(609) 599-3299 1-800-GAMBLER (Nationwide) (Fax number 609-599-9383) Arnold Wexler, Executive Director Ed Looney, Deputy Director Council on Problem and Compulsive Gambling of North Dakota P. O. Box 10292 Fargo, North Dakota 58107 (701) 293-1887 Daryl Gronfur, President Ohio Council on Problem Gambling P. O. Box 41262 Brecksville, Ohio 44141 1-800-457-7117 (in Ohio only) Terrance M. Toohig, L.I.S.W., President (home: 216-585-4162) Fax 216-585-5414 Oregon Council on Problem Gambling 1539 N. Pacific Highway Woodburn, Oregon 97071 (503) 581-9200 and in Oregon 1-800-772-7799 Virginia Vandehey, Acting Executive Director Council on Compulsive Gambling of Pennsylvania c/o Martin McGurrin, Ph.D., President 2319 South St. Philadelphia, Pa. 19146 (215) 744-1880 Rhode Island Council on Problem Gambling P. O. Box 2030 Pawtucket, R. I. 02861 Kenneth MacGregor, President (401) 724-8552 or (401) 724-0610 Texas Council on Problem and Compulsive Gambling, Inc. 5501 LBJ Freeway, LB 23, Suite 602 Dallas, Texas 75240 (214) 490-9999 1-800-742-0443 in Texas only Sue Cox, Executive Director Washington State Council on Problem Gambling P. O. Box 55272 Seattle, Wa. 98155-0272 (206) 546-6133 in Washington only 1-800-547-6133 Deborah Rost, Program Administrator rev. October, 1993 22-589 96-5 Mr. HYDE. Thank you, Mr. Ashe. The next witness will be Frank J. Fahrenkopf, Jr., president and chief executive officer of the American Gaming Association. Mr. Fahrenkopf. STATEMENT OF FRANK J. FAHRENKOPF, JR., PRESIDENT AND CEO, AMERICAN GAMING ASSOCIATION Mr. FAHRENKOPF. Thank you, Mr. Chairman and members of the committee. I want to, on behalf of the American Gaming Association, thank you for the opportunity to appear before you this morning, and, as you know, we are in opposition to the proposed bill. The American Gaming Association is an organization that consists of most of the large publicly-traded stock companies that are involved in the gaming and manufacturing business, casino devices, and so forth. As you said, Mr. Chairman, I have filed a lengthy statement with the committee attempting to deal with many of the things that the speakers before me have testified about and which some that are at the table with me now will testify about, including problem gaming and economic development. But as I was sitting here this morning with the witnesses that were before you, I sort of reminisced. When I first started practicing law 30 years ago, I was in criminal defense. While I have been in Washington for a long time, I still consider myself a country lawyer from Reno, NV. I was thinking about a question that I think Mr. Schumer asked, parroting what the Washington Post said the other day: If gaming is so good and all the benefits are there, why would anyone who is involved be opposed to a Commission who can validate it? And I thought back to a fundamental concept that I learned as a young lawyer, and that is that our form of democracy provides that anyone who is somehow accused of wrongdoing before the State, whether it be prosecution or if one of the members of this Commission were to be picked out, for example, by a columnist of the New York Times of having violated a campaign reform law, before the Congress of the United States would vote for a special prosecutor, whether it is the ethics committee, someone is going to take a look at the evidence and make a preliminary judgment as to whether there is probable cause before going forward, and I thought about that this morning in context of some of the witnesses. I think the Congressmen and Senators who spoke on behalf of the industry and against the bill this morning clearly pointed out the 10th amendment arguments, and I don't-Mr. Flanagan— somebody referred that those are things you are going to have to wrestle with, and there has been some reference to a report that was done some years ago, and that report I don't want to just be completely moved over. We filed with staff a complete copy of that report for your review. But that was a very, very important Commission. On that Commission were some very impressive individuals: Senator John McClellan, who made his reputation fighting organized crime and busting rackets; Charles Wiggins, who is now a ninth circuit judge and colleague of many here on this panel, a ninth circuit judge on the west coast; Senator Taft; Senator Scott. And they looked very closely, and what their conclusion was after 3 years and millions of dollars in that study-I just want to take a moment and read just one short paragraph because it is important. Here is what that group concluded: Because it is a social issue, the Commission has determined that gambling policy is the proper responsibility of the Government entity closest to the lives of the citizens, the State. States should have the primary responsibility for determining what forms of gambling may take place within their borders. The Commission does not believe that the Federal Government, which represents the Nation as a whole, should substitute its judgment for that of the individual States in this area. I don't think I have to say anything more about jurisdiction. I want to move to the other part of the argument that the proponents make; namely, that there is some need out there for Governors or State legislatures to be provided information so that they can make a decision. What I would say on that, and the first implication is that somehow organized crime, that is what came out of Mr. Jahoda-I think came out of it. I had as much trouble as some of the witnesses or of you to determine exactly what he said. I did quote, however— I wrote down his quote: No evidence of any links between organized crime and legalized gaming, no mob connection with licensed gaming; corporate gaming has done a magnificent job of cleaning up gaming and policing it. And if there was, in fact, an organized crime problem, I assume the representatives of the Federal Bureau of Investigation and law enforcement would be sitting here right now testifying to such an involvement. Mr. HYDE. Go right ahead. Mr. FAHRENKOPF. And I am pleased that the committee has agreed to listen to Mr. Jeremy Margolis, who was contacted, whose name I gave to the committee 10 days ago, and was contacted yesterday, and, interestingly enough, he put behind bars many of the people who Mr. Jahoda was talking about earlier today. The reason that you don't have anyone here from the FBI is in many ways what Jahoda said. The industry has done a good job. Why? Because it has 75 publicly-held companies listed on the New York Stock Exchange, the American Exchange, the Nasdaq Exchange. They are companies that have had to pass SEC scrutiny, Justice Department, Treasury Department scrutiny. And you know, the interesting thing, Mr. Chairman, is who owns these companies. Interestingly enough, the gaming institutions that are publicly-held companies are owned by institutional investors. They are owned by banks, they are owned by pension plans, they are owned by individual companies that are involved as institutional. Quick numbers: 80 percent of Caesars, institutional investors; 81 percent of Circus Circus, institutional investors, 37 percent of Hilton; 67 percent of Mirage; 72 percent of Harrah's. We have filed with our report two lists-a list of 200 studies that have been done in recent years by State legislatures, State governments, State institutions, independent groups, Peat Marwick, independent agencies that have looked at it. And again, if in fact the Governors and State legislators needed the assistance of the wis dom of the Potomac, Mr. Chairman, I assume that they would be lined up outside this door. As you know, we offered 10 days ago the speaker of the house of Mississippi, who was in charge of the work that was done in that State to determine whether or not they should have gaming. He was going to come here and testify that they handled it all right by themselves, that they didn't need anyone from Washington helping them. In this morning's Washington Post, on the front of the metro section, there is a report of what is happening in Maryland, where they are doing it the right way, the State is doing it. They have appointed people to a bipartisan commission, who are going out and making a determination. The States can do the job. What we have had with the proponents of this bill-and I respect them, I respect the men who are on the bills in both Houses, but they are attempting to put their moral judgments about this industry on the American people, and they want the Federal dollar to be used to do it. The States are doing a good job. That is where it belongs. Thank you, Mr. Chairman. [The prepared statement of Mr. Fahrenkopf follows:] PREPARED STATEMENT OF FRANK J. FAHRENKOPF, JR., PRESIDENT CEO, AMERICAN GAMING ASSOCIATION I. Summary Mr. Chairman and members of the Committee, thank you for the opportunity to present testimony on H.R. 497, the proposed establishment of a National Gambling Impact and Policy Commission. As president and CEO of the American Gaming Association, I appear before you today to express the opposition of our membership to the legislation. The American Gaming Association's membership includes most of the industry's largest publicly-traded gaming-entertainment companies and companies licensed to manufacture and distribute gaming equipment. Proponents are saying a commission is needed to study the ramifications of the growth of gaming so the general public, elected officials and others can have the information they need to make decisions about gaming. While that sounds good at first blush, a close examination of the real intent of the proponents, as manifested in their own rhetoric, shows that their intent is the complete abolition, on moral grounds, of the gaming-entertainment industry. I realize that as a member of this Committee it is always easy to support a study or commission. After all, who could possibly be against gathering more information? Who can argue with a study? When opponents of gaming ask, as The Washington Post did recently, why gaming proponents are afraid of a study, I respond by saying look carefully at the motivation of the commission advocates. Frankly, it is a lot like someone telling you "we're going to appoint a special counsel to look into your tax returns and personal finances -- and you ought to welcome it. Because if you are innocent, it will clear the air." Well, ladies and gentlemen of the Committee, such a proposal is outrageous and unfair on its face. And it is especially ridiculous when it is clear proponents of this commission see it as a first step toward their moral goal of abolition. Once that first step is taken, you have started down the slippery slope leading to a claim of Federal jurisdiction and control. Putting aside for a moment the motivation of the legislation's proponents, there are two fundamental questions raised by this legislation: (1) Does the abolition of and/or regulation of gaming fall within the jurisdiction of the Federal government; and (2) is a study really necessary? The answer to both questions is clearly -- No. No, the Federal government clearly does not have jurisdiction over gaming in the states. And, no, there is no demonstrated need for such a study. 2 |