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Easy Money

Americans are betting more than $550 billion a year. With corporate ownership, a new mainstream image, and political clout, the gambling industry is on a roll

| Tue Jul. 1, 1997 10:00 AM EDT

But comprehensive data on the effects of legalized gambling are still scarce. Last July, Congress approved the formation of the National Gambling Impact Study Commission to conduct a two-year study of gambling's political, social, and economic effects. It is the first federally sponsored study on gambling since 1974.

The fight over the commission was the first major political engagement for the gambling industry, and Washington's newest player did a textbook job of buying influence. Three months after the House voted to form the commission, industry fundraisers raised $500,000 each for the Clinton and Dole campaigns. (It is one of the great ironies of the 1996 campaign that the day after candidate Dole gave his celebrated "Hollywood speech," in which he excoriated movie executives' values, he was in Las Vegas pocketing $500,000 in gambling money.)

The results started to show immediately. Dole used his influence as Senate majority leader to ensure that the commission would not have the ability to examine, or even bring up, the question of levying new taxes on the industry. The president—shortly after playing a round of golf with Mirage Resorts chief Steve Wynn—announced that he thought the commission's subpoena power should be limited. (Speaker Newt Gingrich had already stated his opposition to the subpoena-powers provision—the day after returning from a private dinner with Wynn in Las Vegas.)

In the end, the gambling lobby proved victorious. Congress sharply narrowed the commission's subpoena powers. There will be no embarrassing public inquisitions. And an addendum to the legislation gave the gambling business one more advantage by requiring that the nine members of the commission—chosen by the president and by the House and Senate leaders—each must have "some knowledge" of the industry. That provision enabled Newt Gingrich to appoint J. Terrence Lanni, CEO of MGM Grand, to the commission. House Minority Leader Dick Gephardt appointed John Wilhelm, treasurer of the gambling industry's largest union. And Clinton's picks included a top Nevada regulator.

In any case, the federal commission will probably have little impact. Two years of study and hearings will produce a report that most will no doubt ignore. There is no requirement for the states to adopt or even consider any of its recommendations.

It's not likely that the explosion of legalized gambling will slow any time soon. Today, all but two states (Utah and Hawaii) offer some form of gambling—riverboat casinos, Indian casinos, racetracks, jai alai frontons, lotteries, etc. Gambling has emerged from the criminal shadows to become a widely sanctioned pastime.

Ten years ago, it probably would never have occurred to a mom or dad to plan a family vacation in Las Vegas. Today, you'll find baby strollers gridlocked at intersections up and down the Strip. Suddenly, going to Vegas is not a whole lot different from going to Disneyland.

And what difference there is may blur more and more as the gambling giants expand into other forms of entertainment. MGM's Lanni says he expects a major consolidation in the industry over the next five years, resulting in five or six megacorporations that can use their economic leverage to buy established theme parks, movie and television studios, and related businesses. "Is there any reason, if you're in the hotel/ casino entertainment business, you couldn't have a movie studio also?" Lanni asks. "We are in the entertainment business. Why not expand on that? Why not be those destination resorts where more people are going to travel?"

Lanni believes that casinos, with their phenomenal cash flow, have the economic muscle to become the heart of the entertainment industry. "Ten years from now," he predicts, "the issue of gaming won't be an issue."

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