Gambling has been good for Nevada, but regulation is critical
May 31, 2007
A couple of weeks ago the “Parade” Sunday supplement published a lead article titled “Is Gambling Good for America?” The article seemed to waffle on the answer, but as a former state gaming control official, I’d like to comment on that provocative question.
On balance, casino gambling has definitely been good for Nevada since it was legalized in 1931 at the height of the Great Depression. Nevada’s world class casinos lure tens of millions of tourists to the Silver State each year and continue to generate, directly and indirectly, well over half of the state’s general fund revenue, which pays for highways, public schools and other much-needed services.
But as we’ve learned over the years, casino gambling must be accompanied by strict gaming control measures administered by honest and vigorous state officials who are willing and able to enforce those measures without fear or favor. That’s exactly what Gov. Grant Sawyer did in 1963 when he and Gaming Control Board Chairman Edward A. Olsen revoked singer Frank Sinatra’s gambling licenses for hosting Chicago Godfather Sam Giancana at North Lake Tahoe’s Cal-Neva Lodge. I was privileged to work for Sawyer and Olsen and have admired their courage and integrity ever since. They were positive role models for their successors.
In the aforementioned Parade article, writer Sean Flynn repeats the old saw that “only 30 years ago, Americans could only gamble legally in Nevada and Atlantic City.” That’s patently false because when I worked in gaming control in the mid-1960s, six states including California and New York were already making more money from legal gambling than Nevada was. Their revenue came from horse and dog tracks, various forms of lotteries and legal card rooms. Nevertheless, some moralists argued that while it was OK to place a two-dollar bet on a horse, it was somehow immoral to place that same bet on a Nevada blackjack table. Today, 48 of 50 states permit some form of legal gambling (Hawaii and Utah are the only holdouts).
Over the years, hypocritical attitudes have given way to widespread acceptance of legal gambling, spurred by state lotteries – the worst bet of them all – and the rapid expansion of virtually unregulated Indian casinos. Just last month the California Senate approved the largest expansion of tribal gambling in that state’s history. If passed by the State Assembly and signed by Gov. Schwarzenegger, the measure would increase slot operations by more than 50 percent by allowing Indian tribes to operate an additional 22,500 new slot machines, the equivalent of more than 10 Nevada-sized casinos. Needless to say, that’s bad news for the Silver State.
Although the Governator wants tribes to contribute $500 million annually to close the state’s chronic budget deficit, that’s highly unlikely because gambling tribes will do almost anything to avoid paying their fair share of state and local taxes. The fact is that no one really regulates tribal casinos – certainly not the impotent National Indian Gaming Commission – and the tribes can pretty much do what they damn well please. Nice work if you can get it.
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Nevada’s gaming control agencies should take a hard look at licensees like Station Casinos of Las Vegas, which operates the thriving Thunder Valley tribal casino east of Sacramento that, in turn, competes directly with struggling Reno/Tahoe casinos. Meanwhile, our gaming agencies continue to ignore a key regulation that requires licensees to operate “in the best interests of the people of the state of Nevada.” Clearly, Thunder Valley is a drag on Northern Nevada’s economy and our state should force Station to choose between its California and Nevada operations, as we did with our licensees in the 1960s. Message to gaming licensees: Put Nevada first or get out!
But let’s return to the question of whether gambling is good for America. After citing several positive aspects of legal gambling, including job creation and increased tax revenues, Parade’s Sean Flynn goes on to mention the downside of legal gambling, quoting a Baylor University professor who believes that “gambling leads to increased crime, to suicides and to people ruining their lives when they get caught up in it.”
The professor, who has studied problem gamblers, argues that the costs of legal gambling far outweigh any benefits. Moreover, researchers at Creighton University in Omaha, Neb., found that personal bankruptcy rates in counties with casinos were more than 60 percent higher than in counties without casinos.
Closer to home, evidence of problem gambling abounds with a very visible array of pawn shops and payday loan centers, which attach themselves to casinos like parasites. That’s why I’ve urged city supervisors to declare a casino moratorium in order to study the noxious effects of problem gambling. Another important consideration is that retail establishments generate sales taxes, which finance much-needed municipal services like police and fire protection, while most gambling taxes go to the state’s general fund.
Those who criticize me for opposing Max Baer, Jr.’s tacky hillbilly casino should consider that fact before sounding off.
In summary, while I have long been a supporter of well-regulated casino gambling, I believe we’ve reached a saturation point here in Carson and that supervisors should consider gambling expansion as a quality of life issue. We don’t need more casinos and payday loan offices in our historic capital city; instead, we need solid retail establishments, and that’s what city officials should be seeking. Go for it!
• Guy W. Farmer, of Carson City, worked for Nevada’s gaming control agencies in the mid-1960s.