Is America taking a chance on gambling? (1995) | THINK TANK

Is America taking a chance on gambling? (1995) | THINK TANK


Ben Wattenberg: Hello. I’m Ben Wattenberg. Gambling is big business in America. From the glittering casinos of Las Vegas to
the Vermont General Store, Americans wager billions of dollars a year on games of chance. But should the government be your bookie? Joining us to sort through the conflict and
the consensus are William Eadington, professor of economics at the University of Nevada,
Reno, and the director of the Institute for Gambling and Commercial Gaming; Gabrielle
Brenner, professor at the University of Montreal business school and author of “Gaming and
Speculation: A Theory and History” and “A Future of Some Human Decisions”; Father
Robert Drinan, professor of law at Georgetown University and author of “The Fractured
Dream: America’s Divisive Moral Choices”; and Robert Goodman, director of the United
States Gambling Study and author of the forthcoming book, “The Luck Business: America and the
Culture of Chance.” The question before this house: Is America
taking a chance on gambling? This week on “Think Tank.” Americans love to gamble. They bet everything from dogs, horses, sports,
and jai alai to lotteries, blackjack, bingo, and roulette. For the last 200 years, much of this was done
through illegal bookies, game rooms, and numbers rackets. But in the last 40 years, much has changed. State lotteries have largely replaced illegal
numbers rackets. Millions of Americans buy tickets in the hope
of becoming instant millionaires despite astronomical odds against them. In 1964, New Hampshire became the first state
to legalize lotteries. In 30 years, lotteries have spread to 37 states. And there is big money to be made. In 1964, New Hampshire residents wagered $5
million on the lottery. By 1993, Americans bet $25 billion on the
lottery. States typically rake in 40 percent of that
in profits, which they spend on schools, highways, and other public projects. Now casino gambling is exploding across America. It used to be that you had to go to Atlantic
City or Nevada to gamble. Today, riverboat casinos line the Mississippi,
and casinos on Indian reservations are sprouting up almost everywhere. State governments back these projects because
they are eager for the jobs and tax income that casinos promise. And there is a lot of money to be taxed. Americans spend nearly $35 billion a year
on gambling. That’s seven times more than they spend
at the movies or at sporting events. Some opponents argue that the promises of
economic benefits from gambling are exaggerated. Others say that the idea of government as
bookie teaches wrong moral lessons. Government-approved gambling, they say, appeals
to greed and deceives people, especially poor people, into believing that they can get something
for nothing. But with nearly every state interested in
opening casinos, gambling in America is on a roll. Let’s begin by going around the room once
with you, Gabrielle Brenner. Are people who gamble in public venues, like
casinos or lotteries — are they suckers? Gabrielle Brenner: No. They are no more suckers than people that
buy People magazine or go to a movie even if it’s a bad movie. They decide how to spend their leisure dollar. Ben Wattenberg: Okay. Bill Eadington. William Eadington: Well, gambling has become
more and more a commodity in the last 20 or 30 years in the perception of both individuals
and the general public. And the real issue is: Is gambling truly a
commodity? Robert Goodman: I think gambling has changed
so much in the last couple of years that it’s no longer gambling the way it used to be. And what’s happened is government has basically
become the largest promoter of gambling in the country. So I think it’s a problem not of people
being suckers; people have always gambled. But it’s a problem of the government trying
to get them to gamble more and trying to make suckers out of people, if you look at it that
way. Ben Wattenberg: Okay. Father Drinan. Robert Drinan: America in the last generation
has done something that we never did for 200 years — namely, pander to people and exaggerate
their greed. All of the churches and synagogues, we’re
opposed — are still opposed to this organized gambling. We don’t know yet what it’s doing to the
psyche of the people. More and more problems can occur with people
addicted to gambling and the devastation of families. I think that it’s time to reconsider the
whole thing. Ben Wattenberg: But don’t churches hold
raffles where people win money or turkeys or — Robert Drinan: Yes, but that’s not organized
by the state, and it is at a very, very low level. Ben Wattenberg: Would you favor private gambling,
where the government is not involved? I mean, like Las Vegas, where Bill Eadington
is from, is not government-run. Those are privately run. Robert Drinan: Well, I’d have less objection
to that, but the real objection that people have now more and more is the fact that the
government, while it seeks to cure us from alcoholism and from drugs and from other addictions,
it is urging the addiction to gambling. And with the latest on the Indian reservations,
we don’t know the enormous consequences of what we’re doing. William Eadington: You know, it’s interesting. When most of the gambling that was going on
was the province of organized crime, you didn’t have full-page ads in the newspapers and spots
on TV urging people to gamble more. The governments are now spending $300 million
a year just in advertising their gambling products. Organized crime never did that. Now, that’s not an argument for organized
crime to do it. Ben Wattenberg: And the state lottery business
is probably the worst bet you can make in gambling. Robert Goodman: It’s not a good bet, but
I mean, I don’t have any problem if people decide to do things that are against their
interest. I have no concern with that. The concern I have is the role of government
in that process. Government, at one point, was regulating this
industry. It was trying to protect people’s interest
in it. And I think they’ve shifted their role from
being a regulator to being a promoter. Gabrielle Brenner: I believe the problem of
gambling per se is not a problem. People have gambled since the cave age. They must have been gambling then. But what is new now is the role of government. The proper role of government in the gambling
industry is to regulate and to tax, not to promote. Now, you are speaking about state lotteries,
which are maybe the biggest instance of government being the promoter of gambling. In Canada, we have also state casinos now. The casinos are state-owned. In Montreal, we have one of the most successful
ones, and in Winnipeg, we have another state casino. And some are coming. Now, governments are not constrained by the
same accounting and financial constraints as every private business, and there may be
too much gambling because they don’t look at the bottom line like a private business
would. Robert Goodman: Well, not only that, but they’re
having these major negative impacts on other private businesses. The government has essentially given the gambling
industry in certain locations a monopoly to run their enterprise. So while they have the exclusive role of providing
gambling products, a particular company, meanwhile, other businesses, like bowling alleys or people
who sell shirts or furniture, are losing business. Now — Ben Wattenberg: You mean because there is
a finite amount of money and — Robert Goodman: There is a finite amount of
money, and what we’re seeing in all our studies now is money being shifted out of
local enterprises and into these new gambling ventures. Ben Wattenberg: Bill Eadington, defend your
industry. William Eadington: Well, I would like to make
a point on the role of government that I think is very important, and that is that in the
last six years, we’ve seen a phenomenal proliferation of casino-side gaming in the
United States and Canada and in many other countries throughout the world. And I think the United States is perhaps weakest
in terms of its own perspective as to why it is doing it. We have, in effect, competition among jurisdictions
to legalize casinos to capture tourist dollars or exported dollars from other jurisdictions,
which I think is perhaps the wrong reason to legalize gambling. The underlying question that you have to come
back to, and it’s one that Bob is alluding to, is that: Is gambling an activity that
is a legitimate activity for citizens to participate in, or is it something that we really don’t
like, but we’re going to legalize it in spite of itself to capture the ancillary economic
benefits, such as taxes or job creation, that it might bring about? I think it’s very important for jurisdictions
who are considering gambling that they ask the question: Is this an activity that, on
balance, is it worthwhile for our citizens to freely participate in? Robert Goodman: Well, we also have to ask
whether it creates jobs. I mean, that’s — it’s basically a jobs
program. I mean, the lottery — Gabrielle Brenner: No, it’s not. No, it’s not. Ben Wattenberg: It’s basically — on the
state side, it is basically a revenue enhancer, as we say in this wonderful town. I mean, it’s bringing taxes in. Robert Goodman: The lotteries were essentially
put in place as a revenue enhancer. Ben Wattenberg: Right. Robert Goodman: They — the lotteries employ
very few people. Now we’ve escalated that. Governments escalated that, and they’re
looking at casinos, riverboats, slot machines, basically to create jobs and to bring in revenue. And you’ll notice that almost all of the
new ventures are in places that are economically depressed. You don’t have casino companies going into
affluent areas trying to locate casinos there. They’re saying, this is your way out of
poverty. This is the way to create jobs. It’s the single most significant economic
development policy on a local and state level right now. As I say, we spend hundreds of millions to
promote gambling, but we’re spending only $50 million nationwide on supporting our local
manufacturing industries, local small businesses. We’re spending six times that amount on
our gambling industry. Robert Drinan: And I hope that the United
States learns the lesson again. We had gambling from the beginning of the
republic, and then it grew into the 1830s and 1840s. Then there was a great crusade against it. It was corrupting people. And the Quakers particularly came forward
and said this is debasing and degrading to human beings. And then the states abolished it, and the
federal government came in and abolished it. And until, really, 20 years ago, 15 years
ago, we abided by that moral decision. And now we’re trying to learn again what
they learned in America, and they just abolished it. And of all of the forces that lead to this
deception, I think The London Economist said it well, that the government is seeking to
deceive people, and if they had the true facts, they would not bet because they can’t possibly
win. It’s all a big deception. Gabrielle Brenner: No, that’s not true. I believe this has been found a lot of times,
that people do know that the odds are against them. But they also know, especially for the lotteries,
that for a lot of them, it’s their only means to get rich. So people who want to abolish it are people
that have other means to get rich. They can play on the stock market, they can
play on the commodity market, they can marry somebody, or they can inherit wealth. Ben Wattenberg: Or they can work hard and
earn it. Robert Goodman: Those are not just the people
who want to abolish it. [Cross talk.] Gabrielle Brenner: I would like to interrupt
on the moral aspect. Robert Goodman: Not just the rich people. Ben Wattenberg: Yeah, I want to come back
— please. Gabrielle Brenner: For the last 20, 30 years,
what has characterized our societies has been government getting out of the business of
trying to legislate morality. Now, there was a problem about sexual conduct,
and now there is a problem about gambling. And there are a lot of other problems. And this legalization of gambling would go
into the same aspect. Ben Wattenberg: I want to ask Father Drinan
a question. If I spend Thursday evenings with a group
of buddies, with beer and pretzels, and we play poker, is that immoral? Robert Drinan: No, no, but I don’t think
that you have the same governmental things, and you don’t have an outside syndicate
running it with machines you’re going to resent. Ben Wattenberg: All right, so gambling itself
is not immoral? Robert Drinan: No, no. It’s always — Ben Wattenberg: Now, if you have a private
company without any government subsidy in a casino having gambling, that the government
has licensed and they get a piece off the top, is that immoral? Robert Drinan: Well, you’re approaching
the stage where you are addicting people, the poor people and the young people. Ben Wattenberg: But they were going to bookies
before, before the state gaming. Robert Drinan: Well, I know, but that was
all illegal. And the enforcement was very, very difficult,
so the government, wrongly, in my opinion, decided to let us legalize all of this and
that we are the ones that are promoting it. Robert Goodman: There’s a real conflict
of interest. Let me give you an interesting example. In Japan, the government has the monopoly
on selling cigarettes. Eighty-five percent of the cigarettes sold
in Japan are sold by the government of Japan. In Japan, you cannot even get a label on a
package of cigarettes saying this might be dangerous to your health. The health care industry there has difficulty
getting any money to do research, government money to do research, on the dangers of cigarette
smoking. The problem is: What is the role of government? Should the government become so dependent
on these revenues that it has a conflict of interest in terms of regulating that industry,
in terms of controlling what that industry is doing? If they’re the industry and their revenues
are so dependent on it, they can’t take an unbiased position on it. And we see that in Japan. William Eadington: Yeah. There are really three main reasons why people
have opposed gambling — legalization of gambling in the past. The first is the morality argument, which
in recent years has diminished in impact, partly because the institutions of the church
and state have diminished in their influence over the body politic. The second is organized crime and corruption
linked to gambling, which is more a byproduct of illegal gambling and prohibitions against
gambling than it is of legal, highly regulated gambling. The third is, I think, the real issue we’re
going to deal with over the next 20 or 30 years, or into the indefinite future. And that is problem gambling, or people who
have difficulty controlling themselves when they gamble. And I think what is needed as part of the
public policy debate is a better understanding of what are the realities you’re confronting
and what are the real costs of problem gambling. Robert Goodman: Well, one of the real costs
is when people — we’re expanding the base of problem gamblers right now. The more ventures that we create, the more
problem gamblers we have. This has very serious impacts on our economy. People who gamble and get in trouble don’t
pay off their debts. They borrow money. They wind up writing bad checks. They embezzle money. They engage in fraud. This is money lost to the private economy. When you see it as a jobs problem, it all
seems like we’re just creating jobs and bringing in revenue. But we’re losing a lot of money by expanding
gambling. Ben Wattenberg: Isn’t that also true with,
say, alcohol and cigarettes? I mean, by legalizing alcohol and cigarettes,
some people get addicted and get lung cancer or get cirrhosis of the liver. Robert Goodman: Absolutely, but the government
is not promoting — Ben Wattenberg: What? Robert Goodman: The government is not promoting
cigarettes. The government is not promoting alcohol. Robert Drinan: In fact, they’re deterring
it. They’re seeking in many, many ways to — Robert Goodman: They’re trying — you’ve
got sectors of the — exactly. Robert Drinan: To urge temperance and restraint
and abstinence. Gabrielle Brenner: Well, not all governments. In Canada, for instance, alcohol distribution
is also state-regulated, and I didn’t see such a temperance movement. So again, we’re coming back to the problem
of government. Ben Wattenberg: It is — in many states in
the United States, you have state liquor stores. Gabrielle Brenner: We are coming back to the
problem of government involvement. Robert Goodman: You have state liquor stores,
but you don’t have those state liquor stores promoting the sale of liquor. Gabrielle Brenner: I think it’s a red herring
to speak about government being so dependent on the revenues from gambling. If you are looking at the money involved,
it is a small amount. There is absolutely no modern government that
could reduce its deficit — Robert Goodman: Why do you think the government
is doing it, then? Gabrielle Brenner: Because they are desperate
for money. Robert Goodman: Well, that’s right. Gabrielle Brenner: But if you are looking
at the money per se, at the sum per se, compared, for instance, either to the deficit of the
government or to the total revenues of the government, we are speaking about a very,
very small percentage. Ben Wattenberg: How much do governments in
the United States take in from gambling? William Eadington: It’s a significant industry. The gaming industry is nearly as large as
the commercial airline industry in terms of gross revenues. In terms of tax revenues accruing to government,
lotteries is the largest tax collector. And I think if you are concerned on the public
policy issues, the appropriate role of government, lotteries is where you end up focusing. Ben Wattenberg: Lotteries bring in more money
to a state than a sales tax? William Eadington: To the government — not
than a sales tax generally. But lotteries in the United States in 1993
generated total sales of about $25 billion, gross revenues after payment of prizes of
about $13 billion, and contributions to state tax coffers, or earmarked moneys, of about
$9 billion. Robert Goodman: Yeah, but I agree with Gabrielle
that as a percentage of what the state budgets are, it’s quite small. In many states, the lotteries make up anywhere
from 1 to 3 percent of the total budget. It’s really a political process that we’re
looking at here. Because it’s very easy for politicians to
say, “Let’s bring in a new lottery game. Let’s bring in a new casino. We won’t have to raise your taxes.” The reality is they’re not bringing in that
much money, and the reality is it’s harder — it’s getting harder and harder to get
people to gamble more and more. What’s happening is the revenues are actually
increasing, but the percentage that the governments are taking out of this is actually decreasing. By and large, all the surveys have shown that
the industry has not been able to keep up with the revenue demands being made on them. So you see this enormous surging interest,
interest falls, and then they bring in new games. Ben Wattenberg: Now, what is your problem
with gambling? Is it economic or moral? Robert Goodman: It’s economic. I gamble myself. I have no problem with it. I don’t have any problem. It’s economic. Is it a job creation program? Do you really create jobs? You’re not really creating — as this expands,
you’re saturating the market, you’re sucking money out of other local businesses, you’re
asking other local businesses to lose revenues and lose jobs. Robert Drinan: Why should the government be
involved in doing this? It’s totally inconsistent with the role
of the government as we envisioned it in the history of America and in Canada. The government is supposed to be promoting
the virtue of people and the morals of people, helping them with their health and to get
rid of their addictions. That’s the traditional role of the government
as the educator, as the uplifter. And now they come along and say, well, we
need a free lunch, and we don’t want to tax you according to an equitable formula. Let the people work it out that they will
pay sales tax or property tax or income tax, or something like that, rather than say, we
are going to the poor and the people who are weak, and we are encouraging them. I think that’s just totally inconsistent
with American morality. William Eadington: I think the real issue
here is a question of paternalism versus self-responsibility and whether gambling should be treated differently
than other commodities. That is the fundamental issue. The reason we have seen so much legalization
has been because jurisdictions do want the jobs and they do want the tax revenues and
the investment and the stimulation that gambling promises, or gaming promises. The real question is: Does it deliver on its
promises? And in some jurisdictions it does, and in
some jurisdictions it does not. Nevada, where I come from, has been the fastest-growing
state in the US over the last three decades because it has had, if you wish, a moral monopoly
on legal, casino-style gambling. That monopoly is now diminishing, and we’re
seeing new jurisdictions, many of them, capture the latent demand in those regions with high
profits and large job creation. The real question is: Does that sustain itself
in the long term? Robert Drinan: I’m in favor of paternalism,
okay? I’m in favor of paternalism. That is not paternalism. This is the good government that urges virtue
in our people. And that’s what the US Constitution does
and the whole American history. Ben Wattenberg: You said that gambling — I
thought you said that you do not think that gambling itself is immoral. Then how can you make a virtue argument for
it? Robert Drinan: No, I’m not saying — this
is a tendency that goes back to — in all of recorded civilization. However, it is so dangerous that people — a
certain number of people can get out of control, and I don’t think that the government should
be saying, “Do it, do it, and you’ll be a millionaire” — advertising it. [Cross talk.] Ben Wattenberg: All right, hold it, hold it. Just stop for one second. I want somebody — there is another twist
on this gambling argument, which is the role of the Indian reservations. Could somebody sort of speak to that, just
for our viewers? Bill, why don’t you just lay it out, what
the facts — what’s happening. William Eadington: Well, I think what’s
happened with Indian gaming, Indian gaming is a phenomenon that has occurred in the last
few years. It has created tremendous economic opportunity
for autonomous Indian tribes throughout the United States who have been able to exploit
especially casino-style gaming. And what has happened is those tribes have
done the same thing that Nevada has done over the years, and that is to be the monopoly
that has captured the latent demand for gambling within their regions. The tribes themselves, in many cases, have
become quite affluent. The question as to whether this is good or
not for the tribes really has to be analyzed on a tribe-by-tribe basis, because some of
them are being foolish and some are not. Ben Wattenberg: On balance, as Sophie Tucker
once said, “I’ve been rich, and I’ve been poor. It’s better to be rich.” I mean, I assume that — Robert Goodman: No one’s going to argue
against being rich. And clearly, for most of the tribes, it has
been a benefit. But I think we can’t just limit our picture
to just what’s happening in the tribes. We have to look at what — Ben Wattenberg: But we’ve talked about some
— no, I want to follow this Indian tribes thing a little further. I mean this has been a disadvantaged class
in the United States, Native Americans living on reservations. Hasn’t this helped them? You’re a social liberal, Father Drinan. Robert Drinan: Well, all right, it may have
helped them in the short run, but in the long run, I don’t think this builds up that reservation,
giving them jobs and opportunities and good health. And they may have a few jobs, but what do
the young people coming along think? Will they think that the white people have
victimized us once again? Robert Goodman: In terms of what we’ve done
in the past, we haven’t made any opportunities available for either the tribes or many disenfranchised
groups in the United States. And to see gambling as a panacea, either for
tribes or economically depressed cities or economically depressed race tracks, this is
no magic bullet. Ben Wattenberg: Let us go again, very quickly,
around the room just for a brief comment about what we — this panel agrees upon and what
you disagree upon. And Father Drinan, why don’t you start? Robert Drinan: I am reinforced in my belief
that the great moral tradition of America was correct, that if we allow gambling, we
discourage it, and certainly the government should not be there pandering to the weakest
tendencies of people that “I’m going to get rich all of a sudden.” I have the hope that somehow in the plebiscites,
that the voices of the moral forces of America are going to be heard, and the people will
say that’s not the way to go for this great country. Ben Wattenberg: Bob. Robert Goodman: I think that we have the federal
government and local and state governments operating at cross purposes. The federal government is trying to expand
the economy using industrial policy, trying to put money into high-tech industries so
we can be competitive on the global marketplace. On the local and state level, we are basically
trying to expand a predatory industry. And I say predatory in the sense that it can
only grow at the expense of other local businesses. Ben Wattenberg: Bill Eadington. William Eadington: I think that the real issue
confronting both local governments and the federal government is one of: Where do we
want to have gambling as part of our society? Ten years ago, we said we want it almost nowhere. Now we’re saying almost everywhere. I think the reality is we want it somewhere
in between those two extremes, but there is tremendous difficulty getting to that point
because we basically have political jurisdictions competing against other political jurisdictions
to capture the economic benefits, and that leads to bad policy. Ben Wattenberg: Gabrielle. Gabrielle Brenner: I believe that gambling
is a perfectly legitimate activity like any other activity. What is not legitimate is to say the role
of government. The proper role of government — I am sure
Father Drinan won’t agree with me — is not to legislate morality or to try to uplift
people, but to regulate and probably to tax. Now, what we have now is governments that
are so desperate of moneys, they don’t think about regulations. They think only about taxing. What I would see would be the future of an
industry where gambling would be allowed, but there would be a very strict regulatory
framework for it, no monopoly given to one special group or another. And let the free market see who is going to
be the winner and where people want to spend. Ben Wattenberg: Okay. Okay, thank you, Gabrielle Brenner, Father
Robert Drinan, Bill Eadington, and Bob Goodman. And thank you. As you know, we enjoy hearing from our audience. Please send your comments to
New River Media, 1150 17th Street, NW, Washington, DC 20036. Or we can be reached via email at [email protected] For “Think Tank,” I’m Ben Wattenberg. Announcer: This has been a production of BJW
Inc., in association with New River Media, which are solely responsible for its content.

1 thought on “Is America taking a chance on gambling? (1995) | THINK TANK”

  1. William F. Buckley Jr

    3:50

    So, according to her, you can't be a gullible sucker as long as you're deciding how to spend your money??

    HaHaHaHa!! Lady, casinos L💋VE people who think like you.

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