How the Casino Economy Robs The Poor

"I'm a man on a mission, a man committed to all-out war," the Rev. Tom Grey tells me as we stand on the hill overlooking his Mississippi River town of Galena, Ill. Grey may be a Methodist minister, but it's his experience as a Vietnam infantry vet and his ongoing work as a lieutenant colonel in the Army Reserve that shapes his speech. "This time around we're the ones who have the guerrillas among the people, we're the ones winning the hearts and minds. The enemy is being surrounded."The enemy, "the predator" that Grey wants to "hunt down and destroy," is the burgeoning national gambling industry. And Grey's adversaries are just as visible as the behemoth U.S. choppers that rattled over the Indochinese jungle like giant floating targets. Whereas just ten years ago casino gambling was found only in Nevada and Atlantic City, Americans now lose some $40 billion a year in hundreds of casinos spread over twenty-seven states. Gambling is the new American pastime. Seventy million go to pro baseball games each year; 125 million visit casinos."I'm not a prohibitionist," says Grey, field coordinator of the National Coalition Against Legalized Gambling. "This isn't an issue of personal morality. This is about social morality, about an issue of social justice, a battle for who we are in America." Growing more angry as he speaks, he adds, "And this is about pure greed. Either we decide as a country to build a future on solid economic foundations that mean something for our kids and our grandchildren, or we build a casino economy where we say it doesn't matter, America isn't gonna be here so go try and hit a jackpot; a casino economy where you have a mass sellout, where you empty out the middle, making the rich richer and the poor poorer. Let's call gambling what it is, not pass it off as economic development."Grey's grass-roots organizing efforts have halted the building of any new American casino since 1994. So successful has his counterinsurgency been -- defeating pro-gambling referendums about 90 percent of the time in twenty-three contests -- that one top gambling consultant has likened the 55-year-old minister to Adolf Hitler. But Grey draws from a long past of liberal social activism, pastoring an inner-city congregation, protesting the invasions of Grenada and Panama, even publicly questioning the Gulf War while in the active Army Reserve.And while he uses the left's language to decry gambling -- denouncing the "greedy wedding of bottom-line entrepreneurs and cynical politicians who have given up on America" -- most of his volunteer foot soldiers are from the right. Grey's tactical alliances include the Christian Coalition and the fundamentalist Traditional Values Coalition. Except for some anti-gambling statements from California State Senator Tom Hayden and U.S. Representative John Conyers, Grey doesn't hear as much as boo from progressives."This is a natural issue for the left, but it is nowhere to be found," Grey tells me. "When I went up before Congress to testify, Barney Frank told me gambling was an issue of personal choice. Well, Barney Frank just doesn't get it. And frankly, I don't get how in hell the left is so slow to come around to this issue."Grey's befuddlement is legitimate. Gambling in today's United States -- repackaged, sanitized, videoized, down-marketed and ubiquitous -- is not an issue of temperance or free choice but rather one of social class and public economic policy.Here we have an industry popping up in areas devastated by Reaganomics (under any of its names) and imposing the most regressive of taxes on the most vulnerable part of the population, while simultaneously sucking away millions of dollars from whatever is left of the rest of local economies. But in this election year, in this uncertain economic climate, the issue has so far been ceded -- by default -- to pseudo-moralists like Richard Lugar, Pat Buchanan and the Christian Coalition's Ralph Reed, who have been the only major political voices to speak out against the proliferation of legalized gambling.You could have gone to the G.O.P. presidential debate in Des Moines, as I did, and strained to hear some allusion to the plight of working Iowans as they struggle with poverty-level wages. The only candidate who even mentioned creating something as grudging as $10-an-hour manufacturing jobs was businessman Morry Taylor, who, upon acquiring a wheel company, stripped his workers of their pensions and retirement health benefits.While the pundits spill tons of ink over the implausible prospect that a flat tax might ever be enacted, much more about the future of ordinary Americans can be learned by looking at the riverboat gambling casinos twinkling just a few yards outside the Iowa hotel rooms of the traveling White House press corps.For if Lenin once summed up Communism as "Soviet power plus electrification," the highest formulaic expression of the New American Economy might just be "casinos plus part-time jobs."Quad Cities meet where Davenport and Bettendorf, Iowa, shake hands with Moline and Rock Island, Ill., across the muddy Mississippi. It's no accident that this is where America's gambling fever has incubated and spread over the past half-decade. To look at the clumps of casinos now clogging the heartland is to look at a map of every place that once had a booming industry -- or had none at all. Like a toadstool blooming on rotted wood, a casino will be replacing the steel industry in Gary, Ind., America's murder capital in 1993. The most lucrative of Illinois's nine riverboats, Harrah's, rakes in a royal take of $210 million a year from its berth in Joliet, where it has replaced the Caterpillar tractor plant as the town's biggest employer. East St. Louis, described by the St. Louis Post-Dispatch as "America's Soweto," with no obstetric services, no regular trash collection and 75 percent of its almost all-African-American population on welfare, is now saddled with casino gambling. Other boats jostle for space downriver in poverty-stricken Tunica, Miss., traditionally known as the "Ethiopia of America."And here in the Quad Cities, three riverboats now compete within a five-minute drive of one another, two on the Iowa side of the river, one on the Illinois side. Such a concentration is a sad spectacle in this area, once known as the "Detroit of the farm belt" for its headquartering of mighty John Deere and International Harvester, which produced the heavy machinery that plowed and harvested the fields of the world. I.H. cranked out fleets of the legendary Big Red tractors, which became an icon of rural and prosperous America.Nearby, Alcoa ran the biggest aluminum-rolling mill in the world. "Those industrial jobs were so good that I remember back in the '60s college kids buying overalls and working in those factories at night knowing they'd make more money that way than when after they'd graduate," says local historian Ronald Tweet. If downtown Davenport and Rock Island look post-nuclear now, you can date the holocaust to the early '80s."The reason we have these riverboats today is because of the economic crisis of the last decade," says Tom Fennelly, who as director of Davenport's Eastern Iowa Center for Problem Gambling has seen his client list "jump tenfold" since the local boats opened in 1991. "Case tractors left, I.H. closed down, Cat left, Deere laid off thousands. It was literally 'last man leaving please turn out the lights.'" The farm crisis, the Reagan recession of 1981-82, the overall shifts in the economy and the disastrous results of a couple of marathon strikes against intractable managements hit this area like the apocalypse.By the end of 1984, 35,000 jobs in a metropolitan community of 400,000 had been cut. Unemployment, fluttering between 17 percent and 22 percent, was the highest in the country after Flint, Mich. Between 1980 and 1985, Iowa lost a higher percentage of its population to internal migration than any other state in the Union. Eight million square feet of industrial floor space lay empty. "We waited and waited for two, three, four years for someone, anyone to come in and take up the slack, something like maybe a Saturn plant," says Professor Tweet. "Who would have guessed it would have been riverboats?" In 1989, two Iowa state legislators -- both Democrats, by the way -- took on the formidable task of convincing this puritanical state, one that owned all liquor stores and was known to raid church bingo games, to lay its chips on the table. This followed five years of dogged lobbying by the gambling industry, which had been looking precisely for some busted-out place like Davenport as a site to break the national tradition of casino bans.The political strategy they used promised kinder, gentler gaming -- not wicked gambling. Promotional materials pictured a neat fleet of noble paddle-wheelers steaming on the Mississippi while curious out-of-towners sipped wine, munched Brie and, oh yes, laid a few bucks down on the green felt. The gambling stakes would be kept small, to attract wholesome families and not urban gambling junkies. Gaming would take place only during limited two-hour cruises. Maximum bets would be $5.A limit of a $200 loss per day would be imposed. "It's a fool's game. It's entertainment-style gaming," said one of the two sponsors of the measure at the time. "We're selling the lore of Mark Twain," said Robert Arnould, then Democratic majority leader of the Iowa House. Opposition to the gambling proposal was countered with assurances that a healthy portion of casino revenues would be gathered up in new taxes and that another portion would be earmarked for social improvement projects.This political soft-shoe turned the trick. Even organized labor signed on, knowing full well that the new casino jobs would be non-union. "We were deeply involved in and strongly supported bringing in the riverboats," says Jerry Messer, president of the Quad City Labor Federation. "You know, the lesser of two evils. Either work on a boat or be unemployed. I believe in everybody making a paycheck."After a popular referendum to seal the deal, the first of the new generation of riverboat casinos -- the Diamond Lady docked in Bettendorf and the President in Davenport -- opened their tables and slots on April 1, 1991. Disneyland's Columbia is much closer to a real paddle-wheeler, the new casinos being little more than glorified barges with a thin film of Mississippi riverboat gloss. But that was of little concern to the endless caravan of buses from wealthy Chicago and the surrounding states that brought in hundreds of thousands of gamblers for one-day turnarounds. Indeed, in the year the President opened, a full 40 percent of its patrons came from Chicago ZIP codes.A panic immediately gripped the neighboring states. Soon, Mississippi legalized its own casinos and -- unlike Iowa -- did away with all pretenses, allowing patrons to lose as much as they liked and, in addition, not actually have to go out and cruise the river. Illinois followed suit, eliminating the $200 loss limit while maintaining the cruise requirement. The prairie wildfire had been touched off, and casino lights began to blaze from impoverished ports and Indian reservations throughout the heartland.The competition devastated Iowa's boats (their owners, in the meantime, had built exactly none of the land-based tourist developments they'd promised in the lobbying campaign). Within two years, out-of-town visits fell to less than 15 percent of casino business. The Diamond Lady in Bettendorf lifted anchor and floated down to the more liberal no-cruise/no-limit state of Mississippi; the Emerald Lady in Fort Madison, Iowa, also weighed anchor for Mississippi. These departures dumped 600 workers out of their jobs and left the town holding the bag for a $2.6 million tax-dollar investment in a municipal dock."'Chasin' the losses' is what we call it when compulsive gamblers up the stakes trying to recoup previous losses," says treatment counselor Fennelly. "When the other states took away part of the casino traffic, Iowa, by now itself an addict, started chasin' its losses." In fact, as competition among the river states surpassed any back-alley cutthroat game of Texas Hold 'Em, Iowa threw Tom and Huck overboard and went instead for the Meyer Lansky approach.By 1994, Iowa was dependent on gambling revenue and answerable to a new constituency of riverboat owners, workers and gambling addicts. Responding to a vigorous lobbying campaign led by a prominent G.O.P. lawyer, the state dropped its quaint $200 loss limit, loosened the requirement that casinos actually cruise the river and went for full-bore, round-the-clock dockside gambling. To fight off the out-of-state competition, Iowa also reduced gambling taxes, expanded off-track betting and actually took over ownership of a collapsing racetrack in Des Moines, turning it profitable by legalizing the installation of hundreds of slot machines. The state had moved from regulator to pit boss. "With each liberalization, from the allowing of more A.T.M.s, to the lifting of limits, to the end of cruising requirements, our client base would incrementally jump," says Fennelly.No matter that each compulsive gambler costs the taxpayers between $13,000 and $35,000 a year in treatment, law enforcement, divorce, spousal battering and absenteeism. No matter that Iowa's compulsive-gambling population has more than tripled since the boats opened, from 1.7 percent to 5.4 percent."Before the boats came I used to gamble a maximum of once a year in Las Vegas and limit myself to maybe a $500 loss," says Linda Edwards, a 45-year-old single mother who drives a forklift for John Deere. "When the President opened in 1991 it was like a new adventure. I went the second night it opened and I lost the $200 limit." Soon Edwards was back, at first once a month or so, then once a week, then every night. As the limits were lifted, she fell deeper into debt. "I'd play one slot machine at a time, mostly quarter slots. At first I could go through the $200 limit in fifteen minutes. When the limit was lifted I could stay all night." Eventually she was maxing out credit cards, taking out personal loans, even bouncing checks in the casino itself.Last year, when she was $75,000 in the hole and thinking of suicide, she sought treatment. "I came on the boats to escape my problems. I was already behind in my bills, [had] problems with my boyfriend and my daughter, so what the heck? It was the excitement. There's not much to do around here, and the boat was like a candy store."The Saturday afternoon of the Iowa presidential debate the pit manager of Davenport's President swears casino attendance is abnormally high. "Maybe that debate brought more people in," he laughs as he signs a credit voucher for one bearded gambler in a Harley T-shirt. Any daily attendance bump would be hard to figure, as casino patronage in Iowa has been climbing astronomically since the liberalization of 1994-up nearly 100 percent in 1994 to 3.1 million visits; the state now has nine riverboats.The President is the largest of them, but on this day, there is standing room only at the crap, roulette and 21 tables. (In part because there are proportionally fewer gaming tables than in Vegas, the riverboats' more downscale clientele favor the slots and video poker machines.) The dress is strictly jeans, workboots, flannel shirts and baseball caps. The gnarled hands of workers and farmers snap up cards dealt from across the table by the equally gnarled hands of former factory workers now making the average $19,000 a year paid to those 60 percent of casino employees who are full time -- or by recent high school graduates whose career aspiration is to graduate to Reno or Las Vegas.These floating casinos are what Professor Robert Goodman calls "convenience gambling" in his just-published book, The Luck Business. The 7-Elevens of the industry, they are to the Vegas mega-casinos what crack cocaine is to pure Colombian snow. This is like the town carnival that never closes and never leaves. Always open to empty your pockets, the casinos endlessly recycle desperate and now mostly local day-trippers. One doesn't have to stay long at any table to see the visible pain that comes with the loss of a $5 or $10 bet, the high number of "players" digging deep into their purses or pockets for that ciggy money they'll put down to chase the loss.Statistics show that the poor are likely to spend two-and-a-half times the percentage of their income on gambling as the middle class. And with the stock market and limited-partnership opportunities not much of a draw among K Mart workers, gambling is the only "investment" many of the working poor think they can afford. A full 27 percent of lower-income gamblers polled in one study said they were in the casino "to get rich."Yet the average result of each gambling visit is a loss of between $25 and $100. Of the total casino take, a city like Davenport gets about $1 per gambler head in tax revenue. A similar amount-more than $2 million a year-flows into a local development fund that is then doled out in dozens of grants to schools, police forces, homeless shelters, charities and so on. In Davenport in 1992, the biggest grant, $750,000, went directly to the business elite in the form of an expansion of the city's convention center. Another 15 percent of the take goes to the state. The other 80 percent of the casino revenue, hundreds of millions of dollars, is transferred from the pockets of the gamblers into the pockets of the owners -- some local, some based in Las Vegas.It's a chilling experience to stand in front of any one of these riverboat casinos and realize that each year a million or more people flock to it and yet there is, apart from parking lots, nothing, absolutely nothing -- not a bar, a cafe, a hamburger shop, a souvenir stand -- that has sprung up near it.Gamblers want to gamble, not shop. And no restaurant can compete with the casinos' $6 all-you-can-eat buffets of prime rib and seafood. Those few who still come on buses from out of town apparently see no reason to stay overnight in the Quad Cities.The casinos produce no wealth (except for the owners, of course). No goods are manufactured or exchanged. Almost every dollar lost in the casino is "cannibalized," sucked out of the community and not spent somewhere else or, God forbid, socked away in a savings account. Last year in Iowa and Illinois alone, more than $4 billion was lost on one form or another of legal gambling.That's about three times the revenue earned from gambling by cities and states in the entire rest of the country. A just-completed review by U.S. News & World Report of fifty-five counties that got casinos between 1990 and 1992 shows they had no more growth than similar counties without casinos, and in some cases they lost local businesses.Since the boats have come in, all we see is more people needing help of more kinds," says Chuck Landon of Churches United of the Quad City Area. "And things are supposed to be getting better! The gambling appeals to the very people who can least afford it."I talk with Landon in the Martin Luther King Community Center, which is surrounded on four sides by sprawling empty lots. On those fields used to prosper the commercial heart of Rock Island's African-American community. Now little business is left even in the white-dominated downtown. Landon helps coordinate a network of church-run food pantries that serve more than 30,000 people a year in the Quad Cities. But surely, I ask him, you can't blame all that need on just the introduction of casinos? "Of course not," he answers. "Let me say we do see a lot of people gambling their food money away. But we served food to 11,000 families last year.""That's one out of ten in the Quad Cities. That's families, not homeless or vagrants. These are largely unemployed or, more likely, underemployed. Despite the official version that we are in a period of rebuilding, more and more people just aren't making it. A state study shows that by the year 2000, 70 percent of jobs in this area will pay less than $20,000 a year. That's the problem." Indeed, unemployment levels hover at a reasonable 5 percent, but Quad Cities wages run 10 percent or more below the national average.Later that afternoon, a few blocks away, Vince Thomas, who runs Project NOW, one of Rock Island's largest nonprofit social service agencies, pulls out a file of state reports and statistics. One set of numbers tells it all: Though the overall population has decreased, there were nearly twice as many residents of Rock Island County on food stamps and/or public assistance in March 1995 -- a time of "recovery" with roughly 5 percent unemployment -- than there were in the summer of 1982, when the local economy was flattening out and joblessness was in the high double digits. "If you had kidnapped me in 1982 when the economy collapsed, held me incommunicado on Mars and dropped me back here last week, I would tell you that nothing has changed," says Thomas. "The only difference is, where we once served the unemployed, we increasingly serve more of the working poor who need help with clothing, energy bills, food bills and, most of all, rent and housing assistance." Five years after the panacea of legalized gambling, 47 percent of Rock Island County residents are classified as "low, very low or extremely low income," though 95 percent of them are employed.And starting this year, Rock Islanders are being saddled with the extra burden of directly subsidizing their one casino riverboat. Squeezed by Iowa's more liberal dockside, no-cruise gambling, the Rock Island Casino has seen its receipts plummet; even so, 14 percent of the city's operating funds derived from casino revenues as late as 1994. Rock Island has had to factor out that income from its budget for this coming fiscal year, so jobs have been cut and taxes have been raised to make up the shortfall. And now the city is rebating all casino taxes owed it if the riverboat's revenue is less than its monthly cash losses. So far, this city of 40,000 has returned nearly half a million dollars in tax money to the casino owners. "We can't get the city to give us a $15,000 grant for minority businesses and a job search program," says John Carroll of the Alliance for Justice. "But it gives hundreds of thousands of dollars in tax abatements to the riverboats and then raises our water bills to pay for it."The most jarring thing about the Quad Cities is the fact that their overall economic situation is now considered absolutely normal in America's new post-industrial era. Except for a handful of activists like Landon and Thomas, no one in the establishment dares speak of crisis. All you hear about is the low unemployment rate."Our economy is very, very rosy. Robust and diversified," says Larry Reed of Davenport's Chamber of Commerce. "The local economy is healthy and growing," concurs Republican Mayor Patrick Gibbs, sitting beneath a signed photo of Newt Gingrich. The riverboats, he says, are economic development. As proof of revival, he points to the arrival of a telemarketing firm providing a few hundred jobs at $16,000 a year. When I ask what sort of business boom the boats have brought, the Mayor boasts of a downtown Starbucks-like coffee bar, one that seats maybe six or eight people and certainly employs fewer.These two officials are no different from thousands of others across the country, at both the local and national levels. The scene in Davenport is repeated in hundreds of other American communities. Local industry collapses in the global market. Local commerce goes with it, leaving downtown boarded up and joblessness in the stratosphere. Service industries move in to exploit the battered work force, and national retail chains open up on the fringe strip malls, driving the final stake into Main Street, while local banks and TV stations are snapped up by out-of-town networks. Jobs reappear-albeit at subsistence wages. Victory is declared.The only problem for local officials is finding an adequate tax base. Along the Mississippi River that dilemma has been solved by the riverboats. Now the poor can throw their money on the table -- and get new convention centers in return.The day I receive Larry Reed's "rosy" economic forecast there's a near-riot at the Moline Holiday Inn. America's twenty-ninth Farm and Fleet store -- a retail outlet like K Mart or Sears -- is soon to open out on John Deere Road. A ten-day "Job Fair" has been scheduled at the hotel to fill the 200 open positions -- 40 percent of them part time, average starting wage less than $6 an hour. A thousand applications have been printed for the week-and-a-half event. But within the first five hours they are gone and the swelling throng of job seekers, packed elbow to elbow in the Holiday Inn banquet room, is angry. "My God, to see this kind of turnout for something like this, it's sad," says 41-year-old Betty VanEckhouette, out of a full-time job for the past four years. "They're scraping to get these $6-an-hour jobs. How can you sustain a family on $6 an hour?"With new casino construction stalled by growing local backlashes, the next battle over gambling will take place at the national level. Partisans on both sides are readying to fight over a measure proposed by Sen. Paul Simon and Rep. John Conyers that would create a national commission to study the effects of widespread gambling.The commission bill most likely will be approved. But any proposed rollback or ban on gambling will meet a wall of resistance from the industry lobby, which is aggressively buying its political standing. Meanwhile, the industry's full-time foe, Tom Grey, hopes that before this political season is over, legalized gambling will surface in the national debate. "What an opportunity for us," says Grey of the '96 campaign."Where else in America could we catch all the bad guys together at the feeding trough? We could really clean house. The right, the left, all of America has to come together and ask what we want as an economic foundation for the next century." And Grey continues to believe his eventual success depends on bringing the left on board. "Liberals tend to look at 'isms.' They don't see the little battles that open the door to the big battles," he laments. "The left keeps closing the door, withdrawing, giving up on the people in the middle. They'd rather attack the right than talk to ordinary folks in between. Unfortunately for the left, it's the right which is doing a much better job of talking to the middle."While Grey is waiting for the left to come around, the gambling industry is forging ahead with plans for expansion. At a recent gambling industry summit in Las Vegas, Melvin Simon, whose company helped build the mammoth Mall of America in Bloomington, Minn., said he envisions the day when casinos, not department stores, will be the anchor of the country's malls. "It will take a lot of legislation," said Simon. "But believe me, it's a possibility."


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