When President Bill Clinton proposed in 1994 to tax the profits from casinos and other gambling establishments 4 percent to pay for his welfare overhaul, the industry responded by forming the American Gaming Association. Just the thought of the federal government being involved in the gaming business was enough to spark that action, even though the proposal barely made it to become a bill.
But that wasn’t the last incursion by the federal government into gaming. Just a couple of years later, Rep. Frank Wolfe of Virginia proposed a full study of all facets of gaming being conducted in the U.S. and the National Gambling Impact Study Commission was formed.
Because the first leader of the AGA was Frank Fahrenkopf, a Reno attorney who had been Nevada GOP state chairman and later was chairman of the national Republican Party under President Ronald Reagan, wielding wide influence in Washington because of his respectful diplomatic approach to all issues, the industry was prepared to make its case. Fahrenkopf was able to get three pro-gaming panelists on the commission, while there were also three anti-gaming critics, along with three semi-neutral members.
After two years of holding hearings in various cities around the country, including Las Vegas and Atlantic City, the NGISC released a report that verified most of the positive impacts of gaming. The first national survey of problem gamblers was completed and revealed that only around 1 percent of people exposed to gambling could be classified as compulsive gamblers.
Fahrenkopf told me numerous times that his one goal with the NGISC was to prevent any federal oversight over gambling, claiming correctly that gambling is a states-rights issue and should be decided at that level. The findings of the NGISC supported that point, and for his 17 years at the helm of the AGA, Fahrenkopf was able to keep the federal government at bay, as have his successors, Geoff Freeman and Bill Miller.
Last month, the AGA came out with an excellent report on illegal gambling, describing its scope, the various elements, and most importantly its cost to the American people. One of the main findings of the NGISC was that legal regulated gaming was far better than the illegal variety, which usually involved organized crime, political corruption and felonies far more serious than simply placing an illegal bet.
So the AGA and The Innovation Group, which produced this groundbreaking study, should be applauded for their efforts to bring this to light.
I have one concern, however, and that is in the vague field of unintended consequences.
In the study, the AGA urges action by state and federal authorities to crack down on these illegal activities. In the past year, the AGA has penned a letter to the U.S. Attorney General asking him to take action against illegal, offshore sportsbooks.
All of this makes a lot of sense, but what happens if it spins out of control? For example, what if some well-meaning congressman decides maybe we should draw a line between what is legal gambling and what is illegal gambling at the federal level? Now some states have legal gambling activities that are considered illegal in other states.
Yes, that’s unlikely to happen, but there could be something small and seemingly inconsequential that would be a foot in the door. And those of us in the gaming industry understand that strategy better than anyone, since that’s the way most gambling expansion has been handled. Lots of states that now host a major gaming industry started off small—sometimes as small as electronic pull-tabs.
So once again I commend the AGA for issuing such an important study with up-to-date information on illegal gambling. Hopefully it will lead to a dismantling of those “skill” games, a blocking of illegal online casinos from offshore, and an awareness of the public about what is legal and what is illegal, something many bettors don’t understand.
But please pay attention to how this is implemented and protect the legal industry from any intrusive intervention at the federal level. Keep the camel’s nose out of the tent.