COLUMN ONE : U.S. Rolls the Dice on Gambling : From Biloxi to Cripple Creek, betting fills town coffers and creates jobs. But gaming may offer just a short-term revenue fix as it brings a new set of worries.

By J. MICHAEL KENNEDY

Oct. 31, 1992 12 AM PT

TIMES STAFF WRITER

BILOXI, Miss. — The President Casino was packed. Wall-to-wall gamblers jockeyed for position at the blackjack tables just in case a space came open.

Video poker fanatics pumped quarter after quarter--and in some cases, dollar after dollar--into the machines, looking for the big payoff from gambling’s latest hottest item. Cigarette smoke filled the air, as did the sound of slot machines kathunking.

Just another weeknight in Biloxi, the somewhat bedraggled queen of the Mississippi coast that has turned to the roll of the dice and flip of the card as a way to fill the city’s coffers and create jobs galore.

Three casinos, in the form of permanently docked riverboats, are now within the Biloxi city limits. Biloxi Mayor Pete Halat beams at the prospect of millions of dollars that will pour into the city’s coffers, like found money.

He had better enjoy his corner on the new money while he can, because competition is on the way. No fewer than 45 other applications have been filed with the state gaming commission to open floating casinos on the Mississippi River and Gulf Coast.

Within the last two years, legalized gambling has taken off throughout the United States. Betting is now allowed in places where it has been taboo for generations, frowned upon by church and state alike.

Even dirt-poor Tunica, located on the Mississippi Delta in one of the nation’s poorest counties, now has its own casino and, with it, hope that life will improve. Bay St. Louis, little more than a stone’s throw from Biloxi, reduced city taxes by 85% last September, in large part because of expected casino revenues. This, before the casino was even completed.

Three Colorado mining towns are now virtual wall-to-wall casinos, with gambling measures being readied for more than two dozen other struggling communities in that state. Louisiana has approved a huge casino in New Orleans--over the protests of business leaders who say it will irrevocably alter the character of the famous French Quarter. And lotteries, limited to only three states a decade ago, are growing steadily across the nation: After the November elections, there could be as many as 38 state lotteries if voters in Nebraska, Georgia and Mississippi pass measures.

Yet amid this onslaught, concerns are emerging. Some critics say gambling is a short-term revenue fix for strapped state governments. It’s a cash flow that cannot be sustained, others assert, citing problems that have already developed in Colorado, where gambling revenues are falling off after an initial spurt.

“It’s going to be the most visible of the growth industries through the 1990s,” said Bill Eadington, director of the University of Nevada, Reno’s Institute for the Study of Gambling and Commercial Gaming. Yet he believes that the helter-skelter spread of gambling in the country will eventually taper off, leaving in the lurch communities that have bet all on gambling revenues.

Eadington and others contend that the gambling binge is being fed by state legislatures looking at the success of their neighbors and eager for a piece of the action. Witness the beginning of casino gambling in Deadwood, S.D., in 1989, followed quickly by riverboat gambling in neighboring Iowa and Illinois. Next door, in Missouri, a riverboat gambling measure is on the November ballot.

Perils Abound

But perils abound for governments looking for a revenue fix. Take the case of the small Iowa town of Ft. Madison.

Riverboat gambling was thriving in Ft. Madison, where people had floated a $2.6-million bond to build a pavilion and docking facility for the Emerald Lady. Yet the boats moved on to more lucrative pickings when other states passed laws that did not limit the amount of money that can be bet and lost, as is the case in Iowa.

In Ft. Madison, hard feelings remain.

“If anyone from that company came through town, there would be a lynching,” said Mayor Arlene Carlson.

Still, despite some hitches, the gambling bandwagon rolls on.

Rock-ribbed conservative Texas, after years of resisting, is now in its first year of a lottery. Texans promptly bet $17 million in the first 24 hours. The United States now leads the world in lottery sales, with last year’s betting totaling $20.5 billion. Spain was second, with a mere $7.2 billion.

Even Utah, the heart of Mormon country, has a measure on the ballot this year that, if passed, would allow counties to have parimutuel betting at racetracks.

Such has been the proliferation of casinos on American Indian reservations that there are now more places to play blackjack in Minnesota than there are in Atlantic City. Michael Cox, a lawyer with the National Indian Gaming Commission in Washington, estimated that 140 tribes were involved in gaming of one form or another and that there were now more than 30 reservations with casino-style gambling.

State legislatures throughout the nation, tantalized by what they see as revenue without new taxation, have been introducing gambling bills, from legislation allowing casino gambling to lotteries. In less than two years, reports the Center for State Policy Research, more than 1,000 gambling-related measures have been introduced in state legislatures.

In 1982, Americans legally bet $178.4 billion; in 1991, they bet $304.1 billion in what waging experts described as a flat year. Americans in 1990 ponied up more for gambling than for health insurance, gasoline, televisions, radios, drugs, cigarettes, household appliances and shoes combined.

Another barometer is the number of slot machines produced by IGT, the nation’s largest manufacturer. In 1989, the company made 18,708 machines. That number rose to 52,208 in 1992. IGT recently published a 106-page booklet on gaming, a how-to primer for neophytes interested in opening a casino.

Gambling’s History

Gambling is no stranger to the United States, as witnessed by the untold number of Western movies featuring a card game in a saloon.

The lottery has been around for hundreds of years. The Jamestown colony, the Colonial army, the District of Columbia and the Ivy League all used a lottery to raise money, as did Thomas Jefferson to pay off a large personal debt when he was old and destitute. Benjamin Franklin once sold lottery tickets.

But lotteries were banned nationwide in the late 19th Century after a scandal involving operators in Louisiana, a state long familiar with payola and back room deals.

The first formal casino opened in New Orleans in 1827 and gambling halls were prevalent throughout the United States in the mid-19th Century. Modern U.S. casino gambling began in 1931, when Nevada Gov. Fred Balzar signed a bill making it legal. (Another he signed that day approved quickie divorces.)

Reno was an early destination for gamblers until a Los Angeles mobster named Bugsy Siegel opened the Flamingo, Las Vegas’ first resort in 1946. Nevada remained the only place where casino gambling was legal until 1976, when New Jersey voters approved it for Atlantic City.

The lottery was reinstated in New Hampshire in 1964, aimed at assisting public schools. Since then, lotteries have gradually spread across the country, although time has shown that lotteries have to constantly change and offer huge payoffs in order to be successful.

I. Nelson Rose, a gambling law expert and professor at Whittier College Law School, says betting in the United States tends to be cyclical. Gambling flourished in Colonial days, the Wild West days and is once again on the rise, he notes. The current surge will be reasonably short-lived, he believes--done in by another round of scandal and corruption.

“This is going to be seen as the Golden Age of gambling,” he said. “Of course, it will be followed by a Tin Age.”

Church and State

Rose believes, as do others, that some fundamental forces that once kept gambling in check have disappeared. Among them: church and state.

“Once churches started running bingo games they lost the right to say that betting on a horse race is a sin,” he said. “Government no longer enforces morals. Seventy years ago all gambling was illegal and it was a crime to sell someone a drink. Today, government is selling lottery tickets. . . . “

Vic Vickrey, a retired Las Vegas casino manager now living in Biloxi, says it will be impossible for Mississippi and other nearby population centers to support a large number of casinos in the region, simply because there are not enough people. “You’re pounding on mostly salaried people here.” he said. “That is going to run out.”

It is difficult in the short run to fault places like Biloxi for wanting the casinos and the estimated 2,500 jobs the three riverboats have already created. “It’s changed my life,” said Kim Adams, who went from being a beauty shop manager to casino employee, catering to the needs of VIPs.

On the other hand, it has created some odd circumstances. Take gambling in Colorado. Casinos have taken over every commercially zoned nook and cranny of the three towns where gambling is now legal. Consequently, there is not a gas station, hotel, drug store, hardware store or market in Gilpin County, where two of the towns--Central City and Black Hawk--are located.

The onslaught of gamblers has all three towns scrambling just to meet basic services. There is a revenue crunch in Central City, where the budget went from $331,708 in 1990 to almost $3.6 million this year. Long-term debt has risen from less than $600,000 in 1991 to $14.5 million today.

Those improvements were made on the assumption of continued big profits for the casinos in Central City, as well as Black Hawk and Cripple Creek. But Candace Fox, a Reno-based government consultant, said profits were beginning to flag in the Colorado casinos.

“The short gaming history in Colorado is showing signs of stress,” she said.

If other towns in Colorado approve gambling in November, says Bill Plein, a real estate broker in the Central City and Black Hawk area, some will fail.

“My perception is that some of these towns are going to have a major catastrophic event because they are going to fail like a business fails,” he said.

Colorado’s casino towns already are experiencing soaring land values and the taxes that come with it. In Cripple Creek, Cliff Young said the property taxes on his gift shop had gone from $1,600 last year to $10,840 this year.

“Who can pay these kinds of taxes? You won’t have anyone left in town if you continue this,” said Young, who along with a group of businessmen and homeowners has filed suit against the county tax assessor’s office.

Longtime Cripple Creek resident Helen Rankin, 79, is selling her house because she fears the property taxes will break her. “It had been my plan to finish out my life right here,” she said.

Amid this nationwide burst of gambling fever, Las Vegas is not standing still.

Las Vegas Competes

Even as some of the old-line casinos are facing financial failure, unable to offer the kind of splashy entertainment visitors have come to expect, major construction is under way elsewhere. Cranes dot the skyline as some of the biggest casinos race to become even larger.

“Nobody is going to catch Las Vegas,” said Michael Gaughan, owner of the Gold Coast and Barbary Coast casinos.

Among the projects under way: The Mirage is building a $430-million Treasure Island-style resort, and Circus Circus has announced it will begin construction of a five-acre, $75-million theme park to be called Grand Slam Canyon. It will be completely covered by a vented pink dome. Circus Circus is also building a $300-million hotel and casino that will resemble an Egyptian pyramid.

Overshadowing both of those, however, is a $1-billion, 112-acre project by MGM Grand that will include a movie studio theme park as well as the world’s largest hotel and casino. When all the construction is complete, said Phil Hevener, a columnist for the Las Vegas Sun who covers the gaming industry, Las Vegas will have the 10 largest resort hotels in the country.

“Las Vegas is taking it to a whole new level,” he said. “The prevailing wisdom is that if Las Vegas wants to compete with the spread of gambling in the rest of the country, it has to be better and brighter.”