Vegas casinos facing dicey days

Foes fight growth as hearings set; parlors blame for social ills

By Paul Pringle / West Coast Bureau of The Dallas Morning News

Published 10-25-1998

GAMBLING IN AMERICA

First of four parts.

LAS VEGAS - As dusk fell over the cloudless desert, the lights of the downtown casino towers

sparkled like gaudy jewels. They did nothing to brighten the rotting shacks and boarded-up shops

of west Las Vegas, just a few blocks away.

"The casinos don't want you to see this," said Steve Miller, 54, as he wheeled his van down a

rutted stretch of Jackson Street, the impoverished heart of the west side - Glitter Gulch's

shadowland. The street once thrived with juke joints, soul food cafes and family- run stores. "This is

Las Vegas behind the mirage."

Mr. Miller's passenger, Otis Harris, 57, pointed out a group of limp drunks and wild-eyed dopers

roosting on a corner.

"Sammy Davis, Lena Horne, all the black entertainers used to stay here," he said. "Now, it's winos

and crackheads."

Mr. Harris, a venture capitalist, and Mr. Miller, a former Las Vegas City Council member, tell

anyone who will listen that their hometown is a poor model for justifying the two-decade spread of

casinos across the United States.

Such views border on blasphemy in the city that Bugsy Siegel built and Steve Wynn refined. But

Mr. Harris and Mr. Miller are not alone in questioning what the gambling explosion has wrought for

America.

Indeed, the gambling industry suddenly finds itself in dicey times. It faces a harsh inquiry by a

federal commission, an aggressive grass- roots drive by an anti-gambling coalition, tough election

fights in three bellwether states, and a softening market from here to Atlantic City.

Gamblers dropped about $8 billion in Las Vegas and other Nevada cities last year, one losing bet

after another. The state has paced a fivefold increase in U.S. gambling revenue since the late 1970s.

The industry's annual take is now $51 billion, lotteries included.

Las Vegas' betting parlors, say Mr. Harris and Mr. Miller, have failed to rescue the city from urban

decay, high crime, underperforming schools, multiplying bankruptcies, gambling addictions and a

worst- in-the-nation suicide rate. That's the testimony Mr. Harris and Mr. Miller plan to offer the

National Gambling Impact Study Commission, which arrives in Las Vegas on Nov. 10 to wrap up

its far-flung and often critical review of legal wagering.

The commission grew out of a crusade by the National Coalition Against Legalized Gambling,

whose guerrilla-style battle has moved from a single state five years ago to 40 today.

On Nov. 3, the coalition hopes voters will support efforts to stop the growth of Indian reservation

gambling in California, eliminate Arizona's lottery and pull the plug on two-thirds of Missouri's

riverboat casinos.

Gambling corporations are not about to fold their hand. They have launched multimillion-dollar

election and lobbying campaigns. But their problems are more than just political.

Casino profits are sluggish this year and stock prices have nose dived, analysts say.

"The gaming stocks have gone down phenomenally," said William Eadington, an economics

professor at the University of Nevada, Reno. One reason he cited was the "backlash" against

gambling, as embodied in the commission.

The panel has conducted hearings across the country in preparation for a report due in June. Its

conclusions and recommendations could help shape Washington's policies on gambling well into the

next century, experts say.

The commission is dealing with some steep-ante questions for the industry. Should the federal

government, largely by ceding regulatory authority to states and cities, continue to accommodate the

nation' s obsession with betting? Or should it crack down on gambling with the sort of broad

marketing controls and costly litigation faced by tobacco manufacturers?

Most of those monitoring the commission predict that its proposals - none of which has reached the

drafting stage - will stake out a middle ground. But even that may be less than good news for

gambling.

Calls for more industry-sponsored programs for compulsive gamblers are considered a certainty.

There is also speculation that the commissioners will urge lawmakers to short-circuit the burgeoning

enterprise of online wagering, impose special restrictions on young sports bettors and draft national

standards for where and when the industry may expand. The last could bar casinos in residential

areas and slot machines in grocery stores, common sights in Las Vegas.

If the commission does suggest significant changes, it might be in for a showdown. Few expect

gambling powerhouses such as Circus Circus, Hilton Hotels and Mr. Wynn's Mirage Resorts to roll

over.

The casino lobby is a generous financial contributor to both major political parties, giving it heavy

influence with legislators.

After it became clear the industry could not prevent the commission' s formation, it cashed in

election-year IOUs to ensure that several allies were seated on the panel, including MGM Grand

chairman J. Terrence Lanni and John W. Wilhelm, general secretary of the Hotel Employees and

Restaurant Employees International Union.

"The industry has a lot of clout," said Rep. Frank Wolf, R-Va., a gambling foe whose bill

established the commission. "It throws a lot of money around."

The nine commissioners, selected by Capitol Hill and President Clinton, have a full plate. Their

examination has delved into the proliferation of Indian and riverboat casinos, the wisdom of funding

schools through lotteries, sports betting on college campuses, slot machines at racetracks,

bookmaking and loan-sharking tied to organized crime, the limitless possibilities for Internet

wagering, and the human toll of gambling addictions.

At the same time, they have heard from people who praised gambling companies for delivering

thousands of jobs to hard-luck towns and Indian reservations. Many of them pointed to Las Vegas

as the industry archetype, proof that gambling can build something from nothing.

"I had a huge learning curve," said commission chairwoman Kay Coles James, a conservative

Virginia college professor. "It's far more complex than simply pro-gambling and anti-gambling."

Like other commissioners, Ms. James, who was appointed by House Speaker Newt Gingrich,

would not reveal her leanings in the debate.

But she said the commission will not be cowed by the industry's political muscle, hence the decision

to close out its roadshow in Sin City.

"Why not go into the lion's den?" she said.

Casino interests and Nevada's elected officials bristle at such words. They express suspicions that

the commission majority intends to embarrass Las Vegas during its two-day session there.

Most troubling to them is the commission's evolution from the anti- gambling coalition, a

media-savvy volunteer group that counts several churches among its backers. They are also

unnerved by the panel's focus on university and medical studies that show that more than 5 percent

of the population may be prone to compulsive gambling.

"Its creation is somewhat suspect," Nevada Gov. Bob Miller, no relation to the former council

member, said of the commission. "Those who were primarily supporting it indicated their disdain for

gaming in its entirety. . . . [They] have an agenda of either the abolition or the restriction of gaming."

The governor has assembled a committee of 54 civic, business, religious and labor leaders to

present to the commission a "complete picture of Las Vegas . . . a city that has grown around

gaming."

The committee's message: Without the blackjack pits, craps tables and slots, greater Las Vegas - as

the nation's fastest-growing metropolis, now home to more than 1 million - simply would not exist.

It sailed through the last national recession, fattening payrolls while layoffs were the rule elsewhere.

Most Las Vegas residents work directly or indirectly for casinos.

Local median incomes have eclipsed the U.S. mark in recent years, though gambling wages rank

low among Las Vegas industries. The Strip, meanwhile, reinvented itself in the early 1990s with a

string of new mega-hotels that resemble theme parks as much as card salons.

And despite the industry's mounting worries and the competitive threat posed by Indian wagering in

California, Las Vegas is still building gambling palaces.

Mr. Wynn's $1.6 billion Bellagio opened on Oct. 15. The 3,000-room property is touted as the

world's swankiest casino, complete with a $300 million art collection and a fake lake. Several more

hotels are scheduled to make their debut over the next 18 months, which will swell the room

inventory by about 15,000, to an unrivaled total of 127,000.

"We are today the leading entertainment center in the world," said Circus Circus president Glenn

Schaeffer, who added that Las Vegas has only begun to tap its potential visitor base.

He noted that just one-third of Americans have been here and that many who haven't are baby

boomers with money to spend, prime casino patrons.

"That's pretty good pickings," said Mr. Schaeffer, who speaks in the charged tone and quick

cadence of a born promoter. "And Las Vegas has not penetrated, to a particular degree, the

European and Asian markets. . . . We're not going to run out of tourists."

Not as long as folks such as Ralph Galicki are out there. Mr. Galicki, a 50-year-old retired police

officer from Pittston, Pa., travels to Las Vegas twice a year or so.

"I come for the atmosphere," he said while waiting to check out from the New York New York

casino, whose facade is a mock-up of the Big Apple's skyline. "This is Disneyland for adults."

Mr. Galicki, who said he loses about $1,000 during a typical Las Vegas visit, dismissed the

commission's work as folly.

"People are going to gamble no matter what," he added.

But the money Mr. Galicki and other gamblers leave in casinos doesn' t benefit neighborhoods such

as west Las Vegas, critics say. The west side has been destitute for 40 years, said Mr. Harris, who

attended school there.

"The casinos say they have a social conscience, but they don't, " Mr. Harris said as Steve Miller

drove the van past one derelict house after another, their lots choked with weeds and litter. "Look

at this."

Mr. Miller, who has made losing runs for mayor and lieutenant governor, represented the west side

during his City Council tenure. He said his pleas to pump dollars into the area fell on deaf ears at

City Hall and in the Strip's executive offices.

"Now the casinos are moving into places like Detroit and Mississippi, " he added. "It's treason."

Mr. Harris, a bishop in the local Mormon church, nodded.

"They say they're going to redevelop those places, when they haven' t done that in Las Vegas," he

said.

If called before the commission, Mr. Harris and Mr. Miller are ready to wow the panel with

statistics that are every bit as depressing as the pro-casino camp's are uplifting. They could be

well-armed.

Las Vegas has the second-highest incidence of poverty in Nevada. For years, its crime rate has

hovered near the top for cities its size. The region also fares badly in state and national comparisons

for bankruptcies and high school dropouts. Some studies have shown that its casino workers are

far more likely to become gambling addicts than their customers are.

And Las Vegas residents and visitors kill themselves at twice the U.S. average. There were 272

suicides here in 1997. At least one university study has drawn a link to gambling losses.

The casinos have disputed the validity of the suicide research. They also assert that gambling

cannot be held accountable for the variety of social ills that afflict many American cities.

One commissioner, Bill Bible, a former Nevada gambling regulator, sides with the industry on this

point.

"Just because you have gambling doesn't mean you don't have urban problems," he said.

But neither, Mr. Miller rejoined, does it mean that gambling can provide solutions.

"You shouldn't use this town as a model," he said. "Unless you fix it up."

PHOTO(S): (1. - 2. Special to The Dallas Morning News: AP)

1. Students walk home through blighed west Las Vegas, where casinos

2. Loom in the background. West Las Vegas has been destitute for 40

years, critics say, and casinos have done little to improve living

Conditions citywide. 3. A day laborer reads while he waits for work

in west Las Vegas. Median incomes in the city have eclipsed the U.S.,

but gambling wages rank low among Vegas industries. CHART(S): (DMN)

Growth in Legal Gambling Spending, 1982-97.

Paul Pringle / West Coast Bureau of The Dallas Morning News, Vegas casinos facing dicey days

Foes fight growth as hearings set; parlors blame for social ills., 10-25-1998, pp 1A.