Gaming finds comfort in remarks by head of fed panel

The head of the federal gambling study panel wowed Wall Streeters and gaming executives when she offered a thoughtful, balanced and well-received thesis on the industry's rights and responsibilities Tuesday.

Unfairly branded by some as an anti-gaming idealogue, Kay Coles James instead revealed for the first time that she opposes increased government regulation and federal taxation of the industry.

But she advised industry executives to be more responsible, especially about problem gambling, criticized "slick and misleading lottery marketing" that targets the poor and urged a continued dialogue between gaming's supporters and critics to resolve social issues.

James' remarks at the American Gaming, Lodging & Leisure Summit may help calm fears among investors and gaming executives that the National Gambling Impact Study Commission will recommend federal taxation and regulation of the industry.

The nine-member commission's report, due in June, more probably will "establish parameters for future discussion ... and research," James said.

A standing-room-only crowd in a Bellagio ballroom heard James praise fellow panel members Terry Lanni, chairman of MGM Grand Inc., and John Wilhelm, head of the Hotel Employees & Restaurant Employees (Culinary) union, both considered friends of the industry.

And it listened attentively as she explained why she hasn't disclosed her thoughts until now, saying she wanted to wait until she'd had a chance to study the facts.

"It's been surprising to me to read newspaper accounts of my position about gambling because I've been very careful to avoid making any statements until today," she said.

Noting the industry's initial opposition to establishment of the commission, she said, "I can empathize with those who feel they've been unfairly targeted for sanctions. But this commission is an ally, not an enemy ... that will set the record straight" about gambling.

"If you think the commission is getting it wrong, don't complain," James urged. "Help us get it right.

"We realize our limits," she said, adding that the panel had only two years and $2.5 million to study an industry with net revenues of more than $50 billion annually.

James urged dialogue about the moral implications of gambling because "morality is important," but she said the federal panel won't address that issue.

"Our task has been to focus on the social and economic impact of gambling," she said.

James, Lanni and two other panel members will spend the next three months preparing a draft report, then send it out to other panel members for their comments. And if final result bears her stamp of approval, it could be good news for gaming companies.

"As a Reagan conservative, I believe in limited but effective government," she said. "People who support increased government intrusion, taxation and regulation ... will have to make a very convincing argument to get my vote.

"I believe government has no place in dictating personal choice," she said. "We should resist attempts to control or modify people's behavior.

She criticized the reliance of many state governments on lotteries, "which offer the lowest odds of winning and the highest profits," and advocated further debate on whether governments should run them.

She spoke passionately about lottery promotions "aimed at those least able to afford to gamble. Too many poor people believe Lady Luck is the best way out of poverty."

And she suggested that states decrease their dependency on lottery revenue and focus instead on reducing government spending.

Noting the "multiple and complex issues relating to Indian gaming," James said tribal casinos "may need some increased level of government scrutiny."

She also said more study should be given to Internet gambling, especially on unregulated sites outside the United States.

James said she was touched by stories of people who'd been helped by gambling-related jobs as well as by accounts of family breakups, suicides and bankruptcies related to gambling.

As for pathological gambling, she said treatment works. She applauded companies such as Harrah's Entertainment and Mirage Resorts that have taken the lead in establishing awareness programs about problem gambling, and she called for more spending on research and treatment of those suffering from the disorder.

James also suggested the industry avoid a knee-jerk reaction to criticism or questions, saying, "Not everyone who expresses concerns is anti-gambling."

Gaming also shouldn't sugarcoat problems or boast too much about the benefits of the industry, she said.

"Let the facts speak for themselves and the public draw its own conclusions. If everything was perfect, we'd call it 'heaven' instead of 'Atlantic City.' "

Noting the lack of research on the social and economic impacts of the industry "significantly hindered our study," James recommended continued funding of such programs.

"Most of you demonstrate good corporate citizenship," she said. Instead of worrying about whether gambling or other factors cause crime-rate increases, "work together on bringing down crime no matter what the causes."

"We have a tremendous opportunity to work together on these problems ... if we come together in a civil, objective and informed manner," James said.

Earlier, American Gaming Association President Frank Fahrenkopf said several legislative issues are on the industry's radar screen for 1999.

He said a possible bankruptcy reform measure that would bar automatic teller machines from casinos, increased immigration controls that could create bottlenecks at international airports, Internet gambling and money-laundering bills, smoking regulation and various tax proposals are all being watched by the AGA.

But fallout from the federal gambling study panel's report "is likely to be the greatest challenge we face" this year, Fahrenkopf said.

"We expect commissioners to say almost unanimously that casino companies have provided important economic and social benefits in the communities where they operate.

"We expect there to be a consensus -- and would agree with that assessment -- that additional funding is needed for research and treatment of disordered gambling.

"Our concern continues to lie with (Commissioner) James Dobson," Fahrenkopf said. "Despite 19 months of testimony from countless witnesses documenting the benefits of gaming, Dobson's position remains unchanged from Day One ... and fails to acknowledge any benefits of gaming whatsoever.

"Fortunately, we believe that other members of the commission have kept an open mind and, in the end, will issue a balanced and fair assessment of gaming.

"But we expect anti-gaming activists in and out of Congress to latch onto only the negative aspects of this final report and continue beating their own drum, calling for additional congressional hearings and legislation into the next millennium."

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