Gambling Incomes

Through the years, gambling has become America’s
pastime. Over 60 million Americans make some sort of
wager every day.1 When compared to other recreations(in
billions of dollars) in 1990, gambling institutions made
2.2 more than magazine sales, 8.3 more than book sales,
20.9 more than theaters, and a whopping 21.8 more than
movies.2 This number has increased to this high level
because of the growth in the amount of legalized gambling
establishments and the accessibility to these
establishments, both of which increases the number of
gamblers. The compulsive or pathological gambler affects
society most. According to Stuart Winston,
The compulsive gambler is the backbone of gambling.

Without the compulsive gambler, there would be no Las
Vegas, no Off Track Wagering. Two thirds of the race
tracks in America would close. The attendance of sporting
events would drop 50%, and T.V. wouldn’t bother with
sports beyond championship events…..The compulsive
gambler bets a piece of his life everyday, and a piece of
his family’s. The other 45 million people who gamble are
having fun.(Out of the 60 million who gamble every day)3
These gamblers often resort to crime to pay off their
debts and anger. Even though legalized gambling has
changed through time, and has been accepted in America
today, it remains detrimental to society, and should not
be legal anywhere.

American gambling can be traced back to the early
years of the nation. Different forms of gambling, such as
lotteries, remained popular until 1890, when U.S.

jurisdiction made lotteries and all other forms of
gambling illegal by direct prohibition.4 Gambling had
become more and more a low life thing to do. These low
lifes, called rowdies, would bet or take a bet on
anything. Most tried to look different from everyone else
by wearing thick imitation gold chains, a dyed black
mustache, a velvet coat, and long hair.

New York City alone had about 30,00 people earning a
living from gambling in the 1890’s. The casino’s were
plush and usually had a buffet with alcohol. The
operation made a lot of money, most from cheating. Each
casino would hire agents to come in and claim winning
keno numbers, afterwards giving most of it back to the
casino. Counterfeit money was also handed out to the few
people who happened to win. Any protest from a loser and
he would end up with a black eye. Oscar Handlin said, An
individual may sometimes take away substantial sums of
money, but in the long run the banker must win.5
Essentially, gambling hurt society in the early years of
America. For the next 25 years, gambling became unpopular
again because of reports of cheating and changing American
values. Anything thought of to be harmful to society
became illegal. For example, alcohol became illegal by
Prohibition.

The reintroduction of gambling resulted in the return
of corruption and fraud. By the mid 1920’s, state after
state abolished its anti-gambling laws. Gambling had
become more and more accepted because of churches holding
bingo sessions and legitimate racetracks being built. In
1931, gambling became totally legalized in Nevada to
replace the money the state was getting from depleted ore
rich mountains.6
Organized crime started to turn toward gambling as
their main source of income after Prohibition ended in
1933. These criminals made most of their money
bootlegging alcohol during Prohibition, so once alcohol
prices went down, they needed another way to make a lot of
money fast: gambling.7
Organized crime started getting more involved with
gambling once Las Vegas started to boom. Bugsy Siegal, a
half insane murderer who was sent to Nevada to enforce mob
control of the race wire services, opened up the first
hotel/casino in Las Vegas. His hotel, the Flamingo began
a long period of gang involvement in Las Vegas. In 1947,
the Desert Inn opened, run by a gang from Cleveland. A
savage group of people, including the infamous Meyer
Lansky and Lucky Luciano, established the Desert Inn in
1947. Lansky, the brains of this group, was a genius with
numbers, while Luciano, the brute of the group, was a
genius for finding Lansky. 1952 brought the opening of
the Sahara by some run-out’s from Oregon. The Sands, with
Frank Sinatra as a headliner, opened in 1953, funded with
Chicago mob money. This was the first attempt at bringing
big time entertainment out to Las Vegas to draw people to
casinos. Tony Stralla, a hoodlum from California, opened
the Stardust in 1955. The Stardust towered over the rest
of the hotels on the strip and had more luxuries inside.8
Each hotel became bigger than the next and all made a
lot of money. Much of the money was skimmed off the top
and sent around the country to different mob headquarters
before taxes could be taken out. By the late 1950’s,
federal accusations such as the Kefauver expose and
investigations by the Treasury Justice, showed the mobs
involvement in Las Vegas and the ways they were stealing
money from the government such as skimming.9 Once again,
the public saw decided gambling was bad after, the news of
corruption and fraud, just like in the 1890’s10
Today, everyone has given gambling, a booming
corporate industry, another chance. Squeaky clean owners,
such as Steve Wynn and Donald Trump, own numerous casinos
in Las Vegas and Atlantic City. Each has been portrayed
by the media as good guys who just happen to be making a
lot of money through gambling. They advertise gambling as
a legitimate business, with corporate style offices
staffed by corporate style employees and have stocks
representing their company on the stock market.11
Each new hotel/casino is bigger and nicer than the
next, just like in the late 1940’s and early 1950’s. They
bring in big-time gamblers with complimentary amenities,
such as free air-fare and suites. Middle class gamblers
are lured to casinos by free food. For lower class
gamblers, owners provide free transportation.12
Outside of Las Vegas, growth can be seen even more.

State lotteries, riverboat casinos, bingo parlors, and
Indian Reservation casinos can be seen all across the
country. More and more states are legalizing forms of
gambling each year. The gambling cycle is still rising
and may never come down. This recent resurgence in
gambling tried to clear its image, but problems still
exist.

The growth in gambling venues has greatly increased
the chances for an average person to gamble legally. This
growth, in turn, has exponentially increased the number of
gamblers. By the year 2000, 95% of Americans will live
within a 3-4 hour drive of a casino.13 Today, the only
two states without any kind of legal gambling are Hawaii
and Utah.14 Because of this, the amount of money gambled
legally in 1993 was 2,300% higher than the amount wagered
in 1974.15 From 1982-1990, Americans increased their
amount of money they gambled over twice as much as their
incomes increased.16
Despite the growth of this new clean gambling
industry, the results of gambling remain frightfully
dangerous. Casino owners, while no longer street
hoodlums, are still mercilessly preying on the weakness of
their clients. The owners of these gambling institutions
have two rules: get the people to start playing and keep
them playing.17 They make their casinos more enticing for
the average person by making themselves look like good
citizens. Casino owners make donations to local charities
and schools and run lucrative adds sounding as if making
money at their casino will be easy and fun.18 The
industry has also stayed up with the times making betting
easier, more appealing, and more exciting.19 Harrah’s
casino spends thousands of dollars each year to see
whether fresher air, wider aisles, and back supports can
increase gambling. The Hilton in Las Vegas even went so
far as to release a scent called Odorant 1, produced by
Alan Hirsch, a Chicago neurologist. This scent made the
air smell fresher, in a slot machine pit. These slot
machines saw 45% more action than usual.20
Why do these casinos want each person in their casino
to stay longer, and to bet more money? Because the odds
are in favor of the house, and the more money gambled, the
more the house will make. CEO and President of Claridge’s
Casino in Atlantic City, Bob Renneissen, said, Our goal
is not to get more out of a customer in three hours but to
get him to stay for four hours.21
In lotteries and horse racing the house earns the
same percentage from the wagers, no matter what the
outcome is. This fact ensures that more money is wagered
the more money is made. In casino’s, each game has a
certain percentage of winning. Sports books get 10%,
craps gets .6-1.4%, roulette gets 5.2%, blackjack receives
2-15%, and keno gets a whopping 20%.

In 1980, a math genius named Jess Marcum calculated
that a craps player who made just a one dollar bet every
bet for two months straight would have a one in two
trillion chance of winning $1000 before losing $1000. In
contrast, if that person only plays for 25 minutes and
bets $200 every time, they would increase their odds to
1.15 to 1.22 Basically, the longer the gambler stays, the
more money the house will take in. The casinos of today
do not need blatant fraud and corruption, like their
predecessors, to make large sums of money. As long as a
casino remains popular, it will make money.

The recent resurgence in gambling has created more
problems in America. In 1980 Tunica, Mississippi was
known as America’s Ethiopia. Around 53% of the
population lived in poverty. Everyone thought the answer
to the community’s problems would be to build a casino
This did make new jobs for some people, but the price of
land increased 10 times more. Property taxes increased
dramatically as the property values increased.23 The only
people who were reaping the benefits of the casino were
the rich owners and the rich real estate developers.

Lotteries also end up hurting the people who need
help most. High school drop-outs and people with incomes
under $20,000 make up the largest percentage of lottery
players.24 In lotteries nationwide, the poor spend $572
per year on lottery tickets, while receiving only $80 in
services from increased tax revenues. Meanwhile,
wealthier people spend $26 per year on lottery tickets,
while receiving as much or more than that in local aid.

Even though state lotteries are supposed fundraisers to
help people who need help, they generally hurt the poor
and while helping the more fortunate.

Local casinos always spell disaster for nearby
restaurants. In Atlantic City, from 1977-1987, 101 out of
243 restaurants closed with the arrival of casinos. These
nearby casinos offer free food to draw customers in. This
very expensive proposition from the owners can be written
off of their annual income tax. In 1991 alone, 234
million dollars were written off casino’s taxes.25 Why
should the consumer pay for food when he can get it free
at the casino?
Gambling also spurs a huge increase in crime.

According to United States Attorney General Kelley,
Between 1977, when the first casino opened in
Atlantic City, and 1986, just nine years later, the
incidence of larceny per capita increased by four
hundred and sixty- seven percent. Incidence of all crime
combined increased by 138%- and this figure includes all
categories of violent crime, including rape and robbery.

Since Illinois legalized riverboat gambling, funding for
state police has increased 50%, or 100 million dollars per
year.26 Charles Cozic said, The best estimates of
increased costs to Illinois’s criminal justice system[from
gambling] appear to range between 1.03-1.18 billion
dollars. This amount of money is much more than the
state has received from the casinos. A high percentage of
these problems stem from pathological/compulsive gamblers,
who in 1990 cost the city of Chicago approximately $52,000
per year per gambler. They also cost the state of
Maryland alone 1.5 billion dollars in lost work,
productivity, stolen or embezzled monies, and state taxes
not paid.27
The compulsive gambler is the biggest problem that
gambling produces. Most compulsive gamblers live unhappy
and frightened lives.28 They almost always lose more than
they can win and since they are stubborn and childish,
they continue to chase the lost money in a bitter, angry,
driven mood.29 Also, they are always on the way down,
losing more and more money, and going deeper and deeper in
debt to banks, finance companies, relatives, and
friends.30 Compulsive gamblers lose their tempers
frequently, often striking anyone at any time.31 They
have been known to have no limits in obtaining money.

Murder, stealing, embezzling, conning, and even resorting
to prostitution or putting their wives into prostitution
have been known ways of getting money to pay off gambling
debts.32
People become compulsive gamblers through peer
pressure and social pressure. Most are very competitive,
athletic, have above average intelligence, and are
motivated to achieve.33 Many gamble for a death instinct,
a need to lose, a wish to repeat a big win,
identification, and a desire for action or excitement.34
Out of the three million compulsive gamblers in America,
65% are men.35 The most common occupation for a
compulsive gambler is an attorney, while accountants,
bankers, stock brokers, and sports figures have a higher
than average percentage of compulsive gamblers.36 Some
compulsive gamblers of today include Walter Mathau, Omar
Shariff, and Larry King.

These troubled people have been and will be around as
long as gambling is available. Even over 100 years ago,
big name compulsive gamblers, such as W.H. Vanderbilt and
J.P. Morgan lost millions of dollars gambling.37
Institutions, such as the 800 Gambler Anonymous’s and 300
Gam-Anon’s, have been made to help these troubled
individuals, but most need professional help, which they
can not afford.38
Unfortunately, teen-age gambling also has increased
dramatically, especially in cities with legalized
gambling. According to Fred Franco Jr., a prosecutor in
New Jersey, gambling is the addiction of the ’90’s.39
These teen gamblers get an adrenaline rush when gambling,
just like when taking drugs. Approximately 500 million to
one billion dollars are gambled each year by underage
gamblers.40 Even worse, the estimated 1.3 million teen
gamblers, 7% of which are under the age of 18, are twice
as likely to become compulsive gamblers.41 Another source
determined that one million teenagers are compulsive
gamblers out of the eight million compulsive gamblers in
the country.42 These numbers vary so much because few
institutions have researched this very major problem.

These young compulsive gamblers have the same problems as
their older counterparts. Approximately 13% commit crimes
to pay for their habit.43 They put gambling above school,
friends, and their growing debt.44 A poll at a local Las
Vegas high school showed that 400 out of 768(52%) students
had gambled illegally. Other research showed 155,000
underage gamblers were caught trying to get into Atlantic
City casinos last year.45
Teen gambling is rapidly growing for many reasons.

First, few seem to care about or address the issue.

Second, every new casino built on the Las Vegas strip has
become family oriented. The MGM Grand, Luxor, and
Treasure Island, built in the last five years, and Circus
Circus and Excalibur, built a few years before, all have a
Disney-like environment geared towards kids. Children
have to walk through casinos to get to their hotel rooms,
theme parks and video game arcades.46 Third, teenage
gamblers hardly ever suffer any type of severe penalty
when caught trying to sneak into a casino or buy lotto
tickets, so they just go to the next casino or next drug
store. Finally, most young adults do not get warned about
the wrong of gambling. Parents and schools drill into
their kids heads not to have sex, do drugs, or drink
alcohol, but hardly ever even say a word against gambling.

These teens are headed towards more and more problems as
they get older. Because of this huge involvement among
teens, gambling had an even worse effect on society this
time through the cycle.

Through the years, all forms of gambling have caused
major problems and should not be condoned by government.

Gambling has gone in and out of popularity through cycles
where owners have gone from low life rowdies to
organized crime heads, and now big money corporation men.

America is in a very dangerous cycle because of the clean,
corporate style gambling operations run today, which don’t
seem to have any fraud or corruption. Also, many forms of
legalized gambling have become more and more accessible.

Worst, as the number of compulsive gamblers have grown,
the number of teenage gamblers have dramatically grown,
leaving poor futures for them.

Government needs to recognize the problems gambling
has always produced, along with the new problems of today,
and banish gambling altogether.

ENDNOTES
1Stuart Winston, Nation of Gamblers (Englewood Cliffs, New
Jersey, Prentice Hall, 1984) p. 5.

2Bertha Davis, Gambling in America: A Growth Industry
(U.S.A., Impact Books, 1992) p. 12.

3Winston, p. 5.

4Rufus King, Gambling and Organized Crime (Washington,
D.C., Public Affairs Press, 1969), p. 11.

5Oscar Handlin, This Was America (New York, New York,
Harper and Row Publishers, 1964), pp. 326-331
6Bertha Davis, p. 19
7Bertha Davis, pp. 10-20.

8Rufus King, pp. 121-122.

9Rufus King, pp. 8, 123.

10Betha Davis, p. 10.

11Bertha Davis, pp. 13-14.

12Bertha Davis, p. 27.

13James Popkin, America’s Gambling Craze, U.S. News and
World Report, March 14 (1994), p. 1.

14Ronald Clayton, Nation Raising a Generation of
Gamblers, U.S.A. Today, April 5, 1995, p. 3.

15Charles Cozic, Gambling (San Diego, California,
Greenhaven Press, 1995), p. 80.

16Betsy Reed, America’s New Addiction: How the Gambling
Industry is Seducing the States, Dollars and Sense,
July/August (1994), p. 1.

17Bertha Davis, p. 24.

18Ronald Clayton, p. 2.

19Bertha Davis, p. 11.

20James Popkin, pp. 5-6.

21James Popkin, p. 5
22James Popkin, p. 4-5.

23James Popkin, p. 6, Charles Cozic, p. 159.

24Charles Cozic, p. 26.

25Betsy Reed, p. 2.

26Charles Cozic, p. 137.

27Charles Cozic, p. 67.

28Bertha Davis, p. 72.

29Sirgay Sanger, The Compulsive Gambler: A Bet Guaranteed
To Lose, U.S.A. Today Magazine, January (1990), p. 2.

30Stuart Winston, p. 8.

Economics Essays