GAMBLING GOES LEGIT

By Michael Demarest

And, lo, in the sorry streets of the stricken city there was of a sudden great exultation and praise unto the Lord. Young men dreamed lusty dreams, while the elders spake of a day at hand when multitudes would flock from near and far to lavish shekels upon the once-more blessed shore. The place of Atlantis would be born again, said the prophets, as a citadel of many marvels, and it would be called Las Vegas East.

The near-biblical euphoria of Election Day still vibrates along the sagging boardwalk and ravaged back streets of Atlantic City. Since New Jersey's voters overwhelmingly approved a proposal to legalize casino gambling in that neglected aunt of Eastern resorts, money has poured into the city as if gold had been found beneath its soiled beaches. Downtown real estate values have soared 200% or more as speculators and promoters of every ilk and bilk rush to make the demodee dowager a belle again --and so prepare to wring the belle of millions of restless Eastern betting chips expected to wind up cozily close to home. "Most people can't afford to go to Vegas," notes one booster, already trying to one-up Nevada. "Anyway, who needs sunshine in a casino?"

Though the first roulette wheel will not spin for at least a year in Vegas East, even New Jerseyites outside Atlantic City are starting to slaver over the promised tourist bonanza. For--say the prophets--it will not only revitalize the old burg of Miss America and Monopoly but also return to the state nearly $18 million in new tax revenue by 1980 and more than $35 million by 1985. No one, of course, is talking about 1984, the year of George Orwell's novel of the superstate Oceania in which betting for "some millions of proles was the principal if not the only reason for remaining alive." Nor, for that matter, is the citizenry much disposed to discuss the possibility that organized crime, with deep, comfortable roots in New Jersey, will move in with the wheels and the slots to control the life of the city and even the state.

What obsesses Atlantic City, the rest of Jersey, and indeed much of the rest of the nation, is that gambling--an activity that churns out money, creates jobs, resists recessions and does not pollute the air or streams--is going legit.

Sanctioning of the sometime sin has been sweeping the nation over the past decade. In the early 1960s, outside of Nevada, state-countenanced gambling was almost entirely confined to track betting. Today, 44 states have some form of legalized gambling and the kinds are growing. Legislation to permit new and expanded types of wagering--from jai alai to bingo, dog racing and card rooms --is pending in 37 states. A few states have even invaded the fertile field of numbers betting, long the exclusive and profitable province of organized crime. Two states, Delaware and Montana, have joined Nevada in providing legal betting on sports events like professional football, which is where illegal bookies get most of their action.

As the spread continues, states watch each other as carefully as players in a no-limit card game. If something works in Atlantic City, say, or Delaware, the temptation is strong to follow suit. For at stake is the risk of losing betting dollars, and the revenue they promise, to a faster-shuffling neighbor. As gaming types put it, "When you're hot you're hot, when you're not you're not."

The domino theory of gambling expansion is already evident in the proliferation of lotteries. Each of the 13 states that operate them today--and Vermont is poised to follow--is contiguous to at least one other of the fraternity. As New Jersey reasoned in 1970, if neighboring New York was doing it and attracting Jersey players, it made sense to provide a local product and keep the money home. The same thing happened with off-track betting. After New York got into it in 1971, Connecticut followed, and Massachusetts is eying the same action.

Gambling, legal and illegal together, is today among the biggest and fastest-growing commercial activities in the U.S.--and that means the world. Its turnover may be as high as $75 billion a year. That said, there is hardly a mayor or Governor in the nation who, in his ace of hearts, would not like a piece of it as a painless revenue raiser.

Thus, as inevitably as frost follows fall and tax man pursueth achiever, betting of every kind, shape and flutter, from acey-deucy to ziginette, may ultimately--and ironically--become a pillar of fiscal integrity in most major cities and populous states.

There is even a federal case for it. "Gambling is inevitable," says the first sentence of a massive, little-noticed 1976 report by a federal commission that spent three years and $3 million to investigate the subject. The 413-page study, Gambling in America, is portentously subtitled Final Report of the Commission on the Review of the National Policy Toward Gambling. Its rationale is clear and simple: Americans gamble in massive numbers. Where legal, regulated gambling is not available or cannot compete with illegal, uncontrolled gambling, people gamble with the illegals. Illegal gambling is not in the public good. Ergo, legal, controlled gambling should, in keeping with local custom and sensibilities, be available and competitive.

Americans, like most other people the world over, believe they are taxed to the limit. All forms of state-sanctioned gambling offer an alternative to more taxes. Admittedly betting, when filtered through bureaucracy, is often a horrendously inefficient way to raise revenue: a lottery returns to the state only an average of about 40-c- of every dollar taken in, with 45-c- going to prizes and 15-c- swallowed by overhead and administration; states generally spend only about 5-c- to collect each tax dollar. Nowhere save in Nevada does the take from gambling contribute more than 4% of a state's budget; in most cases, it amounts to less than 2%. The amount raised for New York State by its new lottery this year ($45 million) could have been matched by a .1 % boost in the state sales-tax rate.

To be sure, admits Illinois' lottery superintendent, Ralph Batch, "it costs more than collecting the sales tax. But not many people enjoy paying taxes. The lottery is voluntary, it generates revenue, and it provides entertainment." And much more. Most buyers of lottery tickets, legal or illegal, are working-class men and their wives, who have no expectation of the big raise or the year-end bonus. "We're selling a dream," says David Hanson, a Michigan state lottery official. "How else do you get out of the factory? How else do you get out of the rut?" '

No sociologist or psychologist has explained convincingly why people gamble. Yet many gamblers can empathize with Fyodor Dostoyevsky's compulsive gambler who with one coin left in his pocket for food returns to the gaming table to lose it. A contemporary Fyodor, a Manhattan-based writer with deep, affectionate knowledge of gambling, speaks of "the smell of cordite," the burning fuse that draws him to the casino.

The whiff of gunpowder is conspicuously lacking in the sanitized gambling dens that governments run. Yet even in these Airwicked parlors, many bettors divine that gods, not odds, are at work. At a mid town Manhattan OTB (OffTrack Betting) shop last week, a 20-year-old secretary named Donna said: "I'm on a diet, see, and instead of putting two bucks into a burger and a shake for lunch, I'm putting it on a race. No, I haven't won anything yet, but I've still got to lose 20 pounds. Then I'm gonna win big, so I can buy clothes and stuff, and that'll be my reward from Up There. I got it coming, you know?"

The urge to bet may be almost as old as mankind; some revisionist wags suggest that Adam and Eve took bad odds from a four-flushing serpent and gambled away Paradise. Certainly, over the years, it has been variously regarded as an innocent pastime (the bridge game), a peccadillo (the $2 horse-race bet), a societal problem (the compulsive gambler, see box), or part of a sinister antisocial conspiracy (the Mob). The dominant Protestant ethic in America traditionally looked with suspicion or disdain upon an activity that deviated from the accepted mold of discipline and diligence, punctuality and prudence. A man who spent his lunch hour reading the form sheets and phoning his bookie was somehow not to be trusted. He might not go so far as to embezzle the company's funds, but he was clearly one who worshiped at an alien altar. Speculation in real estate or uranium stocks was all right. But laying bets with bookies . . . better he should spend his lunchtime slurping vodka or seducing the secretary. To legalize gambling, it was agreed, would be to open Pandora's box office.

Actually--and actuarially--the 13 original American colonies were largely financed by lotteries, as were Harvard, Yale, Princeton, Brown, Dartmouth, Columbia, and schools of lesser luster. George Washington, Benjamin Franklin and Thomas Jefferson, to name only a few true blues, staunchly advocated lotteries as a means of raising public funds. (Jefferson went so far as to endorse the lottery as "a salutary instrument wherein the tax is laid on the willing only.")

Today, according to the report of the National Gambling Commission, an overwhelming majority of Americans (more than 80%) regard gambling as an acceptable activity. Even more significant, the commission found, nearly two-thirds of the American people make wagers of one kind or another. One authority even estimates that 70% of all Americans who see a football game on TV have a money bet on the outcome. Edward C. Devereux Jr., 64, a Cornell University sociologist who predicted 25 years ago that gambling would eventually go legit in the U.S., offers this wry explanation: "Our society is moving more and more toward secularization, to rationalization, to the collapse of real commitment to public morality. Gambling fits into our whole Machiavellian rationale that anything goes if it works."

James Blascovich, an assistant psychology professor at Marquette University who has studied the social psychology of gambling, takes the more pragmatic view that the popularity of gambling attests to its "social value. Risk-taking is more culturally valued in our society now." Like many other observers, Blascovich believes that "gambling is not greatly different from the risk-taking involved in playing the stock and options markets, or in some career choices or acts of physical daring. When it comes to money, moderate risk-taking is more socially valued in our society than caution."

In other words, pal, you are in style if you risk two bucks on Fancy Lady in the Fourth at Aqueduct. Or take the night flight to Vegas, to the mythic shrine of champagne and schlock, the green-felt jungle of clacking dice and clumping slot machines and the grave susurrus of blackjack and poker games --Rimbaud's Eldorado banal for old and young, rich and poor, slick and rustic millions who aspire to high delirium.

Each year 30 million people come from all over the world to the land of the Golden Fleeced. On any given day in Las Vegas, 200,000 tourists pump the slots, harangue the ivories, face down the cards. Some rely on "systems," others play hunches or dreams, and not a few resort to prayer. What some may face is horripilating odds that give the house as much as a 30% edge in some games (like keno), though it is only 1.4% on craps. Still the clients come and come again, even if they have to beg the management for a Greyhound ticket back home. (They usually get one.) At year's end, when every last chip and chump has been accounted for, the net is a $1.2 billion gross for Nevada's casinos; almost half of that sum flows into state and local treasuries. As a result, the state's 583,000 residents pay no income, sales or inheritance taxes.

Is Nirvana-Nevada exportable? Probably not. Sans year-round sun, lacking the economic substructure that has taken decades to assemble, it is unlikely that any community can match the allure of Vegas. Though Atlantic City will certainly try--and perhaps it can learn from some of the casino Mecca's mistakes.

Wide-open casinos have been operating in Nevada for some 30 years, but only fairly recently has a tough state gaming commission been able to purge the industry of blatant Mafia control. Even now, despite elaborate screening procedures, crime authorities say there is little doubt that the Mob still dominates part of the action through respectable front men. At least five of the big twelve casinos are believed to have ties with organized crime.

Says Ralph Salerno, a consultant on crime who was formerly head of the New York City police department's racket squad: "I have no confidence in the screening process. I know of no jurisdiction where they can keep a mobster from owning a gin mill. Why should they be able to keep them out of Atlantic City?" A former Mafia lieutenant, now living in the New York area under police protection and an assumed name, agrees. Talking to TIME'S John Tompkins about Vegas East, he predicted: "It's going to be big. Your biggest gamblers are in the Northeast. It's the greatest thing in the world for the Mob, and there's no way to keep 'em out. Who's going to be the pit bosses, the money handlers? Nobody but the Mob has the money for casinos. Guys will come out of the woodwork down there lookin' like clergymen and askin' for a license."

With the brains, computers and social support that it can attract, legalized gambling should in theory be able to drive the Mob out of the betting business. However, it can succeed only if it truly competes. The bookie offers not only better odds than the state-sanctioned OTB or lottery: his payoff is in cash, and easy to avoid reporting on income tax returns. To date, legal gambling systems, like lotteries and OTB wagers, have only increased the number of bettors and the sums they wager--and the amount that goes to the illegal sector. As every analysis of gambling shows, legal betting can prevail only if winners' windfalls are tax free--as they are in nearly all of the 50 foreign countries, including China and the Soviet Union, that support national lotteries.

So far in the U.S. legal gambling generally has been a boon to bookies. It has got more citizens interested in betting, and some of them, once hooked, find that wagering illegally offers other advantages besides tax-free payoffs, like sometimes better odds. In New York, for instance, bookies pay off horse bets at track odds; the state betting parlors pay 5% less to help cover their overhead. Of course, OTB provides some long-shot "exotic" bets--like picking the first three finishers in order in the last race--that bookmakers do not. But these mostly attract the small bettor, who is often not worth a bookmaker's time. Says a New York City cop: "The bookie couldn't be happier to get rid of the $2 bettor." But the heavy bettor who gets a taste of gambling through OTB can become meat for the grinder of illegal gambling. As one veteran Manhattan bookie puts it: "OTB runs a great kindergarten. When the kids graduate, I'm their finishing school."

Legal gambling seems to have had little impact on the multimillion-dollar illegal numbers racket, even though New Jersey, Maryland, Massachusetts and Rhode Island have introduced their own numbers games to compete with the illegals. The most successful of these, run by Maryland, has closely patterned its game after the illicit version. Players choose a three-digit number and can bet on it daily in multiples of 500; the payoff is 500 to 1 in cash, up to $600. It is a more honest game than the numbers rackets. Winners are always paid, which is not always the case on the streets. Illegal numbers banks have been known to go bankrupt when too many bettors hit the right number.

Cities, such as New York, Chicago and Los Angeles, may have more difficulty combatting the numbers game --or bolita or the policy racket--because its networks of runners are big employers in the ghettos and amount to major community industries. Notes Max Renner, a New York investigation commission special agent: "Even when the numbers in Harlem was operated by white mobsters, 90% of the take stayed there." Thus powerful politicians from poor urban constituencies have traditionally opposed serious attempts to drive the numbers out of business.

Moreover, there is little public or judicial support for police crackdowns on illegal wagering, a so-called victimless crime. The principal moral objection to the numbers game today is that it is, in effect, a regressive form of taxation that is borne far more heavily by the poor than the well-to-do. On the other hand, scoffs a New York hunch player, "TV is regressive. So are beer, taxes and mass transit fares."

For serious gamblers, a major drawback of government-run betting is the hoopla that surrounds it--and it is indeed part of the mystique, borrowed from TV game shows. In the Michigan lottery, finalists participate in an elaborate game show on prime-time TV that outdraws every other program on the air. People who make gambling their business are passionately anonymous. "It's sort of like sex," says a no-nonsense Manhattan punter. "If you score, it should be up to you whether you want to tell anyone about it."

Many impartial critics object to the very notion of governmental agencies promoting gambling. "More instant millionaires just waiting to be chosen!" say the radio spiels for New York's Empire State lottery. THE CHANCE OF A LIFETIME was the original slogan of the Michigan lottery. Now it is BE A PLAYER. In Britain, casinos and betting shops are not allowed to plug their wares.

But the biggest drawback to legal gambling is clearly the taxes that must be paid. The lottery-winning "millionaire" who makes TV news shows and tabloid front pages is lucky if he nets about $30,000 a year--and then has to fight off hordes of hungry relatives, strapped friends, charities and con men who expect him to share the largesse (see box). Starting in January, anybody who wins $1,000 or more on any lottery or by betting on or off any track will have 20% of his payoff withheld against taxes. Snaps New York OTB Chairman Paul Screvane: "Illegal gambling has the best partner in the world--the Government. We just can't compete."

The greatest potential area of competition is, of course, sports betting, which accounts for 90% of the action currently handled by illegal bookies --despite the old gambler's adage, "Never bet on anything that talks." It has been called the "big button." Delaware recently became the first state to start a football lottery. Called Touchdown, it takes into account the point spread between opposing teams, just as the bookies do. In brief, that means that somebody betting on, say, the Seattle Seahawks, who are rated nine-point underdogs, wins if Seattle wins, or even if Seattle loses by eight points or less. It is a form of wagering that can make the most lackluster game exciting for those who have money on it.

The National Football League has brought suit against the Delaware gambit, charging that it will sully the game's reputation and lead fans to believe the sport is being fixed. In fact, an estimated $15 billion to $30 billion in illegal bets are already being wagered on sports nationally--$1.5 billion in New York City alone, much of it on football--without stirring grave suspicions of foul play. Top officials of organized basketball, baseball and hockey also vociferously oppose legalized betting on their sports though this nonetheless seems likely to follow across the nation. The more deeply held moral objection to sports betting stems from the fear that the states may get into wagering on college or other amateur sports, where the temptation to rig games could be stronger and easier to fulfill.

The spread of gambling across the U.S. is certain to sharpen the debate about its social effects and spur efforts to analyze its roots in human behavior. One explanation for its pervasiveness is offered by James Ritchie, executive director of the Gambling Commission. "There is in the breast of every person," he observes, "a desire to risk. It may be a desire to run for political office, or a desire by a farmer to plant wheat and see if the elements allow him to reap a crop, or a desire to buy stock or commodity futures. Or maybe it comes from a person who decides he has some disposable income and he's going to risk that money because he has a feeling he'll come away with more money, which is called gambling. It makes little difference. It's the desire to risk."

It can even be argued that betting, within reason, has redeeming social value. Felicia Campbell, a University of Nevada behaviorist who earned her Ph.D. with a thesis on "Gambling Mythologies and Typologies" (and was once married to a croupier), insists that gambling permits many people--especially the elderly--to "lose themselves in the action of the moment." She adds: "Even though the final result is often negative, it's a positive impulse. The peak experience is almost more important than winning. When he grabs the dice, a blue-collar worker is in control of his destiny. For the businessman, gambling can be cathartic because it can produce an altered state of consciousness."

But does more legalization mean more compulsive gamblers who become problems? "The problem gambler has all the opportunity he needs right now," says Ritchie. "I'm not promoting legalized gambling. But the argument that legalized gambling will create problem gamblers is false." Nonetheless, a number of psychologists and sociologists emphasize the need for a vigorous educational program to inform the public --particularly adolescents--about the risks that are as much a part of gambling as its potential profits and pleasures. Dr. Sirgay Sanger, for example, director of the Parent-Child Interaction Program at St. Luke's Hospital in Manhattan believes: "We've become a very materialistic and success-oriented society that is tremendously influenced by mass communication, particularly TV. The effect on children is to indulge them into thinking they can do anything--but that, by hook or by crook, they need to have money to be successful. We're talking about a nation at high risk to having a gambling problem; it is a nation susceptible to gambling."

Yet the nation to date has virtually ignored the problem of the compulsive gambler. The only federal funds allotted to treatment of the hopelessly addicted bettor are some $330,000 a year spent by the Veterans Administration. Dr. Robert Custer, who as chief of the VA's mental-services division has made a close study of the subject, points out that there is now no funding whatever for research into gambling addiction, as there is for alcoholism. He suggests that psychological research and treatment of the obsessive gambler could be financed by a small portion--say, .5%--of the revenue that states now derive from legal gambling. Any such program, he contends, would in the long run save the states some of the money they now have to spend in welfare payments and court costs for the gambler who wrecks his life.

"We can put controls on gambling," says Dr. Custer. "We can minimize the casualties." He urges that: 1) the states should not permit around-the-clock gambling (as in Nevada), 2) nobody under 21 should be allowed to gamble ("Virtually all the compulsive gamblers I've treated began gambling as adolescents"), and 3) state betting operations should not promote gambling as they do today. One of the most "addictogenic" factors, in Custer's view, is the easy credit that is available through a bookie -- a strong argument for state-run gambling, in which credit is hard to get and tightly monitored.

Some critics of the present format argue that gambling in the U.S. should be handled as it is in Britain: strictly supervised by government agencies but managed entirely by private companies. Among other effects, this would remove the stigma from the states of frenetically pushing an activity that is distasteful to many and dangerous to some.

For all the current euphoria among those who are introducing legalized gambling and those who are welcoming it, it is already clear that in its present forms it can be no panacea for states' and cities' budgetary woes, and it poses little threat to illicit gambling. Yet in one sense, legalizing gambling is a healthy recognition of reality, one of society's periodic and necessary adjustments of its laws to changing mores and unchanging human nature. Almost by definition, such evolutions solve some problems and create others. It is far too early to wager on whether the U.S. will win or lose as gambling goes legit -- but anyone who hankers to bet on it can surely find a taker.

With reporting by John Tompkins, David DeVoss, Georgia Harbison, Andrea Chambers, Ted Bolwell

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