http://www.library.ca.gov/CRB/97/03/crb97003.html#toc
I.
Gambling in the
"Gambling is inevitable. No matter what is said or done by advocates
or opponents of gambling in all its various forms, it is an activity that is
practiced, or tacitly endorsed, by a substantial majority of Americans."
-- Commission on the Review of National Policy toward Gambling, 1976, p.1.
In 1973, the Commission on the Review of National Policy toward Gambling was
created to study gambling in the
This report will use the terms gambling and gaming interchangeably. Within
the gambling industry, the term gambling has fallen into disfavor and is being
replaced by gaming.
Legal Gaming Has Expanded Greatly Throughout the Country. Legal gambling activities include state lotteries; parimutuel betting on horses, greyhounds, and jai-alai; sports book-making; card games; keno; bingo; slot machines; progressive slot machines; video poker machines; video keno machines; video blackjack machines; and video roulette machines. Not all of these are legal in all places. These activities have grown tremendously, especially when considering that virtually all have been only recently legal in most states. This growth of gambling has been remarkable: in 30 years gambling has transformed itself from sinful to well accepted.2 But the spread has been inconsistent, with each state selecting the type of gaming that it supports or at least condones. Some states have casinos, but no lotteries. Other states have lotteries, but no casinos. Some have both.
Illegal gambling still exists and, by many accounts, flourishes.3
Not surprisingly, there is not a lot of data about illegal gambling. The most
popular forms of illegal games are "numbers," which is essentially a
lottery, and betting with bookies, typically sports betting. Sports betting, in
particular, is thought to amount to a large sum. Some analysts think it is the
largest category of gambling after casino games.4
Views on Gambling Vary. Gambling is regarded by some as a vice, a sinful activity which corrupts society. Others view gambling simply as a harmless form of entertainment. These contrasting views help shape the regulation of gambling. The regulation of gambling is unusual as society regulates gambling like no other business.5 Overall, society has taken a cautious view of gambling. Only limited types of games are legal. Gambling is heavily regulated because of concerns about criminal involvement. Because of the large amount of cash involved, gambling is an attractive target for criminals.
Others look at gambling in economic terms. Legalized casino gambling, whether
in
Why has gambling grown? There are a variety of possible explanations.6
One explanation for the spread is that states need the revenue and are hooked on
gaming funds. Another related view is that government has said it is acceptable,
hence people are more willing to participate. Some observers attribute the
domino effect. The domino effect of gambling occurs when one state legalizes
gaming, other states legalize gambling so they do not lose money to their
neighbors. The spread of lotteries can be seen as an example of the domino
effect. The current wave of legal lotteries started in
Regardless of viewpoint, there is little doubt that gambling is a very
popular activity in the
The Gaming Sector is a Large Entertainment Industry. In 1995,
gambling in the
Another way to look at gambling's relative popularity is through the public's participation. In 1993, the last full year before the baseball strike, 70 million fans went to the ballpark, while 92 million visited casinos.
The preceding comparisons were made using gross revenues, but the amount of money people spend gambling is usually measured by one of two methods.
The handle is popularly used for measurement, but it can be misleading. Because it is the amount wagered before payment of prizes, the handle tends to inflate the economic importance of gambling. Gross revenues are a better measurement when comparing gaming to the rest of the economy.
An example may help illustrate the difference. A player spends a dollar
playing video poker and wins $4. The $4 is fed back into the machine until she
loses the $4 plus her original dollar. In this example, the handle would be $5.
But the gross revenue and the amount the player lost out of pocket is only $1.
There Are Four Major Types of Legal Gambling. According to one
well-known researcher, these include charitable gaming, parimutuel betting,
casino gaming, and lotteries.9
There is some potential confusion that may arise from these definitions. The
definition of casinos include what most of us would expect, i.e. the Las
Vegas-style casinos that are found in
Charitable Gambling
Charitable gambling is run for the benefit of nonprofit organizations,
although the nonprofit may not necessarily be the operator of the games. Some
examples of charitable gambling are PTA Monte Carlo nights and church raffles.
The most popular form of charitable gambling is bingo. Charitable bingo is legal
in all but five states. In
Despite the nonprofit nature of charitable gaming, it has come under
criticism. One reason is that it is the area of gambling that is the least
regulated. As the tables and graphs show, it accounts for a significant amount
of money even if the total is dwarfed by that of casinos. According to some
industry observers, there are serious problems of fraud, theft, cheating, and
accounting irregularities.10
In
Parimutuel Wagering
Parimutuel wagering refers to the type of gambling where the total prize pool
is based upon the amount of money wagered. The more money gambled, the bigger
the prize. Horse racing is the best known and widespread parimutuel betting
event. Horse racing is the only form of partimutuel wagering legal in
Dog racing and jai-alai are less popular parimutuel betting events. Dog
racing operates in 17 states, while jai-alai is legal in just three:
Parimutuel wagering has not been able to compete well with the myriad of new
forms and types of gambling. Observers attribute its decline to the complicated
nature of the sports, especially for the new gambler.11
The industry is changing, however, some racetracks are adding casino games.
Situating casino games with the track exposes other gamblers to horses and
thereby parimutuel wagering. In turn, this may lead to increased parimutuel
participation.
Lotteries
Lotteries have a long tradition in this country. They were used to raise
money in support of the first North American colonies. Lotteries continued to be
used by the original thirteen colonies to raise necessary revenue for the
development and the successful independent operation of the new settlements.
Though early lotteries were successful in raising money, the scandals from
crooked operations strengthened the hand of antigambling forces, eventually
leading to prohibition of lotteries in many states. From 1894 to 1964 no legal
government-sponsored lotteries operated in the
Legal Lotteries Experienced a Rebirth in the 1960s. The first
legal lottery in the twentieth century was the New Hampshire Sweepstakes which
began on
Casino Gaming
Casino gaming is the largest part of the commercial gambling market. Casino gaming continues to grow in popularity, fueled by the creation of new casino destinations and the expansion of existing casino locales.
A casino is usually characterized by the offering of banked games. Banked
games are where the house is banking the game and basically acting as a
participant. That is, it has a stake in who wins. In contrast in a non-banked
game, like the lottery, the operator does not care who wins. As noted earlier,
cardrooms such as those in
Currently, ten states have legalized some form of commercial, non-tribal
casino gambling with banked games. These are what the typical observer would
call
The following chart lists the states and the year each made casino gambling legal. Note the rapid growth since 1989.
|
State |
Form of Casino Gaming |
Year of Legalization |
|
|
Unlimited Stakes |
1931 |
|
|
Unlimited Stakes |
1976 |
|
|
Limited Stakes |
1989 |
|
|
Riverboat |
1989 |
|
|
Limited Stakes |
1990 |
|
|
Riverboat |
1990 |
|
|
Riverboat, Dockside |
1990 |
|
|
Unlimited Stakes, Riverboat |
1991 |
|
|
Riverboat |
1992 |
|
|
Riverboat |
1993 |
This chart does not include Indian gaming, which is discussed later.
For almost 50 years casino gaming was only legal in
The first state that authorized one of the new wave of legalized casinos was
in
In 1989,
Riverboats Present a Good Example of the Domino Theory of Making
Gambling Legal.
The advent of riverboat gaming also led to increased Indian gaming, when
Indian tribes were allowed to operate the same kinds of gambling allowed within
a state. A
Riverboat Gaming Has Captured 20% of the Casino Market Share.
There are two major categories of riverboat casinos, excursion and dockside. Excursion riverboats cruise along some waterway, while dockside casinos are tethered to the shore during operations. Dockside casinos are usually just a land-based casino on pilings or a floating, but not navigable, platform.
The excursion requirement was important in the beginning because it provided a subtle transition into legal gambling, giving the public an impression that the gambling could be isolated and controlled. The gambling takes place in a restricted location, namely on a boat traveling on the waterways and the amount of activity is limited by the length of the excursion. If the excursion is three hours, then the amount of gambling is limited to the three hours on the river, plus another half hour or so while the boat is tied up for loading and unloading. Many analysts believe that the perception that riverboat gambling would be physically contained made legal gambling an easier sell to the voters.
Some states are eliminating the law concerning the cruising requirement.
Dockside casinos are more popular because some customers do not like to be
cooped up for a set period of time, and some do not like having to leave when
the ship is moored. Eliminating the cruising requirement also reduces the
possibility of accidents on the waterways.
In 1992,
Many of the major developers are turning
As the following chart shows, the big operators in casino amusement are large
publicly-owned companies. If the merger between Hilton and Bally's goes through,
it will create the largest company in the country, surpassing Harrah's.
Indian Gaming
Indian tribes have used their position as sovereign entities to develop a
number of gaming establishments. Indian casinos operate in 22 states:
The opportunity for economic development through gambling has piqued the interest of many Indian tribes. The U.S. Bureau of Indian Affairs reported that there are 545 federally-recognized Indian tribes in 35 states. Gambling on Indian-owned land has grown in popularity and there are approximately 150 to 175 casinos and bingo halls currently in operation.14
Gambling has represented an opportunity for tribal self-reliance and a chance
to reverse some of the poverty that has affected many of the tribes. Indian
tribes started offering games similar to those being offered by charities, such
as bingo. In order to gain a competitive advantage, some tribes began offering
high-stakes bingo, an option that was not available to the charities because of
state laws. The growth of Indian gaming led to many court battles, including
some important ones in
Illegal Gambling
Illegal gaming is popular, though its popularity and prevalence are difficult
to measure. An estimated $32 billion was wagered illegally in 1986, resulting in
gross revenues of approximately $5.6 billion.15
Another estimate places the illegal gaming handle at about $48 billion with
gross revenues of $2.4 billion.16
The most significant forms of illegal gambling in the
Betting with bookies usually involves placing bets on the outcome of a
certain event, such as a sporting event. Sports cards and pools are also bets
involving sporting events. Most sports bets are between friends or
acquaintances. A smaller amount is made with bookies and the bets are usually
under $100.
All Types of Gambling Have Shown Growth. Although there are
numerous types of gaming, a common theme is that they are all growing. The
following charts show the growth in the different categories of legal gambling.
Gambling is Usually Regulated by a Commission Form of State Agency.
Currently in the
Parimutuel Wagering
Lotteries
Card Rooms
Casino Gaming
1996 Election Results Suggest Gaming Will Continue to Expand. Prior to the elections, there was concern within the industry that a backlash was beginning to build. As the history section of this report discusses, such a backlash has occurred in the past. There was some evidence that a backlash was starting. Factors slowing growth include:17
In a reverse for the industry, a federal study commission on gambling has
been created despite the opposition of the gaming industry and gambling had
failed to gain approval in new states. During 1994, the industry suffered some
losses in important elections in
However, the 1996 elections changed that view.18 The industry recorded the following major victories:
Some observers have drawn different conclusions from the election as there
were also losses for gambling interests.19
Nevertheless, there has never been such victories for gaming interests in
state-wide contested elections. The vote was even more dramatic when one
considered the criminal convictions resulting from
The Internet may be the source for the largest growth in gambling. The World Wide Web has three hundred gambling-related sites, some of which have set up operations offshore. The Attorney General of Minnesota has filed a suit against a service that plans to offer sports bookmaking.
II.
History of Gambling in the
Examining the history of gambling in
Societal standards and laws related to gambling have tended to change back
and forth from prohibition to regulation. These changes in law have led one
noted observer, Professor I. Nelson Rose, to describe three waves of gambling
regulation during the history of the colonies and the
The First Wave: 1600's to mid 1800's
The early colonies had very different attitudes towards gambling. Historians
have classified the early settlers into two groups, the English who brought
along the English traditions and beliefs, and the Puritans. Although the
Puritans came from
Entire colonies were established along the guidelines and beliefs of one
group or another. In particular, different attitudes towards gambling were
enforced. In
In other colonies, English attitudes towards gambling and recreation prevailed. These settlers brought with them the view that gambling was a harmless diversion. In these colonies, gambling was a popular and accepted activity. Legal gambling tended to be those types that were considered proper gentlemen's diversions. For example, it took a long time for cock-fighting to become legal because it was not considered a suitable game for gentlemen.
One prominent researcher speculates that the appeal of gambling was probably heightened by the frontier spirit. The desire to explore new worlds is similar to gambling. Both rely heavily on high expectations, risk taking, opportunism, and movement.3
Despite the acceptance, gambling began to be blamed for the problems of the
colonies. To investors and others in
Lotteries Used to Bail Out the Early Colonies. Although the
financial backers of the colonies viewed gambling as a source of the colonies'
problems, they began to see it as the solution as well. The Virginia Company of
This episode was not the last use of lotteries to benefit the colonies. All
13 original colonies established lotteries, usually more than one, to raise
revenue. Playing the lottery became a civic responsibility.6
Proceeds helped establish some of the nation's earliest and most prestigious
universities -- Harvard, Yale,
Lotteries became an issue in the drive for independence of the colonies. The
colonies protested the crown's rules for holding lotteries. In 1769, the crown
tried to prevent lotteries from occurring without its permission. Once the war
of independence started, the Continental Congress voted a $10 million lottery to
finance the war. The lottery had to be abandoned, however, because it was too
large and the tickets could not be sold.
The Popularity of Lotteries Continued in the Early 19th Century. Notable among the later lotteries was a private lottery passed by Congress in 1823 for the beautification of Washington D.C. Unfortunately, the organizers absconded with the proceeds and the winner was never paid.
Lotteries were not the only form of gambling during this era. Wagering on
horse racing was a popular form of gambling. Not surprisingly, it was not quite
as organized nor as elaborate as modern horse racing. Rather, the gambling was
limited to a few friendly bets between owners of horses and their partisans. The
first racetrack in
Casino gaming started slowly. Taverns and roadhouses would allow dice and
card games. The relatively sparse population was a barrier to establishing
gaming houses. But as the population increased, by the early 1800s lavish
casinos were established in the young republic.
The
Gambling establishments were started in the river towns and were popular haunts for both travelers and professional gamblers. These gamblers preyed upon these cash-laden travelers who were, "Seduced by the bright prospects of their business deals as well as by the transience of the river frontier..."8 These professional gamblers, also known as sharps or sharpers, generally were dishonest and often turned to confidence games and cheating to make money.
During the 1830's, the actions of the professional gamblers came under growing scrutiny and southern settlers turned against the professional gambler. The professional gamblers were blamed for limiting economic growth, interfering with business, endangering the streets, committing numerous crimes, and debasing the morality of the society. Vigilantism was one method by which the anti-professional gambler sentiment manifested itself. Groups of citizens organized to push the gamblers out of the South.
In 1835, a vigilante group lynched five cardsharps in
The First Wave of Legal Gambling Draws to an End. During the early 1800's, gambling came under increasing attack. There was always a group opposing gambling on moral grounds. This opposition was largely based on religious beliefs.9 The flames of opposition were fanned, however, by the prevalence of scandals and the belief that the poor were being targeted, especially by lotteries. This opposition drew strength from the larger climate of social reform. Issues such as temperance, women's rights, educational reform, prison reform, and abolition of slavery were on the minds of many. Although there was strong sentiment to avoid interference with market forces, there was a countervailing view that people should behave in a virtuous way and that meant no gambling.10
The attack against gambling was focused particularly on lotteries because it
represented a form of wagering that was offensive to both the moral
sensibilities of reformers, and the Jacksonian resentment toward privilege.11
The exclusive charters granted to lottery operations were examples of this form
of privilege. Ironically, President Jackson was an inveterate gambler12
and had such a history of problems that he must be viewed as a likely addictive
or compulsive gambler. His gambling was well-known but tended to be seen as the
behavior of a gentleman, hence he was reserved the disapprobation held for
commercial gamblers.
Lottery Scandals Led to Gambling Prohibition. As noted earlier, lottery for the beautification of the nation's capital ended in scandal with the operators absconding with the proceeds. This incident illustrated the problems with the lotteries of that time as many were crooked. Increasing evidence of fraud and dishonesty in the operations of lotteries added to the opposition.13 An additional argument was that they corrupted the free press and made them captive to their huge demand for advertising.14
The antilottery forces fought against lotteries and prevailed. In 1833
The demise of the riverboat gambler had more to do with circumstance than direct action by the people. Emergence of railroads and the outbreak of the Civil War were the precipitating factors. Travel by steamboats declined as railroads started to supplant steamboats as the favored method of transportation. Trains were more reliable and were faster than the riverboats. The Civil War interrupted virtually all river travel and abruptly diminished gambling in that area.
The end of the first wave did not result in an end to all legal gambling. The
prohibition was selective in terms of type of gambling and location. The
frontier areas,
It was also during this time that the Grimaldis sold a concession for gaming
in an attempt to keep their principality,
Second Wave: Mid-1800's to Early 1900's
The expansion of the western frontier spurred the second wave. As the country
moved westward, the frontier spirit continued to spread. Mining booms increased
the rush to the
Gold Rush Set Off a Gambling Boom in
The apex of
As settlers spread beyond
Public Opinion Quickly Turns Against Gambling. Laws against
gamblers and gambling began to be enacted in
Initially, the state laws were weak and had little real effect on gambling.
The statutes outlawed specific games, making the laws difficult to enforce as
new and unnamed variants were used and only light penalties were provided.
However, the laws were gradually strengthened. In 1860, all banking games were
banned. (Banking games are those where the player bets against the house.)
Initially, the laws tended to focus on those who ran the games, not the players.
In 1885, this was changed so that it was illegal to play. Finally in 1891, the
statutes made the penalty for playing equal to the penalty for running the game.
The Prohibition Did Not Eliminate Gambling But Drove it Underground.
Even in
Another effect of the antigambling laws was to stratify gaming activity more.
One result was the prevalence of Chinese gaming houses that catered only to
Chinese. There were also large Chinese-run lotteries that appealed to
non-Chinese. Enforcement of the gaming laws became a method of discrimination.
During times of strong anti-Chinese sentiment the gaming laws were enforced more
vigorously against Chinese establishments.18
One operator in
Lotteries Began a Comeback. Following a long national
tradition, the South turned to lotteries to generate revenue to rebuild the
war-ravaged region. The
Scandals and antigaming sentiment led to additional state and federal
legislation against lotteries. In particular, religious leaders led the move
against them.20
By 1878,
Lotteries Were Not the Only Source of Gambling Scandal. Horse racing was plagued by fraud. The odds and payouts were often faked. The parties taking the bets, known as the bookmakers, often owned horses and were able to influence the race. "Ringers," horses that were fraudulent substitutes and were either much quicker or slower than the expected entry, were often raced.
The second wave of legal gambling, was relatively short-lived. Scandals and
the rise of Victorian morality led to the end of legal gambling. By 1910,
virtually all forms of gambling were prohibited in the
Third Wave (Early 1930's to Present)
The great depression led to a much greater legalization of gambling. The
antigambling mood changed as tremendous financial distress gripped the country,
especially after the stock market crash of 1929. Legalized gambling was looked
upon as a way to stimulate the economy.
Horse racing and parimutuel wagering began to make a comeback. In 1933,
Coincident with resurgence of legal gambling was a crackdown on illegal
gambling, in part because illegal gambling had become so prevalent. A backlash
developed and reform candidates were swept into office in
Crackdown on Organized Crime Sent Mobsters to
At the same time, scrutiny also resulted in the closing of the floating
casinos. The most famous was the Rex, a floating casino operated by
organized crime that was anchored just outside the three-mile limit of state
jurisdiction. Gamblers were taken out to Rex in excursion boats. The Rex
and some gaming ships that operated out of
The
Organized Crime Syndicates Were Early Supporters of Gaming and Invested
Heavily. Many casinos in
Part of the reason for Mr. Siegel's success was due to his connection to the
underworld. Wartime shortages did not slow down his plans because of his ties to
the black market and his political connections.24
The lavish casino he built opened with such stars as Jimmy Durante, Xavier
Cougat, and George Raft. The Flamingo helped establish
Senate Investigated Mob Influence in Casinos. During the 1950s, the Senate Committee to Investigate Organized Crime in Interstate Commerce held a number of hearings on criminal influence in the casino industry. The committee was chaired by Senator Estes Kefauver, and the committee is also known by his name. The committee found widespread evidence of skimming, which sheltered gambling profits from taxes. The prevalence of crime left gaming once again on the verge of a national prohibition.25 The result of the committee's findings was a crackdown on criminal influence and a cleansing of the casino industry. Eventually, the mob sold their casino interests to lawful individuals and publicly-traded companies.
The link between organized crime and gambling was a factor in four state
elections on legal gaming.26
In 1950, voters in
Lotteries Begin Their Resurgence. From 1894 to 1964, there were
no legal government-sponsored lotteries operating in the
Another prominent form of lottery was the illegal "numbers" game.
Despite the illegality, numbers was quite popular. One author claimed that the
amount being wagered on numbers was $5 billion in 1960.28
Another estimate shows that the numbers game was grossing $20 million annually
in
Growing opposition to tax increases was a leading factor in establishing
state-run lotteries in the 20th century. In 1964
In 1978,
What Could End Gambling's Third Wave? The first and second waves ended in part because of a resurgence of public concern about morality and scandals in gaming. People can live with adverse odds but not cheating.30 What kind of events could lead to scandals today? If lotteries were plagued by fraud that would probably have an impact on people's perceptions. Another route is through problems and scandal in sports gambling. Pete Rose is a symbol of what gambling can do to a person. What happens if a sports hero is more interested in winning a bet than a game? Could such a scandal impact legalized gaming?
III. Lotteries
"
Lotteries Have Been Prominent Throughout History.1
Ancient
As early as 1420, lotteries were used in
As noted in the history section, lotteries have a long and mixed history in
the new world. In modern times, lotteries started their comeback with the
legalization of the
Researchers usually point to
Lotteries Enjoy Widespread Legalization. Lotteries are legal
now in 37 states and the
Lotteries, along with their close derivative bingo, are the most popular kinds of gambling. The popularity of lottery games is not limited to state-run lotteries. Indian tribes run lotteries and illegal lotteries still exist.
Lotteries are also legal around the world. The 1995 worldwide sales for legal
lotteries were $95 billion.2
The
Looking at some specific industry statistics, we can see that lotteries are
well-established in this country and within
|
Per Capita Lottery Sales - 1995 |
||
|
|
1 |
$462 |
|
|
2 |
$404 |
|
|
3 |
$208 |
|
|
33 |
$69 |
|
|
37 |
$38 |
|
Source: La Fleur's 1996 World Gambling
Abstract.
|
||
Despite Success, Opposition Exists. The resurgence of lotteries has not been universally welcomed.3 An argument used in opposing lotteries is that they symbolize the boredom and materialism of modern life. Another argument against lotteries is that legal gambling leads to illegal gambling. Lottery critics see legalized state-sponsored gambling destroying ethical values by promoting the ethics of easy money over hard work. Critics point to the ads of employees being disrespectful to their bosses after winning the lottery.4
Another argument that is marshaled against lotteries is that they prey on the poor, the ignorant, and compulsive gamblers. The poor may be induced to spend money on lottery rather than basic necessities leaving local and state government picking up the tab through varied service programs. State lotteries are also a monopoly and some question exists whether that is proper. Another argument is that if the purpose is to make money for schools or some other worthy purpose, why shouldn't the state earn money through opening other businesses such as restaurants or brothels?5
In sharp contrast, supporters call lotteries a painless tax, even a high-minded tax. Money is raised for good causes through people having fun. Lotteries are to be celebrated because they restore consumer sovereignty, allowing people to spend money on what they choose. The argument goes on to state that gambling is prevalent whether it is legal or illegal, so why not allow people to do it legally. To prevent people from gambling is a form of paternalism and is elitist. There is no harm save for the compulsive gambler or in the crooked game, which all state lotteries go to great pains to avoid.
Two stories by modern American writers indicate the ambivalent feelings aroused by the lottery.
"Once you could send your innocent babes, hope of the future, off to the candy store to buy some chewing wax, a Baby Ruth, the new Batman comic book and a kazoo, and be secure in the knowledge that good Mrs. Chesley behind the counter would bust their little knuckles if they tried to buy a copy of The Racing Form. Not anymore. Now good Mrs. Chesley has turned her shop into a gambling hell where she greets the traffic with a leer that says, "Hello sucker" and has to keep kicking the kids out of her way so the lottery players can get their bets down."6
But there is another view. A supporter noted:
"Editorial and other criticism of legal gambling smacks of nannying ordinary working and retired folks: we the affluent, who would not dream of playing numbers whether legal or illegal, long shots on the races or for jackpots at slot machines, don't want you, the unwashed, to enjoy your simple pleasures."7
There are objections to lotteries that go beyond the arguments just presented. Some critics are concerned that state-sponsored lotteries are not just supplying a good, but trying to foster a taste for it.8 In legalizing a lottery, the state is yielding to consumer preference and the argument that a little gambling does not hurt anybody. But the question remains, does the business-like behavior where sales of lottery tickets are actively encouraged through state sponsorship and huge amounts of advertising reflect the public interest?
Why have lotteries grown? There are several trends that receive credit for expanding lottery business.9
State Lotteries Have Two Important Attributes. One of these is a significant marketing and advertising campaign and the other is that the lottery is a monopoly run by state government and not by a private firm.
Lotteries are run by state government for two major reasons. One is to reduce
fraud and the other is to raise money for a worthy cause. Some states deposit
the proceeds into the general fund while others earmark the money for special
purposes. Some interesting purposes include a gamblers aid fund in
Critics Argue That Much of the Advertising is Misleading. For
example, lotteries, including
Modern Lotteries Have Been Essentially Free of Scandals. Early
lotteries were plagued by corruption and scandals. To protect the integrity of
the games, lotteries have adopted many safeguards to protect against corruption
and fraud. The lottery industry has experienced very few scandals in the more
than 30 years of state-administered lotteries in
There have been some instances of fraud in modern lotteries, although the
incidents pale in comparison to the experiences of the 18th and 19th century
American lotteries. In 1982, there was a scandal in the
States Have Been Very Effective at Stimulating Demand. As
noted,
Lottery Players are Widespread. Lotteries are the most popular
and broadly played form of gambling despite having the lowest payout. A large
proportion, about 50 to 60 percent of adult Americans play legal lotteries in
lottery states. Two-thirds of these play regularly, which means that about
one-third of the adults are regular players. Heavy players are about 10 percent
of all lottery players.12
The poor, minority, Catholic, undereducated, and middle-aged are all more likely
to play.13
Two of the first 11 big winners in
There is substantial evidence that youths play the lottery, although they are forbidden by law. Studies have found large number of high schools kids playing lottery games. Some of these individuals have characteristics of pathological gamblers.14
The total number of all lottery players is probably greater then reflected in
statistics because illegal lotteries still exist. They can exist because their
payout ratio is much higher. State lotteries are a very unattractive gambling
proposition as they return a relatively small amount of the money as prizes.
The Typical Individual Spends $100 Annually.15 This amount exceeds the amount spent directly on prescription drugs and reading materials. Also, a small number of poor families spend a very large sum on lotteries.16 In general, the amount spent on lotteries per person does not vary as much as the percent of income spent. That is because higher income people spend proportionally much less on the lottery.
Research has shown that a relatively small minority of customers provide a large share of revenues. A study based on California data showed that, typically about two-thirds of the take is provide by about 10 percent of the customers.17
Lotteries have come to be seen as "implicit taxes" by researchers.18
That means that they are not, of course, taxes because no one is obligated to
pay them. But lotteries are similar to taxes because they raise money for public
purposes. Some critics would argue that lotteries are not wholly voluntary
because of the coercive nature of the advertising and the fact that people buy
them on impulse.19
The counter argument is that it is in fact a voluntary purchase. Even if
purchased on impulse, so are candy bars and lottery tickets do not cost much
more.
Lotteries Raise a Disproportionate Share of Money From Low-Income Groups. Almost every study conducted by economists and researchers has found lotteries to be regressive form of raising money.20 Regressive means that as income rises, the proportion of money spent on a given product, lotteries in this case, declines. The regressivity of a lottery is heightened because of how the money is spent. The proceeds tend to go for programs that benefit the population as a whole, namely education. The regressivity could be diminished if lottery proceeds went for programs that aided lower income groups exclusively.
In other states there has been criticism that lotteries have targeted
low-income people. The lottery in
Why do People Play the Lottery? The main reasons are availability, no skill is required to play, players have little or no fear of corruption, and gamblers can wager small amounts. People play despite the low payout compared to other forms of gambling. However, playing the lottery is a cheap way to have an opportunity of winning big dollars and become a celebrity. If you win a big lottery prize you are put in the newspapers. The celebrity status of winners may be an important aspect in encouraging play.
The odds of success in lotteries do not seem that important to players. When interviewed, consumers do not seem to know the odds or the payout rate. Researchers have found that once people believe that a low probability event can occur, they tend to overestimate the chances of it occurring.22 And a small number of people do win and win large amounts of money, although the overwhelming majority lose money.
Lotteries give an illusion of control to some players. Because you can pick your own numbers in some games, you can choose your own lucky number. Tabloids feature articles about how to improve odds at picking lottery numbers, obviously a forlorn hope because the winning numbers are a product of a random process. Another attraction of the lottery is that people enjoy the non-monetary aspects of it, including talking about playing, engaging in the ritual weekly purchase, socializing with friends and coworkers to pool to buy tickets, and dreaming about winning, perhaps the favorite activity among lottery players.
According to some research, lotteries recruit people into commercial gaming, especially in states that have had little legalized gaming or exposure to such activity.23 This finding is interesting because lotteries have been opposed by commercial gaming interests. Another view is that lotteries have sanitized gaming and popularized it.24
Gambling can be an addiction for some gamblers and the resulting costs from
these compulsive gamblers is quite significant as discussed in Chapter IX. It is
unclear what role lotteries are having on the compulsive gambler.25
Illegal Gambling Isn't Eliminated by Lotteries. One
justification that has been used to win approval of lotteries is that they will
undercut the illegal numbers game. Nevertheless, illegal numbers still persist,
although they are probably smaller.26
Numbers persist because its convenient, flexible, offers credit, and if you owe
the government for taxes or welfare, it may be a better place to bet your money.
And the payout is much larger than the approximately 50 percent of state-run
lotteries. Although the size of numbers is not known, researchers note that
estimates put drugs as a far bigger source of funds to criminal interests.27
Economic Impact of Lotteries is Unclear. The lotteries help retailers that sell lottery tickets, especially the small ones. But of course by removing money from expenditure on other goods and services it can have a harmful impact on other retailers, but that has not been quantified.
Some research on the
There are New Directions for Lotteries. State lottery commissions are intrigued by several new directions. These include video lottery terminals and betting at home through touch-tone phones or cable television. Another is sports betting. Sports betting may be the most popular type of betting, although much of it is illegal. Four states have used sports betting in the lotteries, but Congress acted to outlaw it at the behest of professional athletic organizations. There was a widespread concern that any legalized sports betting could make the athlete more concerned with the bet than the game.
State lotteries have not been involved in casino gaming. A different
situation exists in
Lotteries have gone to quickdraw keno and it has become quite popular.
Monitors are placed in bars and restaurants and drawings are held on a very
frequent basis, approximately every five minutes. Critics argue that it exposes
young people to casino-type gaming.
As will be discussed further in the Indian Gaming section, the Coeur D'Alene
Indian tribe in
There is a strong link between the lotteries and Indian gaming. The Indian
tribes are allowed to operate whatever type of gambling that is not prohibited
to everyone within a state. The games used by the lottery are often used to pave
the way for expanded Indian gaming in states that do not otherwise allow casino
gaming.
Lotteries May Not Stay Public. Governor Rowland of
Appendix I
|
Start-up Year |
State |
Authorization |
Approval Rate |
|
1964 |
|
Legislation |
|
|
1967 |
|
Referendum |
61% |
|
1970 |
|
Referendum |
82% |
|
1972 |
|
Legislation |
|
|
1972 |
|
Legislation |
|
|
1972 |
|
Legislation |
|
|
1972 |
|
Referendum |
67% |
|
1973 |
|
Referendum |
80% |
|
1974 |
|
Legislation |
|
|
1974 |
|
Referendum |
|
|
1974 |
|
Legislation |
|
|
1974 |
|
Referendum |
61% |
|
1975 |
|
Legislation |
|
|
1978 |
|
Referendum |
66% |
|
1981 |
|
Initiative |
51% |
|
1982 |
|
Legislation |
|
|
1982 |
|
Initiative |
66% |
|
1983 |
|
Initiative |
60% |
|
1985 |
|
Initiative |
66% |
|
1985 |
|
Initiative |
58% |
|
1985 |
|
Legislation |
|
|
1986 |
|
Referendum |
67% |
|
1986 |
|
Referendum |
70% |
|
1987 |
|
Referendum |
60% |
|
|
Referendum |
64% |
|
|
|
Referendum |
70% |
|
|
1988 |
|
Referendum |
57% |
|
|
Referendum |
65% |
|
|
|
Referendum |
64% |
|
|
1989 |
|
Referendum |
51% |
|
|
Referendum |
62% |
|
|
|
Referendum |
60% |
|
|
1990 |
|
Referendum |
57% |
|
1991 |
|
Referendum |
65% |
|
1992 |
|
Referendum |
65% |
|
1992 |
|
Referendum |
63% |
|
1993 |
|
Referendum |
52% |
|
1994 |
|
Referendum |
54% |
VII. Why do People Gamble?
Earlier sections of this report presented data on the growing popularity of
gambling nationally, as well as in
"Yet the fact that empirical evidence strongly indicates that the best way of finishing up with a small fortune as a result of gambling is to start with a large fortune is played down."
Gambling is defined by the Webster's New World Dictionary as the following:
Various Theories Exist on Why People Gamble. There is a debate over whether the motivation to gamble is positive or negative. A common view is that gambling is negative. In particular, this view is common among religious groups.2 Others argue that the motivation is positive, that people enjoy gambling and it is usually a harmless diversion. Because people enjoy it they continue to gamble in spite of losing.3
Any discussion of the motivation of gambling usually starts with the natural comparison to life. Life is a gamble. Everyday, people are faced with situations which involve risk and chance.
Gambling activities are extensions of the risk and chance in life. The activity of gambling becomes play, it becomes a game. Gambling allows the person the choice of engaging in the activity, the amount of risk and, in many cases, the stakes. The stakes are a necessary element for many people. It turns the bet into not just an opinion but a commitment.
The concept of gambling mimicking the risk and chance of life has a parallel in the history section of this report. As noted in that portion, gambling was a popular activity during the gold mining era. Mining was a high-risk enterprise that required constant gambles by the participants. Considering that the people who accepted risk were drawn to mining, it is not surprising that gambling would become a popular leisure activity.
The fact that recreational gambling mimics life does not really help us determine why people gamble. If risk and chance are integral parts of life, why do some people seek out gambling activities and why are others content without it? Researchers have attempted to answer this question, but thus far no definitive answer has been found, but plenty of articles have been published.
Another way to determine why people gamble is to ask them. Why do people say
they gamble? In a survey in
Modern theories of gambling motivation are quite a change from some earlier theories. Early social scientists theorized that gambling was a way to deal with the pressures of industrialization. Karl Marx grouped it with religion as an opiate for the masses. Psychoanalysts had a different view. Sigmund Freud analyzed Fyodor Dostoyevsky's heavy gambling and diagnosed him as punishing himself for his oedipal urges.5
Different groups are more inclined to gamble than others. A review of several studies on demographic factors which relate to gambling behavior helps answer the question of who gambles the most. The following represents a synopsis of some of the research findings:6
VIII. Why do People Gamble Too Much?--Pathological and Problem Gambling
To many people, gambling is a simple form of entertainment. But to some others, it becomes an uncontrollable behavior. Many terms are used to describe a person who has a problem with gambling, including pathological gambler, gambling addict, compulsive gambler, or problem gambler. All of these terms are used to describe a person for whom gambling has become more than an innocent diversion.
Some of these terms lack specific meaning. This report will follow the literature and use "problem gambling" to mean an umbrella term to describe a situation where gambling activity disrupts one's life, but the extent of the disruption is not defined. Problem gambling includes pathological gambling, which is a more severe condition and is a term with specific medical meaning.
Pathological gambling is recognized as a medical disorder by the American
Psychiatric Association and has elements of addiction similar to alcohol and
drug addiction. It describes a gambler who loses control over gambling behavior
with damaging personal, social and financial effects. Very often, the
pathological gambler suffers from legal problems. Because the gambler is losing
control it is referred to by mental health practitioners as an impulse disorder.
Pathological gambling is a progressive disease, meaning that the symptoms will
get worse over time. Mental health professionals see it as a complex disease
often seen in conjunction with other disorders including depression and chemical
dependency.
Graphic Stories Exist of Those Whose Lives Were Destroyed by Pathological Gambling. The media readily tells the tales of those whose lives were destroyed by their uncontrollable gambling. These are some stories that have been pulled from press clippings:1
Tragic examples such as these receive an enormous amount of publicity and are
often used by anti-gambling groups to fight the spread of legalized gambling.
Industry observers credit attention from these stories as blocking laws that
would have relaxed betting limit regulations in
Describing the behavior is much simpler than explaining why the problem gambler persists in behavior which is so damaging.3 There are several models that are used to describe the problem gamblers.
Mental-health professionals prefer the term "pathological gambling" because it stresses the disease aspect of the issue. Pathological gambling is a progressive and chronic disorder that is clearly distinguished from social gambling. Psychiatrist Richard J. Rosenthal, who has written the official medical definition, defines it as:
"a progressive disorder characterized by a continuous or periodic loss of control over gambling; a preoccupation with gambling and with obtaining money with which to gamble; irrational thinking; and a continuation of the behavior despite adverse consequences."4
The results can be quite devastating. The disorder is incapacitating. The
pathological gambler is unable to maintain solvency or provide basic support for
themselves or their family. Further, as noted in the American Psychiatric
Association description of the condition, "When the individual's borrowing
resources are strained, the person may resort to antisocial behavior to obtain
money."5
That is a vague medical term for theft, embezzlement, fraud, and other crime. A
significant percentage of pathological gamblers have a second addiction to drugs
or alcohol.
Pathological Gambling Recognized as a Medical Problem. In 1980, the American Psychological Association included pathological gambling in their Diagnostic and Statistical Manual of Mental Disorders, Third Edition (DSM-III). By including pathological gambling, it gave official medical recognition as a disease. Pathological gambling is also identified as a disease by the World Health Organization.
Since 1980, the definition of pathological gambling has undergone some major changes. At first, the emphasis was on the damage and disruption caused by the disease. The motive was of little importance. Subsequent versions have changed this description and revised the diagnostic criteria for pathological gambling, emphasizing the addictive nature of the disease. It mentions issues concerning tolerance and withdrawal, suggesting a physiological basis for the disorder. In the case of the pathological gambler, tolerance refers to their increasing need for gambling and usually gambling with greater risks to get the same emotional effect. As with chemical dependency, withdrawal refers to the pain and discomfort associated with not practicing the behavior.
According to the latest version of the manual, DSM-IV, a person who exhibits at least five of the following behaviors may be a pathological gambler:6
Researchers consider pathological gambling an invisible problem with symptoms
that are hard to distinguish from non-pathological gambling.7
This contrasts with drug or alcohol addiction where there are obvious symptoms
of intoxication. Further, individual cases will vary greatly.8
Who is Most at Risk For Becoming a Pathological Gambler? Research has shown that there are factors that increase the risk of being a pathological gambler. Surveys of pathological gamblers show a greater proportion of:9
These findings are from prevalence surveys, not from studies of who is in treatment. White middle-aged males are the pathological gamblers most likely to end up in treatment.10
Researchers have been less successful in determining what causes problem
gambling and what the differences are between problem and normal gamblers. There
are many people who have a variety of risk factors but don't become problem
gamblers.
Studies Indicate That There is a One to Five Percent Incidence of Problem Gambling in the Adult Population.11 Specifically, the studies usually show the following results:
These incidence figures are surveys for the adult population as a whole. The rate of compulsive gambling among teens may be higher, reaching seven to eleven percent.12
One of the most comprehensive research projects on compulsive gambling
prevalence was conducted by Rachel A. Volberg with funding by the National
Institute of Mental Health.13
In this study, randomly selected individuals in five states were interviewed by
telephone, using a survey instrument that detects pathological gamblers.
|
Prevalence over Lifetime |
|||
|
|
|
|
|
|
|
Total |
Problem Only |
Pathological |
|
|
4.1 |
2.9 |
1.2 |
|
Average of 13 States |
3.9 |
2.5 |
1.3 |
|
|
|||
|
Current Gambling Problems |
|||
|
|
|
|
|
|
|
Total |
Problem Only |
Pathological |
|
Average of 6 States |
2 |
1.3 |
.7 |
Controversy Exists Over the Accuracy of the Surveys. The survey instrument used is the South Oaks Gambling Screen (SOGS). This survey instrument is a twenty-item scale that was derived from the diagnostic criteria for pathological gamblers published in DSM-III.14 Critics of the SOGS say that the instrument is too broad and vague, and it overstates the persuasiveness of the problem.15 They point out that one incident of an argument with a spouse and some remorse over losses from exceeding gambling limits can lead to a positive result on the screen. The potential for false positives may be increased because gambling may be more likely to lead to occasional problem elements by normal individuals.16 In other words, there may be some low or occasional incidence of distress that cannot truly be considered problem or pathological, but does result in a positive score according to the test.
Another criticism is that the screen doesn't accurately detect problem gambling in the young. The screen was developed from response and behavioral patterns of adult pathological gamblers. There is also a concern that it based on the criteria in the DSM-III, not the DSM-IV. Those that use the screen retort that it is accurate for many different groups.17 The screen is in the process of being updated to the new DSM-IV definitions.
Some critics argue, however, that the screen doesn't detect enough problem
gamblers. Some observers are concerned that researchers can't realistically
conduct phone surveys of problem gamblers. They point out that problem gamblers
are at the clubs or afraid to answer the phone because the gamblers don't want
to talk to somebody they owe money.18
Another point of interest is that there is a large rate, 27 percent in the
Controversy Exists Regarding Whether Prevalence Studies Suggest a Link Between Pathological Gambling and Legal Gaming. Results of the Volberg study suggest that problem gambling is a greater problem in those states where legal wagering has been available for some time.20 This conclusion is arrived at by comparing rates in different states. Drawing conclusions from comparisons of one state over time or a cross-sectional study of multiple states is difficult. Such comparisons are based only on the prevalence rates and not by looking at population differences that could explain the different rates.
Another way that prevalence studies attempt to shed light on the same
question is by conducting the studies over time. In
Mental health professionals who treat pathological gamblers tend to believe that legalization leads to increased compulsive gambling.21 The DSM specifically notes that the onset of pathological gambling can result from greater exposure to gambling.22
Counselors form this belief based on their experience and the nature of addiction. They tend to hold the view that some people may be predisposed to an addiction. If a person was predisposed to have a drinking problem, but never came into contact with alcohol, she or he would not become an alcoholic. The pathology of their predisposing factors may still cause some damage to them and others. They might also be some other kind of addict, but they would not be an alcoholic. In the same way, a person with a predisposition to problem gambling may not see it manifested until access to gambling becomes available. Another element of this is that legalization leads to greater acceptance of gambling and greater exposure for the average person.23
This behavioral pattern occurs because pathological gambling is a problem of impulse control. The more accessible gambling is, the harder it is to maintain the control. Despite the logic of this line of reasoning, there are no prevalence studies that prove the notion that expanded gambling will lead to increased problem gambling.
Another theory of problem gambling counselors is that electronic games such
as slots and video lottery terminals are especially addictive.24
They refer to these as the "crack cocaine of gambling," because of the
low cost per wager and their rapid play.25
This connection is disputed. Those disagreeing point to survey results from
Regardless of any possible links, legal gambling probably cannot be blamed
for all pathological gambling. Research in
If gambling were prohibited, would problem gambling stop? Probably not.
According to Jean Falzon, executive director of the National Council on Problem
Gambling, "Problem gambling is going to exist despite the availability of
legalized gambling or the lack thereof. Many problem and compulsive gamblers
have problems with sports betting which is predominantly illegal in this
country."29
Social Costs in
|
Estimated
Social Costs of Pathological Gaming in |
|||
|
Percentage and Number of Pathological Gamblers |
Cost Per Pathological Gambler |
Total Cost |
|
|
.5 |
105,000 |
$8,000 |
$844 Million |
|
$15,000 |
$1.6 Billion |
||
|
1 |
210,000 |
$8,000 |
$1.7 Billion |
|
$15,000 |
$3.2 Billion |
||
|
1.5 |
316,000 |
$8,000 |
$2.5 Billion |
|
$15,000 |
$4.8 Billion |
||
|
3 |
633,235 |
$8,000 |
$5.0 Billion |
|
$15,000 |
$9.5 Billion |
||
|
Source: |
|||
The social costs of pathological gambling are explained in more detail in the economics chapter.
The State of
Pathological Gamblers Play a Number of Different Games. Surveys
have shown that some play a number of games. A study in a state with casinos
showed that the majority of problem gamblers were having problems with
non-casino gambling, including the state lottery.30
The study also looked at the reasons that people called a help-line. Among
these, a small majority said their problem was related to casino gambling. But,
significant numbers said that their problem was lotteries or sports and race
betting.
There are Two Main Types of Pathological Gamblers. With so many different types of gambling opportunities, the course of the disease can be broken into two types:
Pathological Gambling and Gamblers Exist Outside of Gaming
Establishments. One article points to Donald Trump and Robert Maxwell.31
Both men were gambling that their empires would emerge unscathed from the
challenges they faced. Both men gambled incorrectly as subsequent events have
shown. They are identified because of the nature and size of the risks they
took. Experts in pathological gambling point to some of the more notorious
financial market trading scandals as evidence of pathological gambling outside
of gaming establishments.32
Resources for Treating Problem Gamblers Have Grown. Historically, problem gambling was regarded as an individual failing rather than as a medical or social problem.33 As such, little treatment was available.
The original treatment for problem gamblers was Gamblers Anonymous. It is
also known by the shorthand GA. GA was established in 1957 and until the 1970's,
it was the only treatment program in the
Since its Inception, the Number of Gamblers Anonymous Chapters Has
Grown Rapidly. In 1960, there were 16 chapters in the
The National Council on Compulsive Gambling (now called the National Council
on Problem Gambling) was founded in 1972. The first inpatient treatment program
for compulsive gambling was established at the
With the inclusion of pathological gambling in the DSM-III in 1980, people started to look at this problem as a disease, and paid more attention to treatment. There were an increasing number of treatment programs for compulsive gambling. Some programs were established by state legislatures in response to concerns voiced by the opponents of legalized gambling. There are also a number of private practitioners whose private practices are focused on compulsive gamblers. Generally, treatment is modeled on the treatment of alcoholism and other drug addictions. That consists of 12-step programs, behavioral modification and counseling, including individual, group, and family therapy, although, a review of the literature shows that a variety of treatment forms have been tried, including electric shock treatment and aversion therapy.
Treatment is complicated by the nature of the disease. Addicts are in denial of their disease, hence they cannot be relied upon to accurately report their condition. Many GA members were in therapy prior to joining GA, usually for depression, anxiety, and marital conflict, but their gambling problem was not admitted, recognized, or discussed. The employer can be a valuable tool in requiring an employee receive treatment. But because gambling is a disease that involves loss of control over money, any pathological gambler who is handling money is especially reluctant to let their employer know that they have a problem.
Another complicating factor is that pathological gamblers often don't have
insurance to cover treatment. Many are having financial and employment problems
so they don't have health insurance. If they have health insurance it may cover
alcohol or drug treatment but only rarely gambling.
Effectiveness Rate of Treatment is Not Accurately Known. Although individual pathological gamblers can be quite successfully treated, little is known about the effectiveness of treatment programs. Self-help programs such as GA don't keep track of their success. One study showed that 8 percent of the members haven't gambled two years after joining the program. It is likely the effectiveness is greater because some members take longer than two years to completely refrain from gambling. When GA is combined with outpatient and/or inpatient treatment, the success rate is thought to be more like 50 percent.34 However, many members leave GA because they don't want to abstain or they have difficulty with the concept of admitting a lack of control and having to decide to turn their life over to a power greater than the individual.
There is a school of researchers that argue that prevention is much more
cost-effective, because of the high treatment costs and the uncertain success.
Prevention programs include public awareness advertising and programs in the
schools to make individuals aware of the disease. Again, despite the questions
about the overall success rate, clinicians describe the disease as very
treatable for any particular individual who has the appropriate motivation and
receives the proper treatment.
Very Small Minority of Pathological Gamblers Seek Treatment.
Although accurate figures are not known, the consensus of researchers is that it
is a small minority. The best estimate for the population of Gamblers Anonymous
is about 80,000. There are about 1 to 2 million pathological gamblers in the
One gambler who did seek treatment was Chet Forte, who was better known as
the director of "Monday Night Football." He also was producer-director
of the 1984 Olympics. Mr. Forte won 11 Emmy awards. But he also gambled away
nearly $4 million including his million-dollar home. He was spared from prison
only because the judge recognized his cooperation and his efforts in gaining
treatment for his gambling addiction. According to press accounts, he paid back
his debts, including back taxes, and continued attending Gamblers Anonymous
meetings up until his untimely death from a heart attack in May 1996.
Some States Have Directed Significant Resources to the Problem.
The Gaming Industry Has Responded to the Issue of Problem Gambling. Though there is debate over the prevalence of problem gambling, the industry generally accepts that there are problem gamblers. Some gaming companies are participating in programs aimed at educating the public about problem gambling and providing information about the help that is available to those who need it. But participation is far from uniform. One observer has characterized the industry as doing surprisingly little.35
There are different approaches to educating the public about problem gambling. Toll-free help-lines have become popular and one can see posters or stickers with the 1-800 number posted in casinos. Public service announcements on television and radio have also become popular. These announcements are often sponsored by the casino industry or a specific casino company.
While the industry is taking some responsibility and has been an active participant in the education effort, it does not feel its responsibility extends to treatment. The industry view is that pathological gambling should be treated like any other medical condition. Individual members of industry may have donated to charitable organizations that promote the counseling and treatment of problem gamblers.
Could casinos do more? One researcher noted that it is possible that seasoned
casino personnel can be quite effective in identifying pathological gamblers.
However, once a pathological gambler is identified it is not clear what is the
appropriate response. Industry action is complicated by the concern that a
gambler may walk down the street to a competing casino or facility.36
There are Regulatory Strategies That Might Reduce Pathological Gambling
Problems. The situation is quite different in European countries than in
the
The British experience with casinos provides an interesting contrast. This
discussion is drawn from an article by the noted
Pathological Gamblers Leave High Costs in Their Wake. People seek treatment for compulsive gambling, but not just because of the losses they run up. Pathological gambling is not just a problem of lost money. Compulsive or pathological gamblers seek treatment when other addicts do, when their life is an absolute mess and they can't take it anymore. Mental health professionals point to factors such as widespread borrowing, deception, and crime making the lives of pathological gamblers uncontrollable. Reportedly, a large number of compulsive gamblers are involved in white-collar crime. Not surprisingly given the pathological gambler's need for funds, a significant proportion of those incarcerated may be pathological gamblers.38
These problems don't even begin to detail the impact of their behavior on their family, including children. In other words, pathological gambling is not victimless. Research has shown that children of pathological gamblers had a variety of problems and were much more likely to be abused. In the parlance of the mental health professionals, "Children of pathological gamblers show more signs of serious psycho-social maladjustment."39
Asians and Native Americans (as well as the young) have been identified as
being particularly sensitive to pathological gambling problems.40
Another study identified the elderly, the poor, minorities, and housewives.41
Asians have been identified because gambling is a more accepted part of their
culture and participation tends to be much higher. The young are at risk because
of their immaturity, which can lead to excess.42
Those involved in treating pathological gamblers also note large numbers of
senior citizens, although this may reflect their high participation rate in
gambling.43
Underage Gambling Shows Worrying Trends. Some who are concerned about the issues say that gambling-related problems are overtaking drug addiction as the most prevalent problem among teenagers.44 Surveys among young people show that a very large number gamble. The surveys show that about 80 percent responded that they have gambled by the time they were 15.45 Approximately one-eighth of the nation's compulsive gamblers are teenagers.46
An alternate point of view is that young people engage in a variety of experimental behavior of which gambling is but one example, and can be viewed as relatively normal.47
A survey of teenagers in
A recent story that received considerable press attention involved three
students at a
Many played games that were illegal for minors to play and a significant number also bet on sports. Problem gambling counselors find this pattern of behavior worrying because it is illegal, hence it may have implications for those caught and convicted. Second, gambling among minors may lead to increased levels of problem gambling when they become adults.49 A significantly larger percentage of pathological gamblers than the population as a whole report starting when they were young. At least some mental health practitioners view problem gambling, like alcoholism, as a family disease.50 That is, there is a definite link between parental problem gamblers and their dysfunctional household and a higher level of addiction in their children, including pathological gambling.
The prevalence studies seem to show a consistently higher rate for youthful gambling than adults.51 One study of college students showed that 87 percent had gambled at some point, 26 percent gambled weekly, and 11 percent said they had gambled more than $100 in one day. In that study, 5.7 percent were pathological gamblers, a higher figure than that found in adult prevalence studies.
There is some question about the actions taken by regulators and the casinos
to deal with the problems of underage gambling. Although there are figures on
the thousands of underage patrons that were turned away or escorted from a
casino, according to one researcher, no casino has even been fined for allowing
minors to gamble.52
His article is several years old, however, and there are recent press reports of
such fines, but it is not know how widespread they are.
Recent
Legal Treatment of Pathological Gambling Varies. Despite the recognition of pathological gambling as a medical condition, it is specifically excluded from the Americans with Disabilities Act. It is at least theoretically possible that a pathological gambler could claim disability under social security. Such a claim would not likely be for the gambling itself, as it isn't clear how that would make an individual disabled and unable to work. However, the gambling would probably be an indicator of another disorder. Many pathological gamblers also suffer from another mental illness.
The liability of gaming proprietors is largely unexplored. The courts have
been quite ready to hold dispensers of alcoholic beverages liable for damages to
third parties from accidents caused by drunk drivers. There have not been any
lawsuits yet for third-party damages from pathological gamblers, but the analogy
has not been lost on observers.
Test for Gambling Addiction
If you answer yes to any of these questions, you might reconsider your gambling, according to experts on problem gambling.
XI. Gambling and Crime
Gambling is often associated with crime. The relationship is easy to
understand. Many types of gambling have been, indeed still are, illegal. Hence,
by definition, criminals were the only operators of games. When gambling
restrictions were relaxed, criminals were the first to open up legal gambling
establishments. A lax regulatory framework in
Up to the 1960s,
Because of this history, the concern about organized crime usually is raised
whenever legalizing gambling is discussed. Even when
Much has changed since the days when Bugsy Siegel started the first modern
casino in
Modern Casino Gaming Has Safeguards to Protect Against Organized Crime.
Casino gaming has become one of the most highly regulated industries in
The casino companies suggest that they are devoid of organized crime influence because they are:
Nevertheless, there remains an ever present concern about organized crime.
The sheer volume of money, cash in particular, that is generated by gambling,
makes it a tempting target. Organized crime has been successful infiltrating
ancillary businesses such as machine maintenance or those that provide other
services.7
Often labor unions are used as the vehicle to carry out the infiltration.8
There are examples of organized crime infiltration. For example, as discussed in
the section on gambling and politics, the FBI is investigating allegations that
Researchers state that organized crime is more of a product of illegal or
poorly regulated gambling than well-regulated gambling.9
That is especially worrisome because gambling isn't just done within the large
casinos. There are many other gambling opportunities and not all are as
well-regulated or as free of organized crime influence as casinos. In
The Role of Organized Crime and Indian Gaming has Been a Controversial One. As noted in the section on Indian gaming, the charge that Indian gaming has been infiltrated by organized crime has been made. Competitors and antigambling interests use that charge as an attack on Indian gaming. Some researchers and industry observers are quick to point out that, however, there is no evidence that organized crime has significantly infiltrated Indian gambling operations.10 Others counter that inadequate regulation and oversight make it harder to find evidence. But there is ample evidence of attempts, some of which have met with success.
The Los Angeles Times ran a lengthy article on Mafia attempts to take over an
Indian gaming operation in
There have been other incidents.12
Two tribal leaders who had complained that Indians weren't getting a fair share
of gambling profits at another facility were later murdered. At the Barona
Reservation, a bingo manager was caught rigging games so that shills in the
audience could win. Later, he testified about mob involvement in a number of
Indian casinos throughout the country. Some of what he said has been
substantiated. These events did occur, however, during the earlier years of
Indian gaming.
Gambling is a Natural Target for Criminals Because of the Large Amounts of Cash. Gambling operations, including cardrooms, earn large amounts of cash and present particular opportunities for skimming and money laundering. Dealers don't have to continually inventory their chips and money while they are working, providing opportunities for fraud. In addition, cheats are drawn to casinos and cardrooms because of the large amount of money generated by the facilities. Dealer skimming of chips by palming or collusion is probably the greatest risk.13 Clubs allow employees to gamble when they aren't working, a situation that can lead to collusion. Other risks include credit abuse, card cheaters, and currency transaction violations. Because of these factors, proper operations and security are very important.
Skimming has been a significant problem. The Kefauver committee found that it was widespread. There were indictments in the early 1960s of casino owners for tax evasion. Skimming can also occur with the granting of credit. Credit can be granted to individuals who aren't required to repay all of the loan. One solution is to prohibit credit, but that can increase the problem of loan sharking.
Money laundering is another problem. Bettors can come in with a large amount
of cash and purchase chips. The chips can then be cashed in, labeled as
"winnings" and the money is now legal. In
Another issue is kickbacks. These occur in a variety of different situations.
Operators can receive kickbacks for allowing money laundering. Employees can be
pressured into giving kickbacks for preferred assignments.
Crime has Been an Issue for Cardclubs. Although there has not been an overall comprehensive study, information is available from a report by the Attorney General, new reports, as well as a report by the City of San Jose Police Chief.14 According to these sources, there have been robberies and assaults of patrons who had left the cardclubs after making money. In the news reports, the criminals and victims are usually Asian and have been playing Asian games which frequently have high stakes.
There is debate about the role of the clubs and crime. The City of
Some of the crime may be unrelated to the gambling that occurs at the cardclubs. Rather, the club is a suitable place to meet individuals who are willing to buy stolen property, drugs, or cars without registration. Other activities such as loan sharking and credit card/check fraud have been noted. Unfortunately, some of these crimes are difficult to prosecute. There is some belief that gambling crimes are victimless. This thinking ignores the role of organized crime behind some of these. Loan sharking can be difficult to prosecute because the victim doesn't want to be involved.
In the City of
Since then, however, there have been other incidents. A
Detailed information about the cardclub in
The television news show, "60 Minutes" did a report on the club. They were able to catch on camera the laundering of money at the club.
Loan sharking has also been an issue for the clubs.17 This crime is particularly dangerous for the problem gambler who needs money for gambling. Because of their compulsion it is easy to end up in debt to a loan shark.
The purpose of detailing some of the crime is to give a general sense of some
of the problems that have occurred. A more detailed listing of cardclub crime
can be found in the information available from the Department of Justice.
Federal Concern for Money Laundering Evidence by New Regulatory
Requirements. During 1996, the U.S. Department of Treasury's Financial
Crime Enforcement Network proposed to more tightly regulate cash transactions at
Another Crime Issue Associated with Gambling is Street Crime. U.S. News and World Report did a comparison of crime rates in cities with gambling versus those that do not. The crime rates were significantly higher in the places that allowed gambling.18 Industry researchers dispute the view that cities with gambling have higher crime rates and assert that the rates aren't higher when the tourist population is considered.19 The article failed to consider that these cities are vacation destinations and their population is swollen by the influx of tourists.
In Deadwood, there were significant increases in crime and violence when gambling was legalized.21 The researcher acknowledges that the influx of people may be the cause. Another possible cause is the boom-town atmosphere.
Another researcher has pointed out that the crime that is attributable to compulsive gamblers is often underreported.22 This includes bad checks, embezzlement, check forgery and fraud. The crime rate is usually for street crimes, which aren't typically attributed to compulsive gamblers.
As noted in the economic section,
Illegal Gambling is Still a Significant Problem. How big is illegal gambling? It may run as high as $100 billion per year.23 Other estimates put the figure even higher.24 That may seem like a very large figure, but as noted earlier, sports betting is immensely popular and most of it is illegal. The large extent of illegal sports betting is one of the reasons that some used to advocate its legalization. Others claim that business with illegal bookies would not decline because they offer better odds, credit, tax free payouts, and greater convenience in placing bets and collecting winnings.25
Sports books are not the only component of illegal gambling. In