Casino gaming in the United States: 1994 status and implications

Casino gaming in the United States: 1994 status and implications

UTTE I N RWQ RTH E M A N N Tourism Management, Vol. 16, No. 3, pp. 189-197, 1995 Elsevier Science Ltd Printed in Great Britain 0261-5177(95)00013-5...

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UTTE I N

RWQ RTH E M A N N

Tourism Management, Vol. 16, No. 3, pp. 189-197, 1995 Elsevier Science Ltd Printed in Great Britain

0261-5177(95)00013-5

Casino gaming in the United States: 1994 status and implications Patrick T Long College of Business and Administration, Campus Box 419, Uniw;rsityof Colorado at Boulder, Boulder, CO 80309, USA Gaming in the United States is a $394 billion industry, with casino gaming accounting for about $297 billion. Casino gaming is a legal, legitimate and,highly regulated industry, experiencing tremendous growth. Communities, states and Native American Indian tribes across the country are trying to capitalize on the success of Las Vegas and Atlantic City in attracting tourists and new money through gaming. The current wave of public pro-gaming sentiment is due to increasing fiscal constraints at the state and local level, coupled with an increasing demand on government to provide services. The potential for windfall profits that increase jobs, tax revenues, real estate investments and general economic and community enhancement makes gaming attractive. Concerns continue to center around morality and religious issues, compulsive gambling and the impact of gaming on community life in general and the culture of the Native American Indian in particular. Keywords: United States, gaming, tourism, economic development

The US gambling economy is growing explosively and becoming daily more complex. It is diversifying into new forms and new locations. Traditional boundaries between games are blurring and its most dynamic sector - casinos - is evolving into generalized family entertainment that competes directly with Disney's themed amusement parks and Hollywood movie studios. In 1993, it was estimated that Americans wagered $394 billion on all forms of legalized gaming* in the United States, a 17% increase over the amount wagered in 1992. This amount represented 7.3% of all 1993 US personal income. Wagers were made at horse tracks and off-track betting establishments, on greyhound racing, Jai Alai, video lotteries, state lotteries, Nevada and New Jersey slots and table games, riverboats, other casinos and non-casino devices, bookmaking, card rooms, charitable bingo and other charitable games, and on Class II and Class III Indian gaming. Of this record amount,

"The term 'gaming' has become the acceptable term when referring to gambling in the US. It suggests entertainment offerings beyond gambling and is preferred by the industry. Both gaming and gambling will be used throughout this article as the author feels appropriate.

casino table games and slot machines accounted for $297 billion. 1 Gaming as a tourist attraction and economic development tool is a fast emerging, viable option for many US states and communities seeking to increase their share of the traveler market. Because either legislative or citizen-driven voting initiatives are providing a legal environment within which gaming can operate, and because the profits are so great, gaming as a part of tourism is becoming increasingly attractive. Today in the USA, only Utah and Hawaii do not offer any form of legal gaming. Ten states have non-tribal casino gaming, 12 have approved card rooms, 46 offer charitable bingo or other charitable games, 44 have horse or dog racing, 21 have slot machines or video slot machines, and 19 have Class III tribal gaming that includes casino-style games. There is approved riverboat gaming in Louisiana, Mississippi, Missouri, Iowa, Illinois and Indiana and, to date, 91 tribes in 19 states have signed agreements with their respective governor to legalize casino gaming (see Figure 1). In Colorado, where voters have placed a limit of $5.00 per wager, the adjusted gross proceeds (AGP equals the amount of money wagered less amount paid out in prizes) for July 1994, from the 62 casinos in three historic 189

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@

= Indian Gaming -- L a s V e g a s ~ A t l a n t i c City = Riverboat G a m i n g = Limited Stakes Gaming

Figure I Casino gaming in the USA 1994 mountain towns, was $32.2 million, reaping $5.2 million in tax revenues for the state. This AGP was more than $6.6 million higher than the previous record set earlier that year. With a market this size and revenues this substantial, what community would not at least be titilated by the potential of gaming as a tool to diversify and revitalize their economy? The current wave of progaming sentiment clearly has risen on the heels of increasing fiscal constraints at the state and local level - coupled with an increasing demand on government to provide services. The potential for increasing jobs, tax revenues, real estate investments and general economic and community enhancement makes gaming attractive. The fact is, almost every community in the USA is debating the appropriateness of gaming. In the 8 November 1994 election alone, residents of 13 states voted on some type of gaming issue. / Rose noted, 'There are people working in literally every city, state, province and territory . . . to bring in more legal gaming, in the belief that casino-style gaming will solve all of the locale's financial problems'. 3 What are the long-term implications of the sweep of casino gaming across the USA? When does the current pursuit of gaming by the American people shift to other interests? At what point does the 190

market for gaming become saturated? What other revenue- and job-generating alternatives do economically distressed communities have? What are the implications of initating gaming to the culture and history of both Indian tribes and local communities? What is the most effective way to develop gaming to attract new visitors and new money to an area? What should be the scale of gaming in a state, region or community? Who should benefit from gaming development? Can gaming be done right? These are only a few of the many questions regarding gaming that are being publicly debated throughout the USA today. This paper will focus on the largest and fastest growing segment of the US gaming economy casino gaming. It will provide an overview of the relationship of gaming and tourism; look at the various venues where casino gaming takes place, including limited stakes gaming, tribal casinos, riverboats and Nevada and Atlantic City; discuss policy issues facing government and the gambling industry; and provide a look at the future of casino gaming in the USA.

Gaming and tourism Macintosh, Goeldner and Ritchie identify gaming as Tourism Management 1995 Volume 16 Number 3

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a 'major force in the tourism industry'. 4 The authors suggest that it is a growth industry and that the type of tourist and the mode of transportation to the traditional large-scale gaming venues of Las Vegas and Atlantic City, USA, are quite different. They differentiate the tourist base of the two locations by noting that 'Las Vegas attracts destination visitors from long distances who fly or drive while Atlantic City is located in a densely populated area and attracts nearby (within 150 miles) residents'. (Macintosh et al4 p 150) Rose suggests that the best gaming operation is a tourist model, taking disposable income from non-residents. This is exemplified by Canada's building a casino on the US border across from Detroit to capture US dollars. (Rose 3 p 16) There is little doubt that gaming can be an effective part of a tourism attraction mix. But to be such, gaming must attract outside visitors and, thus, outside money. Las Vegas, Nevada, since gaming was authorized in 1931, has unconditionally proven that gaming can attract visitors from throughout the world, resulting in new revenues, new construction, real estate development and jobs. In 1993, Las Vegas, which now has over 86 000 hotel rooms, hosted 23.5 million visitors. But, today, this mecca of gaming leads the gaming industry in a concerted effort to diversify its appeal with the addition of such hotel and gaming properties as the MGM Grand Hotel and Theme Park, the Excalibar, The Mirage and Treasure Island. The MGM Grand alone, besides having 175 000 f12 of gaming, has a 33 acre amusement park, arcade and youth hotel; a grand theater that seats 1700; a fully equipped health club and spa; 750 suites; and 15 000 fff of garden space. It also has a proactive water conservation program, actively recycles and 30% of its rooms are nonsmoking. Las Vegas has sent a loud and clear message to Florida and the Walt Disney Company, that it is now in the family entertainment business and its tourism attraction base has been greatly expanded. Foxwoods Casino, owned by the Mashantucket Pequot Indian Tribe and located in Ledyard, Connecticut, offers its regional tourist audience over 7.6 acres of gaming. It has 3800 slot machines, 190 table games and bingo hall, with seating for 3100 players. It also has two hotels with 592 rooms. Should projections hold true, Foxwoods' machines will win $1.6 million per day for a staggering $602 million over a one-year time period. Much of this revenue appears to be coming from gamblers (tourists) from the more populated areas of Philadelphia and New York City; the local population is too sparse and simply not affluent enough to generate such overall wealth. Deadwood, South Dakota, located in the Black Hills near the famous Mt Rushmore and the site of the annual Sturgis Motorcycle Rally, now offers

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gaming to an already existing diverse tourism experience. The city offers limited stakes ($5.00 bet limit) casino gaming at 80 local casinos in addition to a number of traditional historic and outdoor recreation experiences. Fishing, hunting, skiing, snowmobiling, camping and hiking remain popular in addition to sightseeing and visiting historic buildings and sites such as the burial place of Wild Bill Hickok and Calamity Jane.t Riverboats up and down the Mississippi River are attracting visitors to their casinos. In Tunica County, located in the State of Mississippi, six casinos are contributing half a million dollars a month in gaming taxes into the county treasury. This is nearly twice the entire annual county budget before gaming was approved. Because of the massive influx of visitors, business in shops and cafes is booming and there are more jobs than residents. There are new motels, new businesses, new roads, all 'bringing people to a town that doesn't have a permanent police station a place where the mayor's office is in his furniture showroom and even more casinos are being built in Tunica')

Casino gaming in the USA today Information from a report prepared by the Saul F Leonard Company Inc.. advisers to the Hospitality and Gaming Industries, from the 'North American Gaming at a Glance' report prepared by the Gaming and Wagering Business publication, and from the publication Win Lose or Draw? Gambling with America's Small Towns, gives a fairly accurate picture of the general status of casino gaming in the USA, as of September 1994. It is evident that casino gaming is now a legal, legitimate and highly regulated industry which is experiencing tremendous growth. The following is a brief summary of the status of casino gaming in the four major venues including limited stakes, riverboats, Indian tribes, and Nevada and Atlantic City. Limited stakes gaming

Limited stakes casino gaming began in 1989 in Deadwood (pop. 1800), South Dakota, and in 1991 in Black Hawk (pop. 125), Central City (pop. 350) and Cripple Creek (pop. 550), Colorado. Combined, these two states have over 150 casinos distributed across four historic mining towns offering limited stakes casino gaming. Gaming revenue for these two states in 1993 totaled $303.2 million. In both states, approval for gaming was gained through a state-wide resident vote with a local resident vote required only in South Dakota. These citizen initiatives resulted in the passage of a constitWild Bill Hickokwas shot in the back of the head on 2 August 1876, while playing poker, supposedly in Saloon No t0, in Deadwood. CalamityJane was a local character about whom many unsubstantiatedstories are told.

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tutional amendment allowing for limited stakes poker, blackjack and slot machines. The four mountain mining towns where gaming was approved historically had had gaming and, for years, had experienced severe economic decline. Buildings of great historic significance were literally falling down with no hope of their restoration or preservation. Jobs were scarce and there were virtually no opportunities for employment for either adults or young people. The towns were dying. Gaming has provided significant economic benefits to the towns, the local region and the state. It has meant job opportunities, tax revenues, restoration and preservation of historic structures, new construction, a year-round tourism economy, lower residential property taxes and a significant increase in the value of commercial property. In Central City, the property taxes on a $57 000 home have declined over three years from about $1500 to less than $300. Although some services and conveniences have been lost for now, new entertainment outlets, restaurants, community special events and increased community services have emerged. Deadwood and the Colorado towns are aggressively expanding their capacity as destination communities and are positioning to provide not only an entertaining gaming experience, but also the outdoor recreation and cultural opportunities for which the West is already noted. However, despite the economic gains derived (mostly to the area and state), it has not been easy for local residents. Shopping outlets for retail and basic supplies have dwindled to the point of scarcity. Today, Central City and Black Hawk have no grocery store or gasoline station. Local residents from both states feel they have lost their political influence and that the gaming industry now has the ear of the politicians. Noise, traffic, congestion and an influx of the 'new' gaming tourists have replaced the relative peace and tranquility that once blanketed the towns. Parking, for both residents and visitors, has become a major problem. Many residents claim that their community is no longer an ideal place to live and would consider moving. And few residents of these gaming towns recommend that other communities consider legalizing gaming. The policies developed to manage gaming in South Dakota and Colorado are quite different, resulting in different outcomes for both states. South Dakota, for example, limits the number of gaming devices allowed by each gaming establishment; Colorado, by percentage of space. South Dakota has maintained a consistent state tax rate since it initiated gaming; Colorado has adjusted its tax rate each year. South Dakota allocates a majority of gaming tax revenues and license and application fees to historic restoration and preservation, defined broadly to include improvements to streets, water, sewer, and low-interest loan programs for both commercial and residential property; Colorado defines historic

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preservation more narrowly and allocates a much smaller portion of state tax revenues for that purpose in the gaming towns. The state gaming tax in each state has provided substantial revenues for city, county and state government. In Colorado in 1993, after set-aside for administration, the state general fund received $13.4 million, the state historical fund $8.5 million, the state tourism board $61 000, the two gaming counties $3.6 million and the three gaming towns $3 million. In South Dakota, the state general fund received $1.3 million, Lawrence County $324 000 and Deadwood $5.6 million. As with Colorado, these funds were allocated after administrative costs were covered. Local public education was not built into the state tax formula in either state. It is clear that these first two states to implement small town community-based casino gaming did not start out with a well-conceived vision of how they wanted gaming to look - nor did they have in place the right set of policy enablers and controls to achieve their vision. If gaming is being considered as a key tourism attraction in rural communities, planning is essential, at the community, state and industry level.

Riverboat gaming Iowa was the first to legalize riverboat gaming in 1989, followed by Illinois and Mississippi in 1990, Louisiana in 1991, Missouri in 1992 and Indiana in 1993. Riverboat names such as the Casino Queen, Mississippi Belle, Biloxi Belle, Lady Luck, Cotton Club and the Casino St Charles conjure up images of the early days of riverboat activity. At the end of 1993, there were 30 riverboats; today there are 54 and the number is rising, Total gross revenue for riverboat gaming for 1994 up to November was reported at $1.9 billion; contribution of riverboat gaming to overall US gaming revenues in 1993 was about 5%. The number of riverboat gaming devices (machines and tables) is 15 830 and the 'typical floating casino draws a net monthly wager of $6 million, employs 700 people and pays 18% of its revenues in taxes'. 6 The cost of entering the marketplace for an owner/operator has risen in this brief time from $25 million to over $100 million. Riverboat gaming has experienced rapid early growth, possibly due to its acceptance as an alternative to community-based gaming where the costs to community life are perceived to outweigh the benefits. Because riverboat casinos require primarily easy access by the tourist, adequate parking and sufficient docking space, the overall character of a community offering riverboat gaming is less susceptible to wholesale change. This is in contrast with the Colorado and South Dakota experience where the whole downtown area of the gambling communities was transformed into casinos owing to the introduction of gaming.

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The International Gaming and Wagering Business publication7 has provided the first comprehensive status report of riverboat gaming in the USA. The state of Indiana has not yet 'set sail' because the constitutionality of a portion of its law was being contested. The issue has now been resolved and hearings are currently being held to determine suitability of applicants. A total of 11 licenses will initially be granted. Riverboats in Indiana will be required to be on an excursion schedule, although the riverboat captain will have authority to decide when not to take a boat out. A $3 per head admission fee will be charged and a 20% tax on adjusted gross receipts (AGR) will be assessed. Indiana requires a local referendum prior to the issuance of any riverboat gaming license. Illinois legalized riverboats in February 1991 and launched its first boat in September 1991. Ten licenses were allowed of which nine are currently in operation; boats are required to cruise a limit of four hours. Each gambler is charged a $2 admission fee and a wagering tax of 20°/,, of AGR is assessed. Iowa legalized riverboats in July 1989 and launched its first riverboat in April 1991. A total of four licenses are currently in operation with the total number of licenses left to the discretion of the State Gaming Commission. From April to October, boats must make a two-hour excursion cruise on 100 different days. Once boats meet this requirement, they can operate from the docks. Riverboat taxation is based on AGR and levied on a graduated scale. The first $1 million AGR is taxed at 5%; from $1 to 3 million AGR the tax is 10% ; and above $3 million, the tax is 20%. Iowa initially had a $5 bet limit and a $200 per excursion loss limit. Following the implementation of riverboat gaming in Illinois and Mississippi, which have no bet limit and no loss limit, Iowa actually lost some of its riverboats and much of its business to these other states. Thus, Iowa was forced to alter its riverboat gaming legislation to remain competitive. Louisiana legalized riverboat gaming in June 1991 and launched its first boat in October 1993. Of the 15 total licences allowed, only seven are currently operating. Other than in the City of Shreveport, riverboats must cruise away from the dock unless the boat captain determines conditions to be hazardous. State gaming tax is 18.5%. Mississippi legalized its riverboats in April 1990 and launched its first boat in August 1992. The State Gaming Commission determines the number of licenses with 30 currently in operation. Taxes are assessed on a sliding scale of gross gaming revenue and are capped at 8% on monthly casino revenues exceeding $134 000, Missouri became the next state to legalize riverboat gambling, in November 1992. A constitutional challenge of the riverboat law limited Missouri riverboat casinos to games of skill including poker, blackjack, craps, Texas Hold'em, Double Down

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Stud and the video representation of these games. In the recent election, Missouri voters approved the use of games of chance, including slot machines, roulette and baccarat. The Gaming Commission determines the number of licences with four currently operating. All boats must cruise unless passenger safety is a concern, and the AGR is taxed at 20%.

Tribal gaming The Indian Gaming Regulatory Act (1988) came about due to court victories in their respective states by the Seminole Tribe (Florida 198l), the Oneida Tribe (Wisconsin 1981) and the Cabazon Band (California 1987). The Seminole and Oneida Tribes sought relief in federal court from Florida and Wisconsin bingo laws, while the Cabazan Band sought similar action regarding its bingo activities as well as card games. The cumulative effect of these court cases was that any state which permits even minor charitable gaming such as charity casino nights, charitable bingo or any other charitable activity may be forced to allow a tribe within that state to conduct high stakes Indian gaming without state regulation. These three tribes all won complete victories against their respective states which in turn encouraged other Indian tribes to begin operating gaming facilities. This meant an increase in revenue to Indian tribes, concern from the non-Indian gaming industry regarding emerging and possibly unfair competition, and distress for many states unable to regulate or tax what, to that point, had been considered high-revenue, illegal activity. The states then pressured the federal government to regulate Indian gaming, resulting in the establishment of the Indian Gaming Regulatory Act (1GRA) and the National Indian Gaming Commission. s The IGRA established three classes of gaming that can be conducted on Indian lands. Class I Gaming consists of traditional ceremonial Indian games over which Indian tribes have exclusive jurisdiction and the operation of these games is not subject to federal law. Class II Gaming consists of bingo, pulltabs, punch boards, tip jars, instant bingo and other games similar to bingo. To conduct such games a tribe must adopt, and have approved by the Chairman of the National Indian Gaming Commission, an ordinance or resolution concerning the conduct and regulation of such gaming on its land. All Class I1 games are within tribal jurisdiction but are only allowed if the tribe is located within a state that permits such gaming for any purpose by any organization or entity. Class 1II Gaming includes all forms of gaming not included in either Class I or Class 1I such as lotteries, pari-mutual gaming, casino gaming, slot machines and electronic gaming devices. Indian tribes wishing to engage in Class III gaming must negotiate a compact with the governor or their respective state

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which details the specific games that can be operated and the conditions under which such operation will occur. A state is required to negotiate the tribalstate compact for Class III Gaming in 'good faith'. Contested negotiations end up in court or revert to the Secretary of the Interior for decision, depending upon the reason for failure. IGRA continues to provide fuel for a heated intergovernmental debate over the management of economic activities on Indian lands. States firmly believe that the regulation of all forms of gaming is a state, not a federal, concern, while tribes continue to resist any form of state control over their sovereignty. Clearly the issue is an extremely delicate one, with no readily agreeable solution on the horizon.

Class II1 Gaming. There are about 550 federally recognized Indian tribes in 32 states, with Alaska alone having 220 (Alaska has no gaming compacts or litigation). Currently, 19 of these states have tribalstate compacts with ongoing litigation over the status of Indian gaming currently in progress in 14. Today, Arizona leads the nation with 15 tribal-state compacts, followed by Minnesota and Wisconsin each with 11, Washington and South Dakota each with nine, and Michigan with seven. Thirteen other states also have tribal-state compacts and currently offer some form of casino-style gaming. Although there is every indication that Indian casinos are doing well financially, generating an estimated $2.2 billion in Gross Gaming Revenue (GGR) in 1993, there is no definitive published financial information on revenues and profits. Because of their sovereignty, tribes are not required to report financial information to either states or the federal government. The IGRA does require that a minimum of 60% of the G G R be returned to the respective tribe while up to 40% can go to the holders of the casino management contract. 9 In addition to the earlier mentioned financial success of the Mashantucket Pequot tribe, which recently gave a gift of $10 million from their gaming profits to the Smithsonian Institute in Washington, DC, it was recently noted that 'financial records of Little Six Inc., the company that runs the Mystic Lake casino on Shakopee Sioux land in Minnesota, report this casino had a $500 million drop* and won $177.7 million in fiscal 1993 - and had net income of $96.8 million'. (Christian 1 p 38) But gaming on Indian reservations has been referred to by some as the 'new buffalo', indicating a concern that dependence on gaming could leave tribes once again without an economic alternative should gaming revenues decline. Increased competition from other tribes and non-tribal entities, a change in the leisure patterns of Americans or more *Drop refers to the total amount of money wagered.

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restrictive federal or state legislation could dramatically affect gaming revenues. Unless tribes resist developing a sole dependence upon a gaming economy and invest their current economic windfall of gaming revenues in economic diversification, they may once again experience difficult social and economic times in the future. There is also concern that the cultural values and traditions of the Native American Indian will be compromised owing to initiating gaming. The appeal of easy money, the potential for addiction, and the 'demonstration effect' of replacing traditional tribal behaviors with the behaviors of visitors is viewed as detrimental by many to the Indian culture. Yet others view gaming as a 'once-in-a-lifetime' opportunity for tribes to establish parity with a white culture that values everything in economic terms. Native American Indians have for decades experienced poverty, alcoholism, lack of education, dismal business success and high unemployment rates. Today there are reservations with zero unemployment, whose members receive no entitlement (welfare) payments, and who gainfully employ large numbers of neighboring non-Indian residents. Rose notes that: Legal gaming on Indian land has been an overwhelming financial success. Most tribes are relatively small and the law has given them an advantage over potential competitors. State and federal governments have saved billions of dollars in aid that used to be required for Indian health services and food stamps; on some reservations unemployment has gone from eighty-five percent to zero. (Rose 3 p 9) Hospitals and medical centers, community centers, recreation facilities, new homes with indoor plumbing, jobs and new ancillary businesses are emerging as some of the benefits of gaming on tribal lands.

Las Vegas and Atlantic City The Nevada Gaming Control Board recently reported that revenues for July 1994 improved by more than 28% over July 1993, a statewide win for that month of $627 281 501. These figures include the five major gaming areas of the Las Vegas Strip, Washoe County (greater Reno/Sparks metropolitan area), Downtown Las Vegas, Laughlin and South Lake Tahoe. Las Vegas is the major contributor to this success accounting for more than $372 million of the statewide win. It has 62 of the state's 189 Class 'A' casinos and produced, in 1993, 61.7% of all gaming revenues and 60.5% of the pretax gaming income, lo Despite adding 20 000 new rooms over the past year and a half, Las Vegas has an overall hotel occupancy rate of over 90%. The end of 1993 saw the opening of Circus Circus's Luxor, the Mirage's Treasure Island and the MGM Grand, for which the

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city received a record amount of national and international publicity. This internationally renowned resort city, which provides the best perceived value of any major destination area in the USA, is scheduled to add additional mega-casinos in 1996. Atlantic City continues to show slight gains financially despite increasing regional competition. The adjusted cash flow (income before interest, depreciation, non-recurring items and income taxes), was $696 million in 1993. Greater flexibility in regulatory matters from both the local and state government seems to be helping. Casino playing time was permanently extended to 24 hours, simulcasting of horse racing has begun, restrictions on the size and use of casino space have been eased permitting more coin-operated machines, keno operations are now allowed, and a new parking tax provides funds for hotel room expansion (Saul F. Leonard Company Inc 9 p 44). Atlantic City remains a regional market and is vulnerable to the increasing competition from the surrounding area. Foxwoods Indian casino provides the immediate major competition. An additional casino is projected for Connecticut and the potential for other New England casinos is good. Area tribes, the state of New York, riverboat gaming in Pennsylvania and possibly other venues in New Jersey could provide further competition.

Public policy issues The public debate surrounding gaming is growing and the intensity of that debate is best seen at the local and state level as gaming is considered for approval. Both the representatives of the gaming industry and public policy makers appear to be moving slowly toward a more common ground. In the short term the rapid expansion of gaming may be virtually impossible to stop or even slow; the challenge comes in better understanding its costs and benefits and thus being in a more advantageous position to plan adequately for its introduction. As mentioned earlier, planning must begin early, in the conceptual stages of development, and should focus on three major issues: scale of the industry, competition for gaming dollars and who should benefit. 11 Some of the policy issues most frequently discussed in the public arena center around problem gambling, crime, consumer spending, societal support or sanction, and Indian gaming. Problem gambling

A recent study (1994) conducted by the State of Massachusetts Senate Committee on Post Audit and Review provides the following perspective on problem gaming: Problem gaming is a public health concern, yet it is a danger to only a limited number of people. HowTourism Management 1995 Volume 16 Number 3

ever, by restricting legalized gaming the state restricts the right of the vast majority of adult citizens to gamble in legal and well-regulated venues of their choice, and stands to lose significant financial and economic benefits. The evidence suggests that denying most people the right to enjoy a relatively harmless form of entertainment, denying the state's treasury a much-needed boost, and denying the region much-sought after economic development will not protect a troubled but small percentage of society from their gaming compulsion. Simply stated, the problem gambler will gamble whether it is legal or not. However, their behavior should not restrict the recreational choices that could be legally available to others. 12 The prevailing issues appear to be (1) whether gaming should be restricted because a portion (estimated to be about 5%) of gamblers exemplify addictive behaviors, and (2) whether the economic benefits to a community or state outweigh the social costs of addiction. Gaming addiction has destroyed families and personal lives. A recent 48 hour television special 'Gambling Fever '13 highlighted the problems of compulsive gaming. Whether large stakes, limited stakes, racetracks or bingo, there are examples of personal loss and tragedy. It is being argued that the compulsive gambler will seek out opportunities to gamble whether legal or not; and a legal, regulated gaming system can implement policies that can identify and assist the addictive gambler. The safety net for the compulsive gambler is broadening. Public pressure to address gaming addiction is growing and public education about addictive behavior and treatment is making inroads. States are dedicating a larger portion of gaming tax revenues for research and treatment and the gaming industry is assuming a more proactive role in identifying and assisting the compulsive gambler. Gaming is not going to go away nor is addictive gaming behavior; the best public policy makers can do is to acknowledge the problem and aggressively seek solutions through partnerships with all stakeholders. Crime

Gaming is a highly regulated industry today in the USA. But with the size of the cash transactions that take place there will be continued scrutiny on the part of public officials and regulators. Most crime surrounding gaming is of the nature found in any area that dramatically increases tourist visitation although the type of tourist attracted to gaming appears on the surface to have a more singular focus. Public intoxication, disorderly conduct, traffic violations, bad checks and petty theft seem to be most prevalent. Law enforcement staff in Black Hawk (pop. 125), Colorado, which was non-existent prior to gaming, increased after gaming to 22, enough for a town of 15 000. On tribal lands, there continue to 195

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be accusations regarding infiltration of crime due to gaming, but little substantiation. Both the Massachusetts gaming study and the study conducted on law enforcement by the State of Virginia found little correlation between casinos and crime. The Virginia study noted 'There has been no noticeable increase in crime associated with riverboat gaming '14 while the Massachusetts study reported 'according to conventional wisdom, casino gaming attracts crime and criminal behaviors, specifically burglary, larceny, and theft'. It further notes that 'The data do not support the conventional wisdom that there is a demonstrated link between casino establishments and crime' (Massachusetts Senate Committee t2 p 2). C o n s u m e r spending

Although this issue is being researched and some industry studies have been conducted, little public information is available regarding personal spending and where individual gaming wagers come from. Also, little is known about what goods and services are being most greatly impacted by the transfer of purchasing dollars to gaming. Is the value of the gaming experience worth the same as that of a professional sport experience, for about the same cost? What we do know is that gaming has created wealth through real estate transactions, construction and general investment. It has also created jobs, purchasing power and new business and career opportunities. For tribes, gaming has meant personal discretionary income and lesser dependence on entitlement payments. Personal purchasing power has increased dramatically and any tribal member wishing to attend college can do so, generally at tribal expense. Societal s u p p o r t

The cycles of gaming in the United States indicate that during hard economic times we are more open to ideas such as gaming, yet, when prosperity reigns, we are quick to cast off gaming as morally degenerative. Thus, morality could be characterized as a luxury to be afforded during the good times• Clearly, the acceptability of gaming depends on our current society values, which are shaped in part by prevailing economic conditions. (Long et a111 p 65). Due to the current economic conditions in the USA and also to a change in consumer behaviors that indicates more acceptance of gaming, support for gaming is on the increase. A GTECH study noted 'Americans approved of legalized gaming by a • margin of nearly three to O n e,. -1 5 The study also noted that '69 percent of respondents said they have no moral reservations about gaming' (p 3). Consumer spending on gaming is at an all-time high with no indication of it lessening in the near future. Gaming initiatives are being passed or at least being consi-

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dered in many political venues. Churches are hard pressed to argue effectively against gaming when they promote charitable bingo and when state residents have given their voting approval. Every indication is that the US society is expressing a long pent-up demand for gaming. Indian g a m i n g

Policy issues surrounding Indian gaming focus primarily at this time on proposed amendments to the Indian Gaming Regulatory Act. Attempts are being made to alter the 'scope of gaming' as determined by the C a b a z o n principles. This would restrict those gaming activities which the tribes now have under IGRA. In addition, tribes are opposed to any freestanding agency having exclusive regulatory authority that might inappropriately infringe upon tribal powers of self-government. 16 Tribes are finding themselves competing with cash-strapped states and must be careful not to over-invest in gaming ventures that could fail. They must be aware of the impacts of their casinos on the surrounding regions and be willing to help in mitigating any negative impacts• They must also address the preservation of their culture and history, which has been their mainstay throughout history. And they must be ever vigilant to attempts to infringe upon their sovereignty.

The future of gaming in the USA Gaming will continue to expand in the USA in the decade to come owing to pressure from the gaming industry, public officials concerned with declining revenues and increasing demands for services, and consumers. Currently, the USA is under-supplied for the demand for casino gaming that is being shown by the consumer. The American public is eager to gamble and harbors few negative feelings about those who do. Las Vegas will continue to lead as the worldwide destination gaming resort with many new family entertainment offerings - most new US gaming ventures are being developed to attract a local and regional market and, thus, are not intended to rival Las Vegas as a destination attraction. Atlantic City will struggle to remain competitive within its region while continuing to be used as the example of how not to implement large-scale gaming, because of the widely reported negative impacts on the surrounding city. New Orleans is soon to open a major downtown casino; Chicago, Washington and Detroit are probably not far behind. The number of Indian tribes seeking tribal-state compacts will continue to increase and pressure will continue to mount from states on the federal government for more power to regulate (and tax) tribal casinos. Riverboats will continue to increase in popularity as an alternative to community, land-based gaming.

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Casino gaming in the US: P T Long

The competition in certain geographic regions will result in casino closures and force a diversification of leisure offerings beyond gaming to remain competitive. Community residents and leaders will demand more involvement in the planning process and will not approve legislation for gaming that does not ensure this involvement. Government will find itself a more active partner in promoting gaming and will be forced to bail out some failing gaming initiatives. The investment needed from the gaming industry to enter every gaming market will increase dramatically and investors will push for more destination, megaresort developments. The industry will continue to push the image of integrity that has built up momentum over the past few years. Gaming is a growing part of the entertainment mix today in the USA. Voters and legislators are inclined to approve gaming as the gaming industry is increasingly viewed as a viable economic development strategy. Despite concerns on religious and morality grounds, gaming appears to be here to stay although its presentation will continue to change in response to consumer preferences and competition. The stakes involved in implementing gaming are high: substantial public and private investment, a community's well-being and confidence in government. Managing casino gaming is not a game for the faint-hearted. Nor should it be a game of chance. It requires a fair-sized ante, a game plan and skill in playing. The rewards can be great, but so are the risks. And states and communities must be careful not to become addicted to it.

Acknowledgements The author wishes to acknowledge the Rural Economic Policy Program of The Aspen Institute, the USWEST Foundation, and the University of Colorado at Boulder Outreach Committee for their

Tourism Management 1995 Volume 16 Number 3

financial support; Professor Richard Perdue, Jonelle Nuckolls and Yong Soon Kang of the Tourism Management Program, University of Colorado at Boulder for their assistance in the gambling and tourism research project; and Charlene Johnston, Research Analyst for Hemmeter Enterprises, for her review of this manuscript.

References ~Christian, E 'Record y e a r - and warning lights - in 1993' International Gaming and Wagering Business 15 (8) 15 ~-Hemmeter Enterprises, "November 8, 1994 Election: Votes to Watch" Internal Report, Denver, CO, 1-2 3Rose, I 'Gambling and the law. 1992 Endless Fields of Dreams', Whittier Law School, Los Angeles, CA (1993) 13 4Maclntosh, R, Goeldner, C and Ritchie, J Tourism." Principles. Practices, Philosophies 7th edn, 149 5CNN Special 'The Gamble' 24 July 1994 "Editor 'Riverboat Expo set to make waves in Louisiana' International Gaming and Wagering Business 15 (11) 1 7International Gaming and Wagering Business 'Riverboat Almanac" 1994 (5 November) 39-67 SFIorida Senate Committee on Commerce Select Committee on Gaming "An overview of gaming in the United States and an analysis of Indian gaming' 1994 (January) 1(I '~Saul F Leonard Company Inc '1994 study of US gaming industry' in Fourteenth Annual Study of The US Gaming lndustrv and its Financial Results 49 ~%olomon Brothers 'Biweekly gaming update ~ United States Equity Research on Gaming, 1994 (30 September) 8 l~Long, P, Clark, J and Liston, D Win Lose or Draw? Gambling With America's Small Towns Best Practices Series, Rural Economic Policy PrOgram, Aspen Institute, Washington, DC (1994) xiv ~-~Massachusetts Senate Committee on Post Audit and Review 'Toward expanded gaming: a review of gaming in Massachusetts" (1994) 28 ~'Gambling fever" 48 Hours television special, 1992 (1 January) ~4Virginia State Police 'Impact of riverboat gambling on law enforcement activities in Virginia' 1992 (11 December) 11 15GTECH National Gaming Survey, West Greenwich, RI, 1 ~'Hill. R 'Tribal leaders applaud negotiations, express concern over amendments Bill' Indian Gaming 4 (8) 3 4, 16

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