[Congressional Record Volume 141, Number 191 (Monday, December 4, 1995)]
[Senate]
[Pages S17929-S17930]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           LEGALIZED GAMBLING

 Mr. LUGAR. Mr. President, I would like to take this 
opportunity to inform my Senate colleagues on the progress of important 
legislation moving through Congress that addresses the issue of 
legalized gambling in America.
  Legalized gambling today is proliferating at breathtaking speed, 
touching the lives of millions of Americans. Communities across the 
country are considering casinos, riverboat gambling, pari-mutuel 
racing, off-track betting, and other forms of wagering. Whereas only 2 
States offered casino gambling in 1988, today 23 States have authorized 
casinos to operate. Overall, 48 States now permit some form of 
legalized gambling.
  A steady stream of news accounts have chronicled the recent growth 
and expansion of gambling activities in America. Many of these stories 
describe the enormous profits generated almost overnight by gambling 
enterprises. Questions are being asked about decisions by State and 
local leaders to legalize gambling. People are concerned not only about 
the economic costs of these decisions, but of the human costs as well.
  The Wall Street Journal, recently reported that some New Orleans 
public officials, retailers, and citizens are having second thoughts 
about the economic impacts of bringing riverboats, casinos, and video 
poker machines to Louisiana. The New York Times related the personal 
experiences of local residents in cities and towns across America who 
visit a casino instead of a restaurant or ballpark, who spend their 
grocery money on a nearby instant-play video lottery game, or who 
exhaust their personal or family savings at the casino tables.
  In the face of this explosive growth, I joined Senator Simon last 
April in support of legislation to establish a national commission to 
conduct an 18-month study on the effects of gambling. This measure, S. 
704, would provide State and local governments with an objective, 
authoritative resource to use as a basis for making informed choices 
about gambling. S. 704 does not propose to further regulate gambling 
activities or to increase taxation of gambling revenues. The bill has 
been endorsed by the President and enjoys bipartisan support in the 
Senate with a total of 11 cosponsors, including Senators Gorton, Kyl, 
Lieberman, Grassley, Warner, Feinstein, Hatfield, Kassebaum, Hatch, and 
Coats.
  The Governmental Affairs Committee on November 2 conducted a hearing 
on S. 704. Senator Simon and I testified before the committee along 
with several other Members of Congress and outside experts concerned 
about this important issue. I am hopeful the committee will approve 
this important legislation before the conclusion of this session.
  Companion legislation was introduced in the House of Representatives 
by Congressman Wolf of Virginia. The House Judiciary Committee held 
hearings on Representative Wolf's bill, H.R. 497, and approved the 
measure by voice vote on November 8. Prospects are good for passage by 
the full House during the 104th Congress.
  The Washington Post, in a September 22, 1995, endorsement of the 
gambling study commission proposal, stated that,

       Those pushing casinos into communities make large claims 
     about their economic benefits, but the jobs and investment 
     casinos create are rarely stacked up against the jobs 

[[Page S 17930]]
     lost and the investment and spending forgone in other parts of a local 
     economy. The commission's study could be of great use to 
     communities pondering whether to wager their futures on 
     roulette, slot machines and blackjack.

  As evidence of the desirability for a comprehensive study of the 
gambling issue, I ask that the following Chicago Tribune article from 
November 29, 1995, be printed in the Record.
  The article follows:

               [From the Chicago Tribune, Nov. 29, 1995]

Risky Business: Can Gaming Win in Cities?--Chicago May Get Tip From New 
                                Orleans

                           (By Ken Armstrong)

       The way casinos have flopped in New Orleans may drive other 
     cities to flip in their views toward gaming, but Chicago 
     still looks like a viable gambling market, according to 
     financial analysts.
       As the country's first major city to introduce large-scale 
     gaming, New Orleans was to be a model demonstration of 
     casinos creating tax dollars and jobs. What transpired 
     instead were budget shortfalls, unrealized promises and the 
     threat of municipal layoffs.
       ``I think there were many municipalities watching this 
     project as an experiment in urban gaming,'' said Jason Ader, 
     a gaming analyst with Bear Stearns & Co. in New York. ``And 
     the fact that it has effectively failed casts a dark cloud 
     over other urban markets considering gaming as an economic 
     engine.''
       Harrah's Jazz Co. shut its temporary casino in New Orleans 
     last week and declared bankruptcy. Harrah's Jazz also 
     suspended construction on its permanent casino, which was 
     slated to open in New Orleans next summer.
       No longer able to count on lease and tax payments from the 
     casino, New Orleans faces a budget shortfall and has 
     postponed the sale of $15.8 million in general obligation 
     bonds. Mayor Marc Morial said he may have to lay off as many 
     as 1,000 city employees.
       Gaming opponents have latched on to the debacle, using it 
     to argue that other cities pursuing casinos would be wise to 
     give up the chase.
       Tom Grey, a Galena, Ill., minister spearheading the anti-
     gambling movement nationwide, said there's reason to believe 
     that what happened in New Orleans would be replayed in 
     Chicago, where Mayor Richard Daley has pushed hard for 
     casinos.
       But several financial analysts who specialize in gaming say 
     it isn't necessarily so.
       ``Everybody in the industry knows Chicago and New York 
     would be layups if they had casinos there,'' said Steve 
     Schneider, an analyst with Stifel Nicolaus & Co. in St. 
     Louis.
       He estimated that casinos in Chicago could generate $800 
     million to $1 billion in gross profits without cutting 
     heavily into the revenues of nearby riverboat casinos.
       Daley spokesman Jim Williams said the mayor still views 
     casinos as a good way to attract convention-goers and 
     increase tax revenue for the city and state.
       But he added: ``The mayor has never seen gaming as a 
     panacea. He's been steadfast in his belief that it should 
     never be seen as a primary source of income.''
       What happened in New Orleans would more likely give pause 
     to marginal markets for gaming such as Milwaukee or 
     Cleveland, Schneider said. The poor performance of the New 
     Orleans casinos also will make it more difficult for gaming 
     companies to secure project financing for future 
     developments, he said.
       Brian Ford, director of gaming industry services at Ernst & 
     Young in Philadelphia, said New Orleans hardly proves that 
     casinos can't flourish.
       With video-poker machines in truckstops, casinos on 
     riverboats and what would have been one of the world's 
     largest land-based casinos, Louisiana tried to do too much 
     with too small a population base, Ford said.
       The shutdown of Harrah's Jazz was New Orleans' second 
     losing hand.
       Another project with two riverboat casinos--the $223 
     million River City complex--closed in June after opening just 
     nine weeks before. Analysts blamed its failure, like that of 
     Harrah's temporary casino, largely on its location.
       The riverboat complex was built in an industrial area where 
     its neighbor is Glazer Steel & Aluminum--hardly a tourist 
     draw. A thousand feet of head-high weeds, tractor trailers, 
     piles of gravel and an abandoned Chevette with smashed-in 
     windows separate the complex from the edge of the city's 
     downtown area.
       David Anders, a gaming analyst with Raymond James & 
     Associates in St. Petersburg, Fla., said New Orleans shows 
     that while state and municipal governments should rightfully 
     profit from a casino, they shouldn't make the casino's 
     financial burden so great it can't survive.
       Harrah's Jazz paid $125 million up front as a franchise fee 
     for the state's only land-based casino and promised payments 
     of at least $100 million a year to the state, regardless of 
     financial performance.
       The company's principal partner is Memphis-based Harrah's 
     Entertainment Inc., which grew from a bingo parlor in Reno 
     during the Depression to an industry giant with casinos in 
     all of the country's major gaming markets.
       Ralph Berry, a Harrah's Entertainment spokesman, said 
     Harrah's Jazz still wants to open the permanent casino and 
     will try to renegotiate the casino agreement with the state, 
     city and lenders. Critics have accused Harrah's Jazz of using 
     the bankruptcy filing as leverage for more attractive 
     terms.

                          ____________________