• TheGamblingScam

2006 - 2007 Articles

Updated: Nov 6, 2019

The battle for Kentucky’s future is set

Proponents attempt to convince citizens that casinos are good for Kentucky. Opponents say they’re just wrong.


The battle for Kentucky’s economic future is intensifying as the first month of the 2006 General Assembly session concludes and, now that the filing deadline has passed, all of the challengers to the state’s legislative incumbents have filed. Legislators are sizing up their opposition to their seat back home and are evaluating the major issue of casino gambling. The Kentucky Equine Education Project (KEEP) remains adamant that Kentucky needs casinos, but the groups that oppose casinos are equally committed.


An overview of KEEP’s plan includes eight casinos (located only at the eight horse racing tracks), an annual “handle” (the total amount of money gambled at the casinos) of $12.5 billion and $1.25 billion of “revenue” from those casinos, with 35 percent, or $437.5 million, of that revenue going to state government.


KEEP’s primary tactics in their effort have been a $5 million advertising campaign and a prolific initiative of offering portions of the revenue monies to groups and organizations who might support their plan.


The situation with lawmakers in Frankfort has not yet been kind to KEEP and other casino proponents. In order to pass the constitutional amendment needed to introduce casinos, there must be 60 votes in the House of Representatives and 23 votes in the Senate. To date, they have neither.


The result is that KEEP is shifting its plan of “selling” casinos to the public to simply demanding “Let the people decide.” Its advertising campaign has already begun changing the message in an attempt to stir up the state’s population, not for casinos, but for their “right” to decide.


That approach is an easier sell for them because it sounds very democratic to the citizenry. It is also attractive to fence-sitting legislators who might very easily be tempted to side-step the issue and not go on record for or against casinos, but instead vote for an amendment to “Let the people decide.”


Opponents to KEEP’s plan point out that their proposed new “handle” is one and half times the size of the state’s General Fund and more than 22 times the “handle” that the eight race tracks currently have combined. In other words, they’ll profit nicely and be able to have vast influence in Frankfort. Opponents also emphasize that Kentucky families, who are the source of all the $1.25 billion of revenue, cannot afford to lose that much money annually and that government and business already pay millions of dollars each year because of the complications of Kentucky’s current 35,000 pathological and 70,000 problem gamblers. They ask how many more troubled gamblers will be created by the huge multiplication of gambling.


In addition, opponents emphasize that duly-elected legislators have been sent to Frankfort to do the people’s business and that policy decisions should not be made by referenda, but rather by the will of the people through their delegated representatives.


“The people of Kentucky have not asked for casinos, only a small minority with a $5 million bank account have,” said Kent Ostrander, executive director of The Family Foundation. “Because that group is not currently making headway in the General Assembly, they want to roll the issue over to the people so they can attempt to sway them with another multi-million-dollar advertising campaign.”


Ostrander also pointed out that the pressure will rise for casino money as the session progresses and the budget crunch becomes a key factor. He emphasized that calls from citizens across the state to their legislators are the most effective weapon that can be used in this battle.



Their new battle cry: “Let the people decide.”

Pushing “Casinos are good for Kentucky” was just too difficult for them in Frankfort.

There has been a MAJOR shift in the messaging that casino proponents are conveying with their $5 million advertising campaign and the shift marks a serious setback in their efforts.


Initially, last Fall, proponents explained how important horses were for Kentucky and how horses “deserved” casinos to help them out. Then, just before Christmas they began to instruct Kentucky citizenry how important casinos in Kentucky would be to stop all the losses to Indiana’s riverboat gambling establishments. But just recently, upon realizing that they were not getting enough legislators in the state House and Senate to support their casino plan, they have shifted their message to “Let the people decide.”


There are two obvious reasons for the shift: 1) Casinos weren’t selling in Frankfort because many lawmakers already know the negative realities that come with major gambling expansion and casinos in particular; and 2) It’s easier to move a fence-sitting legislator to side-step the issue by convincing him to vote to “Let the people decide” than convince him that casinos are “good.”


The second point is particularly attractive for gambling expansionists. Putting the issue on the ballot as a constitutional amendment is a major victory for them because they know they can spend millions more dollars persuading citizens to vote “Yes for casinos” in the Fall election. This is partly because they know if the amendment passes they will recoup their expenditures with the billions of dollars they’ll receive over the years from the casinos.


How does one counter this new strategy?



There are too many concerns . . .

Sleight of hand is one of the hallmarks of the gambling trade. Helping someone believe what isn’t so, is another. Unfortunately, Kentucky citizens were hoodwinked with empty promises through the Kentucky lottery hawkers some 16 years ago . . . and the dream-sellers are offering the same snake oil now with casinos.


Don’t be fooled. Consider:


The right plan?

Never before in the history of the Commonwealth has $5 million been raised to pass one piece of legislation. KEEP leaders, who boast about their financial resources, also say their plan is “the right plan at the right time.”


Well, if it’s such a good plan and the time is so right, why do they need $5 million to convince people it’s so-o-o good?


Sucking more money

If Indiana is indeed “sucking” money from Kentucky people (and that’s a bad thing), why then does KEEP come up with a proposal that will suck at least FOUR TIMES the amount of money from Kentuckians (based on their revenue numbers)?


Perhaps it’s because KEEP gets to handle all the money . . . (and get 65 percent of it).


Truth in advertising

When KEEP spokesmen say they’re going to generate $1.25 billion in revenue each year, what they really mean is that they believe they can make citizens lose $1.25 billion every year. That approach and philosophy represents the very worst in our free enterprise system.

The magnitude of dollars lost


To emphasize the magnitude of that amount of money, you must consider the state’s median annual household income — $35,000 based on the last census. It will take 35,714 families making $35,000 a year to lose ALL THEY MAKE — every year — to equal the $1.25 billion in annual “revenue” the casino-proponents project.


Property taxes dodged

If Churchill Downs’ motives really are to help government through taxation, why did they so very carefully deed their property over to the City of Louisville for a 20-some year span and a one-dollar-per year lease? Could it be that they did not want to pay property taxes on their recent $121 million “improvements”?


Horse racing in Vegas?

There are no horse racing tracks in Las Vegas – the gambling capital of the world. What makes the Kentucky horse industry really believe that the big casino interests are not just using it as a Trojan Horse to establish casinos in Kentucky, only to trash it as a very inefficient source of gambling revenue in the years to come?


When you look at West Virginia (which added slots at the tracks to “help” their horse industry) what you find is that no one comes to the races any more – they just stay inside at the “racino.” How long will it take the managers to conclude that racing is just an exorbitant and needless added expense?


Benevolence or self-service?

Some leaders of Kentucky’s horse industry claim their motive is to help state government with its revenue problems, yet the industry lobbies every year for new tax breaks for itself and new state revenues to be set aside for its exclusive use.


Do not begrudge this industry (or any industry) attempting to improve its situation through carefully considered legislation.


But, also don’t be confused that their casino plan is designed with the purpose of helping government. Make no mistake . . . it was designed to help those at the very top of the horse industry. They’re simply selling it as though they cared about government.


Prosperity, not poverty

The answer to Kentucky’s revenue problems is not to rip off more money from the state’s citizens through casinos, but rather to help them prosper. As they prosper, they can buy more things (paying more sales tax to the state). As more things are demanded, business hires more workers (who pay more income tax to the state). Then, as more workers are hired, more supervisors and managers are needed, hired and trained (making even more money and paying even more income tax to the state.)


The principle in our system is that government should prosper only as the people prosper — not at the expense of the people.


Entertainment?

Casino gambling is not “entertainment.” It is a form (granted, a poor form) of investing. Any time you put money in to some arrangement in order to get more money out, you are investing.


Even stock market investors – who invest for fun or entertainment – are still investing.


Why aren’t all the rules and regulations set up to protect stock market investors set up to regulate gambling?


Should casinos collect taxes?

One aspect of the casino proposal that gets little attention is that government will receive only 35 percent of the revenue, with the casinos “stewarding” the other 65 percent — nearly a 2 to 1 differential. By comparison, with the current tax structure, the administration receives ALL — 100 percent — of the money it levies and does not have to share with any other industry. Why should government “hire” the dubious casino industry to collect taxes for it? That’s an extremely inefficient way to generate money for government.


The best way is to call and leave a message for your legislators so they understand that you are against ANY expansion of gambling and against opening the door to expanded gambling through a constitutional amendment.


By conveying these points, your legislators will know, regardless of how many different bills are presented or how any of them are modified, that you are against expansion of any kind – including casinos.



Four Testimonies: Broken hearts, broken lives

Kentucky currently has 35,000 pathological gamblers. These are gamblers who have lost control and cannot stop or help themselves.


In addition, there are another 70,000 problem gamblers – gamblers who can stop but who have generated serious problems for themselves and their families because of excessive gambling.


KEEP’s casino plan offers over 22 times as much gambling – from the current $546 million at the eight race tracks to $12.5 billion at the proposed race track casinos.


There is no way to accurately predict the new levels of pathological and problem gamblers – clearly it can’t be 22 times as great. But at the same time, it will not simply double or triple.


Studies show that the annual cost to state and business per pathological gambler is $10,330 and per problem gambler is $2,945. With Kentucky’s current numbers, that comes to $567.7 million.


KEEP’s plan is only offering $437.5 million to state government. That’s $130 million less than current levels of need. Their proposal does not take into account the new troubled gamblers added to the list.


But the assessment of the casino proposal should not be primarily about dollars, but rather people. How can dollars fix the collateral damage to the children, spouses, friends and neighbors of those who become ensnared and lose everything?


Unfortunately, the casino proponents seem only to see dollars. They don’t see people.


I. I see casinos as tearing families apart.”

Twelve years after learning of her husband’s compulsion, considering divorce and working through the healing of harms, Diana Walters is strongly against expanding casino gambling in the state.


“I certainly, absolutely, without a doubt, see casinos as tearing families apart,” Diana said. “Not only do they take away time with your family, but they take money away from your family. And I believe they take money away from your community, because money that families need will be spent at casinos,” she said.


Diana said she thanks God for the ongoing restoration of her husband, who began his recovery from his gambling addiction in October 1993.


“Before, even though he may have been present in body, he wasn’t present in mind,” Diana said. “It’s a disease of being dishonest. . . . As a closet gambler, he wasn’t often where he said he was.”


“How could I have not known?”

Diana’s husband had been hooked on different forms of gambling since age 16. He bet on horse races and sporting events, and sometimes attended casinos in neighboring states.

Diana says her husband was never abusive toward her or their two children, yet the hurt was still there. He would often secretly take out loans from the bank or other sources, and even diverted funds from their family business.


The final breaking point arrived when her husband’s employer caught him stealing and Diana discovered her husband had disappeared.


“The day he checked himself into the hospital, I was clueless,” she said. “I got a call from the hospital to say he was there, and I said, ‘Are you sure?’


“You sort of feel stupid, that you didn’t know. How could I have not known that?”


After years of her husband’s recovery programs and mentoring relationships, Diana’s marriage and family have survived. “We don’t have this addiction taking up all our time and emotional energy,” she said.


Time and healing have changed the way Diana’s husband can view sporting events and racetracks. Like many gambling addicts, things that are harmless for most people may still cause him some difficulty. “He does watch sports now, but he did not for years,” Diana said.


Good people, serious problems

Diana contends that gambling preys on families, tears people apart and has a negative effect on children. “I never thought that my kids had a bad life growing up,” Diana said. “But there was always the undercurrent . . . that something didn’t feel right.”


Diana warns that nobody is immune from the ills of the gambling industry. “It doesn’t matter who you are or where you’ve come from,” she said. “People have the mindset that gamblers are lowlifes, but that’s not the case at all. I see people all the time, and they’re wonderful people — they just have a serious problem.”


She wants to see Kentucky be a family-oriented state — a state that works to promote the good will and well-being of the family, not a state that preys on the pocketbooks of families.


“Statistics show that communities end up being poorer because of it,” Diana said. “They say that they’re doing it for schools and for the kids, but instead what they’re doing is taking from families and taking from children.”


II. “. . . Dad has done something terribly wrong and I must go now.”

One spring morning Sandra Criswell awoke to find her husband Whit missing. In his place by her side was a suicide note:

“Sandra, my dear wife,

Thank you for loving me and trusting me all these years, but I must go now.

You’ll be better off without me. There is no hope. I have committed these

illegal acts at work and I’m finished. I have lied and shamed you, my family,

my friends, and my God. Tell Chad and Whitney that they were God’s gift

to me, smiling and crying, good and bad, but Dad has done something

terribly wrong and I must go now.

Take care of Mommy.

I love you. I love you. I love you.”


Sandra crawled to the phone and called the police and a pastor.


Whit Criswell started gambling when he was about 12, betting on golf and in card games and in pool rooms. Eventually, he met a bookmaker and started betting on sports throughout college and into his career, first as a high school coach and later as a bank employee.


“I would win most of the time,” Criswell said. “I thought, ‘Man, I could buy our kids a car, or a college education and not have to work and save.’”


For a while he raked in the money, stashing it around the house in shoeboxes, but it wasn’t long before his luck turned. Criswell found himself lying to his wife, taking out a second mortgage on his house and stealing from his kids’ college funds in order to pay his gambling debts.


By this time, he was working at a bank, and an easier solution presented itself. He forged a name and withdrew $7000. He promptly gambled again and won the money back and repaid the “loan.” But “borrowing” from the bank became a habit and he was tortured by thoughts of being found out, so one night another solution presented itself. He penned a note and left the house with a loaded gun.


“For eight hours I drove around. All night long the battle raged. Should I do it in front of the funeral home or on a farm somewhere?” he said. “I was a sweaty wreck. I would put the gun in my mouth and hold it up to my head. I’d fire once in the air to get up my nerve and then aim at my head, but I just couldn’t do it.”


Finally, he gave up and came home where Sandra and his children met him with open arms, and a pastor Criswell had never met, Wayne Smith of Southland Christian Church, prayed with him. “I felt a ton of weight lifted off,” Criswell said.

In the two years that followed, Criswell was tried and convicted of embezzlement and served time in prison. Finding it hard to face people or get a job in his hometown of Mt. Sterling, Criswell and his family moved to Lexington where he did various volunteer jobs at Southland Christian.


Today, Criswell is the pastor of Lexington’s Northeast Christian Church, after having served on the staff of Southland for several years. At his job as an associate pastor he coordinated support groups, including Gamblers Anonymous.


As Kentucky considers whether to expand gambling, Criswell counters the argument that Kentucky already allows gambling at horse tracks, so a little expansion won’t matter. “You don’t tame a tiger by feeding its appetite,” he said.


Although he has strong words for gambling, he has a soft spot for addicted gamblers: “You can’t go back and make a brand new start, but you can start today and make a brand new ending.”


III. “I felt like a single parent”

Pamela Slone*, a southern Kentucky resident, never would have imagined that her husband could develop a gambling addiction.


Victor Slone was a lover of statistics who was certain he could defeat the odds. “He would never quit,” Pamela said. “He would always hold out for the big one that was going to bring in all the money.”


That futile hope led to thousands of dollars of credit card debt, time lost with his wife and four children, and stress on his family and on himself.


Now, Victor can’t get that back – not with recovery programs or anything else. A heart attack claimed his life, two years after his addiction began.


‘I never got a chance to ask him’

Pamela describes her husband’s gambling addiction as something that began as a hobby – another avenue of income. “It kind of progressed,” Pamela said of Victor’s computer wagering. “Gradually I noticed he had been spending more and more time [gambling].”


After several months the addiction began to take control of Victor’s life.


“He would come home from work, and if I didn’t have dinner ready, he’d go down and he’d study his picks from the night before and place his bets.”


Pamela attempted to discuss with her husband his new hobby by asking him how he was doing or how much money he had made. But Victor was losing much more than he was making.


“It just consumed his time and his thoughts,” she said. “But he just felt like he could get it down to a science. He was a very intelligent man, a calculating mind, very statistical. … He would spend hours and hours and hours studying statistics.


“And he kept it a secret from everyone. I couldn’t go to a pastor or a close friend. He would have been just furious with me if I told people what he was doing.


“I felt like a single parent,” Pamela said.

The Slones had four children — toward whom Victor would show even more irritation. In his last years, Pamela said, he spent very little time with her or the children.


Then she found the statement from their life insurance company, showing he’d borrowed $5000 against their policy. Pamela was stunned, but unsure how to deal with the problem. Any questioning of anything he did would bring his anger toward her in return.


“I sat on that for about a week, just praying. What is going to happen here?” Pamela wondered, thinking that her husband would become infuriated if she confronted him.


“But I never got a chance to ask him.”

Victor collapsed one night of a heart attack.


Remaining debts

The consequences of Victor’s addiction remained.


Eventually several of their credit card bills arrived, showing not only a few car repairs and other necessary expenses, but over $25,000 in borrowed money for unknown purposes — clearly gambling-related, according to Pamela.


Much of Victor’s life insurance money went to cancel those debts.


Pamela sometimes battles with remnant anger towards Victor, especially for the lost time he could have spent with her and the children before his death. “But there’s really no way to resolve it,” she said. “You just have to move on in life.”


Though Victor’s addiction began with Internet gambling, Pamela cannot imagine what people could undergo if more expansion was allowed, particularly casinos.


“[People] think about gambling in terms of local businesses and whether or not that money is going to help them or are they not going to get that money,” she said. “But there are emotional factors that you just can’t plot on a graph: wasted time and shattered trust.”


If casinos come to Kentucky, Pamela suggests that even more individuals and families will suffer.


“There are going to be marriages torn. I see this as an addiction just the same as alcoholism,” she said. “Yes, it was my husband’s addiction, but it affected the whole family.”

* Names changed for privacy


IV. Trusted employee rocks small business

Even good people can go wrong when confronted with gambling debts and gambling addiction.


Tom Riesbeck has been in the trade since 1961, starting his own plumbing firm in Lexington in 1977. “The business has a good name and a good clientele,” Tom said, “so things were going pretty well.”


At least he thought so — until an IRS agent showed up at his door on a Wednesday morning in February and said that Tom owed the government about $50,000.


“He was straight and to the point that he wanted it,” Tom said. “I told him there could be no way I owed that money. . . . I figured that they had made a mistake somehow.”


But the mistake was not the IRS’s. That following Sunday, Tom’s bookkeeper, “Becky,” arrived at his house with a tearful confession: she had been writing business checks to herself for eight years, to feed her gambling problem. And to cover some of it, she had failed to pay the business’ taxes.


Shattered ‘family’

The revelation was crushing to Tom. While re-telling the account, his voice wavered.


“She’d been with us for 16 years,” he said. “She was a friend of mine and a friend of my wife’s. . . . We would basically consider her our daughter.


Becky had cried on Tom’s shoulder for a long time after she told him. She even worked a few days after her confession.


But, of course, her position could not last long. Tom had to find a new bookkeeper.


“It just devastates you. There’s no other explanation for it. Your emotions run the gamut from anger to discouragement. You’re hurt.”


In retrospect, her confession explained the increased stress Tom had been experiencing in recent years trying to keep his business afloat with all the demands of the everyday business world. With money leaving through the back door of the business, Tom had redoubled his efforts and increased his hours only to be rewarded with a heart attack two years ago, followed by open-heart surgery.


Starting small

Teresa Slone, Tom’s accounts receivables manager and Becky’s best friend, had known her for more than 30 years and knew of her small gambling ventures with her boyfriend. But both Teresa and Tom thought small was all they were.


“It started with bingo,” Teresa said. “And then when the boats came [in Indiana], they started going to the boat every night, apparently — unbeknownst to me. She hid it well.


“And of course, we trusted her and we believed in her.”


Now they’ve spent more than half a year trying to determine exactly how much Becky stole from his business. The total could be as high as $750,000.


All of it is gone forever – lost to bingo halls and the riverboat casinos.


“She obviously felt she could get away with it,” Tom said. “To do it for eight years and come in every day and just make conversation. . . . It was just easy money.”


But it did not take long for her easy-money “entertainment” to become an addiction.


Truth and consequences

“She’ll go to prison,” Teresa said, her eyes moist. “I don’t want to see her in jail because I can’t see her surviving there — but I can’t believe she’s done this either.”


On Easter weekend, two months after learning of her embezzlement, Tom helped Becky enter a rehab hospital. Afflicted with severe depression, her thoughts had turned suicidal.


“I agonized for four days before I called her parents. Her life had been going well,” Tom said. “Now what does she have to look forward to?”


All the employees were devastated — they felt betrayed because they were all working to make the firm succeed. But the business will move on, Teresa said. She wants to help Tom rebuild the business to be even stronger. But she said her wound will never fully heal. She herself has entered counseling.


Most at fault, Tom said, is the great lie: the lie that you can get something for nothing. “That’s where the problem is,” he said.


And the same deception afflicts those who buy dozens of lottery tickets, hoping to hit it big, he said.


As a businessman, even now working to rebuild what was lost through a close employee’s gambling addiction, that viewpoint couldn’t be further from his own, he said. “An honest day’s work for an honest day’s pay is what [I] desire.”


“I see that there are two victims – Becky and myself,” he concludes. “And I forgive her. The unfortunate thing is that all the casino folks talk about is ‘the revenue they raise.’”



Kentucky’s horse industry used to work with us to keep casinos out of KY.

They asked The Family Foundation to help keep casinos out of Kentucky in 1994.


For years the race horse industry in Kentucky fought against the expansion of gambling and, in particular, the introduction of casinos into our state. The Family Foundation worked side-by-side with them. In the last several years, that alliance has been broken, with the horse industry radically changing its position to one of wanting casinos and wanting them at their tracks and their tracks alone.


Below are excerpts from an opinion piece that former Gov. Brereton Jones (and current Chairman of KEEP’s board) wrote for the Lexington Herald-Leader which was printed on June 8, 1999. It is not printed here in its entirety. But rest assured that the essence of Gov. Jones’ points is faithfully copied.


Also, to be clear, Gov. Jones is and should be regarded as a respected Kentuckian. Further, it must be acknowledged that all citizens have the prerogative to change their minds on any issue.


The point here is that the horse industry once absolutely opposed casinos and opposed them logically and eloquently. The Family Foundation agrees with Gov. Jones’ 1999 piece and does not recognize any circumstances that have changed to warrant the re-evaluation of our position. In fact, as the casino movement continues to move state-by-state with a domino effect, The Foundation sees all the more reason to oppose their expansion — “The House always wins” (means people must always lose).


Now “The House” wants always to win in the battle for states. This must stop. And it can stop here by the efforts of Kentucky citizens.


Lexington Herald-Leader Tuesday, June 8, 1999 (excerpts)

“Let’s get straight to the point. Casino gambling in Kentucky is a bad idea. The very thought of our own government promoting the deception of slot machines and roulette wheels is a sad commentary.

These casino ‘games’ are programmed so that the house cannot lose. Regardless of how much money you have, you are guaranteed to lose it all if you play long enough. This is absolute. We already have an abundance of gambling opportunities with the Lottery, bingo and horse racing. . .


“If we legalize casinos, a few managers, lobbyists and politicians will make a lot of money, and tens of thousands of Kentuckians will lose a lot of money. We are told, however, that the state will make $200 million to $300 million and that this can be used to do wonderful things for all of us. You name it and the casino money will pay for it.

Does this sound familiar? I remember a candidate for governor who was proposing a state lottery. His ads said, ‘What do you want—higher taxes or a lottery?’ Kentucky voted for the lottery. We also got the highest tax increase in our state’s history.

We justifiably frown on any person in our society who profits by deceiving others. We have an abundance of laws on the books to protect us from the deception of our fellow citizens.

How then, in the name of decency and common sense, can we justify proposing that our own government should enter into the business of promoting games of chance, where our own citizens have no chance for long-term success? . . .


“Please call your legislators today and ask them to vote no on casino gambling. Tell them to dispose of this issue during the first half of the next session of the General Assembly so that they will be free to do the important business of the people before they adjourn.

They must not allow this issue to monopolize their time. We can do better.”



With all the evidence, can we trust them?

This Kentucky businessman concludes that this IS NOT the direction that Kentucky should go.


My interest in the gambling issue came about in an unusual way. A few years ago, I was asked to speak as a businessman to the fifth-grade class at Highland Elementary in rural, middle-class Lincoln County. I talked to them about the qualities we look for in hiring people to work at our banks.


After the speech, the children asked questions. Over half the questions dealt with how to win the Lottery and what to do with the money after winning. It was evident the Lottery was a common subject at home. There were no questions about hard work, saving money and furthering education. If fifth graders from Highland were obsessed with the Lottery, then it appeared to me Kentucky’s future was in jeopardy.


The Lottery is a sad reality. But now, we are bombarded with ads about expanding gambling. This is a wake-up call.


Will the casino crowd do the right thing?

The casino crowd says they will get $800 million, they will give the state $400 million, but Kentuckians must lose $1.2 billion. Not good math. That is $1.2 billion less spent at your furniture stores, restaurants, florists, hardware stores, and grocery stores.


When Atlantic City invited in the casinos, crime went up 380 percent. There was a 20 percent reduction in population and 2,100 businesses closed. Forty percent of those in jail were from outside the area. Importing crooks does not make good economic or common sense.


Can we trust the casino crowd to do the right thing?

According to the National Coalition Against Legalized Gambling, Nevada, casino capital of the world, is the most dangerous of the 50 states in which to live and ranks first among the states in: Suicides; Divorce; Prostitution; Women killed by men; and Gambling addictions.


It ranks third in the nation in: High school dropouts; Poor mental health; and Alcohol related deaths.


And it ranks fourth in: Bankruptcies; and Deaths from firearms.


Nevada is also 47th in voter participation.


Let’s let “What happens in Nevada stay in Nevada.”


Do you think we can trust the casino crowd to do the right thing?


For every dollar Kentucky gets from the casino crowd, we will have to spend three dollars to fix the social problems that go with gambling. This doesn’t account for destroyed lives and homes.


Mahatma Ghandi said, “In a way, gambling is worse than the plague or a quake, for it destroys the soul within us. A person without a soul is a burden upon the earth.”


Are you sure we can trust the casino crowd to do the right thing?

It is bad public policy for the state to endorse gambling and actually be a partner in the revenue that results. This tells our children that gambling is okay.


Warren Buffet, the most successful investor of our time, says “It is a terrible way to raise money for governments. It is a tax on ignorance. I don’t like the idea of government depending on portions of its revenue by hoodwinking its citizens.”


Don’t be fooled. Everyone involved in expanded gambling has a HUGE payoff coming if they can deceive us into thinking this is good for Kentucky.


Have you seen their ads? Talk about putting lipstick on a pig.


The Rotarians have a “Four-Way Test” for people to use in their business and professional lives. It says, “Of the things we say or do: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned?”


Expanded gambling fails the Four-Way Test on all points. It’s just wrong!


Let’s not gamble with our good life in Kentucky. Let’s Say No To Casinos.



Jess Correll

Chairman, First Southern National Bank



The Casino Campaign: Major Deception #1


On Sept. 16, 2005, the Kentucky Equine Education Project (KEEP) announced its push for their casino gambling takeover that they’ve been planning and building for more than a year. Unfortunately, the fatal flaw in KEEP’s proposal is the goal itself: a huge multiplication of gambling in Kentucky. And that makes KEEP nothing more than a Trojan horse filled with “one-armed bandits” that will steal the citizenry blind.


Without doubt, horses are an important part of Kentucky’s culture and the unity of the various associations within the horse industry under KEEP’s banner is a noteworthy success. But they are talking apples and proffering oranges – the fact that Kentuckians like horses and respect the horse industry does not mean they want to embrace the Big Gambling’s casinos that are programmed to separate people from their money as efficiently as possible.


Contrary to what’s conveyed, the horse industry prospered in many ways in 2005: record wagering at the Kentucky Derby, record sales for Keeneland and Fasig-Tipton, and Fall meets at Churchill had increased handles and Keeneland had its second highest attendance ever.


When they announced their casino plan, they emphatically stated that they stood for three goals uncompromisingly: 1) To help Kentucky, 2) No proliferation of gambling, and 3) To help the horse industry.


The first and third goals are obviously violated by the casino takeover: all of Kentucky will be hurt by the massive rip-off of our families and the casino industry has no interest in the costly process of buying horses, breeding horses, training horses, jockeys, race tracks, etc. They know they can extract money quickly and cheaply through their slots and games. Evidence? Las Vegas does not have one race track.


But “No proliferation” is the deception. Using the horse racing industry’s own numbers, they had a “handle” (monies wagered) of $546 million last year. Their proposal, using their numbers, plans a “handle” of $12.5 billion each year. That’s 22 times the current handle.


No proliferation? The plan is a Trojan Horse.


The Casino Campaign: Major Deception #2

Sleight of hand is an expression that describes the deceptive manipulation of a fast-talking and quick-handed “magician” that can fool your sensibilities. It also can apply to policy campaigns — verbiage and advertisements — that attempt to get you to believe something you know isn’t true.


KEEP began with its motto “Horses Work for Kentucky.” There’s nothing wrong with that.

The horse industry is a part of the Kentucky economy just as is the automobile industry, the farming community, the coal industry, etc. So, they begin with what is true.


But . . . the way they spin their message begins to convey a feeling that the horse industry is so important and is in such need that anyone who has agreed to their first motto now begins to embrace in their heart: “Horses work for Casinos.” Yes, the horse industry is the vehicle that the casino industry is using to open the door for itself into Kentucky — and change our constitution as they see fit.


But the next step is even worse. NOW, albeit very subtly, KEEP’s underlying message is how good casinos are for Kentucky. Their motto, then, has very practically been changed to “Casinos work of Kentucky.” Now that’s a lie. But they are oh so good at it!


It’s bait and switch. “Love horses with us”. . . (and we’ll give you casinos).


If they keep this up, pretty soon we’ll all be tempted to change our state slogan to “Unbridled Gambling.” Well . . . that’s just a little too far.


Let’s just get back to the basics: Let’s do what’s right — let horses be horses and let casinos stay in Vegas.


KEEP’s “Robin Hood in reverse” plan

The green tights aren’t the only things that are repugnant about this hero’s makeover.


When I was young, I read a lot of stories. One of them was about Robin Hood, who stole from the rich and gave to the poor. I know you’re not supposed to steal even from a rich person, but you had to like the guy. The green tights were a little much, and his methods left something to be desired, but he meant well.


Robin Hood had a good image, one he didn’t have to spend a lot of advertising money to create. He was on the right side, and everyone knew it.


I imagine, however, that Robin Hood would have been a whole lot less popular if, rather than stealing from the rich and giving to the poor, he had stolen from the poor and given to the rich. If that had been the case, he would definitely have had to hire expensive media consultants and take out pricey newspaper and television ads putting a good spin on his exploits.


That is the situation in which proponents of expanded gambling in Kentucky find themselves. An organization calling itself KEEP (Kentucky Equine Education Project) is trying to convince Kentuckians that the horse industry is in trouble, and needs what amounts to a financial bailout by allowing casinos at horse tracks.

Does the horse industry really need to be bailed out? If you’re ever tempted to think so, just ask yourself these questions:


If the horse industry is hurting, why was Churchill Downs recently described in a Lexington Herald-Leader article as “the most successful racing company in the United States”?


If the horse industry is hurting, then how do you explain that the 2005 Kentucky Derby drew the second largest crowd in the history of the race with 156,435 in attendance and shattered the betting record with $155,133,631 wagered?


If the horse industry is hurting, how do you explain the fact that Keeneland’s January sales event set a new record high of $72,329,100 in gross sales, and that attendance at Keeneland’s fall meet (232,429) was the second highest ever recorded?


If the horse industry is hurting, here’s a great cost-cutting measure that KEEP can begin to implement immediately: Take the $5 million it is now spending on newspaper, radio, and television ads trying to convince Kentuckians that it is in trouble and give it to its neediest members.


And by the way, where did a troubled industry find $5 million to run an expensive media campaign in the first place? Isn’t it funny that even when you’re strapped for cash you still find a spare $5 million laying around to throw into your advertising budget? Oh, and have I mentioned the tens of thousands of dollars they have spent trying to curry favor with legislators?


If this is how the poor live, sign me up.


Let’s face it. When you think about poverty in Kentucky, the horse industry is not usually the first thing that comes to mind.


The horse industry is not in trouble. On the contrary, its remarkable success is something of which, as Kentuckians, we can all be proud. KEEP officials need to be shooed off the public airwaves and told to drop the poverty act. They need to be told that it’s not only deceptive, but unseemly for a reputable industry to act this way.


KEEP’s casino plan is also bad public policy because the implications are not equitable for all Kentuckians.

Who will suffer the most when it comes to losing money at the slot machines they’re planning to pollute the state with? Well, we know who buys lottery tickets. Anyone who makes the mistake of not paying for their gas at the pump has waited in line behind people buying their lottery tickets. More often than not, they are those who can least afford to throw away their money.

The Lottery has built its success on the backs of people who really can’t afford it. And now the Lottery money is funding the KEES scholarships, which, in all likelihood, are going to the children of families from middle and upper-middle class families.


KEEP’s plan to steal more from the poor and give more to the rich is the next step in the implementation of this Robin Hood principle in reverse.


Kentucky is one of the nation’s poorer states. It doesn’t need policies that help make its poor even poorer.



Martin Cothran

The Family Foundation



Setting our course or gambling with our future?

Kentucky’s government should empower its citizens, not exploit them.


What kind of economy and business environment do we most desire in Kentucky? What would be the characteristics of the ideal Kentucky, and what would be required to sustain it indefinitely?


The answers could provide a guide for public policy decisions, a desired state that influences our decision-making in elections and issues including taxation, public education, transportation, environmental protection, and economic development. With all 100 state House of Representative seats and half the State Senate up for election, and a gubernatorial election next year, there is no better time to set our course.


Kentucky has a long history of settling for what we can get, rather than deliberatively setting our course and seeking leaders with the courage to keep us on it. More often than not, state and local leaders act like they’re drowning in limitations: joblessness, low levels of workforce preparedness, low achieving public education systems, public revenue needs, and high constituent expectations, to name a few. While these issues must be constructively addressed, our limitations should never be the guiding principles for attaining what we most desire.


Several contrasting events of 2006 have given us much to ponder relative to our state’s economic future. UPS announced a $1 billion investment to expand their already gigantic operation at Louisville International Airport. Toyota celebrated their 20th year in central Kentucky. The coal mining method known as mountaintop removal assumed high-priority status for many citizens, and casino gambling proponents failed to gain approval from the Kentucky General Assembly.


These events beg the question: do we want to facilitate an economic environment that cultivates and nurtures “empowering” businesses, firms that make substantial investments in their communities, provide strong wage and benefits packages to employees, create opportunities for other businesses to share in their prosperity, produce highly respected goods and services, and provide sustainable governmental revenue? Or will we again surrender to our unfortunate history of promoting “extractive” businesses, groups that simply take assets out of our state, damage the prospects of neighboring businesses, provide no tangible goods and services, and end up placing more of a burden on public treasuries than they contribute?


UPS and Toyota are strong examples of empowering corporate citizens. Both make substantial investments in their operations and communities, provide thousands of good jobs, create numerous opportunities for other businesses, provide globally revered goods and services, and make substantial contributions to government revenues. Agriculture, including the horse industry, has many similar economic characteristics.


On the other hand, we have some of the state’s leading politicians and some horse industry participants who want to saddle Kentucky with an extractive business, championing expanded gambling and casinos as a prerequisite for future prosperity. They want to create opportunities for extractive businesses that take capital out of our state, cultivate addiction, negatively affect other businesses, and cost government far more than they will ever contribute in public revenue.


Yet many horse people reject the casino agenda. They recognize that as the standard bearer of many traditions that Kentuckians most cherish, the horse industry is obliged to consider the cost of these projected gains. Among the costs to be considered are the required losses of others, the permanent change to Kentucky’s landscape and culture, not to mention the long-term future of Kentucky’s equine establishment. The solutions to what ails us will never be found in economic activity that depends on enormous losses by many for enormous gains of a few.


So what kind of business environment do we want? Is our greatest desire to support empowering businesses, or tolerate extractive businesses? Do we optimize our quality of life with employers who pay strong wages, provide good benefits, produce high-quality goods and services, invest in their operations and communities, and provide sustainable tax revenues? Or do we try to gamble our way to prosperity by inviting casinos, the most predatory, extractive form of business known today?


We don’t have to settle for anything less than our most desired state. The decisions we make over the next 14 months – as citizens, as business persons and as community leaders – will be key in setting our course, and are a measure of our commitment to the optimum Commonwealth.



John-Mark Hack

Say No To Casinos


John-Mark Hack is a fifth-generation Kentuckian, a graduate of Transylvania University (BA), and the University of Kentucky (MA), a Returned Peace Corps Volunteer (Costa Rica 92-94), former CEO of the Kentucky Agricultural Development Fund, former President of the Kentucky Tobacco Settlement Trust Corporation and former Executive Director of the Governor’s Office of Agricultural Policy in the Patton Administration (1997 – 2003). He now serves as President of Global Development Partners, is pursuing his PhD at UK, and serves as Chairman of Say No To Casinos.



Politicians look for easy money, but . . .

. . . expanding gambling and bringing in casinos ends up costing citizens far more than conventional taxes.


In the United States, the ultimate arbiter of most social issues that require expertise, wisdom and judgment, should be our elected government. Many local and state government officials are sincerely interested in facilitating economic development within their communities and states. They are passionate in their efforts to do what is best for their constituents, including finding ways to reduce the burdens of government spending that frequently strain public budgets. In the recent past, many members of this group have perceived the granting of a casino license as a painless way to raise public revenue without raising taxes.


Casino promoters are eager to exploit this perspective, offering tax dollars in exchange for little more than a license to operate. Once government officials engage in this partnership, however, their focus becomes exclusively on taxes collected rather than functioning as the impartial observer and benevolent regulator that considers the costs and benefits to everyone, making policy that reflects the greatest good for the greatest number.


As Professor John Kindt of the University of Illinois observed, “Governments used to be protectors that provided police and fire. Now they’re predators, advertising to and preying upon the public.”


As the gambling industry has lavished attention on legislators and public officials across the country, a subset of them have compromised their integrity and betrayed their public loyalties and duties. In fact, two of the three historic waves of gambling in the United States have concluded in the wake of government corruption and public disgust with gambling industry influence.


In the colonial era, state lotteries produced corrupted officials and resulted in a nationwide prohibition of gambling at the turn of the 19th century that lasted until the Civil War. During Reconstruction, officials turned to gambling taxes to help finance the rebuilding of war-torn areas. Government corruption by the gambling industry produced another era of prohibition that lasted roughly from the 1890’s until the early 1930’s, when the current wave of gambling expansion began with the legalization of casinos in Nevada.


In addition to corrupted government officials, gambling-based tax revenue brings other exorbitant costs to citizens. Economist Earl Grinols, in his book Gambling in America: Costs and Benefits, suggests that a gambling-based tax is far worse than a conventional tax collecting identical revenue. He notes that with every tax, there are direct social costs related to collection.


Conventional taxes carry a cost of $1.25 - $1.45 per dollar collected. On the other hand, taxes on gambling revenues cost approximately $2.53 per dollar of tax collected if the tax rate is 50 percent, a number that rises above $4.82 per dollar if the gambling tax rate is 20 percent.


The reasons are simple to understand. Gambling revenue taxes carry huge social liabilities that conventional taxes do not have. The classic example is Iowa, the first state to legalize riverboat casinos in 1991.


Grinols documents that casinos in Iowa are costing the state at least $304 million annually in social costs. Increased crime, business and employment costs, increased bankruptcy, suicide, and illness lead to increased public costs including therapy and treatment of pathological gamblers, unemployment insurance, energy assistance, Medicaid, welfare and food stamps. Added to these would be the direct regulatory costs of casinos in the state.


While politicians look for the easy money, few of them are discussing ways of reducing government outlays and even fewer are championing conventional taxes. Kentucky businesses would likely bear the brunt of the additional costs of relying on gambling revenue taxes.



World’s wealthiest and best-known investor says casinos are a very bad idea

Warren Buffett, Chief Executive Officer of Berkshire Hathaway, Inc., encourages citizens: Don’t be hoodwinked by a casino-politician alliance!


In 2004, Warren Buffett took a strong public stand against casinos in a ballot referendum in his home state of Nebraska. Mr. Buffett sat down with Tom Grey, Executive Director of the National Coalition Against Legalized Gambling (NCALG), to describe his position. The following article includes excerpts from this conversation, reprinted here with permission of NCALG.


Tom Grey (TG): This is the third historical wave of gambling in America. It’s sort of had a boom-bust cycle. It’s in the boom cycle now.


Warren Buffett (WB): Well, I get insights every day as to what gambling does. Incidentally, I’ve bet on my golf game that’s cost me money over the years, so it isn’t like I’ve never placed a wager. But, I get dozens of letters almost daily from people who have financial difficulties for one reason or another. The reasons overwhelmingly come from three sources. One is health problems. People run into unexpected medical bills and it gets them in a tough situation. Second, they get in trouble on credit cards frequently, and a credit card is a temptation to many people. The third thing I hear about is people who have had an addiction to gambling, where they’ve used thousands and thousands, tens of thousands of dollars that the family needs, and they just can’t get off the hook and they find themselves in enormous financial trouble. Sometimes that interacts with the credit card situation because they use their credit cards to defer bills and they use their cash to feed the casinos. So I’ve seen just time after time the kind of misery that these people write me about.


Incidentally, I get a lot of letters from prisoners, too. I seem to be a favorite pen pal of a lot of prisoners, and I got one the other day, for example, where a fellow had stolen, this is extreme, but he had stolen $2.2 million from his employer to feed a gambling addiction. He acknowledged it and said that he was going to spend his time in prison for it. I think we’ll always have some of that, but I think for the state of Nebraska, particularly, the state I love, and my family’s been here since the 1860’s, I think for the state to essentially prey upon its citizens, to create more of these addictions, to create more of these letters coming to me every day, I just think it’s wrong. I think it’s cynical on the part of the state to raise money from people who basically can’t afford it by promising them a dream that is not going to come true for any but the tiniest, tiniest fraction of the people that participate, and to cause people to get into the kind of trouble that I hear about every day.


TG: Government has promoted this as a painless revenue stream. Another promise that’s made is that it’s economic development.


WB: Well, there’s nothing getting developed. It’s a transfer of money. Basically, if you take the losses of everybody that participates in gambling, and it’s not “gaming,” it’s gambling, if you take the losses, it will end up going three places. It will end up going to the state as taxes to some degree, and that’s not development. It will end up paying part of the operating expenses of the operations, but anyplace that you spend the money will go to the operating expenses of that establishment. And, it will go to the owners. I get some kick out of this “Keep the money in Nebraska” name attached by people who want to bring casinos here because there are two propositions out there, and the greatest amount of funds for each one of them promoting them is coming from institutions in Nevada.


Just assume that Nebraska had this, and our Nebraskan citizens overall lost $100 million. Well, I think in one of the propositions, there’s 35 percent of the first $15 million, and 20 percent of the next money goes to the state, so some of the money will go to the state, and that’s just like a tax. Basically, that comes right out of the citizenry, and that doesn’t do any development at all. Some of the money will go for operations, and the rest of the money will go for profits, and the sponsors of both of these are out of state corporations, so you’re not talking about development for Nebraska when you talk about transferring money to Nevada and the state.


TG: Could it have the effect then of taking money out of the local economy that might not be spent on other items?


WB: Look, Nebraskans lose, pick a figure, $100 million, but if the casinos come in, the number will undoubtedly be larger than that based on Iowa. But let’s say it’s $100 million. That’s $100 million they don’t have to spend on food and toys for their children, and movies, and everything else. I mean those are the letters I get. These are people who have been tapped out. It’s all gone. In many cases, they’ve run up balances on their credit cards. And frankly, when I write these people back, I often advise them to just take bankruptcy. I mean, they don’t really have an alternative there, and so the position of the state of Nebraska should not be to create a whole lot more people who are in that position.


TG: It seems to me then a product that’s addictive in nature, that creates a certain pain, and there’s a cost to that.


WB: Addiction will produce crime. It’s not always the case, but if you have a group that’s a large group of people addicted to drugs, then you’re going to have more crime. If you have a large group of people that are addicted to gambling, then you are going to have more crime. People get into impossible situations when they get addicted to something like that. And, some people will opt for crime, some will opt for bankruptcy, and some may commit suicide.


You’re teaching your citizens something all the time by the actions you take as legislators and as the administrators of a state like this. And essentially to teach you that the state is on the other side of the transaction from you, they’re trying to get you to do something dumb, I just don’t think, I think the state should be in the position of trying to do something for its citizens, not do something to its citizens.


I do not think that the state ought to be in the position of selling the needles. I mean, we’re going to have drug addicts in this country, but I don’t think the state ought to get in the business where it hopes there are more drug addicts and starts selling needles. And we’re going to have gambling addicts in this country, but I don’t think the state ought to become the sponsor of spreading that addiction.


In the end, the state of Nebraska could be on the side of its citizenry instead of figuring out ways to take advantage of them. And I think that’s fundamental to government.


The argument is made that all these people are going over to Iowa. But I would say this: If you had a house with a nice lawn, and you had a neighbor and they had a Chihuahua, and that dog occasionally strayed over to your lawn and fouled the lawn, your reaction would not be to go out and buy them a St. Bernard. I mean, you don’t need more of it. There are people in Nebraska, I get letters from them, that become addicted to gambling by going across the river. But I will guarantee you, that if you will open up the flood gates to casinos and various concentrations of slot machines in the state, you will have multiples, you have the St. Bernards of addicts as opposed to the Chihuahuas that presently exist. We’re not going to stop gambling. We’re not going to stop people from going over to Iowa. And I’m sympathetic to them, because most of them, or an overwhelming number of them, are going to be losers. They may have an occasional thrill of winning, but those casinos cost money to operate, and it’s coming out of the pockets of Nebraskans, but there would be far more coming out of the pockets of Nebraskans if we opened up throughout the state.


It’s selling hope. That’s exactly what it is. And people sell hope in terms of perfume, that you’re going to attract men, whatever it may be, there’s a lot of hope being sold in the world. I think it’s very cynical of the state of Nebraska to sell false hopes.


And, if you were taking 1,700,000 people in the state of Nebraska, and you’re going to say, on behalf of the state, you’re going to say, “I want to take hundreds of millions of dollars from practically all of you, so that I can stick a couple of peoples’ names up there as winners.” I don’t think there’s anything hardly more cynical than that.


TG: I think that what you’ve shared with us is tremendously important, because this is something that has not had a thorough airing in the public arena.


WB: The people I hear from every day, the people who are broke, they don’t have a dime to put into this campaign. It’s the people who are not going to keep the money in Nebraska, but take the money out of Nebraska, who are coming in. They’re not writing checks on Omaha banks or Lincoln banks. They’re writing checks on Nevada banks. Incidentally, I kind of like the idea of Nevada existing like it does. To the extent that you have a destination resort where people can go and take advantage like I do, I go to shows out there but I don’t gamble, and making it inaccessible is a real plus when you’re dealing with something that can be addictive. It should not be easily accessible.


TG: Would you go so far as to say this is a predatory product?


WB: Well I think it’s, yeah sure. If I were governor of this state, and I had the power either to have something like this take place or not, not that that’s the case, I would feel if I put in something that took money from people—particularly people with lower income situations—and caused many of them to become addicted, caused many of them to go broke, caused many of them to have families break up, then I would say we don’t need it. I mean if somebody wants to do that in some other state, then fine. But I really don’t think that’s what Nebraska is all about.


TG: You’ll also notice what I call the “slotification” of gambling, as opposed to games of skill.


WB: Slots have taken over. Craps, roulette, all those things have diminished enormously in relation to the power of slots because it requires no mental effort whatsoever, and they’ve arranged it now that you can make these multiple bets and really feed the kitty fast. And machines are ideal for that. They don’t eat, they don’t get health benefits, they just sit there, and occasionally a guy comes around to fix one of them if it has a problem. But basically, it’s not labor intensive, and it’s seductive. They have lots of bells and whistles and all of the things they’ve learned will seduce people, and that’s why they sit on stools and just sit there and feed away their savings.



“Hello, Goodbye”

Just like The Beatles’ song proclaimed: When casinos come to town, other businesses are forced to say goodbye.


As casino gambling proponents have made their way through the Commonwealth, several Chambers of Commerce (including Greater Louisville Inc., Commerce Lexington, Northern Kentucky Chamber and others) have issued statements of support for the introduction of casinos into Kentucky. But according to the experience of other states that have legalized casinos in the recent past, Kentucky’s business community has been misled by gambling promoters. While local business associations have passed resolutions supportive of casino gambling, thinking they were supporting one of their members and/or the horse industry, the facts suggest that these associations are working in direct conflict with the best interests of Kentucky’s business community.


Economic Development?

Casino gambling promoters promise economic development and call the casinos an “economic engine.” This claim is based primarily upon the creation of jobs and is dependent on defining economic development in those terms alone. Economic development is actually the creation of additional wealth in a community through an increase in business activity and higher wages that benefit the community. Casinos abysmally fail this test for the following reasons:


1) Job creation alone is not economic development. There are three possible outcomes of job creation by a casino.

A) If no new money comes to the community from tourism (a single casino is not a tourist attraction), the casino merely moves expendable income from other businesses in the community, causing job loss, and thereby no net jobs gain.


B) If the money leaves the community for casino corporate headquarters, there is a net job and economic loss for the community. This scenario is the most common for smaller casinos in relatively small city and rural locations.


C) If the casino draws money from outside the immediate community from the surrounding 50-mile radius (as is most common), the immediate community may see some gains, but the surrounding area loses. Job creation does not automatically equal economic development.


2) Casinos do not result in additional supportive development.

Another feature of the casino “economic engine” is that casinos develop a site, but there is not additional supportive development of other businesses. Pawn shops and paycheck advance companies may thrive, fuel stations in the immediate area may benefit, but all other businesses are either unaffected or suffer loss. On the other hand, a manufacturing plant converts raw materials into a product with greater value than the raw materials, spawning peripheral supporting businesses; business service companies provide assistance that enables local business to thrive and prosper.


3) Casinos cannibalize neighboring businesses.

Businesses in the same area as a casino suffer loss of income when casinos absorb huge amounts of cash from the local economy. Retail and even manufacturing businesses suffer. The losses include reduced sales and customer traffic and increased delinquent accounts. Shoplifting frequently increases, especially among the young. Credit card fraud increases, bankruptcies increase with losses to businesses, and employee theft increases if they become addicted. Even owners are not exempt from addiction, and many have lost their businesses.


Nearly every casino, outside those where several are in the same community, draws its customers from within a 50-mile radius. If a business is within that radius, owners can expect a decline, with the worst effects nearest the casino.


Jobs and Unemployment

Casino promoters promise jobs and reduced unemployment. This promise is especially enticing to communities with high unemployment rates, but new jobs tend to be in house-keeping, maintenance, and service positions, at relatively low pay. As revenues are displaced from other businesses in the community, those businesses lay off employees. The consistent pattern is that after three to five years there is no net gain in employees if the casino attracts people outside the community, and there will be increased unemployment if the casino cannibalizes local businesses of employees.


The resulting job losses in other local businesses are not uniformly distributed. Restaurants and other entertainment venues suffer the most, as discretionary dollars are absorbed by the casino. For other businesses, proximity to the casino determines losses. Competition from the casino for employees is supposed to drive up wages, although this is not common, because the competition is for the lowest paying employees.


Crime

Casinos contribute to increased crime. The larger the casino, or the larger the number of casinos, the greater the increase in crime. The issue of crime is complex. There are different types of crime associated with casinos.


The first type is crime directed toward the casino itself. Innumerable scams, electronic devices, insider corruption, and plain theft by deception and robbery have been attempted at casinos. The casinos spend millions each year to prevent the various attempts. The local police and judicial system get to bear the cost of prosecution and incarceration.


A second kind of crime is that perpetrated by customers. Many of these crimes are annoyances, like public intoxication and traffic violations. Other crimes are more serious. Most communities experience increases in theft, robbery, assault, drunken driving, spousal and child abuse, embezzlement, credit and tax fraud, and other crimes. Many of these crimes are the result of attempts to finance gambling debt, or to finance continued gambling.


Employee Problems

Employers with operations in close proximity to casinos have been victimized by high growth in problems with employees. Employee crime, increased absenteeism, and emotional problems increase as more employees become addicted to gambling. Family relationships deteriorate causing the importation of difficulties into the workplace.


Social Problems

Based on the experience of communities with casinos, business support for a casino will contribute to the following social problems and fiscal costs:


• Increased family financial stress

• Increased divorce rates

• Increased bankruptcies

• Increased crime

• Increased police, judicial and incarceration costs

• Increased illness

• Increased suicide

• Increased social services costs

• Increased regulatory costs


None of these can be regarded as good for the quality of life. Support for casinos, VLTs under the auspices of the lottery, and other similar gambling will result in steep costs for businesses and their community.



Politics & gambling: A dangerous union

The hell-bent pursuit of money brings casino proponents in league with those hell-bent on seeking power.


Recent developments in Kentucky’s political arena should be raising questions because there is so much more behind the current discussion than what meets the eye. Though the apparent common thread of all the turmoil seems to be focused on Gov. Fletcher’s administration, a deeper look reveals that all the key players are FOR bringing casinos into Kentucky. Yes, the bottom line apparently is “the bottom line” – influential players in BOTH parties want their cut of the gambling money pie. This raises major concerns – storm clouds – over Kentucky’s future.


Political leveraging first became obvious during the 2006 General Assembly with the Kentucky Equine Education Project’s (KEEP) Board Chairman raising $50,000 in campaign contributions for one senate candidate in Louisville’s Feb. 14 special election. The campaign contributions turned out to be a fiasco for KEEP’s image as observers wondered what KEEP leaders were thinking by dropping that much money into a local special election.


At that time, Kent Ostrander, executive director for The Family Foundation, commented, “We had been saying for months that the proposed $1.25 billion of annual revenue for casinos would ultimately corrupt government. We just didn’t expect this type of big-money, political influence before the casinos arrived.”


With the members of the General Assembly cool to the issue of expanded gambling and casinos, it seemed that KEEP members believed they could display financial clout in the special election and thereby intimidate other legislators to get on board with their proposal during the 2006 session. But the move backfired in the session, angering Senate Leadership and, in particular, Senate President David Williams, who was quoted in the Feb. 1 Louisville Courier-Journal charging, “The gambling interests are trying to influence a special election for the Kentucky State Senate.”


The senate candidate who received the money, former Rep. Perry Clark, had said he wants “the people to decide.” But evidently, given the $50,000 price tag, KEEP members believed he was stronger for casinos than what had been perceived or that he could be moved to be stronger for casinos. The $50,000 from KEEP contributors was reported by the Courier-Journal to make up half of the campaign’s total income at the time. Yet, the Courier-Journal also reported that the other candidate, Debbie Peden, said she was not contacted at all by KEEP representatives to discuss her position on casinos.


With the first shot being fired by casino advocates in the hardball political realm, an interesting dichotomy began to arise. As the senate race in Louisville was being campaigned, an unrelated but broad and significant group of ministers asked for a meeting with Gov. Fletcher to encourage him to stand against casinos. (See story on page 3) The overall battle began to look like the “bad guys” against the “saints”. . . and KEEP leaders are not wearing the halo.


But then the battlefield widened. During the session, State Democratic Party Chairman Jerry Lundergran embraced casinos for his cash-strapped party. More recently, key Democratic Governor wannabes are also talking the casino talk, especially with Attorney General Greg Stumbo strongly pushing them in his speech at Fancy Farm on August 5.


Now emerges the newest wrinkle in the saga: the fact that influential Republicans leaders and governor wannabes are carrying the casino banner. Clearly, Lt. Gov. Steve Pence has distanced himself from Fletcher and has expressed his support of casinos. Other leading Republicans who are questioning Fletcher’s re-election run have turned out to be pro-casino.


“The February skirmish has passed. There is a battle coming that will dwarf all policy battles of the last 15 years because some in both major political parties have been won-over by the casino interests,” observes Ostrander. “But I have faith that the people of Kentucky will stand strong against a casino takeover of the state – they are not stupid, and I think many leaders will be surprised.”



The Pennsylvania Story: A sad tale . . . already

In just two years, the quick grab for money has already resulted in a stain of corruption that will be impossible to wash clean.


In the United States, the most recent casino expansion bill was Act 71 in Pennsylvania, passed two years ago for the ostensible purpose of “property tax relief.”


Here are some eyebrow-raising facts:

Pennsylvania Gov. Ed Rendell grabbed a brief 33-line bill on track workers and, with the help of several legislators, amended it into a 144-page casino bill that was passed on the Fourth of July weekend. There were no public hearings, no screening for flaws, no committee investigations, and no public input whatsoever.


The bill created the Pennsylvania Gaming Control Board (PGCB). This Board has no legislative approval and no legislative oversight.


Employees of the PGCB were hired and put to work before background checks could be completed.


Twenty-five PGCB employees or Board members receive in excess of $100,000 per year, yet not a single dollar has been made from slots after two years.


Five employees of the PGCB have since been arrested for public drinking offenses, assault, fraud or homicide over the past two years.


Several communities targeted for a casino have strenuously resisted, but the Board is not bound by local option.


After two years of Board work, no approved gambling machine supplier list has been prepared, probably because of “politics being played” with potential vendors. Millions have been spent by vendors and casino corporations lobbying the legislature for their piece of the action.


The price of a casino license was set at $50 million although the auction value was assessed at $250 to $500 million. (The taxpayers were fleeced because casino-friendly legislators kept the license fees artificially low.)


The plan allows for certain convicted felons to own a license to operate a casino.


The State Police are to provide security for the casinos – at taxpayer expense.


The bill did not address the resolution of Native American land claims that could lead to additional unexpected casinos beyond the 14 planned.


There is no provision for annual license fees or annual reviews.


Alcoholic beverage licenses for casinos do not have to meet normal requirements that other businesses must meet.


The various impact studies that are required for the setup of a casino do not have to be done independently, but rather a casino can select the company to do its studies. (This is the fox guarding the henhouse.)


The historic sites in Pennsylvania, even significant ones like Gettysburg or Independence Hall, were given no protection from legal condemnation when the casino operators try to profit on their tourist draw.


The Control Board has overspent its budget each of the last two years, with no casino open yet. All of this is at taxpayers’ expense.


There is no provision for consumer protection of casino customers. There is only a minuscule provision for education and help for addicts. There is no-truth-in-advertising clause for casinos. And last, there is no provision for testing fairness of gambling equipment.


The Pennsylvania plan was, in essence, set up “of the casinos, by the casinos and for the casinos” – “the people” were not included in the deal.



Beware of the Snake Oil salesmen

“Let the people decide” is a huge scam – worthy only of the deceptive gambling industry.


No one knows for sure when the casino proponents will launch their next effort. Some suggest it will be as early as the short 2007 General Assembly session (February and March of next year). Others think they might wait and have the 2007 gubernatorial race make the decision next Fall because many believe there will be a pro-casino candidate squaring off against a no-expansion-of-gambling candidate.


One thing you can count on is that they will continue to try to push their snake-oil mantra, “Let the people decide.” Not only is that a deceptive idea, it’s unconstitutional.



Examine their thought process . . .

Because they learned during the 2006 session that most legislators were not FOR casinos, they’ve been working very hard to elect their choices this Fall in the November elections. Evidence of their political interest is all around and was clearly visible when they donated $50,000 to one campaign alone in a special election in February. But this fall they know they will not elect the 60 percent majority in both chambers of the Assembly needed for a constitutional amendment. So, at some point, they will be pushing “Let the people decide.”


Why?


Because they know many very “political” legislators do not want to take a stand on the issue. These legislators naturally want to do the proverbial, “Some of my friends are for it. Some are against it. And I’m for my friends.”


The bottom line of that stance? “Vote for me, I’m nice to everyone.”


Legislators like that take no stand except the one that keeps them elected.


But our republic form of government demands that they decide issues. In fact, there is no provision to “Let the people decide.” Kentucky has no referendum, “the people decide” process.


The closest we come to that is our constitutional amendment process, where the people can ratify or reject what the legislators have already decided. But LEGISLATORS DECIDE to amend the constitution in this way or that. THEN, the people agree or reject their plan.


The point is that if a legislator tells you he’s going “to put it on the ballot for you to decide,” HE IS ACTUALLY GOING TO VOTE TO CHANGE THE CONSTITUTION TO ALLOW CASINOS . . . But with a sleight of hand, he’s telling you that he’s letting YOU decide.


What other issue does he “let you decide”? (None.) Why? Because there is no “let-the-people-decide” provision in the Kentucky constitution.


If you carefully remember back to 2004 and the Marriage Protection Amendment debate, the tough part was getting the legislators to vote to change the constitution. Some legislators really didn’t want to. But they never said “Let the people decide.” THEY had to decide . . . and eventually they did. Then the people ratified the amendment AFTER the legislators voted to change the constitution.


Regarding casinos, some legislators are more than willing to run from the decision. But it’s their job to be for or against this proposed huge change of Kentucky’s future.


Once you understand how the casino folks are setting the legislators up with an easy out, you can understand their bottom line – the casino folks want it on the ballot because they know they can spend millions upon millions of dollars to convince the people of Kentucky that “casinos are good” before they vote to ratify or reject the amendment.


How can they spend that much? Because they literally will make billions upon billions if it’s passed. Look at their own numbers – 1.25 billion dollars “of revenue” every year. (That’s 1250 million dollars every year.)


By the way, it’s not for YOU that they want casinos in Kentucky; it’s for . . . well, I’ll let you decide.



Kent Ostrander

The Family Foundation


© 2019 by The Family Trust Foundation of Kentucky