THE biggest game at the annual World Series (news - web sites) of Poker, the no-limit Texas hold 'em tournament, starts tomorrow at Binion's Horseshoe Hotel and Casino in Las Vegas. The entry fee is $10,000, and by Friday a winner will take home a top prize expected to top $2 million.
But while the eyes of poker players are focused on the Horseshoe, the real action in the luck business this year is taking place in other, less glamorous locales.
States already raise $20 billion annually from lotteries and casinos, more than 4 percent of their total revenue. Now, in capitals from Albany, N.Y., to Springfield, Ill., to Salem, Ore., politicians are debating whether to rely even more on gambling to try to balance their budgets without tax increases or service cuts.
Over the next several years, the result could well be a speeded-up expansion in gambling nationally, making betting more accessible than ever before, and states and cities more dependent on the willingness of lower-income people to gamble.
Since 1991, when the current wave of legalization began, the annual amount Americans lose on all betting, including lotteries, casinos and racetracks, has risen from $27 billion to $68 billion, according to Christiansen Capital Advisors, an investment bank specializing in gambling and entertainment.
Americans now spend more on gambling than on movies, videos and DVD's, music and books combined, and with an annual growth rate of about 9 percent since 1991, gambling is growing substantially faster than the economy as a whole.
But so far, that growth does not seem to have caused a serious backlash. During the 1990's, opponents of legalization raised the specter of widespread bankruptcies and broken homes. Those predictions have not come true, however, and gaming as the casino industry calls it has increasingly become a part of American life.
ESPN2 regularly shows poker tournaments, and "Positively Fifth Street," a book about the World Series of Poker, is a best seller. Forty-seven states now have some legalized gambling, and Tennessee, one of the holdouts, is considering adopting a lottery.
But as states search desperately for more revenue, more of them are turning to gambling, and specifically to a form of it that aims at people of modest means and that is particularly harmful to those susceptible to becoming addicted to gambling, experts say.
Last week, for example, in his plan to bail out New York City, Gov. George E. Pataki said he would add as many as 4,500 video lottery terminals to three large Off-Track Betting outlets in the city.
The latest expansion proposals mainly involve video lottery terminals, which are widely agreed to be among the most addictive forms of gambling, and the least likely to create jobs in a community or generate other positive economic effects.
But, not coincidentally, video lottery terminals can be taxed at extraordinarily high rates, meaning that they are extremely efficient revenue collectors from the point of view of state governments, as opposed to local economies.
In West Virginia, one of the poorest states, video terminals account for 12 percent of the state government's revenue, said Frank J. Fahrenkopf Jr., president of the American Gaming Association.
In Las Vegas, money won by casinos is taxed at 6.25 percent, noted Eugene M. Christiansen, chairman of Christiansen Capital Advisers. On the other hand, in some states, video lottery terminals are taxed at rates as high as 50 percent.
"The low-tax-rate, big-entertainment resort presents a different face to the community," Mr. Christiansen said. "It attracts different kinds of consumers. Storefront video poker can be much tougher on low-income people." Experts agree that not all forms of gambling are created equal.
Don Phares, an economist at the University of Missouri-St. Louis, said that, unlike casinos, which create some jobs and foster businesses that cater to the casino-goers, video lottery terminals provide almost no economic benefit to anyone but their owners and the states.
In addition, experts on gambling addiction say that video terminals are especially dangerous because they offer gamblers a very fast, highly stimulating, rate of play. Faster play also means that bettors lose more money, because each bet a gambler makes is, on average, a loser, so more bets translate into larger losses. Inside the gaming industry, the terminals are sometimes called "video crack."
Making terminals more widely available will almost certainly increase the number of problem gamblers, at least in the short run, said Dr. Rachel A. Volberg, president of Gemini Research, which specializes in studies of gambling and problem gambling. Several recent studies have shown, not surprisingly, that the more legalized gambling in a state, the more problem gamblers it has, Dr. Volberg said.
But whether those problems will become severe enough to discourage states from legalizing video terminals is not clear.
Even in states with lots of legalized gambling, no more than 1 percent to 2 percent of the population is addicted to it, with an additional 2 percent to 3 percent reporting gambling "problems."
In addition, studies show that the rise in the number of problem gamblers flattens out after the first few years following legalization, Dr. Volberg said.
"There's a lot of different ways that people sort of move through what I think of as a gambling career," she said. "Gambling availability, gambling participation and gambling problem rates don't seem to march in lockstep."
For the moment, the march toward more gambling has stalled. Efforts to legalize terminals at tracks have failed in several states this year, including Maryland, although proposals are still alive in others, including Illinois and Pennsylvania.
That fact has heartened opponents of gambling, like Tom Grey, the executive director of the National Coalition Against Gambling Expansion. "Our best days are in front of us," he said.
But if the previous decade is any guide, Mr. Grey is wrong. The stock of International Game Technology, the world's largest maker of slot machines and video terminals, has risen fivefold since 1997. And by 2012, the company expects that as many as 10 more states will legalize casinos or video terminals at racetracks, said Robert McIver, its investor relations officer.
Mr. McIver may well be right, at least in an era when the states are starving for cash. That's something gambling can be relied on to provide.
"One way or another, it's a tax revenue source," he said.
!
But while the eyes of poker players are focused on the Horseshoe, the real action in the luck business this year is taking place in other, less glamorous locales.
States already raise $20 billion annually from lotteries and casinos, more than 4 percent of their total revenue. Now, in capitals from Albany, N.Y., to Springfield, Ill., to Salem, Ore., politicians are debating whether to rely even more on gambling to try to balance their budgets without tax increases or service cuts.
Over the next several years, the result could well be a speeded-up expansion in gambling nationally, making betting more accessible than ever before, and states and cities more dependent on the willingness of lower-income people to gamble.
Since 1991, when the current wave of legalization began, the annual amount Americans lose on all betting, including lotteries, casinos and racetracks, has risen from $27 billion to $68 billion, according to Christiansen Capital Advisors, an investment bank specializing in gambling and entertainment.
Americans now spend more on gambling than on movies, videos and DVD's, music and books combined, and with an annual growth rate of about 9 percent since 1991, gambling is growing substantially faster than the economy as a whole.
But so far, that growth does not seem to have caused a serious backlash. During the 1990's, opponents of legalization raised the specter of widespread bankruptcies and broken homes. Those predictions have not come true, however, and gaming as the casino industry calls it has increasingly become a part of American life.
ESPN2 regularly shows poker tournaments, and "Positively Fifth Street," a book about the World Series of Poker, is a best seller. Forty-seven states now have some legalized gambling, and Tennessee, one of the holdouts, is considering adopting a lottery.
But as states search desperately for more revenue, more of them are turning to gambling, and specifically to a form of it that aims at people of modest means and that is particularly harmful to those susceptible to becoming addicted to gambling, experts say.
Last week, for example, in his plan to bail out New York City, Gov. George E. Pataki said he would add as many as 4,500 video lottery terminals to three large Off-Track Betting outlets in the city.
The latest expansion proposals mainly involve video lottery terminals, which are widely agreed to be among the most addictive forms of gambling, and the least likely to create jobs in a community or generate other positive economic effects.
But, not coincidentally, video lottery terminals can be taxed at extraordinarily high rates, meaning that they are extremely efficient revenue collectors from the point of view of state governments, as opposed to local economies.
In West Virginia, one of the poorest states, video terminals account for 12 percent of the state government's revenue, said Frank J. Fahrenkopf Jr., president of the American Gaming Association.
In Las Vegas, money won by casinos is taxed at 6.25 percent, noted Eugene M. Christiansen, chairman of Christiansen Capital Advisers. On the other hand, in some states, video lottery terminals are taxed at rates as high as 50 percent.
"The low-tax-rate, big-entertainment resort presents a different face to the community," Mr. Christiansen said. "It attracts different kinds of consumers. Storefront video poker can be much tougher on low-income people." Experts agree that not all forms of gambling are created equal.
Don Phares, an economist at the University of Missouri-St. Louis, said that, unlike casinos, which create some jobs and foster businesses that cater to the casino-goers, video lottery terminals provide almost no economic benefit to anyone but their owners and the states.
In addition, experts on gambling addiction say that video terminals are especially dangerous because they offer gamblers a very fast, highly stimulating, rate of play. Faster play also means that bettors lose more money, because each bet a gambler makes is, on average, a loser, so more bets translate into larger losses. Inside the gaming industry, the terminals are sometimes called "video crack."
Making terminals more widely available will almost certainly increase the number of problem gamblers, at least in the short run, said Dr. Rachel A. Volberg, president of Gemini Research, which specializes in studies of gambling and problem gambling. Several recent studies have shown, not surprisingly, that the more legalized gambling in a state, the more problem gamblers it has, Dr. Volberg said.
But whether those problems will become severe enough to discourage states from legalizing video terminals is not clear.
Even in states with lots of legalized gambling, no more than 1 percent to 2 percent of the population is addicted to it, with an additional 2 percent to 3 percent reporting gambling "problems."
In addition, studies show that the rise in the number of problem gamblers flattens out after the first few years following legalization, Dr. Volberg said.
"There's a lot of different ways that people sort of move through what I think of as a gambling career," she said. "Gambling availability, gambling participation and gambling problem rates don't seem to march in lockstep."
For the moment, the march toward more gambling has stalled. Efforts to legalize terminals at tracks have failed in several states this year, including Maryland, although proposals are still alive in others, including Illinois and Pennsylvania.
That fact has heartened opponents of gambling, like Tom Grey, the executive director of the National Coalition Against Gambling Expansion. "Our best days are in front of us," he said.
But if the previous decade is any guide, Mr. Grey is wrong. The stock of International Game Technology, the world's largest maker of slot machines and video terminals, has risen fivefold since 1997. And by 2012, the company expects that as many as 10 more states will legalize casinos or video terminals at racetracks, said Robert McIver, its investor relations officer.
Mr. McIver may well be right, at least in an era when the states are starving for cash. That's something gambling can be relied on to provide.
"One way or another, it's a tax revenue source," he said.
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