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Gaming Proliferation Suffers Setbacks Since Election Gains

The much-vaunted expansion of gaming nationwide has suffered serious setbacks across the board since last November's elections.

Tom Grey, executive director of the National Coalition Against Legalized Gambling, likened the reversals to those of Russian Field Marshal Mikhail Kutuzov's army in Leo Tolstoy's epic novel "War and Peace."

"As Napoleon approached Moscow, the French thought the city would fall while Russians were convinced Kutuzov would save the day. As it turned out, Napoleon's army collapsed largely because of its overextension. That's pretty much what has been happening to gaming," Grey said.

Gambling was expected to go through another wave of expansion following last year's election of gubernatorial candidates in 24 states who had favored expanded gaming, and the passage of pro-gaming initiative petitions in five states.

To date, however, proposals to expand slot machine gaming have been defeated in 15 states and now are actively pending in only one. Proposals to expand casino gambling have been turned back in nine states and are pending in only one. And expanded lotteries have been turned back in five states while they are pending in another five, he said.

Grey said two significant factors stalled the spread of gaming.

"They couldn't hide the bodies anymore. Gambling was no longer looked at as just a plus, but as having significant costs," which created serious opposition groups in many states, he said.

"Second, 2002 was an election year. Gambling proposals will get campaign contributions for candidates, but they don't buy popularity once elections are over," Grey said.

Pennsylvania is the only state now expected to approve and implement proposals this year to further expand gambling, said Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm.

Most recently, the Maryland House Ways and Means Committee last week voted overwhelming against Gov. Bob Ehrlich's slots-at-race tracks proposal, effectively killing the centerpiece of his gubernatorial campaign although it may be resurrected next year.

Also, Massachusetts Gov. Mitt Romney proposed allowing the state's racetracks to have slot machines and similar proposals may be revived in Florida, Kansas, Maryland and Pennsylvania.

Greff said proposals for expanded gaming in New England are in the "early innings" and it is unclear what voters in Rhode Island and Massachusetts will support.

Added slots in California and Nebraska are the only other possibilities still showing signs of life this year, he said.

"States that don't already have gambling, don't because politicians don't want it or citizens can't see the economic benefits of enacting some form of gaming," he said.

A recent report by Deutsche Bank, however, found "a cauldron of activity related to potential gaming" still boiling nationwide.

Moreover, because "state budget woes aren't getting any better, even bills that die in this (legislative) session are likely to come back again next year," Deutsche Bank analyst Marc Falcone said.

Still there is significant but not unexpected opposition to expanded gaming in all these states that could kill many remaining proposals, Falcone said.

Opinion is divided over whether the reversal of fortunes for the spread of gaming is good or bad for the industry.

"If gaming expanded, it might broaden the legitimacy of gaming as a form of entertainment," Greff said. "The other train of thought is that proliferation could dilute gaming for other jurisdictions. Right now, more gaming would dilute the industry, but it wouldn't hurt Las Vegas significantly because you only have one Bellagio, one Mandalay and one Venetian."

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