This article was published in the June 2000 edition of the International Gaming and Wagering Business Magazine (IGWB). It was written by Frank Fahrenkopf, Jr., the President of the American Gaming Association. I am reprinting it here because the argument supports NIGA’s position that research on the gaming industry has failed to produce negative findings about Indian gaming’s impacts.

Studies Disprove Allegations Against Gaming Industry

By Frank J. Fahrenkopf, Jr.

We’re all used to hearing and reading the serious accusations that have been leveled against our industry by gaming opponents for years. Claims that gaming causes crime, suicide, bankruptcy and even the financial crisis in Asia are not new for us. But in the past year alone, findings from three independent major government studies have discredited these claims.

So you can imagine how strange it was to find myself hearing these same arguments, in the very room I heard them two years ago, during the hearings of the National Gambling Impact Study Commission (NGISC) in Chicago. There were Tome Grey (still quoting Grinols and Kindt), Valerie Lorenz, Anita Bedell, Tom Coats and a cadre of familiar opponents spewing the same nostrums and inaccuracies.

But this shouldn’t be a surprise. We know that those who oppose our business are not swayed by the facts. They will continue to repeat their claims, despite independent scientific evidence to the contrary.

Gaming opponents predicted that the National Gambling Impact Study Commission would sound a death knell for legalized gaming in the U.S. However, the final commission report recognized the tremendous contribution that casino gaming has brought by way of jobs, capital investment and economic development to new casino jurisdictions. The committee recognized these positive contributions even though a majority of its members opposed any form of gaming.

Unhappy with the NGISC report, United States Rep. Frank Wolf (R- Va.), one of the most ardent foes of our industry, ordered the General Accounting Office (GAO) to conduct another investigation of most of the same topics covered by the NGISC report. The GAO released its report last month, following an in-depth investigation of casino gaming in Atlantic City, and Congressman Wolf did not get the results he wanted. The GAO found "no conclusive evidence on whether or not gambling caused increased social problems in Atlantic City."

A problem exaggerated

One of the most difficult issues we have had to face as an industry is pathological gambling. While gaming opponents have claimed that approximately 10% of players are pathological gamblers, this assertion has been totally rejected. Research by the NGISC, the National Research Council of the National academy of Sciences and by the Harvard Medical School, School of Addiction indicated that approximately 1% of the adult population meets the criteria of pathological gambling. As the NGISC pointed out "the vast majority of Americans either gamble recreationally and experience no measurable side effects related to their gambling, or they choose not to gamble at all."

Many of us have heard the assertion that the social costs of gaming exceed the benefits. The National Research Council of the National Academy of Sciences (NRC) found that "gambling appears to have net economic benefits for economically depressed communities." Additional research for the commission found that " … a new casino of even limited attractiveness, placed in a market that is not already saturated, will yield positive economic benefits on net to its host economy." And NORC determined that "[t]hose communities closest to casinos experienced a 12% to17% drop in welfare payments, unemployment rates and unemployment insurance." The GAO report agreed with the NGISC in finding no conclusive evidence that gaming caused increases in social problems in Atlantic City.

While opponents of our industry have made outlandish allegations about social costs of $200 billion annually, the commission-funded research conducted by NORC placed the annual cost to society of all forms of gaming — casinos, lotteries, parimutuel wagering and charitable gaming, as well as illegal gambling — at about $5 billion. While $5 billion is not an insignificant number, it is helpful to keep it in perspective by comparison with the annual cost of alcohol abuse, which is $166 billion, and heart disease, which is $125 billion.

A lot of people make the assumption that the expanded availability of gaming leads to an increase in pathological gambling. While this might seem logical, the facts show otherwise. The first federal gambling commission, formed during the 1970s, found that the number of "probable compulsive gamblers" was 0.77% of the US adult population, virtually identical to the findings of the more recent federal commission, despite the growth of gambling opportunities during the elapsed time. Research conducted for the 1999 federal commission also stated, "The availability of casinos within driving distance does not appear to affect prevalence rates. Similar government-sponsored research in Minnesota, Texas and Connecticut all showed statistically stable rates of pathological gambling in those states, despite significant increases in the availability of gaming.

Another erroneous assumption about our industry is that the more people gamble, the more likely they are to become pathological gamblers. In fact, NORC research found that while many more people have gambled at least once in their lifetimes (68% in 1975, compared to 86% in 1999), the number of people who have gambled in past years has remained relatively unchanged (61% in 1975, versus 63% in 1999). AS Lace deHaven-Smith, executive director of the recently completed Public Sector Gaming Study Commission, explained in his analysis of the National Gambling Impact Study Commission’s final report: "[T]hese findings mean that Americans have become much more likely to have experimented with gambling, but this experimentation has not turned them into people who gamble regularly or routinely."

An oft-repeated claim by gaming opponents is that a high percentage of our revenue, up to 50%, comes from pathological gamblers. The commission’s NORC research estimated that 5% to 15% of gross revenues came from pathological gamblers. WE all know that we don’t want customers who bet over their heads. Our industry has been working to promote responsible gaming, whether it’s by educating players, training casino employees, or posting toll-free help line phone numbers on casino floors.

Another irresponsible charge is that gaming companies in some way target pathological gamblers in their marketing and are able to identify pathological gamblers through their customer databases. IT is impossible to determine who is a problem gambler within a list of names and data. In fact, according to treatment experts, it is a difficult disorder to diagnose even in person. The experts have told us that our role should be one of educating both casino employees and customers and funding research — a role that we certainly have undertaken and will continue to do.

Other false accusations

Despite overwhelming evidence to the contrary, industry foes continue to make outlandish false accusations about gaming and personal bankruptcies. A U.S. Treasury Department study released last year found "…no connection between bankruptcy rates and either the extent of or introduction of casino gambling." The GAO report, quoted the NGISC: "…a 1998 analysis of data on 100 communities between 1980 and 1997 showed no significant change in per capita bankruptcy in communities where casinos were introduced."

Gaming opponents also are fond of maintaining that gaming will contribute to an increase in crime — despite the fact that the federal commission found no link between the two. The commission’s final report also cited a study that found no documentation of a causal relationship between gaming and crime.

Claims about the alleged social costs of gaming are routinely made in government hearings and other public forums nationwide. Inevitably, they end up being reported by the news media, without any basis in fact. It’s up to each and every one of us to make sure that any decisions about our business are based on facts, not anecdotes; science, not theories. We can only accomplish this by working together to educate one another, our customers and our communities.