalized gambling is one of today’s most contentious political and moral issues. Opponents say it takes money from the poor and gives it to the rich. Advocates insist it’s merely a voluntary tax, maybe even a civic responsibility. After all, they say, nobody forces Joe Bluecollar to spend his lunch money on lottery tickets. Or lose his paycheck aboard a landlocked riverboat casino on a cruise to bankruptcy.

Through the Years
Gambling is as ancient as life itself. Some forms of lotteries date back to Caesar. One hundred years before Christ, the Hun Dynasty in China created keno, and lottery funds were used for defense and to finance the construction of the Great Wall of China.

Although its popularity, and legality, has cycled over the years, gambling has always been one of America’s most guilty pleasures. According to Roger Dunstan, in a study he prepared for the California Research Bureau, all 13 original colonies promoted lotteries to help finance the American Revolution. Ben Franklin, John Hancock and George Washington sponsored lotteries to finance their pet public work projects. Lottery profits helped establish some of the nation’s most prestigious universities, including Harvard, Yale, Dartmouth and Princeton.

In 1769, the Crown discouraged lotteries in the colonies, but at the outbreak of the Revolutionary War, the Continental Congress approved the original “Big Game,” a $10 million bonanza intended to help finance the war. That project failed, however, because it was too large and tickets couldn’t be sold.

By the 1800’s antigambling forces nearly killed state-sponsored lotteries, citing moral reasons. By 1860, only Delaware, Missouri and Kentucky had authorized lotteries. The games rebounded after the Civil War when Southern states needed money to rebuild. Even during the lottery lull, however, gambling of the unauthorized type–horseracing, card games and other games of chance-continued to flourish. The adventuresome folks who trekked west to during the California Gold Rush brought their marked cards to the mining camps, and San Francisco became the unofficial gambling capital of the United States during the 1850s.

The Great Depression of 1929-1939 led to another boost in legalized gambling as the government tried to simulate the economy. Massachusetts legalized bingo in 1931, and horseracing and pari-mutuel wagering surged. Nevada became the first state to allow casino gambling the same year, but it wasn’t until 1978 that New Jersey followed suit.

There were no government-sponsored lotteries between 1894 and 1964, but Americans still found ways to play the numbers. One of the most popular was the Irish Sweepstakes, which began in 1930 to raise money for hospitals in Ireland. New Hampshire was the only state with a lottery as recently as 1964, but along with the stock market, legalized gambling surged in the 1990s.

In 1998, Americans spent more gambling than they did on recorded music, theme parks, video games, spectator sports and movie tickets combined. Today, 38 states have lotteries, 40 states allow betting on horses and 28 house casinos. Only Utah, Tennessee and Hawaii do not allow gambling of any type, and Tennessee will attempt to join the crowd at the gaming tables when the issue comes to a vote November 5, 2002.

The Real Winner
What is “legal” gambling? Simple. If the state authorizes it, regulates it, sells it, taxes it and profits from it, it’s legal. If the state doesn’t get a cut, it’s against the law. If the multi-state Powerball lottery were a private enterprise it would be illegal. Good gamblers sometimes win and bad gamblers usually lose, but the only guaranteed winner is the government. To ensure the dollars keep rolling in, the federal government squashes potential competition by passing laws against them. The gambling industry, once controlled by organized crime and associated with prostitution and alcoholics, is now a major source of state revenue.

The numbers are startling. Sixty-eight percent of all Americans say they have gambled at least once in the past year, and the American Gaming Association estimates that Americans legally wager $60.3 billion annually. Lotteries alone add nearly $40 billion a year to state coffers. Gamers in the 11 states operating “commercial” casinos in 2000 contributed more than $3.3 billion in tax revenue to state and local governments. Hitting the biggest jackpots were Nevada with $707 million and Illinois with $512 million.

(Casinos operated on Indian reservations are not considered commercial casinos. Indian casinos first appeared after a change in federal law in the early 1990s, but since then gambling has evolved into the buffalo of the 21st century. The Indian Gaming Regulatory Act requires that only tribal governments, not individuals, can operate gambling operations. About 200 federally recognized Indian tribes operate 309 gambling facilities in 29 states. In 2000, tribal gaming generated about $10 billion in gross revenues.)

Taxpayers foot the bill for a $400 million a year lottery advertising budget. The mantra of “You can’t win if you don’t buy a ticket” rings a chord with many a player down on his luck. And, of course, “everybody wins” because the state rakes in so much of the profits.

At least one politician used gambling as a plank in his campaign platform. In 1998, Don Siegelman promised to institute a state lottery to boost education funding if he was elected governor of Alabama. He said a lottery would produce $150 million a year for university scholarships, a pre-kindergarten program and to improve the state’s decrepit schools.

Once elected, Siegelman called on college students to be fellow “soldiers in this battle,” and even urged them to promote gambling at their schools and churches. He posed with a class of smiling first graders who were encouraged to shout “Lottery!” instead of “Cheese!” Despite Siegelman’s efforts, a high profile referendum to institute an Alabama state lottery failed.

Columnist Michelle Malkin shakes a stern finger at the states for targeting advertising to an at-risk audience by concentrating their “everyone is a winner” message around the first of each month. Malkin points out that government benefits, payroll and Social Security checks are issued on the first Tuesday of each month. She added that although most lottery revenue is supposed to go to education, a Money magazine report discovered that states with lotteries actually spend a smaller proportion of their budgets on education than states without a lottery.

One-time presidential candidate Pat Buchanan also took the government to task.

“In the 1950s,” Buchanan wrote, ” there was a great cry against the ‘numbers racket.’ Petty mobsters were said to be robbing the black poor of their dimes and quarters. Gambling is a vice and an addiction, thundered reformers, and these wicked predators are preying on the urban poor. We cheered. But no sooner had the standing ovation ended than we learned the numbers racket was to be replaced by lotteries run by the government. Government sent the mobsters to jail and then muscled in on their racket.”

Who Really Plays?
Theoretically, lotteries are intended to raise money for needy states and communities without burdening the less affluent with higher taxes. This strikes to the heart of the controversy. Who really plays and who really pays? Is it true that the people least able to afford to lose money are the biggest players? Is the engine of the gambling industry really powered by the uneducated, minimum wage masses?

Absolutely, says the National Coalition Against Organized Gambling. It asserts that instead of providing relief, lotteries burden those least able to play, and that African-Americans and the elderly are the most likely to gamble. The Coalition also cites a Detroit study indicating that people with less than $10,000 annual income spend the same amount on lottery tickets as those who earn $70,000 or more. The study also reported that high-school dropouts spend more than five times, as a percentage of their income, on the lottery than gamblers with college degrees.

The Coalition also pointed to an Oregon study of lottery players that indicated similar results. Researchers said that if playing weren’t voluntary, lotteries would be a good example of the class-conflict theory; how the affluent and well educated exploit the less advantaged working class.

Following the Money
Advocates insist that legalized gambling creates new jobs and millions of dollars in tax revenue. According to the American Gaming Association, players spent more than $24 billion on casino gambling in 2000, up eight percent from the previous year. Much of the money, proponents point out, is funneled directly back to the host communities. Commercial casinos paid nearly $3.5 billion in taxes in 2000. That same year, those casinos employed about 370,000 people who earned about $11 billion.

But University of Illinois professor John Kindt asks analysts to take a closer look at those numbers. He estimates that for every dollar a state receives in gambling revenues, it costs the state nearly $3 to fund escalating criminal justice and social welfare programs. Other reports indicate that discretionary spending in communities decreases when the lottery is introduced. They say that every dollar spent on the lottery instead of dinner at a local restaurant is a dollar siphoned from local economy.

East St. Louis, Ill., is a case in point.

A thriving community of 80,000 as recently as 1960, East St. Louis once ranked first in the nation in the sale of horses, mules and hogs. In 1920, it was the largest aluminum-processing center in the world, the nation’s second busiest rail center, and the leading manufacturer of roofing material, baking powder, paint pigment and coal production.

How times have changed. Today, the city’s remaining 31,542 residents (nearly all are African-American) have little to brag about. Wallowing in misery for decades, they live in a bankrupt city with thousands of abandoned homes and businesses. There is no daily newspaper or movie theater. The “All-American City” of 1956 now has one of the worst education records in the state. The U.S. Department of Housing and Urban Development described East St. Louis as “the most distressed small city in America.”

Those who remain in the city that was once home to tennis great Jimmy Connors, Olympian Jackie Joyner-Kersee and jazz legend Miles Davis live in or near crumbling or burned out homes. An understaffed, under trained police force can’t keep pace with the drug dealers, gang bangers and prostitutes lining the otherwise nearly empty streets. In 1990, East St. Louis garnered dubious national fame when it surrendered its city hall to settle a lawsuit for police brutality. It was its only asset of any value. East St. Louis was tabbed the murder capital of America in 1992.

Officials believed that a casino docked on the city’s bleak, undeveloped riverfront was its only hope for salvation. But casino operators had to be coaxed to East St. Louis. Most investors were afraid that potential patrons would take their paychecks elsewhere because of the city’s reputation, crime and lack of services. In 1993, however, five businessmen took a huge gamble and cruised their $45 million Casino Queen into town and docked it on the Mississippi across from the St. Louis Gateway Arch. But gamblers, as they are wont to do, also took a chance and immediately took their chips to the riverboat. They also left them there–investors recovered their initial outlay in six months.

There’s been a steady flow of cash from the riverboat to East St. Louis ever since. Nearly half the city’s annual budget comes from the $9.6 million the Casino Queen generates in tax revenue. “The Casino Queen has greatly impacted the City of East St. Louis,” said Mayor Debra A. Powell. “The revenues generated have helped the city become more financially stable.”

But it takes a selective eye to spot any improvements. Some services, like trash pick up, have improved, but the city still flirts with bankruptcy, the schools are still dilapidated, the unemployment rate still soars and the once busy shops remain shuttered. Vehicle traffic in downtown East St. Louis appears to be limited to gamblers going to and from the riverboat. There’s been little apparent impact on local businesses. A Casino Queen spokesman mentions only a florist and a dry cleaner, both doing business with the riverboat, as direct beneficiaries.

The Answer?
Many believe there’s something distasteful about our cities and states promoting gambling to its citizens. Columnist Austin Abercrombie wrote, “Traditionally, one of the legitimate roles of a republican government is to protect its citizens against harm, ‘to promote the general welfare,’ but state governments seem to be redefining that role one of ‘how do we separate the sucker from his money?'”

In June 1999, the bipartisan National Gambling Impact Study Commission issued its final report. It was the first such study performed in more than 20 years and it shined an unwelcome light on the gambling industry.

Among the report’s recommendations:

Remove ATMs and credit machines from gambling areas.

Ban Internet gambling.

Prohibit wagering on collegiate and amateur events.

Post warnings about the dangers of gambling, as well as the odds, prominently in every gaming establishment.

State lotteries should be subject to truth-in-advertising laws.

Each gambling facility must implement procedures to allow gambling addicts to voluntarily ban themselves from the facilities.

Restrict contributions from gambling concerns.

Dr. James Dobson, founder and president of Focus on the Family, was a member of the Gambling Impact Commission. His summary statement of the report is chilling.

“Clearly, gambling is a destroyer that ruins lives and wrecks families,” Dobson wrote. “A mountain of evidence demonstrates a direct link between problem and pathological gambling and divorce, child abuse, domestic violence, bankruptcy, crime and suicide. When other activities, such as smoking, have been shown to be harmful, the hue and cry for regulations to warn and protect the public has been loud and long. Today, the silence of most of our leaders about the risks of gambling is deafening. It is well past time for a Paul Revere to sound the alarm. Gambling is hazardous to your-to our-health!”

Until the Commission’s recommendations and other measures are adopted, gamblers are playing against a stacked deck, and casino owners and the states are holding all the cards.