• TheGamblingScam

2000 - 2005 Articles

Updated: Nov 6, 2019

The gambling industry’s two thrusts

It’s all about the battle for the assets of Kentucky


Most people aren’t aware that there are actually two powerful factions trying to expand gambling in the Commonwealth of Kentucky.


First is Kentucky’s traditional gambling enterprise, horse racing. This group maintains that it needs more revenue to make racing more profitable, and increase the size of purses for each race. This, they say, will bring in more and better horses and continue to make the state the nation’s leader in all aspects of horse racing.


The horse racing industry argues that if gambling is allowed to expand outside of its auspices, revenue that would normally come to them would be detoured into the hands of those who care nothing for horse racing, resulting in devastation to the industry rather than assistance at a time they claim it’s needed.


The racing industry has proposed only the addition of video lottery terminals (VLTs) and only at their facilities in order to capture the additional revenue they say they need. VLTs have been called the “crack cocaine” of gambling because they are extremely addictive and can extract large sums of money in a short period of time with only a small initial investment.


Second, the casino industry argues that it would be unfair to allow gambling expansion to only one group. Further, though they too would offer VLTs at their sites, they claim that they can generate even more money through the variety of games that are offered at full-blown casinos, as long as the casinos are properly placed across the state.


Both groups are willing to spend millions to “win big” in persuading Kentuckians to expand gambling. But somebody has to lose, and it might well be a family near you.



Four Policy Concerns


#1. The FAMILY is targeted

All of the billions they say they’ll “raise” will come from one place – the assets of Kentucky families.


When citizens hear the cry for the expansion of gambling, it’s normally from a gambling industry spokesman selling expanded gambling by explaining how much money state government is going to receive. Or, it’s a pro-expansionist legislator complaining about the budget shortfall, reciting the need of government for expanded gambling. Both are focused on one thing only — how much money can be raised by the expansion of gambling.


Though at times they have exaggerated how much can be raised, no one is arguing that huge sums of money—literally billions of dollars— will change hands.


What hasn’t happened in this controversy is a discussion that tells us where all this money will come from. That is no small matter.


Clearly, gambling doesn’t create new wealth. It only causes wealth to change hands. The construction industry, for instance, takes raw materials – lumber, concrete and dry wall – and builds a product that is worth more than the sum of its parts. It creates new value, new wealth. From this new wealth it generates jobs and offers wealth to its workers as well as its suppliers. The manufacturing industry creates wealth in a similar way except it produces its products while remaining at one location.


The service industry and sales or retail industries create new value by offering their abilities to market, deliver, and offer services that the consumer needs and cannot provide for himself.


The gambling industry, on the other hand, sets up its facilities simply to extract money from its customers. It claims to offer “entertainment.” But what other kind of entertainment has a variable cost plan? One person can be “entertained” by losing only $50, while another at the same game, slot machine, or video lottery terminal, can lose $500.


The truth of the matter is that gambling is more closely related to the investment industry because it offers the opportunity to enlarge your initial investment. The problem is, unlike the investment industry, it’s not regulated. And, it is designed so that “the house always wins,” thus giving the investor a loss even before the game is played.


Can people win? Sure, the industry must keep the hope alive, so some do win. But the absolute reality in the long run is the house always wins (and thus, gamblers always lose).


But who are these losers?


That is what is so costly about all the current proposals to expand gambling in Kentucky. The fact is, corporations can’t gamble. Nor can businesses, institutions, schools, clubs, nonprofits, churches, or charities. Only moms and dads and a few single people – only families.


So, what you have is a huge shift of assets from the families of Kentucky into the hands of the gambling industry. And state government gets in on the deal by heavily taxing the money as it changes hands.


The big winners are those in charge of the gambling operations with state government coming in a close second by receiving its “cut” through heavy taxation.


The big losers are Kentucky families. And that, ultimately, will have significant impact on every other aspect of life in Kentucky.


#2. BUSINESSES will lose

Expanded gambling is bad for business, operating like a vacuum on disposable income.


Proponents of gambling have tantalized business leaders with promises of increased tourism and economic development. However, the promises rarely, if ever, materialize.


Robert Goodman, author of The Luck Business, said when making their case for expanded gambling to the public, the gambling industry typically trivializes the negative impacts while inflating the positive ones.


Of all the arguments favoring gambling expansion, perhaps the most attractive is that new gambling opportunities will benefit the overall economy. Unfortunately, over and over again, the statement proves to be deceptive


While capital investment and immediate job creation seem to immediately follow new gambling projects, the long-term impact on most businesses and the economy is usually negative, according to John W. Kindt, professor of commerce and legal policy at the University of Illinois at Urbana-Champaign. Kindt, who grew up in Louisville and is a nationally recognized expert on gambling’s effect on the economy, actually calls for re-criminalizing gambling because it is a “catalyst for economic downturn.” Numerous studies support his position.


Professor I. Nelson Rose, professor at the Whittier School of Law in Los Angeles and a professional legal consultant for many casinos, puts it succinctly, “A casino acts like a black hole, sucking all the money out of the local economy.”


Kentucky native Joe Koester lives and works in Vicksburg, Mississippi, home to four riverboat casinos. “A lot of the gain they bring is in the first two to three years, but after that it levels out.... the shine wears off,” Koester said. “There is a saturation level. A state can have only so much gambling.” Koester, who earned a master’s degree in civil engineering from the University of Kentucky, noted that prior to casinos, there were one or two pawn shops in Vicksburg. Now there are over twenty—one sign of an unhealthy economy.


Critics say gambling is inherently antithetical to good business. It undermines sound economic principles of thrift, diligent labor, and savings. Gambling “produces no product, no new wealth, and so it makes no genuine contribution to economic development,” said Jack Van Der Slik, senior scholar in the Illinois Legislative Studies Center.


Kindt’s assessment is similar. Existing businesses lose the most when gambling is legalized. It cannibalizes discretionary dollars from consumers who would have purchased groceries, clothes, consumer goods, and restaurant meals. And non-gambling-related businesses will not be competing for consumer dollars or recreational dollars on a level playing field, according to Kindt, “because legalized gambling activities can cater to an addicted and potentially addicted market segment.”


With the exception of the cluster services (food services and delivery, alcoholic beverage companies and pawn shops) associated with it, Kindt explains that new businesses tend not to locate in areas allowing legalized gambling because of the associated social and economic costs.


Surprisingly, gambling expansionists targeting Kentucky have pointed to all the money that Indiana has gained by Kentuckians going to the Indiana riverboats. What they haven’t emphasized is that Indiana has had some of its worst economic times since gambling was expanded there, losing 120,000 jobs and causing the late Gov. Frank O’Bannon to speculate earlier this year that the downturn would shape his political legacy. O’Bannon died September 13 following a stroke.


How gambling affects businesses

Unfortunately, the business community has been seduced by the claims of the gambling interests that expansion will bring about economic renewal. Nothing could be further from the truth. Here are just a few facts.


- In the decade following the arrival of casinos in Atlantic City the number of restaurants declined from 243 to 146 (a 40% decrease). (“Help Stop the Invasion”, National Coalition Against Legalized Gambling, p. 4)


- A study of Aurora, Illinois found that only 3% of the businesses had experienced an increase in revenues after the arrival of the riverboat casino. The other 97% had experienced a decline. (“Betting Virginia’s Future on Gambling: Gambling and the Economy, The Family Foundation, Springfield, VA)


- “Madden, Volberg, and Steufen in their South Dakota study found that … categories such as recreation services, business services, auto dealers, clothing stores, and service stations showed significant declines” [after the arrival of casinos in Deadwood, SD]. (Casinos in Florida: An Analysis of Economic and Social Impacts, p. 37)


- “Dr. Timothy Ryan, a University of New Orleans economist, estimated that $62 million will be diverted from all retail businesses excluding hotels as a result of the operation of a single 100,000 square foot casino.” (Casinos in Florida: An Analysis of Economic and Social Impacts, p. 38)


- More than 70 percent of businesses in Natchez, Mississippi, reported declining sales within a few months of the opening of that city’s first riverboat. A year later, several nearby restaurants and bars had closed and revenues from house tours and evening entertainment during the city’s traditional peak tourist season had declined over 20%. (Robert Goodman, Ph.D. Professor, Hampshire College, The Luck Business, The Free Press, 1995, p. 31)


- “A casino acts like a black hole, sucking all the money out of the local economy.” (I. Nelson Rose, Professor, Whittier School of Law, Los Angeles)


- Casinos “divert money from other consumer enterprises in the local economy – it is a basic reorganization of what the economy already has. And … will place stress on existing business.” (Robert Goodman, Ph.D. Quoted in Multinational Monitor, November, 1996, p. 11)


- A University of South Dakota study showed that retail and service businesses in South Dakota suffered a net loss of approximately $60 million in anticipated sales in the year following the introduction of gambling. (Robert Goodman, The Luck Business, The Free Press, 1995, p. 31)


How gambling affects jobs

One of the most persuasive arguments made for expanding gambling is the creation of new jobs. The tragic reality is that after three or so years, there is no net gain, as jobs are lost from other businesses. And, oftentimes, higher-paying jobs are replaced by lower-paying ones.


- In Cripple Creek, Colorado, jobs were lost when the number of retail shops shrank from 60 to 10 after the arrival of the casinos. (Brian Levine, The Rocky Mountain News, 9-92)


- In Deadwood, South Dakota businesses like car dealerships, five-and-dimes, grocery stores and pharmacies have closed, causing many to lose jobs and leaving residents without the kinds of businesses that make a healthy and diversified economy. (Karen Hansen and Megan Seacord, “A 20th Century Gold Rush,” State Legislatures, March, 1991)


- One fourth of all small businesses in Atlantic City closed after the arrival of the casinos. All these jobs were lost, offsetting much of the once boasted job gains at the casinos. (Robert Goodman & Brett Martin, “The Real Economy of Legalized Gambling,” Christian Social Action, July/Aug., 1994, p. 10)


- Using pre- and post-riverboat employment figures in riverboat counties, Earl Grinols, University of Illinois Professor of Economics, found that for every job created by a riverboat an existing job was lost in nearby markets. (Casino Gambling, Indiana Area of the United Methodist Church, p. 8)


- John Warren Kindt, Professor of Commerce and Business Law at the University of Illinois goes even further and says that on a regional basis there is a net loss of jobs. (Kindt, “The Business-Economic Impacts of Licensed Casino Gambling in West Virginia,” West Virginia Public Affairs Reporter, Spring 1996, p. 24)


- Before the casinos, unemployment in Atlantic City was 30% higher than the rest of the state. Ten years after the casinos came, the unemployment rate in Atlantic City was 50% higher than the rest of the state. (Goodman, p. 23)


Bankruptcies generate a “domino effect” on business

Gambling facilitates the financial failure of families and businesses.

Kentucky had 58 households per bankruptcy filing in 2001, ranking it 12th in the nation. There are many rankings to which Kentucky might aspire, but bankruptcy filings should not be one of them.


Is there a link between bankruptcy and gambling? Since Kentucky sold its first lottery ticket in 1989, bankruptcy filings have more than doubled. In 1989, for example, 12,782 households and businesses filed for bankruptcy. In 2001, 26,183 bankruptcies were filed in the commonwealth.

Why the drastic increase? High household debt, easy credit, and a downturn in the economy are key reasons for the avalanche of filings. But several studies indicate that gambling is another contributing factor to bankruptcy. In Kentucky’s case, while it is likely that the lottery was responsible for some bankruptcies, they could escalate should casino-style gambling be introduced.


In a study of eight U.S. communities that recently adopted casino gambling, seven saw an increase in bankruptcy filings. The study, conducted by researchers Mark W. Nichols, Grant Stitt and David Giacopassi, found “those communities that have had casinos the longest tended to have the greatest increase in bankruptcy.” A study released by the SMR Research Corporation found that gambling may be the single fastest-growing driver of bankruptcy. Gambling-related bankruptcies account for 10 to 20 percent of the filings in those areas near major casinos.


Gambling and its ties to bankruptcy

Business is also impacted “indirectly” when personal bankruptcies and business bankruptcies rise, creating catastrophic losses that are unreclaimable.


- A 1997 nationwide SMR Research Corporation study showed that bankruptcies were 18% higher in counties with one gambling facility and 23% higher in counties with five or more, when compared to counties with no gambling facilities. (Joe Weinert, “Bankruptcy Bill Seeks to Erase Gambling Debts,” South Jersey Publishing Company,

March 11, 1998)


- In South Dakota after two years of legalized casino and slots play, gambling was one of the leading causes of business and personal bankruptcy. (Help Stop the Invasion,” National Coalition Against Legalized Gambling, p. 4)


- Non-gamblers have a lifetime bankruptcy rate of 4.2%, problem gamblers a rate of 10.3 % and pathological gamblers a rate of 19.2%, nearly 5 times higher than non-gamblers. (PricewaterhouseCoopers Final Report, December 13, 1999, p. 162)


- Experts tag gambling, health emergencies, divorces and advertising by bankruptcy lawyers as the main causes for the rapid growth of bankruptcy filings. (Michael Markowitz, “U.S. Bankruptcies at Record Level,” The Passaic/Morris NJ Record, Jan. 8, 1998)


- Before the rapid nationwide casino expansion began in 1989, the number of bankruptcies stood at around 2000 per million residents, with the average filer’s debt at 60% of annual income. In just seven years, as gambling expanded, the number of bankruptcies doubled, with average debt reaching 83% of annual income. (Mary Kane, “Congress Charged Up Over Rise in Bankruptcies,” The New Jersey Star Ledger, August 31, 1997)


- In 1994, the year casinos opened in Shreveport, LA, bankruptcies in nearby east Texas totaled 4,870. In 1995 there were 7,921 bankruptcies, and in 1996 there were 10,775, 221% of the 1994 level. (Zanto Peabody, “Crimes, Bankruptcies Linked to Gambling,” The Marshall News Messenger, Sunday, March 8, 1998, p.1)


- An Iowa State University study of those filing for bankruptcy found that 28% identified themselves as gamblers, with 19% admitting it was a factor in having to file. (John McCormick, “ISU Bankruptcy Study Finds Link to Gambling,” The Des Moines Register, Aug 4, 1998, p.1-A)


- In the ISU study gamblers had 19% more debt (an average of $41,342), and were poorer than non-gamblers by an average of $10,000. (See Above)


Gambling spawns embezzlement

Businesses can be impacted by all kinds of crime generated by the expansion of casinos or “racinos” at the tracks. Here are some examples of embezzlement.


Gamblers embezzle from employers:

– A Missouri student loan officer embezzled $30,000 from a community college. Kansas City Star, February 1, 2003.


– A Massachusetts Teachers Association finance officer embezzled $800,000 for gambling binges. Boston Herald, May 6, 2003.


– The treasurer of a New Jersey Ford dealership embezzled $317,000 to cover gambling losses. The Star-Ledger, January 7, 2003.


Gamblers embezzle from government:

– A 56-year-old woman embezzled $23,450 from the East St. Louis police department to cover gambling debts. News-Democrat, May 13, 2003.


– A St. Louis County Missouri recorder of deeds embezzled $800,000 by stealing from $800 to $1200 per day from a cash drawer. Jefferson City News-Tribune, June 8, 2003.


– The Keifer, Oklahoma town clerk embezzled over $250,000 to play Bingo, losing up to $2,000 per night. Family members repaid the money to prevent the community from having its gas and electricity cut off. Iamerica, October 14, 1997.


Gamblers embezzle from charities:

– A New York woman embezzled more than $140,000 from a regional Girl Scout store to buy lottery tickets and gamble at casinos. Cleveland Plain Dealer, March 3, 2003.


– A North Dakota AMVETS (an American veterans organization) gaming manager embezzled $650,000 from the AMVETS to cover gambling debts. The AMVETS were stuck with paying $177,000 in taxes and fines on the unreported income. Bismarck Tribune, May 23, 2003.


– An Olathe, Kansas Catholic priest embezzled $44,000 in parish funds to gamble. Kansas City Star, May 23, 2003.


- A National Council on Compulsive Gambling report indicated that 65% of pathological gamblers commit crimes to finance gambling. Of the pathological gamblers, 30% embezzled money, usually from their employers. www.robertperkinson.com/gambling-treatment.


- When the phrase “embezzlement and gambling” is entered as an internet search, 1283 pages of news articles and studies appear with an average of 15 articles per page. June 30, 2003


Crime rises, business pays

Businesses are victimized by gambling industry’s victims.


The business community pays dearly when gambling comes to town. According to work by the Missouri Citizens for Life and Liberty and the New Jersey Council on Compulsive Gambling, 85 percent of gambling addicts have stolen from their employers to pay gambling debts and 75 percent were driven to commit a felony to cover such debt. In addition, their research indicates that 80 percent of all embezzlements are initiated to cover gambling debt.


But it’s not only the direct costs of having funds robbed or embezzled that puts a new onus on businesses, there is also the cost of improving and maintaining security for both the business owner and his clientele. According to Marjorie Stewart, former University of Kentucky Dean of the College of Home Economics, the entire atmosphere around a casino is permeated with a lust for quick cash. “When we resided in Las Vegas several years ago,” she said, “I was amazed by the fact that some grocery stores had armed guards protecting their patrons from robbery or purse snatching in their parking lots.” She also recounts how her neighbors, casino employees, like many other casino employees, demanded that they be given an armed-guard escort to their car on pay day. Stewart now resides in Owensboro and is concerned about the talk of bringing a casino to that city.


The increased cost of maintaining the local police and judicial system is just one more slap in the faces of business owners who must pay higher taxes to keep up with law enforcement needs. When casinos come in, businesses pay. Increased crime is just another example.

And these guys should know!


“People will spend a tremendous amount of money in casinos, money that they would normally spend on buying a refrigerator or a new car. Local businesses will suffer because they lose customer dollars to the casinos.”

Donald Trump (Real estate tycoon and casino owner, interviewed by the Miami Herald)



“Get it straight…there is no reason on earth for any of you to expect for more than one second that just because there are people here [at casinos], they’re going to run into your store, or restaurant, or bar.”

Steve Wynn (Celebrated casino owner, speaking to small business leaders in Connecticut.)


#3. GOVERNMENT will be corrupted

Because its core values have changed, government will be changed forever.


Why would a state government, whose first priority is to protects its citizens and families, work to open them up to being fleeced by a notoriously shady industry? The answer always comes back to one thing: money. And since gambling interests handle billions of dollars, they also exercise extreme political influence as they pour their wealth into political campaigns and the hiring of expensive, well-connected lobbyists.


Lobbying

Nationally, there are two major lobbying arms of the gambling interests: the American Gaming Association (AGA) which represents 99% of the large commercial gaming operations, and the Native American tribes, most of whom lobby individually or through the National Indian Gaming Association.


These lobbyists successfully suppressed President Clinton’s attempt to impose a tax on casinos, an Illinois probe of lobbying corruption, a U. S. Treasury Department change in regulations governing reporting of large cash transactions, and they stalled attempts to end the tax deduction for casinos on complimentary goods and services given to customers, saving the casinos millions. Thus, the government was persuaded to protect an industry so powerful that in Mississippi, more money was spent in 1994 on gambling than was spent on all taxable retail sales.


[Sources: Dave Palermo, “So Where’s the Clout?” Las Vegas Journal–Review, Oct. 8, 1995 / William Safire, “Gambling’s Corrupting Influence”, New York Times, Sept. 15, 1995]


Lobbying in Kentucky

The gambling industry is one of the leaders in Kentucky regarding lobbying dollars spent. For the 2002 General Assembly (Fall of 2001 through March 2002), lottery vendor GTech spent $35,250, the Keeneland Association spent $65,483, Churchill Downs spent $131,679, and Ellis Park (owned by Churchill Downs) spent $33,683, for a total of $266,096.


But no one has been given access to the much greater figures spent for advertising during their campaign to influence legislation in the 2002 session. Some estimates suggest that it may have been over $1 million.


[Source: Legislative Ethics Commission website www.lrc.state.ky.us]


Political Contributions

Nationally, casino interests tend to donate to whichever party is in power,

and most likely to deliver what the casinos want. They have given slightly more

to the Democrats than the Republicans over the past decade. By giving about equally to both parties they assure themselves a seat at the table for every discussion that involves gambling.


From 1991 to 1998 the gambling interests gave $13.5 million to the national parties and candidates, about half what the tobacco industry donated. In 1998 they donated to 269 federal candidates, up from 146 in 1992.


[Sources: Brett Pulley, Gaming Critic’s Liken Their Campaign Contributions to Tobacco’s, The New York Times, printed in the Las Vegas Sun on March 28, 1998 / Tony Batt, Gaming Gifts Growing,” Donrey Washington Bureau, printed in The Las Vegas Review-Journal, July 28, 1999]


Contributions in Kentucky

In Kentucky, gambling interests had lobbying expenses and made contributions in excess of $1,148,288 in Kentucky from 1992 through 1997 to promote slots at the racetracks. This was the twelfth largest amount among the states.


No one knows what the contributions have totaled since that period because they have not been tallied, but it is true Churchill Downs embarrassed itself when it was learned that they contributed $15,500 to 25 state legislators the weekend before the 2002 General Assembly began. Though Churchill Downs was cleared of anything illegal, the state Legislative Ethics Commission said the track’s decision “fell well short of exercising good judgment.”


[Sources: “Political Contributions by the Gaming Industry,” The Wager, Sept. 30, 1997 / Janet Patton, “Churchill Sends Legislators $15,500,” Lexington Herald-Leader, Jan. 10, 2002 / Janet Patton, “Churchill Cleared on Campaign Donations,” Lexington Herald-Leader, Feb. 13, 2002]


The Payoff

The payoff to the big gambling interests is tax breaks, reduced regulation, direct federal and state largess, and expanded gambling. While Churchill Downs successfully lobbied for a $2 million tax break in the 2000 session with only $83,624 reportedly spent, their ultimate payoff would be the authorization to expand gambling now.


[Source: Janet Patton, “Churchill Sends Legislators $15,500,” Lexington Herald-Leader, Jan. 10, 2002]


Here we go again

The tragedy is that some legislators always “believe.”


Gambling interests make any promise necessary to get approval. In 1988 and 1989 lottery proponents promised $70 million “for education” the first year the Lottery was operating. Forty-one percent of Kentuckians believed that would solve our budget problems, which turned out to be a $400 million shortfall, over $200 million of it for education. (Series of articles by Hunt Helm for the Lexington Herald Leader in 1988 and 1989). In 1990, after the lottery started in 1989, Kentucky experienced the largest tax increase in history, and the Lottery still failed to generate $70 million for the state. (Jack Brammer, “Lottery Income Less Than Expected,” Lexington Herald-Leader, October 26, 1990)


Promising money for education sold the public, but it was only a half-truth. Kentuckians thought all lottery contributions to the state would go to education. In reality the legislature in 1990 put it in the general fund, where only 53% (at the time, even less now) went to education.

One of the most telling arguments for the Lottery was that money was going over the river to the Indiana and Illinois Lotteries. Estimates were that something near $125 million was being lost, which the state wanted to recapture. Now, instead of just losing $125 million a year to Indiana and Illinois, Kentuckians lose over $500 million a year to their own lottery to give the state a little over $125 million in receipts.


Now we are hearing the same song, second verse. The claims are that $287 million is going over the river to the casinos, and we need to bring that money back home. To generate the $200 million in taxes the state wants from casinos, Kentuckians will have to lose another $800 million dollars, in addition to the $500 million lost to the Lottery.


When will we learn?


How government can heal its own deficit

Here’s a clue: It’s something we’ve all just learned. . . and it doesn’t involve gambling.)

Most Kentuckians (and most Americans) just received a free course in economics over the past 10 years. What we all learned was that the way to generate surpluses for government budgets – local, state and federal – is to get the economic engine running smoothly.


Here’s what happens:


Once businessmen have the confidence that the economic climate is stable, they hire and begin raising output. These new jobs add to income taxes. As business begins to prosper, more new and higher-paying jobs are added. This adds even more income to be taxed.


At this point, more people are making more money and they begin to buy more of the products that are being produced. This adds additional sales tax to the government’s income and each level finds itself in a “surplus situation.”


Now, what government should not do at that time is overspend. (Just guess what government did.)


To get out of the budget deficit that it created for itself, government should focus first on re-creating the environment in which the economic engine can thrive. As the people prosper so will the government(s).


The one thing government SHOULD NOT DO is introduce gambling, which will prey on the wealth of the people and further slow down any hope of re-starting the engine.


The people must prosper first, then government.



The South Carolina governor’s story

He chose to do what was right for his state’s families, but gambling money thwarted his re-election.


This man actually lost his re-election bid for governor, but ultimately rid his state of casino gambling.


Former South Carolina Governor David Beasley knows the cost of sticking to his principles. In his 1998 re-election bid for governor, political analysts projected an easy victory for the wildly popular Beasley whose approval ratings were in the 90s. But Beasley didn’t anticipate the financial resources mustered by the gambling lobby that eventually helped to defeat him. While Beasley lost the race, he won the battle and saw gambling banished from the state.


Here is his story.


Kentucky Citizen: Would you tell us how you got started in politics?


Gov. David Beasley: I was a junior in college when I first ran for the state house in 1978. I told my mom one-day that I thought about running for the House, even though I never voted or wasn’t even registered to vote. Her response was, “Don’t get involved in that dirty, corrupt line of work.” I thought about her words and said to myself that if everybody had that attitude, all we’d have are no-good people in office.


Kentucky Citizen: You then served in the state house from 1979-1992 and quickly rose through the House leadership, becoming the youngest Majority Whip and youngest House Speaker Pro Tem in the United States. Then you served as governor from 1995-1999. Throughout your tenure in public service, were you always opposed to gambling?


Gov. David Beasley: I opposed it for quite some time, and was very vocal against it in the House. I began [rethinking issues in a different light] after I came to the Christian faith.

Even though I grew up in church I never gave Christianity much consideration. I was a cultural Christian. I tried to refute the Bible and Christianity for a year… but failed. Once I became committed to the faith, I asked, “Lord what do you want me to do? How does my faith relate to government, family?” Then I became concerned about other issues.


Kentucky Citizen: Is your opposition to gambling based on your Christian views?


Gov. David Beasley: No, opposition should not be based solely on a religious view. It needs to be looked at from economic, social and political perspectives. It will hurt businesses, corrupt government and it will victimize the poor. With gambling you see families suffer, moms leaving kids out in cars in the heat (while they gamble), children’s parents going into casinos and losing family wealth. You see felonies, arson and car theft increase related to gambling. It’s amazing the number of people who would come out of the woodwork after I gave a speech against gambling. They’d approach me afterward and share their stories.

Kentucky Citizen: In your re-election bid for a second term as South Carolina’s governor, your advisors told you to avoid the gambling issue until after the election. Why didn’t you listen to them?


Gov. David Beasley: I believe that you should not only always do what’s right, but to do it when it’s right to do it, and when you do it, do it in the right way. My re-election bid was assured and there was almost no way I could lose. But the gambling industry was fearful of what might happen to their industry.... and poured perhaps 15-20 million dollars of illegal contributions into my opponent’s campaign. The state was in shock after I lost. This may have [had something to do] with the South Carolina Supreme Court’s ban on [slots] across the whole state.


Kentucky Citizen: At that time, video poker was a $2.3 billion-a-year industry in South Carolina. Official estimates indicated that the gambling lobby legally donated at least $3 million (out of a total of $6 million) to your opponent’s campaign. Were you surprised at the power of the gambling lobby?


Gov. David Beasley: My poll numbers were in the 90s. My opponent was a political unknown. But the gambling industry poured in millions against me, more than what was recorded. This is a cash business. They would skim money off the top and give it to local political leaders.

Kentucky Citizen: Gambling expansion is a major issue in Kentucky’s gubernatorial race this year and legislative races next year. What is your advice to the candidates?


Gov. David Beasley: Kentucky will pay a horrid price if [video lottery terminals (VLTs)] are brought into the state. This is the crack cocaine of gambling. It will destroy the moral fiber and integrity of Kentucky government. Once they become entrenched, they’ll start doing business with legislators.


Once you legalize an industry that victimizes the poor what is your rationale for legalizing other vices: prostitution, drugs etc.? Why not regulate and tax it? Just look at Deadwood, South Dakota and Gulfport, Mississippi.


I would tell the candidates to look in their hearts for what’s truly good for the people of Kentucky, short-term and long-term. It’s bad policy for Kentucky. Don’t be a politician, be a statesman. Do what is right for families and children.


Editor’s note: Nine months after Gov. David Beasley left office, video lottery terminals (VLT’s) were banned by the South Carolina Supreme Court. Some observers say a backlash against the gambling industry and their undue influence on the election precipitated the court’s ruling. Others suggest that the gambling industry’s reckless behavior sowed the seeds for its own demise; skyrocketing bankruptcy, child abuse and neglect, and crime were left in its wake. After 16 years of a proliferation of gambling devices, South Carolina is now VLT free, not just because of its Supreme Court, but because the court of public opinion finally realized that the most important bottom line is not measured in dollars and cents, but in real lives.


#4. THE VULNERABLE are destroyed

With the family being the source for all the money that will flow to the gambling industry and to government, one would think that that would be enough burden for one segment of society to bear. Unfortunately, the cost for families just begins as the financial weight comes to bear. Money lost can be regained, but too often relationships, vocations, dignity, spirit and hope are lost. In short, the life is lost.


Here’s a brief inventory of how the vulnerable, those who are poor or poor in spirit, become ensnared in other tragedies after the lure of big money has run them aground.

Crime


Clearly, expanded gambling increases the tax burden for businesses, families and individuals because of the cost of the increased crime – crime prevention, crime prosecution and crime punishment. But what about the increased burden on the family of the perpetrator? Oftentimes it’s a breadwinner on his way to jail for embezzlement. How will the kids be fed? Will they be able to afford the education they need? How will the shame and humiliation impact their lives?


There’s another cost associated with gambling that is never calculated – the cost of re-defining what crime is. Are young women really helped when pro-gambling legislators legalize prostitution, as has Nevada’s legislature?


Divorce

The pressures of the lost finances cause enormous pressures on marriage. How can you calculate the cost of marital breakup? Futures shattered for both spouses with inestimable “collateral” cost to the kids. How can you measure the cost of a childhood without a mother or without a father?


Spouse/Child Abuse

If problems don’t lead to divorce, perhaps the family is “lucky” only to experience spouse abuse or child abuse. Or is it “better” to have an absentee father than one who has physically harmed your mother or yourself? How long will the scars of such abuse haunt the recipients? Will they, in turn, continue the cycle, as is so often the case?


Suicide

At this point hope has been lost at the VLT or crap table many times over. Most likely, friends and family have loaned money so many times they have given up. Then, the gambler gives up on life. The loss of one life. That loss has a devastating impact on others.


Seniors

The grandmothers and grandfathers, who have worked faithfully all their lives, but, now lonely in their later years, find “a place to go” with others at the casino. Life savings, retirements lost. This group is courted by the gambling industry so that rather than their life’s wealth being passed on to their families, it is vacuumed into the “winnings” of the industry. Who will pay the cost of their ensuing poverty in their twilight years?


Bankruptcy

Certainly, the gambling industry never tries to project the cost to government as welfare costs rise when more families file bankruptcy or come near financial ruin. The industry only leads with how much money the government will receive by expanding gambling.


A study by the Florida Budget Office in 1994 indicates that for every dollar the legalized gambling interests say is being contributed in taxes, it usually costs the taxpayer at least three dollars [from the collateral effects].


And though mathematicians can approximate the loss to businesses or to a local economy when the bankruptcy domino affect begins to take place, no one can describe the pain and humiliation when mothers and fathers can no longer provide for their children.


The true bottom line – the human cost bottom line – makes it very clear, expanding Kentucky’s gambling is a bad move.


Separate, but certainly not, equal

Focused marketing to the African-American community is another example of the gambling industry’s insensitive quest for dollars.


Nowhere are the destructive effects of gambling more prevalent than in minority, especially African-American, communities. Regardless of the methods used to determine the impact of gambling, nearly all studies “indicate a serous national problem,” according to the 1999 National Gambling Impact Study Commission (NGISC) Report.


The NGISC reported that, compared with other ethnic groups, African Americans are two to three times more likely to be problem gamblers, i.e., those individuals who are excessive in—but still able to control—their gambling. Additionally, African Americans experience pathological gambling—a recognized disorder of impulse control—at a rate three to six times higher than other groups. Studies by both the National Research Council and the National Opinion Research Center found that “pathological, problem, and at-risk gambling was proportionally higher among African Americans than other ethnic groups.”


According to Washington Post writers Ira Chinoy and Charles Babington, such a disparity—particularly noticeable in lottery play—has “provoked debate about whether states intentionally prey on black neighborhoods with major advertising campaigns and high concentrations of lottery sales agents.”


In a 1998 article concerning lottery play in Maryland, Virginia, and the District of Columbia, Chinoy and Babington revealed several occurrences suggesting that lottery promoters specifically targeted African-American communities. Their investigation showed the two states’ and the District’s $2.2 billion-a-year lotteries relied upon players “who, on average, have less education and lower incomes than the population as a whole…[and] include a much higher percentage of minorities.”


For example, in a 1995-96 lottery survey obtained by The Washington Post, 8 percent of all Virginia adults were responsible for 61 percent of Virginia Lottery sales. Of that small pool of so-called “heavy gamblers,” greater than 30 percent were African Americans, “roughly double the rates among all Virginia adults surveyed.”


In another study from the same year, research showed that although the percentage of African-American participation in the state lottery approximated the percentage of blacks among Virginia adults, African-American lottery play dramatically increased proportional to the level of lottery spending, i.e., blacks made up “a majority of the biggest spenders, [having spent]…the equivalent of $2,362 a year.” (emphasis added)


Similarly, a 1997 Maryland state lottery study revealed that lottery players were “more likely to be black,” with remarkable distinctions according to income, education, and race.


Likewise, in Washington, D.C., lottery sales figures showed that the city’s biggest lottery market lay in an area comprised of the highest concentration of minorities and those with low education and income levels.


Lottery officials typically discount claims that their business focuses disproportionately on those with the least resources. David Gale, executive director of the North American Association of State and Provincial Lotteries, said that lottery games are characterized by promoters as being played by “the average person out there.”


But what goes unpublicized, according to Chinoy and Babington, is that “most tickets are bought by a small core of heavy players…that…is skewed by race, income and education.”


Research clearly proves that some individuals are more prone to developing gambling problems than others. Such individuals are often least able to afford entrapment by the get-rich-quick mentality that is the foundation of the gambling industry. Among those whose resources are already limited—whose need is oftentimes the greatest—the gambling industry’s disparate promotion of false hopes within African-American communities suggest yet another form of discrimination.


Should government take the lead in luring its citizens down such a path?



Dr. Walter Jones

The Family Foundation


Expanded gambling expands crime

There is a tragic correlation of expanded gambling and an increase in crime. As you review these facts and figures, don’t just see statistics and numbers, “see” people. Victims with losses. Perpetrators that are lost. Lives that are ruined.


- In the three years after casinos opened in Atlantic City, New Jersey, it moved from 50th to 1st in per capita crimes among American cities. (Dr. Robert Goodman, speech at the National Coalition Against Legalized Gambling conference, Indianapolis, Indiana)

- Following the introduction of casinos in Atlantic City, the overall crime rate rose 400%. (USA Today, May 24, 1989)


- Las Vegas has legalized prostitution to go with gambling. It has more call girls listed in the phone book than lawyers. (George Magazine, March 1998)


- Mississippi is often cited as an example of what good things casinos can do for a state. But, take a close look at Gulfport in 1993 before casinos arrived and in 1994 after they did – one year!


1993 Jan-May 1994 Jan-May

Rape 9 27

Robbery 22 70

Assault 462 769

Burglary 185 379

Larceny 831 1849

Vehicle Theft 53 141

Arson 4 10

Car Accidents 937 1520

(Source: Citizens for Life and Liberty, Box 169, Chesterfield, MO 63006)


Divorce increases. At what cost?

Even more tragic is the destruction of families. How do you estimate the life-long cost of children being raised without their mothers or without their fathers?


- Harrison County, Mississippi, has averaged 500 more divorces per year since casinos arrived. (Mississippi State Health Department, Bureau of Public Health Statistics, “Vital Statistics, 1994”)


- A PricewaterhouseCoopers study paid for by the Kentucky governor’s office in December 1999 indicated that gambling expansion with VLTs only would increase divorces in Kentucky by 4 to 5%. (Al Cross and Tom Loftus, “Gambling Drain is $1 Billion, Study Says,” The Courier Journal, Dec. 16, 1999. More details are on p.157 of Final Report by PricewaterhouseCoopers, Dec. 13, 1999)


- “In a survey of nearly 400 Gamblers Anonymous members, 18 percent reported experiencing a gambling-related divorce. Another 10 percent said they were separated as a direct consequence of their gambling.” (National Gambling Impact Study Commission Final Report, June 1999, p. 7-27)


- In the National Opinion Research Center (NORC) survey “…53.5 percent of identified pathological gamblers reported having been divorced, versus 18.2 percent of non-gamblers.” (National Gambling Impact Study Commission Final Report, June 1999, p.7-26)


Suicide – the ultimate tragedy

Unlike with all other addictions, the beautiful and powerful human character trait of hope works against those ensnared. In all other addictions – alcohol, drugs, tobacco – hope brings the addict back for more help. . . another try. With gambling, hope drives him to the slots or table “one more time” . . . until many “one more time”s leave him without money, without friends. Simply, without. . .


- Suicides in cities with casino gambling are up to four times as high as comparably sized cities without gambling. (Dr. David Phillips, Professor of Sociology, University of California, San Diego, Associated Press Release on December 16, 1997)


- A clinical study in Manitoba found that clients who had both an alcohol or drug problem along with a gambling problem had considered suicide at a 70% rate, and 40% of those who had considered it had attempted it. (“Suicidal Ideation Among Clients With Gambling & Drug & Alcohol Problems) The Wager (Harvard Medical School), February 24, 1998, p.1)


- Nevada, known as the gambling capital of America, has a rate of 22.2 suicides per 100,000 people, nearly double the national average of 11.8. (Glen Puit, “Growth, Suicides Linked,” The Las Vegas Review-Journal, Friday, April 3, 1998)


- Prior to the nationwide expansion of gambling, a 1987 Gamblers Anonymous study of 162 compulsive gamblers indicated that 13% of them had attempted suicide. Conservative estimates of over 3 million compulsive gamblers would indicate that 390,000 have attempted suicide. (Steve Strunsky, “In Atlantic City, Suicide is Casino Gambling’s Unspoken Worry, The New York Times, p. 7)


- In 1999, Phillip Martinetti lost $87,999 in two days and was the first of three suicides in eight days in Atlantic City. The newspaper of that significant gambling city concluded, “Philip Martinetti was not the first big loser at the tables to take his life in Atlantic City. He won’t be the last. And when gambling proponents scoff at any link between gambling and suicide, as the American Gaming Association has done in the past, they do themselves and their cause a disservice.” (“Gambling and Suicide: Hard to Sugarcoat.” Atlantic City Press editorial, August 23, 1999)

© 2019 by The Family Trust Foundation of Kentucky