A Legacy of Luck

Many people view gambling—and legalized gambling in particular—as little more than harmless personal entertainment. Not everyone agrees, of course. In fact, “governments become addicted to gambling every bit as much as people do,” says one opponent. How big a problem is legalized gambling?

More than 20 years after publication of the last federally sponsored gambling study, the National Gambling Impact Study Commission (NGISC) published its report in 1999. Ordered by the United States Congress and driven by concerns about explosive growth in the gambling industry, the comprehensive study analyzed the social and economic effects of gambling. In presenting the commission’s sobering findings, chairman Kay C. James wrote, “In the end, the usefulness of the Commission’s work can only be measured by the actions of others, be they in the government or in the private sector.”

Ironically, the report has done little more than gather dust. “It was just a blip,” says Bill Thompson, gambling expert and professor of Public Administration at the University of Nevada–Las Vegas. “There was very, very little follow-through.”

Despite the commissioners’ hopes that their findings would be helpful to those responsible for protecting and promoting the public’s welfare, few states even used it. “I know that Alabama refused to legalize a lottery, and South Carolina outlawed slot machines after the report,” adds Thompson, but he isn’t convinced these actions resulted from the report.

The NGISC’s failure to make a difference reveals much about the realities of life in the United States, where gambling, in one form or another, is legal in every state except Utah and Hawaii. Although frequently viewed as harmless entertainment, wide-scale legalized gambling is a relatively new phenomenon and as such raises challenging questions.

The Politics of Gambling

The NGISC did some good research and certainly compiled a lot of information,” says Earl Grinols, author of Gambling in America: Costs and Benefits. “But it did not fulfill its mission totally, because the commission’s makeup included too many members of the gambling industry, who didn’t want the commission to do any more than they allowed it to do.”

Four of the nine members of the NGISC represented gambling interests, which is not necessarily surprising. The gambling industry ensures its survival by influencing American politics. This is a little troubling, as the commissioners themselves acknowledged: “Virtually every aspect of legalized gambling is shaped by government decisions.” Whether on the state or the local level, these decisions range from the types of gambling allowed to the conditions under which establishments may operate.

This decision-making process can be influenced by political contributions. While it is difficult to determine precise figures for the gambling industry’s political spending, an investigative report in Mother Jones magazine revealed that, in the five years between 1992 and 1997, $100 million had been spent on political contributions. Although other industries may spend considerably more, this figure is not insignificant. While researching his book The Luck Business, Robert Goodman found in state after state that progambling lobbyists were paid far more than other lobbyists. He also came to understand that lobbyists were often the main source of information for overworked legislators lacking independent resources or inclination. “What I realized and what scared me was that legislators vote on things they don’t know much about,” Goodman says. “Then you understand why lobbyists have such power.”

Once states allow gambling, they become dependent on gambling revenues and shift from being gambling regulators to being gambling promoters.”

Robert Goodman, Hampshire College

Even without the influence of lobbyists, voting yes on progambling initiatives is a seductive issue for legislators. Finding the revenues to pay for state needs, without “inconveniently” raising taxes, is a constant challenge. But as Goodman notes, “once states allow gambling, they become dependent on gambling revenues and shift from being gambling regulators to being gambling promoters.” David Robertson, a board member of the National Coalition Against Legalized Gambling, adds, “Governments become addicted to gambling every bit as much as people do; that’s where the corruption comes in.”

The Heart of the Issue

The NGISC Report stated that “the heart of the debate over gambling pits possible economic benefits against assumed social costs.” What are these social costs? Can they be proven rather than assumed? And if so, are the “possible economic benefits” great enough to outweigh them?

Most Americans can gamble for fun and entertainment and not suffer negative effects beyond the probability that they’ll lose money in the process. “Only 20 to 30 percent of the population are into gambling,” says Thompson. “Maybe 60 percent of the population make a bet a year, but usually it’s just a lottery ticket.”

One of the big concerns about gambling, however, is that it can be addictive. For those whose gambling far exceeds the occasional casino visit or lottery ticket purchase, the consequences can be devastating. Experts estimate that between 1 and 2 percent of the adult population become pathological gamblers (also known as addicted or compulsive gamblers). A further 2 to 3 percent, while not addicted, become “problem” gamblers. Interestingly, the American Psychiatric Association recognizes pathological gambling as an impulse-control disorder rather than an addiction like alcoholism. But because the human brain can become addicted to behaviors as well as to substances, pathological gamblers are considered addicts.

Robert Custer, a pioneering doctor in the field of problem gambling, identified three progressive phases to addiction. In the winning phase, a gambler increases the size and number of his bets, hoping to maintain his excitement following a big win or a series of wins. In the losing phase, a gambler may brag about his wins but begins losing more than winning as he pays the price for his earlier risky bets. Trying to recoup his losses, he may start gambling alone, becoming irritable, restless, and consumed with raising more money for gaming. His family life deteriorates as he lies to cover his activities and his inability to pay debts. As his behavior becomes increasingly self-destructive, he enters the desperation phase, where he spends much more time gambling, sometimes even engaging in illegal acts to finance his addiction. Feeling remorseful for his uncontrolled behavior, he blames and alienates friends and family. He may even consider or attempt suicide as the hopelessness of his situation overwhelms him.

There isn’t a lot of sympathy for people with a gambling addiction,” says Robertson. “People say, ‘Well, they’re responsible for it.’ But there’s not a lot of responsibility with an addiction. Once it happens, it just takes over people’s lives.”

Several studies have shown a link between having a casino nearby and higher gambling addiction rates. Adults living within 50 miles of a casino have twice the rate of pathological or problem gambling as those who don’t. “We know that anything that increases ease of access also increases the speed at which gambling can lead to addictive behavior,” says Grinols.

We also know that the speed of the gambling itself—the speed at which the gambler gets a reward for an action taken—determines the rate at which he or she becomes a pathological gambler.” With conventional forms of gambling like sports betting, track betting, card games and instant lotteries, it may take three years for an individual who hasn’t gambled to become addicted. But with slot machines or video poker, increasingly common in casinos and simulcast racing facilities, it can take as little as one year. “Video poker is the most dangerous game,” says Thompson. “Sports betting is different because people have to wait for the outcome of the games.”

Youths and Gambling

Pathological gambling is not just an adult affliction; it affects children at surprising rates. Durand Jacobs, a clinical professor in the Department of Psychiatry and Behavioral Sciences at California’s Loma Linda Medical School, is a leading expert in childhood gambling addiction. He says that 12- to 17-year-old children do far more gambling than the average adult, and that they are two to four times more likely to become problem gamblers. “Kids are always looking for something stimulating, and there are few things as stimulating as gambling is for kids,” he says.

One of the reasons it’s so popular with children is that it is increasingly common on television. “Children with little money are very much into Texas Hold ’em poker,” says Jacobs. “We’re very concerned about it, because even with five or ten dollars a play, in time somebody’s getting a lot of money and a lot of people are losing.”

Although children sometimes begin gambling because of the influence of their older peers, it’s more often adults who are their role models. “Adults take children to horse races, and they buy lottery tickets by the score to put in Christmas cards and use as prizes for games,” Jacobs says.

Many parents seem unaware of the potential dangers of their children gambling. “Most parents say, ‘Well I’m glad they’re playing poker and not drinking,” says Jacobs. But his studies of adolescents have shown that gambling can be a kind of “gateway drug” to other undesirable behaviors like smoking or drug and alcohol abuse. These adolescents are also likely to perform poorly in school and to commit crimes.

Whether the high rate of childhood problem gambling continues into adulthood is presently unknown. Jacobs would like to see further studies done. But Grinols expects that the next generation of gamblers will exhibit greater degrees of prevalence and problems than the current generation because of today’s widespread acceptance of gambling.

Gambling and Bankruptcy

Exactly how many of America’s growing number of bankruptcies are caused—in part or in full—by gambling losses is hard to estimate, but there are clear links. SMR Research Corporation, a business and market research firm specializing in financial subjects, has found that counties with major gambling facilities tend to have higher bankruptcy rates than counties without. Overall, SMR Research estimates that around five percent of annual bankruptcy filings have some gambling component. “Since there are hundreds of reasons for people ending up with too much debt and not enough income, any single reason accountable for five percent of the cases is significant,” they say.

George Yacik, vice president of SMR Research, notes that bankruptcy filing has lost its stigma and is seen by some as a kind of refinancing tool. Recent changes in United States bankruptcy laws could mean trouble for pathological gamblers, whose mean gambling debts can range anywhere from $52,000 to $92,000.“ For hundreds of years, gambling debts were not enforceable, because people could get cheated,” says John Kindt, professor of business administration at the University of Illinois. “Now gambling interests are going state by state, using their political contributions to change the laws so that they can collect gambling debts.”

Gambling and Crime

Escalating financial losses can cause pathological and problem gamblers to turn to crime to support their addiction. An oft-cited study by the Maryland Department of Health and Mental Hygiene notes that, in the Gamblers Anonymous group studied, well over half had committed illegal acts because of their gambling. “What we found in our research was that there was an increase in people writing bad checks, embezzling money, and committing fraud on credit cards and insurance,” says Goodman.

In Casinos, Crime and Community Costs, one of the most exhaustive studies yet done on the relationship between casinos and crime, Grinols and coauthor David B. Mustard examined county-level data for the United States between 1977 and 1996. They concluded that between 5.5 percent and 30 percent of crimes in casino counties were attributable to casinos. Communities generally don’t feel the impact of a casino immediately after its opening, because increased employment provided by the casino and increased law enforcement (added temporarily) diminish the initial criminal effects. Over time, however, crime increases as problem and pathological gamblers exhaust their resources; visiting nonresidents commit crimes or become victims of crime; and the impact of the casino on the community begins to be felt. Robbery showed the greatest increase, followed by aggravated assault, auto theft and burglary.

Economic Benefits?

Gambling promoters typically cite job creation and higher tax revenues as some of gambling’s economic benefits. But Grinols argues, “Whether gambling causes jobs to be gained or lost in an area depends on whether gambling attracts more dollars to the region than it takes out.” Higher tax revenues are frequently offset by the resource burden created by problem and pathological gamblers. Kindt estimates that for every dollar gaming produces in taxes, it costs taxpayers at least three dollars in social costs. This means that everyone, gambler and nongambler alike, pays for the consequences of gambling. “The only people who make money in it are the people who own the casinos and the people who own the lotteries,” Kindt says. “It’s an industry that survives on losers and makes its money on losers.”

It’s an industry that survives on losers and makes its money on losers.”

John Kindt, University of Illinois

No Pause, No Will

Drawing the line on gambling has proven difficult,” wrote the members of the NGISC, “and, in fact, most lines in this area become blurred when examined closely. But governments are in business to draw lines, and draw them they do.” And so the members of the NGISC agreed that in areas other than Internet gambling, gambling issues would be best addressed at the state and local levels where communities would most keenly feel the impacts of gambling expansion. Hoping that leaders would take time to use the report to assess the costs and benefits of their gaming operations, the commissioners recommended a pause in gambling expansion.

Obviously this did not happen. In fact, all indications are that gambling in the United States is on a roll. Four years after the NGISC report was released in 1999, gross gambling revenue had increased 25 percent, from $58 billion to almost $73 billion in 2003. As gambling expands over the Internet—raising concerns about higher addiction rates, more bankruptcies, and cyber crime—global revenues from online gambling alone are expected to climb to $24.5 billion by 2010.

Kindt is characteristically blunt in his assessment of gambling growth. “The subliminal and even conscious message is that gambling is OK,” he says. “The public has been misled by literally billions of dollars of public relations propaganda, perpetrated not only by the gambling lobbyists and the gambling companies, but by state governments who have advertised the lottery with taxpayer dollars.” Grinols adds, “It used to be that the church, and mostly Protestant Christians, were the leaders in the major social movements that led to reform and social improvement,” he says. “America today is a much more racially, politically and religiously diverse country and thus that perspective is much weaker than it used to be.”

In explaining the need for a pause, the NGISC commissioners warned, “Without a pause and reflection the future does indeed look worrisome. Were one to use the experience of the last quarter century to predict the evolution of gambling over the next, a likely scenario would be for gambling to continue to become more and more common, ultimately omnipresent in our lives and those of our children, with consequences no one can profess to know.”