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Senator SIMON. We also know that there are people who get addicted, just like they get addicted to alcohol and drugs, and the proximity of a casino has a great bearing on the percentage of the population that is addicted.

An unseen witness at this hearing today is a 19-year-old boy in Iowa who committed suicide and said, "I lost control." That story is being repeated over and over and over again.

I think we need a national commission to look at this. It is complicated, as both you have said, Mr. Chairman, and the other two Senators here before Senator Lieberman came in indicated. No one here suggests that we are going to do away with legalized gambling. The question is its unlimited growth, and if you can put up that chart that shows the growth of the total legal wager. You can just see it has changed dramatically since that first commission.

Let us just say that you are Mayor Lieberman and Mayor Glenn and Mayor Stevens and Mayor McCain and someone comes to you and says, we are going to give you additional revenue without your increasing the taxes on anyone, plus we are going to be very generous with campaign contributions. That is very tempting.

I think we need a commission to take a look at the other side, and that has to include what are the alternatives for revenue for Indian tribes, for local governments, for State governments who are concerned.

This is a very modest commission we are asking for, an 18-month study-$250,000. It is amazing how apoplectic the gambling industry is for just a study to look at this thing. That is all we are asking for. I think it is a reasonable request, Mr. Chairman, and I hope this Committee approves it.

Chairman STEVENS. Thank you.

Senator Lugar, you are also a cosponsor, I understand?

TESTIMONY OF HON. RICHARD G. LUGAR, A U.S. SENATOR

FROM INDIANA

Senator LUGAR. That is correct. I would like for my statement to be a part of the record and I will summarize, if I may.

Chairman STEVENS. Yes. We will put all the statements in the record.

Senator LUGAR. Mr. Chairman, in trying to address specifically the questions that this Committee raised, why a Federal study, why now and in this form, we have already seen cited by yourself and others, Senator Simon most recently on the chart, the extent of the change in the industry.

Senator Glenn has mentioned specifically the Internet aspects, which put now an international complication, because largely, the firms appearing on the Internet are based in the Caribbean, at least the ones that I have seen. The wagers are very substantial and you can gamble continuously. The prospects are that a teenager out of a home somewhere in America could continue gambling all day and gamble away the entire family fortune or income without their parent's knowledge. The whole aspect of the enforcement of all these debts internationally, or given the fact this is illegal activity, is certainly unclear.

I make that point because often the criticism is made that this is a local business. Clearly, the Internet is not local. As Senator

McCain has cited, the Indian tribe issues have been Federal for some time.

But I speak today as a former mayor of a city and I speak for many people in my own home State, who as county commissioners or city council members are now faced with massive questions.

There is in a small county along the Ohio River in Indiana, Ohio County, Rising Sun, Indiana, a proposition of $150 million of investment, a county of only a few thousand people. Rising Sun is a city of 2,000 persons.

People in that county are suddenly faced with negotiating with persons who want to put a $50 million boat on the Ohio River and apparently $100 million of investment in a resort hotel, golf course, and infrastructure that clearly implies roads, communication systems, leaving aside law enforcement and all of the implications with regard to juvenile addiction or adult addiction, for that matter, the social service that will be required. It will change the face of that county forever, as well as Rising Sun, Indiana, and adjacent Harrison County, who likewise are wrestling with this.

I recently went out to bring in consultants to try to help them figure out how to negotiate something that makes all the difference in the future of their situation. There is simply not reliable information available in America as to the effects upon many, many cities, counties, and States of what has been a proliferation of search for revenue.

Mr. Chairman, I would say that it comes down to that, States and local governments desperate for ways of financing their procedures have literally made one last roll of the dice in many cases, frequently subtracting business from each other along the river or across the county line, subtracting a lot of business from small businesses that are not in the gambling situation but of retail dollars that are subtracted.

I believe that we need to have a comprehensive view of this, not only as Senators and Federal officials, but even more importantly, many people at the local level who do not share presently our sources of information, they must have this if they are to make informed decisions in a democracy.

I come here not as a prohibitionist but as one who believe democracy works, but it works only if there is information, an informed citizen debate. That, I think, we have an obligation to help provide. I thank the Chair very much for this opportunity to testify. [The prepared statement of Senator Lugar follows:]

PREPARED STATEMENT OF SENATOR LUGAR

Mr. Chairman, I want to express my appreciation to you for conducting this hearing, and for inviting me to testify before the Committee today.

As legalized gambling proliferates at breathtaking speed, it is touching the lives of millions of Americans. Hundreds of communities across the country are considering casinos, riverboat gambling, pari-mutuel racing, off-track betting and other forms of wagering.

In the face of this explosive growth, I want to establish a temporary national commission to conduct an 18-month study on the effects of gambling. S. 704 does not propose to further regulate gambling activities or to increase taxation of gambling revenues. The purpose of this legislation is to provide State and local governments with an objective, authoritative resource to use as a basis for making informed choices about legalized gambling.

We need to know the answers to questions like: What is the extent of gambling by teenagers? How do gambling revenues impact States' budgeting process? What

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is the impact of gambling establishments on other businesses? How does gambling affect crime rates? How does gambling affect low-income populations and what links exist between gambling and organized crime?

One gambling industry lobbyist recently criticized the proposal saying, “It's a State's rights issue." This argument is flawed for a number of reasons. First, the Federal Government continues to regulate gambling activities on tribal lands under the Indian Gaming Regulatory Act of 1988.

Second, the recent growth of electronic gambling via the Internet is an area of particular Federal interest. In addition to the interstate aspect of gambling across State lines, the Internet allows people to gamble from their homes using personal computers to visit "virtual" casinos and electronic lotteries based overseas and elsewhere.

This new area of gambling raises many serious questions: How do we protect U.S. citizens from gambling organizations operating outside United States' jurisdiction? How will the Federal Government deal with gamblers who may default on debts to foreign gambling operations? What happens if Internet-based gambling organizations do not distribute winnings?

Internet gambling activities could have serious interstate and international implications. We need to learn more about gambling via the Internet.

As a former two-term mayor of a vibrant Midwestern city—Indianapolis—it is clear to me that the civic-minded folks facing the toughest decisions on whether to permit gambling are leaders at the local level. They must decide these issues in a vacuum of reliable, unbiased information-information desperately needed to make sound choices that will affect both the social and economic future of their communities. Many local leaders want to learn from the experience of other communities. Unfortunately, experts have found that a number of available studies were locationspecific, unbalanced or funded by subjective interests.

The Washington Post, in a September 22 endorsement of the gambling study commission proposal, stated that, "Those pushing casinos into communities make large claims about their economic benefits, but the jobs and investment casinos create are rarely stacked up against the jobs lost and the investment and spending forgone in other parts of a local economy. The commission's study could be of great use to communities pondering whether to wager their futures on roulette, slot machines and blackjack.

A steady stream of news accounts in the New York Times, The Wall Street Journal, and other publications have chronicled the recent growth and expansion of gambling activities in America. Many of these stories describe the enormous profits generated almost overnight by gambling enterprises. The articles also relate the personal experiences of local residents who visit a casino instead of a restaurant or ballpark, who spend their grocery money on a nearby instant-play video lottery game, or who totally exhaust their personal or family savings at the casino tables. A major reason for the astronomical growth of gambling is that State and local governments facing budget shortfalls are desperate for revenue. Another important and disheartening factor is our failure as concerned Americans to raise important questions about the spread of gambling.

Hearing of the gambling industry's promises of instant revenue, State and local government officials all too often accept gambling as the silver bullet solution to balancing their budgets without raising taxes. Even if a State or community is reluctant to host a gambling establishment, it can be drawn over the edge by the threat that gambling operations may locate in a nearby town or neighboring State. Studies have shown that casino operations have significant impact on neighboring economies. For many local officials, the legalization of gambling becomes an economic survival issue rather than a question of developing sound public policy.

As gambling gains a foothold in a community, however, it enervates the notion of work ethic. Gambling weakens our ability to teach our children the basic values of hard work, patience, human achievement and personal responsibility. What is the message being sent to our children by clever television and radio commercials for lotteries that bombard us with the message that wealth is only a play away? It says that if you play enough, you can hit the jackpot and be freed from the discipline of self-support through a job or the long commitment to ongoing education.

This same erosion of personal responsibility is at the heart of family dysfunction, drug abuse, criminal behavior and abortion. We cannot tolerate the "get rich quick" symbolism of gambling, while pleading with our children to avoid other "tosses of the dice" that lead to unhealthy living and destructive behavior. The gambling industry does not choose to confront these moral questions. It would like for the gambling issue to be seen as an economic or entertainment choice. But even in the economic realm, the arguments for expanding gambling are weak.

Gambling-related employment pales when compared to other forms of employment such as manufacturing. Gambling does not produce a value-added product or reinvestment in the market economy. Other businesses in the region often lose as consumer spending for all sorts of goods and services shifts to spending for gambling-related activities.

Legalized gambling has existed in various forms throughout our Nation's history. Today, it is one of the Nation's most dynamic growth industries. I am deeply concerned about the potential social impacts and economic costs of gambling. But I am not a prohibitionist, and do not believe wiping out existing gambling operations is a realístic option. I leave the final decision about gambling to democratic forces in each community which will decide for themselves what is in their best interest.

Long-term growth and prosperity for our communities is most often earned the old-fashioned way-through hard work, dedication and commitment to common purpose. Although gambling can provide a quick-cash solutions to urban finance, the better course always is to pull together civic leadership to attract legitimate retail, service and manufacturing businesses to an area. If we put our best minds to work on ways to finance the needs of our cities and communities, we can continue to ensure a higher standard of living and better quality of life for all Americans.

Again, Mr. Chairman, I want to thank you for the opportunity to testify before the Committee today.

Chairman STEVENS. Thank you, Senator. Congressman Wolf.

TESTIMONY OF HON. FRANK WOLF, A REPRESENTATIVE IN CONGRESS FROM VIRGINIA

Mr. WOLF. Thank you, Senator Stevens. I appreciate the hearing. I will submit my testimony for the record and I will quickly summarize.

The legislation is very simple. It does not regulate, does not call for increased taxation or things like that. It deals with a number of issues that the Congress and the American people, I think, ought to look at including the side effects with regard to the breakup of families, suicides, teenage gambling, the cannibalization of other businesses, and many of those things that are not being looked at today.

Just to give you one example, I saw a story about Mississippi, which legalized gambling in 1992, which does not seem very long ago to me, I do not know about other people, but it just seems like the other day to me that they legalized it in 1992. In 1994, $29.7 billion was gambled in Mississippi and all taxable retail sales were $27.6 billion. That means more money was gambled in Mississippi than all the taxable retail sales. I will submit that for the record, the editorial.

[The information of Mr. Wolf follows:]

NORTHEAST MISSISSIPPI DAILY JOURNAL

Betting Figures Are Staggering

An article in the New York Times magazine last year observed that Mississippi "is the Nation's best petri dish for studying the effects of no-limits casino fever." Telling evidence of the nature of the experiment emerged last week.

According to a leading gambling trade publication, $29.7 billion was bet in Mississippi casinos in 1994. That staggering sum, International Gaming & Business magazine said, is a conservative estimate.

Unlike some other gambling States, Mississippi has no betting limits, no restriction on the number of casinos and a favorable tax structure for gambling. This "nolimits" environment encouraged a massive influx of casinos to the counties that legalized gambling in 1992 and beyond-Harrison and Hancock on the Gulf Coast, and Adams, Coahoma, Tunica, Warren and Washington on the Mississippi River. The $29.7 billion doesn't include the Choctaw Indian casino near Philadelphia.

More than half the money bet in Mississippi casinos comes from out of State, but a visit to any casino parking lot at any time of day or night (they never close) reveals a large number of in-State tags. Clearly, a lot of Mississippians are betting

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