States in region seen competing for slots money

Proponents view casinos in neighboring areas as drain on treasury

Pa. also weighing legalization

Critics say competition for gamblers' funds is `race to the bottom'

February 16, 2004|By Greg Garland | Greg Garland,SUN STAFF

As Pennsylvania lawmakers renew the debate over whether to legalize slot machines, the arguments in favor have a familiar ring to Marylanders - that the state must staunch the flow of money to neighboring states where the devices are permitted.

"We have become the golden goose for neighboring states," said Thomas M. Kauffman, executive director of the Pennsylvania Horse Racing Association. He says the state is losing tens of millions of dollars every month to slots in adjacent states.

In Maryland, slots supporters say the same thing about competition with the state's neighbors, including, potentially, Pennsylvania.

Pitting one state against another has proved a successful strategy as the gambling industry has expanded across the country. Because casinos pay taxes that fund important programs, lawmakers view gambling across state lines as a drain on the treasury.

"There's no way we can survive economically with all of our monies going to Delaware and West Virginia - and possibly Pennsylvania in the immediate future," said Del. Clarence Davis, an East Baltimore Democrat who supports expanding gambling. "It's Maryland money paying for education and all sorts of human services programs in those states."

But critics say the competition quickly turns into a "race to the bottom," as states try to up the ante on one another. Officials in West Virginia, for example, have said they may add blackjack and other table games to their slots offerings if Maryland or Pennsylvania legalizes the devices. And tiny Delaware, which has three racetrack casinos, is considering opening two new slots casinos.

As the competition heats up, experts who study the gambling industry say, restrictions are lifted, more sites for gambling open, and new and flashier types of games are introduced - whatever it takes to keep players coming in and the money flowing.

"We saw it especially with the riverboat casinos in the Midwest," said William R. Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. "As one state relaxes its rules, others feel compelled to follow."

What started in 1991 as small riverboat casinos cruising the waterways of Iowa, with $5 betting limits and other tight restrictions, has grown into something much larger. Now, giant dockside casinos are found across a wide swath of the Midwest - Illinois, Missouri and Indiana -with none of the restrictions initially imposed in Iowa.

This year, gambling proponents in the Illinois legislature are pushing to let that state's riverboat casinos expand. They also want to add up to 3,200 slot machines to each of the state's five horse racing tracks. Bars, taverns and social service clubs would be allowed three machines each.

The expansion sometimes takes odd forms. Missouri has what are known as "boats in a moat," large riverboat casino barges that sit in manmade lagoons well off the major waterways approved in the state's original riverboat gambling legislation. Louisiana has dozens of mini-slots parlors called truck stop casinos.

Robert Goodman, a professor at Hampshire College in Amherst, Mass., said such developments are no accident. He is the author of The Luck Business, a book that takes a critical look at the expansion of casino gambling in the United States.

Goodman said a gambling consultant developed what he called the "ladder strategy," in which gambling companies seek to enter new markets with riverboat casinos, slots at racetracks or other limited offerings that can be expanded later.

`Hooked on gambling'

"You promise something very modest at the beginning. But you know once you get [gambling] in that the politicians will see it as one of the few places to go to raise revenues," Goodman said. "You could essentially call it getting a state hooked on gambling."

But gambling can be costly for a state, he said, because of social costs related to problem gambling. Stemming the flow of gambling dollars across a state's borders, though an appealing argument, is not based on sound economics, he said.

"I remember one of the senators [in Nebraska] arguing, `We have to fight fire with fire.' I told him all the research I've seen is if you try to fight fire with fire all you're going to get is a bigger fire," Goodman said.

It becomes a "race to the bottom," he said.

Naomi Greer, a spokeswoman for the American Gaming Association, the chief lobbying arm for the gambling industry, declined to address that criticism, or the issue of gambling interests using competition from neighboring states as a selling point to expand casino-style gambling to new states.

In a replay of what happened in the Midwest, gambling inroads that started as small slots operations in the mid-1990s at racetracks in West Virginia and Delaware have rapidly evolved into mammoth slots casinos with as many as 3,000 machines.

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