Industry Insiders: Elections Could be Turning Point for Gaming

By Rod Smith
/Gaming Wire/

WASHINGTON, DC -- The upcoming November election likely will be a watershed for gaming nationwide, industry insiders say.

It could prove to be a turning point in the development of the industry similar to legalizing Atlantic City casinos in the 1970s, creating the California lottery in the 1980s and developing riverboat casinos in the 1990s.

"The outcome of the election will lead quickly to consideration of expanded gaming opportunities," said Gary Loveman, president of Harrah's Entertainment, the most geographically diverse casino operator.

He cited Maryland, a small state with a huge fiscal deficit, where the two major gubernatorial candidates are strongly pro-gaming and anti-gaming, respectively.

"Three factors are important," Loveman said. "Having at least a neutral governor, fiscal problems and neighboring states with more gaming opportunities."

Harrah's is also working with other states, he said, to make sure legislators know this is not just a free grab to get revenue. The message is starting to get through."

The deck is being stacked in the 2002 election in favor of gaming.

Gaming has emerged as an issue in 23 gubernatorial races. Pro-gaming candidates have been nominated in 14 states and anti-gaming candidates have been nominated in 19 states.

Both candidates in Pennsylvania favor liberalized gaming. Pro-gaming candidates are running ahead in the polls in major states such as New York. And gaming is expected to arise again whichever candidate is elected in smaller states such as Maryland and domino states such as Ohio.

Ballot initiatives are on the ballot in 11 states that area already pro-gaming. Some of the initiatives are statewide and others have been placed on the ballot on a county-by-county basis.

Gambling foe Tom Grey, executive director of the National Coalition Against Legalized Gambling, said opponents lack the resources to qualify initiative petitions for balloting.

He acknowledges that beating back the petitions is an uphill battle.

For example, pro-gaming interests are reported to have been outspending gaming opponents by as much as six-to-one in some initiative campaigns, with pro-gaming groups in Idaho reportedly spending the equivalent of $30 a vote.

Still, "on election night, we'll have done very well in legislative elections, gubernatorial races where we'll win more than we lose and on initiatives we'll win some and lose some," Grey said.

Even where pro-gaming initiatives win, Grey may claim victory. In Iowa, for example, where voters have to decide every eight years whether to continue riverboat gambling in 10 counties, he says if casino interests don't get more than 80 percent, "it would be a real message that gambling does not yet get overwhelming support from the American public."

Stakes are high and tempers are getting short.

"Tom Grey's a phoney and you can quote me," said American Gaming Association President Frank Fahrenkopf.

"He tried to make lemonade out of lemons and that's what he's trying to do in Iowa. If (gaming opponents) lose, it's a major defeat because they've spent eight years trying to turn back riverboats. There's no way he's going to gild that lily," he said.

Fahrenkopf, whose organization does not get involved in state or local contests, sees ballot initiatives in two states as bellwethers.

Tennessee is important, he said, because a real battle is shaping up over doing away with a constitutional prohibition on lotteries.

The referendum facing Tennesseans would, if approved, lay the groundwork for a state-run lottery. Funds generated from the games would be used for college

scholarships and school construction under a plan already laid out by the Legislature.

Also, "from a casino standpoint, the state of Iowa is very significant.

Anti-gaming groups have been saying legalized gaming's social costs outweigh its benefits."

Grey, however, said only one group has been fighting the ballot item and any opposition will be significant.

Anyhow, he said, Frank (Fahrenkopf) stays back there in Washington and doesn't know anything about grass-roots support and opposition.

The election in Pennsylvania may be the most important, just about all experts on both sides agree, and it may be the most important bellwether because it meets all three of Loveman's criteria.

Both candidates have endorsed slots at racetracks, riverboats and video poker at bars. Democrat Ed Rendell is seen as the most supportive of gaming, however, because of his track record on riverboat gaming proposals as mayor of Philadelphia.

A recent poll by Madonna Young Opinion Research found that 61 percent of Pennsylvanians favored slots at racetracks. When told thousands of jobs in the state's horse racing industry could be saved by adding slot machines at tracks, an overwhelming 67 percent favored slots.

Other findings were that 69 percent believe all the state's ban on slot machines does is lead Pennsylvanians out of state to gamble, 56 percent feel the horse racing industry in Pennsylvania needs to have slot machines to compete with racetracks in nearby states and 61 percent agree Pennsylvania needs the thousands of new jobs that would be created by allowing slot machines at the state's racetracks.

Bear, Stearns Co. Inc. analyst Jason Ader agreed Pennsylvania is the most important state in which gaming is being contested. Although both gubernatorial candidates favor liberalized gaming, action in Pennsylvania will have a determining effect on the future of gambling in neighboring Maryland and Ohio because neither can afford to have its tax or jobs base eroded further.

Still, Ader said, "the election is going to be very, very tight. Gaming is an emotional issue and the results are going to go right down to the wire."