4. Interview potentially impacted entitics, facilitating impact identification and the establishment of cost parameters while buttressing Step 1 data collection efforts. Analysis To facilitate analysis, we propose an innovative combination of individual research and a team approach modeled on a very successful process used in conjunction with the development of the Socio-Economic Impact Mitigation Plan - Inner Harbor Navigation Canal Lock Project, principally prepared by Gregory A. Rigamer and Associates for the U.S. Army Corps of Engineers. Representatives of various higher education institutions and appropriate disciplines would bear individual investigatory and analysis responsibilities for each of the previously identified impact areas. In addition, during the first year of the Task V endeavor, team meetings would occur on a regularly (perhaps monthly) scheduled basis, facilitating information sharing, peer review of investigatory efforts and analysis, and very importantly, a continuing presence of appropriate City officials in the process. This information would be updated annually by each of the rescarch team members incorporating the latest available data. We are suggesting that representatives of both the City Planning Commission and the CAO's Office would be pancl participants. A secondary benefit of this process would be the facilitation of potential mid-course corrections and/or inputs in conjunction with ongoing work on Tasks I through IV. Synthesis The Task V administrative team would bear ultimate responsibility for assembling the written analyses prepared in conjunction with topical areas into a practical document which would: 1. Identify impacted services and facilities and quantify those impacts. 2. 3. 4. Quantify actual costs to be borne by the City of New Orleans, organized in a Offer constructive recommendations regarding the use of state aid, direct Enumerate additional work which might be performed by City employccs Chairman STEVENS. Thank you very much. Senator Cochran. Senator COCHRAN. Mr. Chairman, let me ask a couple of questions. One is whether or not you think this Federal study, if we do authorize it and conduct it, will tell us anything that we do not already know. If it would, what would it be? Mr. GOODMAN. One of the things we found in the U.S. Gambling Study, which was a modest amount of money spent for a 2-year study, we looked in detail at 14 economic impact studies that were done all over the country, some by some of the biggest accounting firms in the country if not the world. One of the things we found was that the media and local legislators, and Federal legislators, in some cases, were relying on these studies to make judgments, political judgments about whether or not gambling should or should not be expanded. We found that of the 14 economic impact studies, only one study of all of them was a bona fide study in terms of using proper methodology. Most of the studies were either paid for directly by the gambling industry or researchers who worked for them. I should say that one study was done by the speaker you just heard, Tim Ryan at the University of New Orleans, a study looking at the potential impacts in New Orleans, and indeed, many of his conclusions, in fact, have come true. But the point was that you have a situation where companies engaged in interstate commerce are using major accounting firms to do these research studies, making projections on impacts on the economy, not just locally but in some cases regional economies, and then in that case, those studies being used. Now, it seems to me that a national study which would objectively-you have heard about 200 studies, for example. Approximately 80 of those studies were either done by the gambling industry or are negative studies, actually. You will hear more about that. So the point is, you need an objective source to look at it, not just to say we have 200 studies, but what is in those studies, what do we know, what do we not know, and to have this commission actually go out and find the areas where there is controversial information and subpoena records or do the kind of research that would give the Congress answers to many of these questions. The research that is out there, including my own research, as I have said before, is not an adequate baseline for making these very, very important decisions in terms of the national economy, as well Senator COCHRAN. Let me have an opportunity to hear the responses of the other two witnesses now, if you will. Rev. Grey. Rev. GREY. I think it is tremendously important. It is public policy, because government is bringing gambling in. If it were just Donald Trump that walked into my community in the marketplace and we could have debated whether a riverboat is good for my community or not, that would be one thing. Then we could have gone and gotten studies. He would have brought his experts; we would have gotten a few. But the government makes a judgment that gambling is economic development. It is going to aid tourism. Those are measur able quantities. Now, we should measure whether or not gamb' in Illinois is working, not how much money it makes. For ever lar lost in Illinois, a nickel goes to the city, 15 cents goes to the State, and the owners or promoters get 80 cents. So we are talking about large shifts of money, because these are monopolies. The playing field is not level. The gaming_commission looks to maximize profits. Who minimizes the pain? I think that it is incumbent if government brings it in to have a just place where we can determine whether or not this is the greatest thing since sliced bread, which they say it is, or whether this is a detriment to our community. Senator COCHRAN. Dr. Ryan. Mr. RYAN. Yes. My feeling, as I said before, is I think the one single thing that we have the least good information about in the gambling industry is the problem of addictive gambling behavior. What is the magnitude of that problem nationally? Is it a social problem that, like alcohol abuse and drug abuse, that we need to attack? I do not think the information that is out there is good because it almost cannot be when you look at it isolated. It has to be looked at on a national basis. I do not think we know the magnitude of the problem. We hear a lot of anecdotal information, including the presentation of some of the witnesses here today. I think that is the one thing that, from my point of view, would be forthcoming from a study. Senator COCHRAN. My other question for everybody, too, is once we get this study done, if we do authorize it and it is conducted, what do we do with it? Do we use it as a basis to outlaw gambling nationwide or impose new Federal regulations over and above those imposed by the States or levy some tax? Are those the three options? I Mr. GOODMAN. I would defer to the Congress on that. I mean, think it is their role to decide what to do with the information. If the Congress did nothing, as a hypothetical case, but has authorized the study, then at least there would be a greater basis for States and local communities to make some judgment. There would be some better analysis of the data that we have. I think that that is the least that would be done. Senator COCHRAN. So we could share that with local governments and State governments and let them continue to make their decisions? Mr. GOODMAN. Certainly. There are governments all over this country now that are considering this as a way to jump-start their economies, and Senator COCHRAN. Rev. Grey. Rev. GREY. Yes. Sort of play one State against the other. We have 18 victories and two losses in the past 2 years with peopledriven, no-money operations against this industry. What would happen is already the public is saying, stop this spread by themselves, but the study of what has happened would help us determine what existing forms of gambling are now doing, and if there is a social cost that is greater than the owners are making, then it would institute policies that would minimize the pain to the tax Mr. RYAN. I think that is fairly clear. Either the three Federal options you talk about, greater regulation, taxation, or limitations, or ammunition of one side or another at the local or State level. I do not think there are too many other options. Senator COCHRAN. Thank you, Mr. Chairman. Chairman STEVENS. Gentlemen, I will not ask any questions. I will just tell you a little history. We had an occasion with Olympic sports where, if you remember, we had pole vaulters that were going to the Olympics and they could not use the pole. It was the wrong one. We had some people going to the Olympics where they were taking medicines that they were disqualified even though they were not addictive or in any way stimulative. President Ford created a Commission on Olympic Sports and we held hearings throughout the country. We had the right to subpoena witnesses. We had Members of Congress who were on it. We came back and we started the process of trying to get a bill passed. It is a long story, but we did finally get a bill passed that created and authorized the U.S. Olympic Committee and we have had a very successful time. It is now demanded, after a period of years, that we update that. I hope you realize what you are starting. If we do this-I am unwilling to take a bill to the floor that is just going to produce another report that goes on a wall. If you want a report that digs into this industry and tries to find out what is the power of the Federal Government that could be used to make sure that it is not harming our society, I think we will help you. But if you just want another report to try and cajole some people to stop an addiction, I do not think that is going to work. This commission with $250,000 to me would be that type of commission. There is no real authority in the Senate bill. There is no money and there is no time frame. If we report out a bill, it is going to be a bill, in my judgment, that will set the time frame, provide the money, give the authority, and tell them to come back. with a bill that we can consider, not just another report. Rev. GREY. Can I just say that I appreciate the fact that we have a hearing here. This is more time than I got in my own county 4 years ago to talk about this problem. So whatever seriousness we can bring to this, obviously, I want to bring. Chairman STEVENS. I do thank you gentlemen very much. I must apologize to the next panel. I knew I was going to be called to another meeting. Senator Cochran will stay. The next panel is Frank Fahrenkopf, President and CEO of the American Gaming Association; Richard Hill, Chairman of the National Indian Gaming Association; and Dr. William Eadington, Director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada. I do have 5 minutes yet, so I will wait. Frank, you are first. TESTIMONY OF FRANK J. FAHRENKOPF, JR., PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN GAMING ASSOCIATION Mr. FAHRENKOPF. Thank you, Mr. Chairman. On behalf of the American Gaming Association, which represents most of the industry's largest publicly-traded gaming entertainment companies, it is an honor for me to have an opportunity to address you today. Mr. Chairman, one thing I want to make clear, as I said in my testimony before the House Judiciary Committee last month, the gaming entertainment industry is not concerned about the outcome of a fair and objective study of this industry. We believe we have a great story to tell. We are concerned, however, given the antigaming sentiment of the commission's original proponents that that commission would be biased and would not, in fact, be objective. In fact, there has been a marked change in the rhetoric from the individuals who sat at this table a few moments ago and from some of the new cosponsors, because if you look at, for example, Senator Simon's speech on the floor of the U.S. Senate a month ago, he proposes new taxes on the gaming industry. Now today, the individuals who were here said they were not interested in new Federal taxes. Some of the comments that have been previously made by Congressman Wolf are that there should be Federal regulation or abolition of gaming. That was sort of taken off the table today. So one of the reasons that our initial opposition came forth was that we felt that the legislation in both Houses was defective in two key points. First, there is no need for the study, and second, as you pointed out at the beginning of this hearing, the States have the constitutional jurisdiction over gaming policy and a Federal gaming commission to study the issue would be more likely to, in our view, serve the political ends of gaming opponents than providing any useful information. do not want to repeat the Tenth Amendment arguments that have been previously made but I would point out that that commission that was talked about back some 20 years ago, which had four Members of the Senate on it, Mr. Chairman, Senator John McClellan of Arkansas, Senator Howard Cannon of Nevada, Senator Hugh Scott of Pennsylvania, and Senator Robert Taft, Jr., of Ohio, very specifically said what other members of this panel and prior witnesses have said, and that is because it is a social issue, the commission has determined that gambling policy-gambling policy-is the proper responsibility of the government entity closest to the people, the State. In the preface to that report, the executive director said that the mission of the commission was to study gambling as it exists in America and to develop recommendations for the States to follow in formulating their own gambling policies. This legislation presently before us and the bill under consideration in the House ignores the State jurisdiction reality and, in effect, presupposes the need for Federal legislation. For example, if you look at Section 4 of S. 704, where the duties of the commission are described, there is no indication that the commission is instructed to make recommendations to the States, the purported |