Chairman STEVENS. Rev. Grey. TESTIMONY OF REV. TOM GREY, EXECUTIVE DIRECTOR, Rev. GREY. Chairman Stevens and distinguished Members of the Committee, I have submitted a written testimony but I would like to talk to you, if I could. Chairman STEVENS. Yes. All of the statements we have received so far have been received. If we do print a record—we do not print all records anymore, but if we do print this one, we will print the statements. Rev. GREY. I think what is interesting is we are talking about a study in 1976, and in 1976, I was a minister in the inner city of Chicago with two kids in public schools. We were taking paper from the church over to the school so the kids had paper in the public schools. The politicians came to our leaders and said, “We are going to have a lottery and it is going to take care of educational problems." I remember swallowing and thinking, I do not think so, but I am taking paper so kids have it in school. I am going to tell you, fool me once, shame on you. Fool me twice, shame on me. In 1991, a riverboat came into my community, attacked my community, not invited. Town officials at the end of the meeting voted on it. They were behind. Open meetings acts were violated. It was announced that a riverboat would come in and become the economic engine of our community. To let that happen and not stand up and say, who owns it and what is this about, seemed to me to be wrong, based on what had happened with the lottery. Subsequently, in 3 years, I have been in 15 States, 200 communities, and I have run into the same thing. It is called the fast shuffle. I have been at Easter and Christmas trying to fight gambling because it came in. Open meetings acts have been violated. We cannot get a level playing field. The public relations and the studies that are mentioned are produced by the promoters. We sought out to find economists and to find studies. So what I want to say at this point is that with that as a benchmark, gambling attacked us. I am not setting siege to Las Vegas or New Jersey. I was fine until they came into my county and started to bring Las Vegas and casino gambling in. They are now in Maryland. There are 13 card room referendums in California. I mean, my schedule has just been one continual road trip of responding to citizens saying, can you help us in the face of this expansion? What has happened is that it is said, trust the States, and Mr. Lieberman, we have a State called Iowa that is a compulsive gambling State. It is chasing its losses. It is sacrificing its citizens. It has gone from 1.7 compulsive gambling to 5.4, all in the rush to keep up with Illinois. Tourists are not driving from Illinois to get to Iowa. We are cannibalizing our own citizens, and also in Illinois. In South Dakota, the governor says he fears addiction to gambling revenue. That was the governor. They are at 15 to 18 percent of their budget. They cannot get rid of it if they want to. Chairman STEVENS. Rev. Gray, with respect now, I want you to tell me why you think the study has to be made. We have files full of that stuff now. Rev. GREY. Yes. What I am saying is that the industry is saying, let the States do this and I am saying the States are not in a position to do it. You have certain States that are so locked in that that renders the need for the Federal Government at this point to say, time out. Let us look. Is this growing trend? Will we see States chasing their losses to keep the jobs? For example, government used to act as a protector from gambling. Then it moved to a regulator and it got smart and said, well, we can regulate it and take the money. It is painless. Then it became the promoter. The final step in the evolution is the subsidizer. Rock Island, Illinois, in 3 years has moved from regulating it to now Rock Island gives tax rebates to the floundering riverboat casino. The citizens are going to be asked, to keep the jobs and the boat in town, to either forego services or increase their taxes. So local governments and State governments are under the type of trap that an individual gambler gets in, so I think that an intervention-maybe it is just a crisis intervention that gives a diagnosis. If this is a cancer and it is spreading, it would be good to have that. Finally, trust in government is at an all-time low. Seventy-two percent of the public feels that government does not work. Before Vietnam, it was 22 percent. What I think at this point is, could not government take a look at an activity that has just gone off the graph in terms of expansion, with all the problems, and there are two points of view. We are locked in a battle. It is citizens versus casinos. I wonder if at this moment in time in history, the time is right for the Federal Government to stop and say, we are going to look at this. I think it would restore trust, especially among us citizens who feel we do not have a level playing field whenever we engage the people from Las Vegas. Thank you for your time. [The prepared statement of Rev. Grey follows:] PREPARED STATEMENT OF TOM GREY, EXECUTIVE DIRECTOR, NATIONAL COALITION AGAINST LEGALIZED GAMBLING Chairman Stevens and distinguished Members of the Committee: I am Tom Grey, the Executive Director of the National Coalition Against Legalized Gambling (NCALG), a coalition of citizens and groups that oppose the expansion of gambling. Just like the sponsors of this legislation in the Senate and House, we are Republicans and Democrats, conservatives and liberals, from every area of the United States. We are not an organization of moralists. We are not trying to stop Americans from gambling. We do not seek to close down Las Vegas. Rather, we are trying to stop the expansion of legalized gambling because we believe it is bad for businesses, bad for families, and just plain bad social policy. On behalf of all our members, I'd like to thank you for the opportunity to present our views. Imagine for a moment that you've stepped into a time machine and been taken back nearly two decades to the year 1976. In 1976, commercial casinos were prohibited in 49 States. Only 13 States had lotteries, and the advertising of lotteries on television, radio and through the mail had been illegal until the previous year. There was no such thing as an Indian casino, and gambling from your own house on a personal computer was almost beyond com prehension. Altogether, Americans wagered about $17 billion on legal commercial gambling. In 1976, a Federal commission looked at the social, economic and political consequences of gambling. (See Gambling in America, Final Report of the Commission on the Review of the National Policy Towards Gambling, October 15, 1976.) There has been no Federal study or commission since. And yet, legalized gambling has become one of the fastest growing enterprises in the United States. Just in the past 7 years, gambling casinos have been legalized in 19 new States, and 10 States have legalized slot machines or video poker machines at racetracks and bars. This year, Americans will wager more than $400 billion on legal gambling-that's 2,300 percent more gambling than in 1976. That is why the National Coalition Against Legalized Gambling supports S. 704, as well as H.R. 497. The nature of gambling has changed dramatically since 1976, and yet the Federal Government has not taken a serious look at the consequences of this change. The people of America need to know the implications of the growth of legalized gambling, especially as they vote whether to legalize casinos in their own towns. S. 704 is a modest step. In fact, the idea is so modest it's hard to understand why anyone would oppose it. Yet the American Gaming Association is against this bill. What is it about an objective study that makes them afraid? Frankly, they are afraid of the truth. The last Federal study strongly warned against the expansion of casino gambling outside of Nevada. Specifically: "The Commission does not believe that any clear benefits would derive from passage of legislation in the various States to establish casinos. . . . The likely social effects of legalized casino gambling outweigh purely economic considerations." Gambling in America-1976 at 102. During the years since that warning, both the Federal and State governments have legalized hundreds of new casinos. It is time for the Federal Government to take a moment to study the implications of this unprecedented expansion. What could be more sensible? The 1976 commission warned especially against locating casinos in urban areas: "If Nevada-style casinos were legalized in heavily urban areas, participation by low-income people can be expected to result in increased social problems and an expanded need for government services, thereby offsetting in whole or in part any advantages derived from the stimulation of local businesses." Gambling in America-1976 at 102. Since that time, the Federal Government has approved an American Indian casino in downtown Milwaukee, and State governments have placed casinos in the heart of St. Louis and New Orleans. At this point, urban areas have been penetrated, but far from saturated. Before major cities like Chicago, Detroit, Philadelphia, Baltimore and Washington, D.C. approve proposed casinos in their downtown areas, it is imperative that we look at what has occurred in cities like Milwaukee and St. Louis. Why is the American Gaming Association opposed to the public discovering the impact? The 1976 commission was particularly concerned about slot machines, realizing that this form of gambling "is one that can be easily abused." Noting the view that "the ease and repetition of play of the slot machine" could be a "possible inducement to addictive gambling," the Commission stated that: “The presence of slot machines in areas of public access, such as commercial nongaming establishments, should not be permitted." Gambling in America-1976 at 103. In recent years, ten States have legalized slot or video gambling machines at thousands of restaurants, bars, truckstops, and even convenience stores. There are nearly 400,000 slot machines in America today. Isn't it reasonable to ask what effect the proliferation of slot machines has had on average Americans? Perhaps the American Gaming Association is afraid that a Federal study would find that gambling problems have worsened, as the 1976 commission warned. That commission not only stated that "the availability of legal gambling creates new gamblers," Gambling in America—1976 at 2, but it predicted an increase in compulsive gambling: "Widespread availability of gambling in a legal form leads a portion of those classified as potential compulsive gamblers to actualize their potential compulsion." Gambling in America-1976 at 74. The 1976 commission published a ground-breaking study which found that 0.77 percent of the adult population of America, about 1.1 million citizens, were pathological gamblers. Gambling in America-1976 at 73. Today, just a few years after casinos and slots were legalized in Louisiana, 7 percent of the citizens of that State are now pathological gamblers. This year, a study found that 5.4 percent of Iowans are pathological or problem gamblers. Before the riverboats came to Iowa, only 1.7 percent of adults were pathological or problem gamblers. Casinos caused the gambling addiction problem to triple in just 6 years. The 1976 commission was appalled by the regressive impact of spending on legalized gambling: “One of the major findings of the survey was that expenditures on gambling were regressive-i.e., that lower income groups spent a greater percentage of their income on gambling than did upper income groups. This was true for gambling expenditures taken as a whole as well as for most individual games. The result of this is that taxes on legal gambling appear to be quite regressive." Gambling in America-1976 at 65. Yet, the use of gambling for government revenue has multiplied exponentially. And the current inclination of many State governments is to use gambling to balance their budgets. The American public deserves to learn the facts about how gambling revenue is generated and who bears the brunt of gambling taxes. Opponents of S. 704 argue that whatever the explosive effects of gambling on life in America, the Federal Government shouldn't care. They assert that gambling is solely a State issue. That assertion is not only false, it is incredible. The Federal Government makes key decisions about gambling. The Federal Government is solely responsible for American Indian gambling. The Federal Government is responsible for policing interstate waterways used by riverboats. The Federal Government must respond to proposals to allow gambling on certain Amtrak trains. Only the Federal Government can talk to neighboring countries about gambling by American citizens. And only the Federal Government can deal with the problem of gambling on the Internet. Even in 1976, while studying a Nation with relatively little legalized gambling, the commission recognized the potential for congressional legislation: "Congress could selectively enact statutes concerning those areas which it deemed to involve the national interest, and could act to prevent the channels of interstate commerce from being used by some States to interfere with the gambling policies of other States." Gambling in America-1976 at 8. It is a fact that today gambling States intentionally locate casinos along their borders with non-gambling States. By doing so, they export social problems, especially pathological gambling, to non-gambling States. Clearly, this must be a Federal con cern. A vote for S. 704 is a modest step. It is a signal that you are concerned about the possible impacts of the spread of gambling. It is a statement that you are interested in getting the facts from an objective Federal study. There is no risk to a study commission. But if we are right, that the continued expansion of legalized gambling will devastate our Nation's economy as well as it's character, then there is a terrible risk in ignoring this legislation. More than two decades ago, Members of Congress saw legalized gambling begin to grow, and they worried about our Nation's health. They commissioned a study to investigate whether a cancer had formed on our society. Since that time, we've largely ignored our doctor's advice. Frankly, we are long past due for a check-up. The American people understand this. They are crying out for leadership. They are watching to see whether our Federal lawmakers will enact a small, common sense measure over the opposition of a few, wealthy profiteers. We ask for your help. Thank you. GAMBLING IS BAD FOR BUSINESS The expansion of legalized gambling is a major threat to business in the United States. The gambling enterprise cannibalizes existing businesses, stealing their customers and revenues. Cannibalization in Atlantic City In Atlantic City, casinos were legalized in 1976. Four years later, the number of retail businesses in the city had declined by one-third. The number of restaurants in Atlantic City declined from 243 in 1977, the year after casinos were legalized, to 146 in 1987. Only about 10 percent of the businesses nearest to the casino locations in 1976 are still open today. Instead, just off the beach, there are dozens of pawn shops for losing gamblers to sell their jewelry for cash. Cannibalization in Minnesota In Minnesota, where Indian casinos are found across the State, restaurant business has fallen by 20 to 50 percent within a 30-mile radius of casinos with food service. Cannibalization in South Dakota A study conducted for the State of South Dakota found that, after casino gambling was legalized in 1989 within the town of Deadwood, business declined significantly at nearby restaurants, clothing stores, recreation services, business services, and auto dealers. Within 2 years, legalized gambling constituted one of the leading causes of business and personal bankruptcies among South Dakota residents. Gambling Leads to Loss of Jobs Because dollars spent gambling are diverted from non-gambling businesses, those competing businesses lose revenues and are forced to lay off employees. For example, a recent report by the Maryland Department of Business & Economic Development estimated the establishment of gambling casinos in Baltimore would result in the loss of 23,000 to 31,000 jobs from local industries, including "restaurants, retail, other entertainment, and horse racing and breeding." The casinos would add only 14,000 to 15,000 jobs, so the net impact on employment in Baltimore would be a loss of 9,000 to 16,000 full-time jobs. Maryland Department of Business & Economic Development, Office of Business and Economic Research, draft report on the Economic and Fiscal Impacts from the Introduction of Casino Gambling in Maryland, October 1995. GAMBLING ESTABLISHMENTS ATTRACT CRIME Last year when their State was considering legalized casino gambling, the Florida Department of Law Enforcement, Florida Sheriffs Association and Florida Police Chiefs Association issued a joint report which concluded, "Casino gambling will mean. that crime rates will go up. It means the community will see-and have to confront-more vagrants, prostitutes, domestic violence, and gambling addiction. It means our communities will be less safe and secure." Last month, the Attorney General of Maryland issued a report entitled "The House Never Loses and Maryland Cannot Win: Why Casino Gaming is a Bad Idea." That report explains: "Casinos would bring a substantial increase in crime to our State. There would be more violent crime, more crimes against property, more insurance fraud, more white collar crime, more juvenile crime, more drug and alcoholrelated crime, more domestic violence and child abuse, and more organized crime." Gambling Attracts Street Criminals Atlantic City's crime rate rose an incredible 258 percent within 10 years of the legalization of casinos. In Gulfport and Biloxi, Mississippi, the site of 11 out of 13 casinos in that State, crime increased in every category last year, with murder, rape, robbery and car theft at least doubling. Three years after casinos were legalized in Deadwood, South Dakota, felony crimes increased by 40 percent, child abuse was up 42 percent, domestic violence and assaults rose 80 percent. Pathological Gamblers Feed Their Addiction More than half of all pathological gamblers will commit crimes in order to pay off gambling debts, particularly financial crimes like embezzlement, check kiting, credit card fraud, loan fraud, insurance fraud, and tax evasion. Pathological gamblers are responsible for an estimated $1.3 billion worth of insurance-related fraud per year. In addition, problem gamblers will commit domestic violence and child abuse. For example, since casinos came to the Mississippi Gulf Coast, domestic violence has increased 69 percent, and it is estimated that 37 percent of all pathological gamblers have abused their children. Legal Gambling Benefits Organized Crime William Jahoda, who formerly managed illegal gambling operations for the Chicago mob, testified before the House Judiciary Committee in September that "any new form or expansion of existing State-controlled licensed gambling always increased our market share" because advertising greatly increased the number of gamblers. |