Alabama Lottery Vote Extends Gaming Losses

By: - October 28, 1999 12:00 am

When Alabama religious leaders campaigned against a state lottery, they knew they had a good shot at mobilizing enough voters to defeat Gov. Don Siegelman’s seemingly popular plan to use gambling proceeds to fund college scholarships. What they didn’t know was that their effort would crown a series of setbacks for the gaming industry.

It’s not just in the Bible-belt South where gambling foes are gaining. Political and legal action in states from Oregon to Illinois to Kentucky makes Alabama’s rejection of a lottery just the latest in a run of bad luck for the gambling industry and its backers.

Effects of the Alabama referendum have spilled over into South Carolina. Church leaders and gambling opponents had been vigorously campaigning there in support of a November 2 referendum to dismantle the state’s $2.8 billion video poker industry. But in a unanimous ruling two weeks ago, the state Supreme Court struck down the referendum as unconstitutional and outlawed all video poker payouts after July 1, 2000.

The churches “tasted blood. They saw they were having impact. They saw they were influencing people,” Furman University professor Jim Guth told the Associated Press.

So instead of fighting against video poker, opponents of gambling in South Carolina have turned their attention to next year’s lottery referendum in their state. Church leaders promise a blitz equal to that in Alabama, and the 800,000-member South Carolina Baptist Convention is set to go on record against a lottery at its annual meeting on November 8.

Anti-gaming advocates in South Carolina are further heartened by the Tennessee legislature’s failure by 16 votes to send a lottery proposal to Tennessee voters this year and a 1996 Louisiana referendum that outlawed video poker in 33 parishes.

Gambling is still powerfully entrenched in the South, and indeed the nation. Only two of the 50 states — Utah and Hawaii — have no legalized gambling whatsoever. Louisiana and Mississippi have huge Las Vegas-style casinos, Alabama has dog tracks and bingo, South Carolina has gambling boats and Florida, Louisiana, Virginia, Texas and Kentucky have lotteries.

But a backlash seems to be developing.

Florida Gov. Jeb Bush stunned the state gaming industry this summer by revoking leases for all gambling cruise operations in the state. The move to issue the state’s first ever “no gambling” leases on underwater state land effectively shut down Florida’s 17 “cruise to nowhere” operations.

New Jersey legislators, eager to restrict their gambling industry to Atlantic City, also passed a ban on gambling cruises. The measure, adopted October 1, prohibits ships that have the sole purpose of conducting offshore gambling from leaving or returning to the state’s shores.

Oregon activists are pressing Governor John Kitzhaber to deliver on his promise to ban video-poker machines in the state. A coalition of anti-gambling groups is proposing a measure for the November 2000 ballot that would ban video poker after December 2001.

Though Kitzhaber has called video poker “dangerous and highly-addictive,” he opposes the plan because the state would lose too much money too quickly. Oregon runs about 9,000 video poker terminals, which are expected to create $436 million in revenue over two years. Kitzhaber favors a six to eight year phase out of video-poker.

Legislators in neighboring Washington are also feeling the heat from anti-gambling activists. Upset over the rapid spread of mini-casino gambling in Washington, local officials are protesting the fact that they have no say if and where gambling businesses appear in their communities.

“Casino gambling is an obstacle to–not an agent of–civic progress. It is just plain bad public policy for city, county and state governments to depend on tax revenue from the losses of the weak and vulnerable,” said Penny Lancaster of Spokane in testimony before a legislative panel.

As a result of the growing public pressure and a recent report saying problem gambling had become a significant health issue in the state, Washington legislators have promised to consider giving local government more authority in regulating gambling. State law currently gives exclusive authority to the state Gambling Commission to license casinos, which it did more than 50 times last year.

Legal hurdles have become the main stumbling block to Illinois Governor George Ryan’s attempts to expand gambling and forge a multi-state gambling compact. Illinois passed a sweeping new gambling law last summer that, among other things, expanded the number of legal casinos and permitted riverboat gambling companies to operate from dockside instead of from the water.

The Illinois Gaming Board estimated that dockside gambling alone would net state and local governments an additional $150 million a year.

But two lawsuits filed in recent weeks threaten to block the expansion. While the two lawsuits target very specific parts of the new gambling law, their outcomes will have an effect on the whole system. Illinois legislators wrote an unusual “inseverability clause” into the gambling law, which effectively means that if one part of the act is struck down, all other parts are to be voided as well.

“If any provision is held invalid…then this entire act is invalid,” the law states.

In the face of political and legal pressures, Kentucky Gov. Paul Patton has backed away from a plan to create 14 state-operated casinos. In April of this year, he proclaimed casino gambling as the only possible source to fund a proposal to revive cities and protect farms.

“I see absolutely no other source of revenue. Where else is the money going to come from,” Patton asked then.

All of these state actions come on the heels of a negative report issued this summer by a Congressional commission appointed to study the social and economic impact of gambling on federal, state and local government and citizens.

Among its findings, the National Gambling Impact Study Commission (web link: recommended that states cease aggressive lottery advertising, reduce lottery outlets in low-income areas, ban all gambling on amateur athletics, post warnings on the dangers of gambling in all gambling facilities and prohibit gambling “cruises to nowhere.”

Saying that states were the best place to address the issue, the report also stressed “tight restrictions on contributions to state and local campaigns by entities that have applied for or have been granted the privilege of operating gambling facilities.”

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