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| Insight on the News: Gambling: playing their ace to get out of the hole - surge in gambling industry |
Summary: As barriers to legal betting have fallen to the realities of cash-strapped governments, gambling has grown into a huge industry. With everything from gaming on Indian reservations to state lotteries to floating casinos, revenue is estimated at $600 billion a year. There have been some success stories, but one thing is always true with gambling - there's never a sure bet.
It could have been a Hollywood movie.
Take a 250-member tribe of Indians in Southeastern Connecticut. One day on a hike through the woods of their reservation, a small band hears a voice boom out over the hillside.
"If you build it they will come."
Being of a spiritual nature, they decide to answer the call. But instead of building a baseball field to lure once disgraced players out of the past, as Kevin Costner did in Field of Dreams, they build something vastly more lucrative. Something designed to lure hundreds of thousands of fat-walleted visitors from the adjacent
From its beginnings as a bingo hall, Foxwoods has boomed; with its new expansion the sky is the limit. Northeastern megalopolis.
It's a casino. A really big casino. A casino so big and so successful that each and every member of the tribe becomes a millionaire in less than a year.
Okay, so maybe there never was a booming voice in the woods, but the reality is that since the Pequot Indians opened the Foxwoods High Stakes Bingo and Casino in Ledyard, Conn., about nine months ago, an average of 10,000 to 15,000 people have walked through its doors every day. Most of them leave at least some of their money behind.
And while each member of the tribe isn't driving around in a chauffeured limousine, each is, on paper at least, a millionaire.
"We're not talking anymore backof-the-nickel Indians" says Joey Carter, an executive of the Pequot tribe and assistant director of public relations and cultural resources for Foxwoods. "This is a whole new game. I sometimes drive out here with my son and we just stand outside and look at the casino and I tell him, |Someday this will be yours.'"
If this seems like the appropriate place for the big Hollywood fade-out, it is not. In fact, the U.S. is in the midst of the biggest boom in legalized gambling since a hard case named Bugsy Siegel had his own vision of a desert paradise where the doors never closed, the women were accommodating and sooner or later the house always won.
Today las Vegas still reigns as the quintessential monument to many Americans' belief in easy money. But the lust for betting on anything and everything has become so widespread across the country that one can almost imagine the words "Win, Lose or Draw" replacing "In God We Trust" on the currency.
Gambling, from state-run lotteries to video poker machines, is popping up all over as cash-hungry states and municipalities look to benefit from an apparently insatiable public. Today only Utah and Hawaii do not have some' form of gaming. By the turn of the century 39 states are expected to have legalized casino or riverboat gambling. With an estimated revenue of $600 billion annually, it's little wonder that many states are betting on gaming as the wave of the future.
And just as states are using gaming to fatten their coffers, gambling has become the success story for many Indian tribes, including the Pequot. Gaming revenue has created a ladder out of poverty tribes, but not everybody is happy with Indian gaming. In Arizona, Gov. Fife Symington has vowed to legalize gambling in the entire state rather than allow Indians an advantage. And casino owner Donald Trump has filed suit in federal court to overtum the 1988 Indian Gaming Regulatory Act - which allows tribes to open casinos on reservations and to sue if they aren't negotiated with in good faith - on the grounds that it is unconstitutional.
While the gaming bandwagon is becoming more and more crowded, some experts say the national appetite for wagering will eventually reach the saturation point and that the pie can be sliced only so many ways. To survive and thrive, these experts say, casinos will have to become ever more alluring - even outrageous.
Las Vegas is already transforming itself into a kind of Disneyland with slot machines, gourmet restaurants and chic boutiques. But some predict that even with measures such as these, the gambling boom is likely to go bust. A handful of casinos in both Atlantic City and Las Vegas have shuttered their doors, and some states looking to cash in on the romance of Bat Masterson-style riverboat gaming are finding that the ship has already left the dock.
A look at three communities where gaming has been either approved or established - New Orleans, a small town in the Mississippi Delta and the Mashantucket Pequot reservation in Ledyard - shows that the results have been as different as three pulls on a slot machine, not all of which, of course, produce a winner.
The two-lane highway leading onto the Pequot reservation may look like ordinary asphalt, but to the tribe it might as well be paved with gold. Since the Foxwoods Casino opened, the action has been nonstop. Even at midmorning in midweek the parking lot is filled with cars and buses that bring the 10,000 to 15,000 patrons a day to the most successful reservation casino in America.
What makes Foxwoods special? In addition to being the only casino in New England, it resembles not so much the neon palaces of Vegas and Atlantic City as it does a comfortable hotel lobby. Not the Ritz, but definitely several cuts above Motel 6. There is an indoor waterfall, stained glass, plush carpeting. And in violation of the cardinal rule that casinos should not have windows, Foxwoods has huge picture windows looking over the woods behind the 94,000-square-foot money machine.
"We are now the top tourist attraction in Connecticut," says Carter. "When we decided to do this we wanted to do it right. And everything you see around you, the uniforms, the interior, all of it was done by the tribe."
The tribe must be doing something right - Foxwoods, which hasn't shut its doors since it opened, is expected to generate $400 revenue this year.
When the tribe first went looking for a loan to open a high-stakes bingo hall in 1986 it was turned down by every bank approached until it finally found one willing to finance it.
"We wanted to borrow $5 million" says Carter. "And everyone refused. ... We finally were able to borrow money from the American Arab Bank in New York.... We paid off the [10-year] loan in 18 months."
When the Pequot wanted to borrow $50 million to expand the bingo parlor into a casino, they went to a Malaysian gaming syndicate. "They were very good businessmen and they saw that we were in a unique position to offer something that nobody else could," says Carter. "I mean, look at this location, and then turn around and look at the slums around Atlantic City."
Today the casino employs 4,500 people, many of them from local communities that were hit hard by plant closings when the defense industry lost steam in the late 1980s. Mike Jansen, for instance, holds a master's degree in business administration and worked for 26 years as a computer specialist at the nearby General Dynamics plant before it shut down. These days he's dealing blackjack and making less than $4 an hour, plus tips. "I'll never match the salary that I made," he says. "But I'm glad that I have a job and that I've been able to stay in the area."
In addition to providing employment for locals, the tribe has extended a philanthropic hand to nearby towns. This year, for instance, it is paying for Fourth of July fireworks in Norwich, after that city found it couldn't afford a celebration.
The Pequot largess might seem surprising considering that the tribe twice had to go before the Supreme Court to have its right to open the casino affirmed. But these days Connecticut and the sovereign Pequot nation are getting along just fine. After all, the state can't grouse too much when it will likely get $100 million next year under a deal Gov. Lowell Weicker cut that gives the Pequot a statewide exclusive on slot machines in exchange for a cut of the action.
The Pequot have been so successful with their casino that they have formed a consulting company to advise other tribes on launching casinos. However, even as other tribes gear up for casinos (Charles Keechi, until recently chairman of the National Indian Gaming Association, has predicted that eventually there will be a casino on every reservation), the predominance of Indian gambling may soon end as more states remove the barriers to general gambling after seeing the revenues the Indians can generate.
In Connecticut, gambling proponents are trying to reverse Weicker's deal. And then there's Donald Dump, who has decided to take on the entire Indian Gaming Regulatory Act.
Continued from page 1.
In his suit filed in early May against Secretary of the Interior Bruce Babbitt and Anthony Hope, chairman of the federal National Indian Gaming Commission, Trump seeks to overturn the act on the grounds that it violates the 10th Amendment, which states, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
The suit cites the pact between Connecticut and the Pequot, as well as similar pacts in New York and New Jersey. It says reservation gaming robs states of their sovereign rights and income from taxes, from which the reservations are exempt.
Trump's suit is not the first to challenge the gaming act on constitutional grounds. Two other suits, one in Alabama and one in Florida, are making their way through the legal system. But ask anyone at Foxwoods about the suits and one is likely to get a decidedly different assessment of the issues.
"I think that what the Trump suit demonstrates is a total ignorance of the rights of Native Americans as guaranteed by the Constitution and [the gaming act]," says Mickey Brown, president and chief executive officer of Foxwoods and former head of the New Jersey Gaming Commission. "[The act] was passed by Congress and signed by the president and in two separate cases it has been affirmed by the Supreme Court. The fact that Trump is trying to manipulate Congress to reverse an act that created economic opportunity for Native Americans because it was successful is just a further example of the character of Donald Trump."
It is too soon to tell how the lawsuit will fare; previous challenges to the act have been unsuccessful. However, some observers believe Congress may move to revise the act to exert more control over reservation gambling. In the meantime, as more tribes push for casinos, some will end up competing with each other. In Rhode Island, an hour's drive from Foxwoods, a Narraganset tribe is contemplating opening a casino.
But Carter and other tribal members aren't apprehensive. In fact, they are undergoing a huge expansion that will double the size of the casino and add two hotels, golf courses, theaters and a monorail.
"We aren't in this for the short haul," says Carter "We've been on this land long before anyone else was here and we are going to stay. And we are going to succeed."
The sleepy Delta town of Tunica, Miss., doesn't have any Indian tribes; in fact, until recently it didn't have much of anything. Tucked away about 35 miles south of Memphis on a flat and dusty stretch of eminently undistinguished earth, Tunica was destined to let the world pass it by forever - except for the fact that in 1980 it was the poorest town in the poorest county in America.
So impoverished was the mostly black community of 1,200 that in 1985, Jesse Jackson trooped several dozen reporters to town and mourned it on national television as the "Ethiopia of America," a moniker, more than a few Ethiopians might well have considered insulting. In those days, which many residents would rather forget, a small minority of townspeople lived in modest, middle-income comfort, while many residents lived in shacks without indoor plumbing.
These days, Sugar Ditch Alley, a settlement that once was squalid and had an open stream of sewage running behind it, has been transformed. The shanties have been razed to make way for a row of attractive apartment buildings that stand as a monument to the idea that even a place like Tunica can change.
The town's car dealership is booming, and residents can alternate lunch between the landmark Blue and White Restaurant and the new Subway sandwich shop, whose opening several months ago was accompanied by the kind of celebration generally reserved for nation al holidays. And nobody laughs at the newly painted legend on the town water tower proclaiming, Tunica: A nice place to live."
There is a sense of hope among residents, who in 1991 were so desperate that they considered making the town the site of a hazardous waste incinerator. But these days Tunica has money to burn.
In October, Tunica became the first inland Mississippi town to take advantage of a 1990 state law legalizing floating casinos. Today, one in four town residents work at the Splash Casino. And while some residents feared that the plum jobs would go to trained dealers from Vegas and Atlantic City, the casino operators opened a "casino college" in the center of town.
"What we've done is bring jobs into this community, and it has changed things dramatically," says Rick Schilling Jr., a principal of the casino. "Jesse Jackson ought to come back here. We don't have any racial tension anymore. The crime rate has gone down. People are off of welfare. Unemployment ... has gone from 22 percent to 6 percent. We've got new houses being built. The roads are being fixed. There's been nothing but benefits."
Arcus Nicholas, a soft-spoken 22-year-old who has been working at the casino since it opened, started out in housekeeping but is now a security guard. While that doesn't carry the glamour or the tips that come from working as a dealer, he says heartily that the job has changed his life.
"For the first time in my life I am making a decent living," he says. "What this job did was give me a chance to get out on my own. I was able to buy a brick house, with my mother, and I bought myself a car. I'm from the neighborhood, you know, and I look around at my friends and they're all asking, |How can I get a job at the casino?' Without this job I don't know what I'd be doing'
Nicholas says that apart from the paycheck, the house and the car, the job has given him something else. "I've got respect for myself and other people respect me," he says. "It's been like this for everyone. Ten years ago we didn't even have indoor plumbing. Now we've got condominiums. There's a big difference."
Tunica's residents aren't the only ones who have benefited. Schilling and his partners are making out well, too. And although none of them will specify the casino's profits, Schilling does say they aren't exactly hurting.
On Mother's Day, perhaps a surprising time to find a gambling house packed, Splash Casino is doing a land-office business. By 1 in the afternoon more than 800 people have come in after shelling out the $10 admission fee. Many of them are families treating mom to the advertised brunch and a day at the slots. By midafternoon there's a line forming outside of people who must wait for others to leave before squeezing in.
What they get for their $10 is a chance to hang around in a dimly lighted, retrofitted barge on the Mississippi River that has been gussied up with a layer of stucco, carpeting, and enough mirrors and flashing lights to induce a trance.
There are other inducements, including a steak buffet, one of those artery-blocking, fat-laden feasts featuring the kind of home-style cooking that has made heart disease the No. 1 killer of white, middle-aged men. There are long-stemmed cigarette girls proffering free packs. There's also a gift shop where winners can divest themselves of at least some of their earnings on things such as T-shirts, souvenir pens and cheesy jewelry.
If it's not exactly Vegas, it doesn't have to be. After all, the only girl at the prom is bound to have a full dance card, and for the time being Splash is the only casino for several hundred miles.
But things are about to change. The success of Splash has already started a ripple effect. Even as Schilling spins out a future scenario featuring golf courses, airports, fine hotels and sleepy little Tunica as a kind of Delta destination resort, the folks in nearby De Soto County - about 20 miles closer to Tennessee, where many of Splash's patrons live - may get a riverboat casino of their own.
Under the Mississippi gaming law, the only thing that can stop casino development in a riverside community is enough citizen signatures to force a referendum. Although D Soto residents have twice gambling proposals, the gambling industry is betting that sooner or later they will succumb to the lure of easy revenue.
The possibility of competition doesn't seem to worry Schilling. "They may take some of the cream, but there should be enough milk to go around."
As the mighty Mississippi River flows south toward the Gulf of Mexico, some of that milk is going to flow right along with it. In fact, developers in New Orleans are crossing their fingers that the Big Easy may soon add the world's largest casino to its list of attractions. Not everyone in the city is thrilled at the prospect, but unlike the residents of Mississippi, Louisianans never got to vote on whether they want gambling.
While the state's voters have always shown a remarkable tolerance for corrupt politicians as long as they are colorful, there are those who say that Edwin Edwards, the fourth-term governor once christened by Playboy as the Silver Zipper, may have gone too far.
Continued from page 2.
Edwards is a French-speaking Cajun, high-stakes gambler and veteran of two racketeering trials during his third term of office. (The 1985 trial resulted in a hung jury; he was acquitted the next year.) Many people believe Edwards would have been handily defeated in the November 1991 election but for the fact that his opponent was David Duke, a former imperial wizard of the Ku Klux Klan. A year ago Edwards rammed a bill through the state Legislature that approved the licensing of a single casino to be constructed in the heart of New Orleans, on a city-owned site within hollering distance of the French Quarter.
New Orleans Mayor Sidney Barthelemy quickly moved to award the lease for the Rivergate building, which sits at the foot of Canal Street adjacent to the city's Convention Center, to developer Christopher Hemmeter and Caesars World. They have proposed razing the Rivergate and building a 400,000-square-foot gaming palace. It would be the largest casino in the world.
How did Hemmeter, a real estate developer known as "Mr. Fantasy Island" for his developments in Hawaii, end up with the Rivergate lease? Ask anyone in New Orleans and you'll get a nearly universal response: The fix was in from the start.
In late 1991, Barthelemy, City Councilman Lambert Boissiere, state Senate President Samuel Nunez and their wives were treated to a trip to Hemmeter's resorts in Hawaii. A blink of an eye later, Hemmeter's partner, New Orleans native Dan Robinowitz, flew Edwards and his girlfriend to a resort in Colorado.
Following criticism in the New Orleans Times-Picayune, which has adamantly opposed the casino, and before being dragged before the state's Board of Ethics, the decided to pay back their hosts.
"I don't think that I have to have indictable evidence to say that what was done here was wrong," says Peggy Wilson, the sole Republican on the City Council. "But they should not be taking any perks unless it is food that can be consumed right then and there."
Although many city residents have been vocal in their opposition to gambling, Wilson, who many believe may run for mayor, has been the only council member to oppose the casino. She felt steamrolled by the opposition but used a flanking maneuver to launch a referendum on term limitation, which won and will mean an almost complete turnover in New Orleans government.
"Peggy Wilson ought to be canonized "says James Hovey, an antiques dealer in the French Quarter, or Vieux Carre, who is active in the historic district's preservation. "This city is being run by nothing but a bunch of crooks."
Hovey and many other upscale merchants in the French Quarter believe that the opening of the casino would be their death knell, although the casino's license is contingent on a promise that there will be no new hotels, restaurants or retail operations that could compete with established businesses.
"Of course, that's not going to stop them from being able to give out all the free shrimp, oysters and gumbo that they want," says Hovey.
He and others cite the city's apparent inability - or unwillingness - to crack down on businesses operating illegally in the French Quarter, specifically T-shirt and novelty shops' Despite a moratorium on such shops (enacted on a temporary basis in 1981 and in 1991 adopted into the city's comprehensive zoning ordinance), residents and merchants complain that such illegal businesses are proliferating.
"We are destroying the goose that laid the golden egg," property manager Louise Spottswood testified before a meeting of the Vieux Carre Task Force, a group of citizens and business leaders appointed to manage growth in the Quarter. "What with the opening of the casino, we're going to have two kinds of tourists come to town: People who want to gamble and never leave the casino, and tourists who eat in their rooms and buy junk."
Hemmeter's revenue projections for his casino are so high that many residents wonder if Mr. Fantasy Island himself might be engaging in a bit of fantasy. Hemmeter and Robinowitz, who declined to be interviewed for this story, believe their casino would generate $700 million in revenue annually, which is $300 million more than the revenue of Donald Trump's Atlantic City Thj Mahal, the nation's top-grossing casino. Hemmeter's figures are based on projected revenue nearly double that of the average-size casino in Las Vegas.
According to a study done for the Times-Picayune by Professors John Mills and William Thompson of the University of Nevada at Las Vegas that compares Hemmeter's projected income statement with that of a fictitious Las Vegas casino generating the same revenue, Hemmeter's casino could still lose $64 million annually because of its operating costs.
In the end, Hemmeter may never see his casino - to be named Gran Palais - open. Despite the fact that the city has given him a lease for the property, the state has not yet awarded him a license. And there are at least two parties hoping it never will.
New Orleans lawyer Gauthier is bayou born and bred. The Cajun lilt in his voice is like that of a country lawyer, but the Rolls-Royce in front of his office building in the New Orleans suburb of Metairie bespeaks a successful law practice.
Gauthier also owns a small share of the Saints, the city's football team that has always packed in enthusiastic crowds at the Superdome despite being a perennial loser until recent years. Now, along with at least 10 partners, Gauthier is hoping to beat Hemmeter at his own game.
Working in conjunction with the Promus Cos., which owns Harrahs, Gauthier has plans much more modest than Hemmeter's. Rather than raze the Rivergate to make way for grandiose architecture, Gauthier would refurbish the building.
"What we believe is that Hemmeter's plan is simply too big for the city of New Orleans," says Gauthier. "We don't want to create a city with a casino attached to it. If we're going to have gambling we should have it as an additional attraction. But a casino will never be the reason that people come to New Orleans."
Gauthier's plan, in addition to being far less expensive than Hemmeter's, is also less risky He says that rather than investing hundreds of millions of dollars and taking two years to build a 400,000-square-foot behemoth, he could have at least part of his casino up and running three months after a license is granted in July.
He plans to open the casino in 40,000-square-foot increments; if business warrants expansion he would do so. Gauthier, then, would not face the financial risks that Hemmeter is willing to take - risks that Hemmeter has refused to prove he can take by presenting a personal financial statement.
Gauthier and his partnership promise something else: local control.
"This is definitely the biggest thing to have happened in this state in my lifetime and I would like to think that I could play a part in it," says Gauthier. "We've put together a governing board that truly represents the population here geographically, racially and economically. With Harrahs in charge of the operation I believe we have a proposal that is extremely attractive."
This month, Hemmeter and Gauthier must file their final proposals before the board of the Louisiana Economic Development and Gaming Corp., which will decide in July who gets the license. However, that board has come under criticism from its own chairman, Max Chastain, for actions it took April 20. The board canceled three days of hearings and debate on what it should request from prospective casino operators, changed the wording of the invitation to bid and told potential bidders of the imminent deadline for filing final proposals.
Chastain, at a meeting of the board May 10, said "several board members may have been overzealous" and "to some degree" harmed the credibility of the board.
In the game of casino licensing, Gauthier could end up a winner or a loser, but Hemmeter is a winner no matter who gets the license. As holder of the lease on the Rivergate he will be the one with whom the winner of the license will have to negotiate. Gauthier, who knows well the ins and outs of Louisiana politics, chuckles with grudging admiration at the potential irony of the situation.
"I think that Chris Hemmeter is an aggressive negotiator," he says. "But if someone had told me that an outsider could have 10 locals who've been involved in the political process all their lives running scared I would have said no way. And believe me, if we knew of anything he'd done illegally we'd be screaming. But he beat us on the lease with sheer skill."
Mary Parks doesn't give a hoot who ends up with the license. As far as she and 11 other residents are concerned, all the argument is moot, or at least should be. Parks has filed a lawsuit that is before the state Supreme Court that could end the debate once and for all by resulting in gambling being declared in violation of the state constitution.
Continued from page 3.
Although most people believe Parks's suit stands about as much chance of success as the 1-15 Saints of the 1980 season had of winning the Super Bowl, when this soft-spoken housewife from a suburb near Lake Pontchartrain speaks, there is a certain resolute outrage in her voice.
"I grew up in New Orleans and my daddy used to love to go to the track," recalls Parks, sitting in her immaculate kitchen. "And for a long time I thought, |Well heck, there's nothing wrong with a little gambling.' But frankly, ever since this whole casino debate started happening I've just become completely disgusted with the whole issue.
"I am disgusted with the government for encouraging people to spend their money this way. And when I look at the ads on television [for] the lottery, I believe they are deceitful. I mean they say, play every night and be a winner every night, and that just doesn't happen.
And it bothers me seeing the mayor begging for a casino," she adds. "We've already got enough problems in this city as it is. And now you've got a mayor who is too busy to meet with anticrime groups, but has more than enough time to meet with casino owners. Something is wrong."
But even as the voices of Parks and others question the ethics surrounding gambling, the fact is that the sound of slot machines whirring and coins funneling into state and municipal coffers is likely to d out.
In Chicago, Mayor Richard Daley wants permission to build a $2 billion casino and entertainment complex. In Massachusetts, Gov. William Weld wants to introduce video gaming into the state. Louisiana, in addition to approving the casino in New Orleans, has passed a law allowing up to 15 riverboat casinos. And in Detroit, where residents have voted three times to reject casino gambling, developers looking for a loophole want to donate downtown land to some upstate Indians who are already gaming on Michigan's Upper Peninsula. The Indians could then use the land for a "reservation" casino.
In Maryland, Gov. William Donald Schaefer has added keno - in which a new sequence of winning numbers is churned out every five minutes from 6 a.m. to midnight - to the state's lottery games. Seeking to balance the budget, Schaefer pushed keno through without legislative approval and vowed to veto any bill to stop the game unless provisions were made for making up the expected $100 million a year in revenue. Legislative analysts, however, predicted half that much revenue, and, by March keno had fallen far short of the projected number of retailers and was reported to be taking players away from other state lottery games.
There will be some big winners among these cities and states. But there are always more than a few losers in any game of chance. By its very nature, gambling takes from the many and gives to the few. And it takes only a quick look around the outskirts of Atlantic City to see that money doesn't necessarily spill over into the greater community.
Is gambling good for a community? It probably depends on the community. As to whether gambling is here to stay, the answer is easy. You can bet on it.
COPYRIGHT 1993 News World Communications, Inc.
COPYRIGHT 2004 Gale Group
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