The Federal Commission Will Lead To New Federal Laws

For better or worse, the National Gambling Impact Study Commission has been born. President Clinton signed the bill into law on August 3, 1996. And, it will be two years before the Commission releases its findings. While four of the nine appointees have been suggested, none have yet received final appointment. Now, with the election over, those selections are expected soon.

But no matter who is appointed (and I have applied) and what the final study concludes, despite all the efforts to make the Commission fair and objective, regardless of the promises from the President on down that there will be no new federal regulations or taxes -- the political reality is this Commission will leave in its wake new governmental controls on legal gambling.

The Commission started out as a political ploy by the opponents of gaming, the "anti's." At first, backers of the proposed federal study did not even make much of a pretext of being neutral. The original proposal budgeted only $250,000 for the Commission to study the impact of all gambling in the nation.

Two decades ago, Congress authorized a truly objective study that cost $3 million, in 1976 dollars.

But $250,000 in 1996 is just enough to conduct some nationally televised hearings. This new Commission was intended to have the power to subpoena casino executives and others to testify under oath. It is not difficult to see what the anti's were up to. Remember the Watergate and Iran-Contra hearings, the interrogation of tobacco executives on national T.V.?

The first nationally televised hearings were the 1950's Kefauver Committee's investigations into organized crime, focusing on the mob's infiltration of casinos. The result was a slew of federal and Nevada state laws.

Because the proposed study was an election-year stratagem, it was, at first, given practically no chance of clearing Congress. But then, the idea took on a life of its own.

There is so much legal gambling in this country that its existence has finally sunk into the consciousness of the general public, and its elected representatives. The media helped, with cover stories on Indian gaming, riverboat casinos and the new Las Vegas. So did the massive amount of industry advertising, especially the pervasive state lotteries.

All forms of legal gambling are consumer items, requiring constant promotion. In many large metropolitan areas, state lotteries are the largest purchasers of radio time.

The anti's took advantage of this rising consciousness to promote their proposed study. They had lots of fuel for their fires, some of it real scandals, some of it made-up.

Members of Congress felt that there was nothing wrong in authorizing a study to better understand exactly what was happening, and what should be done about it. Now, instead of being under-funded, the Commissioners will have no limit on the amount they can spend digging for facts, a House Committee having killed proposed amendments by Representative Barney Frank, D.-Mass.

The Commission is now a reality. The casino industry, led by the work of the American Gaming Association's Frank Fahrenkopf, was able to put some reasonable limits on the subpoena power and require the Commission to look for positive as well as negative affects of legal gaming.

The Commission's mandate is "to conduct a comprehensive study of the social and economic impacts of gambling in the United States." It is purported to be neutral and objective. The bill creating the Commission even requires "to the maximum extent possible, fair and equitable representation of various points of view."

But, even if the Commission sticks to its purpose, it will inevitably lead to more laws and regulations.

If the Commission finds that money from legal gambling leaves local economies in the form of profits to out-of-state owners, it will help state legislators restrict ownership to local citizens and to increase gaming taxes. If the Commission finds minors are gambling, it will result in regulations requiring more careful screening of patrons. If it finds that compulsive gamblers are a cost to society, there will be calls for more restrictions on advertising, more treatment programs and more taxes to pay for those programs. If it finds local politicians have been bribed, it will lead to laws restricting donations. If it finds scandals, including the infiltration of organized crime, there will be additional federal regulations; and Congress and the Treasury Department will make no distinction between jurisdictions that are well-regulated and those that are not.

The Commission will, of course, find all of the above. There already have been horror stories and those always get the most attention. The media, especially T.V., thrive on anecdotes, good and bad, not statistical studies. You will never see a front page headline, "Los Angeles Businessman Loses $5 In State Lottery." But if that same man wins $100 million, that's news.

The creation of 1,000 new jobs in a large city is simply not as newsworthy as a teenager who commits suicide because of gambling debts.

Increased regulation is not necessarily a bad thing. There should be better controls to prevent minors from gambling and more programs to help compulsive gamblers.

But, the industry has to recognize the political truth:
Despite all efforts to make the Commission gambling-neutral, its creation will result in more restrictions on legal gambling.

Copyright 1996 by I. Nelson Rose, Encino, CA. All rights
reserved worldwide. Gambling and the Law is a registered trademark of Professor I. Nelson Rose,
Whittier Law School, Los Angeles, CA