The nation's booming gambling industry has emerged as an influential and divisive force in American politics, even as the debate sharpens about how legalized gambling affects culture and society.

Just a decade ago, only two states allowed some form of legalized gambling. Today, only three states prohibit it. Two GOP governors -- David Beasley in South Carolina and Fob James Jr. in Alabama -- lost their jobs last November in part because of their perceived opposition to lotteries and other forms of wagering.

Whether gambling is a legitimate business that should be encouraged, or an insidious cancer that must be controlled, is a question that has provoked internal splits among Republicans and Democrats. Americans wager more than $600 billion annually in legal gambling operations -- at least $100 billion more than they spend for food, according to industry figures and data from the Department of Commerce. In 1997, the gambling industry's gross revenues totaled nearly $51 billion, up from $10.4 billion only 15 years before. The Council on Compulsive Gambling of New Jersey estimates the betting on Super Bowl XXXIII last month may have reached $4 billion, not counting side bets and office pools.

"The epidemic that is sweeping the nation reflects the enormous power and influence that is held by the gambling kingpins" argues social conservative James Dobson, head of Colorado Springs-based Focus on the Family ministry. "Because of their unlimited financial resources ... they can influence elections dramatically and entice political leaders to do their bidding."

Dobson, who has called the gambling lobby "the most powerful force in government today," sits on the National Gambling Impact Study Commission, the panel appointed by President Clinton and GOP congressional leaders to investigate the impact of legalized gambling on the economy, on families and on compulsive gamblers. Created in 1996 to investigate everything from casino video poker to Internet gambling, the commission is scheduled to release its findings June 18.

The impending release date has intensified the political jockeying about gambling's impact. Frank J. Fahrenkopf Jr., the former Republican Party chairman who now is president and chief executive officer of the American Gaming Association, figures to be at the center of the debate. Gambling is not a partisan issue, says Fahrenkopf. "It's not Republican or Democrat, not even liberal or conservative" -- and certainly not immoral. "I'm a Knight of Malta in the Catholic Church, and I don't need Jim Dobson to tell me what's moral," says Fahrenkopf, decked out in his trademark red tie and red suspenders. "And we're not going to apologize for trying to influence political elections."

The industry's pitch: Legalized gambling today is a clean, closely regulated industry that has created more than 1 million jobs, bringing new vitality to rundown rural areas, Indian reservations and depressed Midwestern towns. And the nearly $3 billion the industry pays each year in federal, state and local taxes translates directly into better social services and better schools across the country.

Steve Heneghan, spokesman for the New Jersey Casino Control Commission, cites Atlantic City as an example. "The casinos now employ just under 50,000 people, and there aren't 50,000 residents in Atlantic City," says Heneghan. "Casinos make up 80 percent of Atlantic City's tax base." When casino gambling was introduced in New Jersey in 1976, the assessable value of all the land in Atlantic City was $320 million; today, says Heneghan, it is more than $6 billion.

But critics hope the commission report will spur Congress to impose new curbs on gambling, such as legislation that would end a federal policy that lets gamblers offset any winnings with losses for tax purposes. And opponents already are warning they intend to make gambling a key issue in the 2000 elections.The stakes are high, given the huge contributions that members of both parties -- including those in leadership posts -- receive from gambling-industry leaders and political-action committees, or PACs.

According to the public-interest group Common Cause, the Republican and Democratic national committees are Tweedledee and Tweedledum on the question of campaign contributions from those in the gambling industry. From 1988 through 1998, each party received nearly $9 million. Senate Minority Leader Tom Daschle of South Dakota, House Minority Leader Dick Gephardt of Missouri, and GOP House Majority Whip Tom DeLay of Texas were among the "top recipients of gambling industry PAC money" from 1987 through 1998. A Congressional Quarterly report noted that Senate Majority Leader Trent Lott of Mississippi, GOP Senatorial Committee Chairman Mitch McConnell of Kentucky and Rep. Charles B. Rangel of New York, the ranking Democrat on the House Ways and Means Committee, were among a "parade of law-makers" who flew to Las Vegas before the last election looking for money from the casino interests.

But a number of law-makers are highly critical of gambling's influence in politics, and aren't shy about saying so. Republican Rep. Steve Largent of Oklahoma has taken his own party to task for accepting gambling donations. "I think the Republican Party accepts far too much money from gaming interests," says Largent. "It's money that's been tainted by a negative and sometimes questionable reputation. The party doesn't need that."

Fahrenkopf insists legal gaming is clean. "Organized crime is not involved in gaming today ... it's probably the most regulated industry in the country," he says. However, a 1996 General Accounting Office report found that the "proliferation of casinos, together with the rapid growth of the amounts wagered, may make these operations highly vulnerable to money-laundering." And a report released last summer by the Treasury Department found that since 1995, "there have been a number of criminal and civil enforcement actions in which casinos were used by individuals to commit financial offenses including ... money-laundering" some of it "involving organized crime."

A political shock wave rumbled through both parties in November when South Carolina, considered a conservative Republican bastion, ousted GOP incumbent Gov. Beasley in a campaign that focused on his threat to shut down the state's $2 billion videopoker industry and his opposition to a state lottery. Gambling interests channeled large sums to Democratic challenger Jim Hodges, who won.

But gambling's critics predict further troubles for Republicans. "If there's not a split in the GOP now over the gambling issue, there will be a chasm by the 2000 elections," says the Rev. Tom Grey, who heads the National Coalition Against Legalized Gambling. Grey thinks that Democrats need to be put on the spot, too. "We know the poor gamble more than people with money," says the United Methodist minister from Illinois. "The liberals say they are concerned about that" -- but rationalize that it is all right "since the money from the lottery is going for education."

Fahrenkopf points to the HOPE scholarship program in Georgia, which uses state lottery money to provide scholarships to state colleges for Georgia high-school students with at least a B average -- a program that has helped more than 300,000 students. Grey counters that the average Georgia lottery player earns $30,000 a year, while the average household income of a student receiving a HOPE scholarship is $40,000. "This is a wonderful middle-class rip-off," he says.

Kevin Whyte, executive director of the National Council on Problem Gambling, an organization that is neutral on moral issues but lobbies for better treatment for gambling addicts, believes gambling will remain popular with politicians reluctant to raise taxes. "This is a voluntary tax," says Whyte.

Grey and others, however, argue that average Americans often have little say in the expansion of gambling. "Gambling promoters find politicians [eager for donations and tax dollars], and they create a movement for gambling. It's not something the citizens ask for," says Grey. "Government ought not to be making losers out of its citizens."

William Jahoda, spokesman for Americans Against Organized Gambling, agrees: "People who initially authorized a lottery at a dollar a ticket suddenly find themselves with boats down the street that take bets of up to $1,000."

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