The War on Video Crack
Americans who don't gamble tend to view gambling as
either high-glitz casinos or megabucks lotteries--the only outlets the media
ever bother to notice. This narrow focus has protected the gambling industry,
since Americans are willing to accept a vice that is clearly separated from the
rest of society--as casinos are--or that offers a luscious chance at the good
life--as megabucks lotteries do.
But three nascent
grassroots anti-gambling campaigns in the West could finally bring attention to
the real issue in American gambling, which has nothing whatsoever to do with
casinos or multimillion-dollar jackpots. In Oregon and South Dakota, voters
have gathered enough signatures to place a constitutional amendment on the
November 2000 ballot to outlaw "video lottery." In Montana, activists are
preparing a similar November 2000 ballot measure to abolish video gambling in
that state. These initiatives aren't trying to eliminate all legal gambling in
their states--prohibition has been a disastrously unsuccessful strategy in the
gambling wars. Instead they are targeting only the newest and most addictive
form of American betting: "convenience gambling." The campaigns against
convenience gambling mark the most important development in gambling politics
in years.
Convenience gambling--a cheerful phrase for an alarming
idea--is premised on the notion that once gambling is legal, it should be
allowed just about everywhere: convenience stores, bars, restaurants, bowling
alleys, gas stations. Eight states permit convenience gambling now. In several,
including South Dakota and Oregon, convenience gambling takes the form of a
so-called "video lottery." To those who haven't played it, "video lottery"
sounds like some kind of high-tech Powerball--a lottery played with a computer
instead of a ticket. In fact, "video lottery" bears no relationship at all to a
lottery. It is simply a euphemism for state-run video poker machines. Video
poker is a popular casino game, a low-stakes electronic version of
five-card-draw poker. "It means minicasinos on Main Street that are run by the
government," says Tom Grey, head of the National Coalition Against Legalized
Gambling, which is organizing the three ballot initiatives. Oregon, with about
3 million residents, owns 9,000 video poker machines that it places in 1,800
businesses. South Dakota, with less than 1 million residents, has 8,000
gambling machines in 1,400 locations. Montana has similar numbers of machines
in similar places, though the state does not run the machines.
These Western states
introduced video gambling in the late '80s and early '90s for one reason: It is
a stupendously effective way of parting citizens from their money. According to
the North American Association of State and Provincial Lotteries, the average
American in a state with a lottery spends about $150 per year on the lottery.
But in the five states with video lotteries (Delaware, West Virginia, and Rhode
Island, along with South Dakota and Oregon), average per capita lottery
spending is about $600 per year. In South Dakota, where lottery play is the
highest in the country, the average person spends an amazing $750 per year on
the state lottery.
This generates monster revenues for both state and
retailer. South Dakota's government splits the revenue 50-50 with the bars and
restaurants. The state clears $90 million a year, which it is using to cut
property taxes 20 percent. (This money represents about 5 percent of the total
state budget.) In Oregon, the state takes about two-thirds of the video lottery
revenues. That amounts to more than $230 million a year--about 3 percent of the
budget--which the state spends on education, parks, and salmon restoration.
("What do Oregon's public schools, businesses, workforce, state parks and
salmon all have in common?" boasts the Oregon Lottery's home page. "They all
receive Lottery profits to help them prepare for the future!") In Montana, the
state pockets 15 percent of video gambling revenue in taxes, close to $40
million for the state's treasury. (Both Oregon and South Dakota also run
traditional lotteries, but they are penny-ante games next to the video lottery:
Only a quarter of Oregon's lottery revenue comes from traditional lottery
games, and only 5 percent of South Dakota's does.)
Video gambling delivers
tax revenues, but it exacts huge social costs. Video poker is known as "video
crack." Its rate of play is dizzyingly fast--I once played more than 400 games
of video poker in an hour--and the flashing lights and flickering screens send
players into trancelike reveries. Unlike other kinds of gambling, video poker
discourages social interaction. "The machines suck people into the screen,"
says Professor William Thompson, a gambling expert at the University of Nevada,
Las Vegas. "You don't talk or socialize. You don't trade stories. It is
different from blackjack or even handle slots. These are the most addictive of
any gambling instrument we have today." It's also voracious: A typical gambler
addicted to blackjack takes about 20 years from placing the first bet to
bottoming out; a gambler hooked on video poker needs less than three years. The
number of Gamblers Anonymous chapters in Oregon has leapt from three to 30
since video poker was introduced in 1992. (The state itself recognizes the
dangers of video poker: It forbids video lottery advertising and allocates $3
million a year for treating problem gamblers.) What's more, the small stakes in
video lotteries encourage addiction. Unlike lotteries, which offer low odds but
spectacular jackpots, video poker returns tiny but frequent pots. The state
relies on people playing the games over and over and over again.
Addiction is not the only drawback of video gambling. It is
a cinch for kids to play video lottery machines, since they are often found in
businesses that kids frequent. Though it pays off more often than lotteries,
video poker offers poor odds compared with most casino gambling, taking about
10 cents of every dollar bet compared to 3 cents for casino slots. Moreover,
convenience gambling doesn't deliver the secondary economic benefits that big
gambling can. Because states limit the number of machines that any one business
can have, there are no large casinos. So video lottery brings none of the
ancillary jobs, restaurants, and hotels that big casinos do.
As a result, convenience
gambling is emerging as the kind of gambling that everyone can dislike, a juicy
target for opponents and a scapegoat for supporters of more acceptable kinds of
wagering. A bipartisan grassroots campaign in South Carolina just eliminated
its enormous video poker industry. (Read about that abolition .) This summer,
half the parishes in Louisiana threw out video gambling from their bars,
restaurants, and truck stops. Several years ago, the mayor of Las Vegas, who
strongly supported casinos, tried to root out convenience gambling from stores
in her city. The rest of the gambling industry treats convenience gambling like
an embarrassing cousin, routinely condemning it.
South Dakota and Oregon have preserved a last best argument
against the critics: They can't afford to drop video lotteries. Governors in
both states have said they dislike relying on lottery revenues to fund
essential government services. "The governor has never been a big fan of the
lottery and of letting gambling policy drive public policy," says a spokesman
for Oregon's Gov. John Kitzhaber. But they are too scared of losing their video
lottery funds to endorse the ballot initiatives. When the Oregon ballot
initiative was floated earlier this year, Kitzhaber endorsed the idea of
abolishing the video lottery but said the state needed a phaseout period to
find replacement revenue. So the activists added a three-year phaseout to their
ballot initiative. Kitzhaber now insists on a phaseout of at least six years.
"He wants to get rid of it, but then he wants six years. He sounds like an
addict," says the anti-gambling coalition's Grey.
The Oregon and South Dakota votes are a year away,
and the Montana signature-gathering has not yet begun. No one knows whether
even one of the initiatives can pass. The lottery retailers will surely spend
millions to keep their cash cow, and the governors are likely to campaign for
video gambling as well. But if the initiatives do squeak by, they may signal a
new and encouraging compromise, a recognition that just because gambling is
legal does not mean it has to be everywhere. If the initiatives pass, after
all, the states will retain their traditional scratch-off and Powerball
lotteries, and their Indian casinos will continue to offer electronic gambling
on reservations. These states will have gambling that is accessible, but not
universal; gambling that funds state government but does not hold it
hostage.
