A Roll of the Dice, a Spin of the Wheel: Can Congress Beat Gambling?

The odds aren't good: A vast industry offers people what, for better or worse, they seem to want.
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Gambling is the fastest-growing industry in the U.S., earning more than $50 billion in profit in 1998. Wagers, expressed as a percentage of Americans' annual incomes, doubled in the past 25 years to 0.74%. Americans spent more than $600 billion betting different games -- more than they spent on clothes or cars or groceries. And, tragically, 3 million adult Americans are pathological gamblers who provide 15% of the industry's gross revenue.

The gaming companies are certainly reaping the benefits.

MGM Grand

(MGG)

announced in mid-July that second-quarter earnings more than doubled those of the same period a year ago. The amount wagered at its table games and the amount the house kept both set records, as did its 100% hotel occupancy rate. Food, beverage and entertainment revenue hit a second-quarter peak as well. And MGM Grand wasn't having all the fun: Its rival

Harrah's Entertainment

(HET)

also reported record second-quarter revenue, of $751.1 million.

While the companies' accountants were busy counting the money, the

National Gambling Impact Study Commission

-- created by

Congress

in 1996 to review how all this gambling affects the American public -- issued some disturbing findings.

Among the commission's 76 recommendations, released at the end of June, were bans on Internet gambling and amateur- and college-sports wagering, and removal of credit-card cash-advance machines from casinos. The commission also urged greater disclosure to consumers about the odds of winning, a warning about the addictive nature of gambling for some people and an end to government sponsorships of gambling.

History suggests that gambling, like drinking, is one of those proclivities of mankind with which society every so often has a problem. Pilgrims enacted laws against gambling in 1638, the Quakers in 1682. But provinces like New York and New Jersey were less hostile.

A Feb. 20, 1749, item from a Colonial American newspaper,

The New York Gazette, Revived in the Weekly Post Boy

, reported that the charity lottery in New Brunswick, N.J., which provided for the poor, had been sold out for the completion of a church there. Lotteries were frequent methods of funding public works like roads and lighthouses as well. Indeed, both

Harvard University

and

Princeton University

owe some of their first buildings to the proceeds of lotteries.

Ironically, the same issue of the

Gazette

also reported that New Jersey had just passed a law forbidding any more lotteries there. The paper speculated, incorrectly, that the lotteries were too numerous, competing with one another for the public's money like "cabbages too thick planted, which never suffer one another to come to a head." But the ban was much more paternalistically motivated. The prohibition -- which applied not only to lotteries, but also to "the playing of cards, and dice and other gaming for lucre of gain," including horse racing -- blamed gambling for "the manifest corruption of youth and the ruin and impoverishment of many poor families." It sought to protect "unwary people, as well as children and servants" from those who were "unjustly" profiting -- sentiments not very different from those the commission recently expressed.

The so-called Father of Our Country,

George Washington

, gambled at cards regularly. His diary reveals a particularly nasty losing streak from January 1768 to April 1769, when he never left the table a winner.

Thomas Jefferson

, our third president, gambled too much, or not skillfully enough. Debt forced him to put his beloved Monticello estate up for sale, though death spared him the shame.

Abigail Adams

, wife of our second president,

John Adams

, disapproved of card playing and was aghast, on a visit to Philadelphia, at how widespread "tea and card" parties were.

And so it has gone throughout American history.

In 1835 the citizens of Vicksburg, Miss., enraged at riverboat gamblers camping along the river, formed a mob to chase them away. In the process, they hanged five of the gamblers. Today, descendants of those citizens might well work aboard one of the Mississippi riverboats that feature gambling and entertainment on board. An estimated 700,000 Americans directly or indirectly earn their pay --

$21 billion

of it annually -- from gambling and related industries. Indeed, proponents of gambling claim that it has turned from a social ill to a benefit.

Gambling takes many forms, from resort and Indian casinos to horse racing to church-sponsored bingo night. But the commission seemed particularly focused on the 37 state-run lotteries, which generated $34 billion in 1997. That's because horrendous odds, balanced by the desperate hopes for astronomical winnings, attract a disproportionate share of the poor. The commission's report claims, for example, that households that earn less than $10,000 per year spend three times as much on lottery tickets as households with incomes of more than $50,000. In fact, only 5% of the U.S. population accounts for more than half of the lottery sales.

Another target of the commission, as it has been of community groups, are games aimed at young or problem gamblers, such as video poker games at gas stations.

Gaming companies that operate casinos such as the

Trump Taj Mahal

and the

MGM Grand Hotel

, however, probably needn't worry about the commission's recommendations. That's because the commission recognized that Americans overwhelmingly approve of gambling. The legendary populist governor and senator from Louisiana,

Huey Long

, said it best when he told a radio audience in 1935 that the state was no longer enforcing its gambling laws: "You can't close gambling when people want to gamble."

Richard B. Marrin has practiced litigation and corporate law for nearly 30 years and is a partner in New York City law firm Ford Marrin Esposito Witmeyer & Gleser. He is the author of several books and a number of articles on American history. He can be reached at

rbm68@aol.com.