The States’ Bad Bet: Many Are Betting on Lotteries and Casinos to Bolster Revenues, but Only One Outcome Is Guaranteed: Someone Will Lose

There was plenty of historical precedent when the voters of Vicksburg, Mississippi, and surrounding Warren County rejected a referendum last December that would have allowed riverboat and dockside casino gambling. And considering what happened 155 years ago, the modern-day gambling promoters ought to be happy that all they lost was a vote.

The good people of nineteenth-century Vicksburg were nobody’s fools. The river pirates, blackguards, and run-of-the mill thieves sporting fancy new clothes and stylish women about town were the same scoundrels they always were. The only difference was that they were now members of a newly acceptable—at least in the eyes of the law and the city fathers—and revenue-producing trade, a new class of citizenry: professional gamblers.

“Even magistrates passed whole evenings at the roulette or faro table,” folklorist B. A. Botkin writes of those days in the 1830s, “and gamblers contributed to the income of the town by paying large license money into its treasury.”

But money and morality did not often keep company along the river. The people of Vicksburg only had to look downstream at Natchez. A whole section of that town was gambling heaven, but it was off-limits to any good citizen fearful of getting his throat slit and prematurely swimming into eternity in the muddy Mississippi.

When rumor spread that a local, wealthy, gambling-prone planter had met such a fate in their own town, Vicksburgians decided they had had enough. So, as they celebrated Independence Day 1836, they gathered in the courthouse and agreed to kick every gambler out of the city within 24 hours. The townspeople proved they meant business, Botkin writes in Mississippi River Folklore, when five of the city’s roulette and faro players waged a downtown gun battle rather than leave. Overtaking the fine-clothed scoundrels, the citizens of Vicksburg publicly hanged all five in the courthouse square, including one who had been seriously wounded during the gun battle.

Thus ended legalized gambling—at least for the time being—in Vicksburg, Mississippi.

One-In-A-Million Wish

Elsewhere across the country, however, doors are swinging wide open, not only for five-card stud, faro, roulette, and slot machines, but also for the biggest gamble of all: the one-in-a-million wish known as the state-sponsored lottery. Five counties in economically struggling Mississippi recently approved riverboat gambling, putting the Lower Mississippi River area in competition with gambling operators upriver in Iowa, where floating casinos are already in business.

The states of Illinois and Louisiana have approved riverboat gambling. The Missouri legislature gave its nod this year to a voter referendum on the issue. Lotteries now exist in 33 states. The Georgia legislature recently removed a state constitutional prohibition against lotteries. And strong prolottery movements exist elsewhere, particularly in other hard-pressed states such as Alabama and Arkansas.

Many states across the country are reeling from budget cutbacks and slumping economies. A decade of tax-eschewing Presidents has spoiled the waters for any politically palatable tax hike. Thus, more and more political leaders at the state and local levels see lotteries and gambling as their best—and easiest—way out of an untenable situation. For them, gambling is a pain-free alternative to tax hikes and budget cuts. Armed with vague projections of new revenues, politicians are able to forestall fiscal austerity and even promise new, politically popular programs.

What’s more, if lotteries or riverboat casinos fail to produce the projected revenues, political leaders need only point an accusing finger at the gaming promoters who lobbied to get gambling approved. Yet such failure has little effect on the promoters. They usually get their share, even if the states they successfully lobbied do not.

“The crucial thing in Mississippi and in most states is whether people have the right to vote on whether they want it or not,” Mississippi Gov. Ray Mabus says. He has pushed unsuccessfully for a state-lottery referendum and a tax on video poker games to help pay for a stalled education-reform package he has yet to fund. “States are trying different things. People are pretty fed up with tax increases every time you turn around,” says Mabus, a staunch opponent of tax increases who ran for re-election this year. “This is voluntary, not mandatory, [and] at least you have a chance to win.”

That is another bonus for any politician pushing gambling: he doesn’t even have to identify himself as progambling. He only has to say, “Let the people decide.”

Methodist preacher Donald Wildmon, who heads the Tupelo, Mississippi-based American Family Association, says lotteries and gambling are a bad bet, morally and otherwise. “The thing with gambling is we were sold a bill of goods and we ate it up,” says Wildmon. “We have been told gambling was going to solve our problems. Look at Atlantic City [New Jersey]. Everybody was going to be driving Cadillacs … and see what they got: gambling on one side of the tracks and slums on the other.” Wildmon adds, “People say you can’t legislate morality. Every law legislates morality. What you are doing is you hurt the very people you were trying to help.”

Unfulfilled Dreams

Choosing between the preacher and the politician is easy for George Blackburn, 57, a lottery and bingo lover from Pensacola, Florida. Lottery players “got a chance to be a millionaire,” said Blackburn as he stood in front of the majestic, Taj Mahal—like Hadji Shriners’ Temple in Pensacola to help sell raffle chances on a new Ford Tempo. “I’d like to see casino gambling come here. We’ve got a good place right up the road,” he said, pointing past the palm trees toward the road that runs parallel to the Gulf Coast.

But Blackburn’s friend Charles Shook, 56, a faithful, weekly lottery player, has some misgivings. “The only bad feeling I’ve got about lotteries is that people have a big dream,” he says, but often never fulfill it. “That’s what’s bad about it.”

It is not just the players who see their big dreams fail. Statistics show that a lot of states are in the same boat. Of course, that’s not the story you will get from the promoters. As an industry that deals in numbers, the gaming and wagering business likes to talk in big figures.

For example, the trade magazine Gaming and Wagering Business says that states allowing lotteries, plus the District of Columbia, gross $20 billion annually. By 1995, lottery revenues will top $30 billion annually, the magazine says. By the same token, the nation’s 17 nonlottery states are losing a combined $5.5 billion in first-year sales alone.

While conceding a recent slump in lottery sales due to the recession and other factors, Gaming and Wagering senior editor Terri La Fleur sees a bright future; specifically, a 9 percent increase in lottery sales this year alone.

“Current players … continue to spend billions of dollars annually on their favorite pastime—dreaming about the day when they fax their boss their resignation because they hit the big one,” La Fleur says. “It may not actually happen in their lifetime—considering the astronomical odds for lotto—but ain’t it fun dreaming about it?”

In spite of gambling’s booming business, the dreaming has not been fun for some. States like Florida and California, where lottery revenues were targeted for education and other needs, have found that gamblers are not good fortune tellers. Drooping revenues in California, where 34 percent of lottery proceeds go to education, have contributed to major problems in the state’s public-education system, which faces possible layoffs of thousands of school teachers. The Florida lottery last year produced big headlines for its winners, but it offered little help in staving off an estimated $300 million education-budget shortfall.

Ed Foglia, former president of the 230,000-member California Teachers Association, says his organization fought hard to get education included as a targeted beneficiary of the state’s new lottery in 1984. He says he learned a hard lesson. “The only thing I could suggest to people considering the lottery is … if you are going to vote on it, a portion should go to education to enhance the program, not to fund the basic program,” Foglia says.

The numbers on other kinds of gambling also raise questions. The Iowa Gaming Commission says revenues from the riverboats operating on the upper Mississippi River are about $5 million over the $31 million projected thus far this year. But per capita spending by gambling visitors is as much as one-third below what boosters expected.

Local enthusiasm has also been tempered by concerns about increasing competition. Other states along the Mississippi River have approved riverboat gambling without the restrictions that Iowa attached to the casinos: players there are limited to $5 maximum bets and $200 maximum losses per excursion; operators must limit gambling activities to no more than 30 percent of the operations on board and must provide alternative activities for children. Nearby Illinois is placing no such restrictions on its riverboats. Neither are most of the states downriver.

There are second thoughts, as well, about the side effects of gambling fever. The added revenue states find may in some cases be quickly spent in dealing with the increased crime that inevitably follows gambling, from illegal bookmaking to political corruption. South Carolina state Rep. Paul Derrick was convicted recently of accepting a $1,000 bribe to support a bill that would have allowed a referendum on horse and dog racing. An FBI sting operation in South Carolina over the past three years has resulted in similar indictments against more than two-dozen lawmakers, lobbyists, and others.

“I would suspect that pari-mutuel betting has taken a back seat for the rest of the century,” says long-time state Democratic party activist Bud Ferillo.

Former Mississippi Senate President Pro Tempore Tommy Brooks pulled a prison term for a similar conviction on a horse-racing bill in 1985. And Iowa’s riverboat gambling director, Chuck Patton, admits the casinos have brought an increase in crime to his state.

State and local governments can get as addicted as any person feeding nickels into a slot machine. When New Jersey legislators approved casino gambling in Atlantic City in 1978, they rejected efforts to allow 24-hour gambling. But with Atlantic City casinos now struggling, lawmakers recently agreed to allow round-the-clock gambling on weekends, holidays, and for special events.

Making Losers

With all the economic, political, and social concerns come underlying questions about the morality of state-sponsored games of chance. “The whole system of gambling itself, whether lottery or whatever, presupposes that the bulk of people lose so a few can win,” says Paul Jones, executive director of the Mississippi Christian Action League. “So the state says we must make losers out of the people.… That is a moral problem that is unconscionable.”

Just as in the days when characters like the fictional Yancy Derringer and the real-life Jim Bowie stalked the saloons and alleyways of Natchez-Under-the-Hill, the gambling issue has brought forth a colorful assortment of slicked-back salesmen, Bible-thumping preachers, and accommodating politicians. The clothing styles may have changed, but the odds are just as long and the issues are little different.

“The argument used by gamblers is that gambling is there, so let’s use it,” says Jones. “That was the same argument used for slavery. We’d better watch out. We are falling into a trap that has historically taken us down.”

Eugene H. Peterson is pastor of Christ Our King Presbyterian Church, Bel Air, Maryland, and author of A Long Obedience in the Same Direction (InterVarsity) and Answering God (Harper & Row), both of which are about the Psalms.

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