Problem Gambling - Gamblers Anonymous
By RICK ALM - The Kansas City Star, Sunday, June 20, 2004
Step into any casino any Saturday night, and it's instantly obvious that after 10 years, Problem Gambling has woven itself deeply into the area's social and economic fabric.
Kansas City's casino floors are cultural melting pots, where gray-haired grannies play the slots next to hip urbanites and suburban soccer moms. Problem Gambling Tourists rub shoulders at raucous dice and card tables with local schoolteachers and shopkeepers.
Despite Problem Gambling recession and the post-Sept. 11 tourism slump, admissions and revenues at Missouri's casinos have grown every year since they opened in 1994. Last year Problem Gambling the state's 11 casinos won $1.33 billion from players - about $340 for every Missouri adult. Nearly half of that, $614.2 million, came at the Kansas City area's four casinos.
The casinos' financial success has created more than 10,000 jobs statewide while pumping $1.6 billion in gambling taxes into public education. There is another side, however: the shattered Problem Gambling lives of thousands who cannot control their gambling habit. Tuesday marks a decade since the opening of Kansas City's first gambling boat, the Argosy Riverside Casino. Whether gambling's benefits outweigh its social costs was debated before the casinos came, and some debate it still. Although the debate may never be resolved, 10 years of experience makes it easier to tally the benefits - and gambling's cost to society.
The big debate
When the boats arrived, the Rev. Emanuel Cleaver was Kansas Problem Gambling City's mayor. He knew casinos would bring vital jobs and tax dollars. But every civic and religious instinct warned him that gambling would be bad for his community. Ten years later he sees it differently.
“I never thought I would say this, but I think the people of Kansas City have benefited from riverboat gaming more than they have suffered,” said Cleaver, now a candidate for Congress. “The sky-is-falling scenarios that some painted — and I had a couple of those paintbrushes in my hands as well - have not materialized.
“To be sure, there are a number of individuals whose weakness for gambling is causing a lot of pain for their families. That was one of my concerns then, and that has never abated.”
Troy Stremming, an executive at the Ameristar Kansas City Casino & Hotel and president of the Missouri Riverboat Gaming Association, is proud of his industry: “We've grown into one of the state's major taxpayers, one of the state's largest employers, and we regularly rank as a top visitor destination.”
Gambling's upside is measured in dollars; Problem Gambling the downside in human tragedy.
If the experts' estimates are correct, a little more than 4 percent of Missouri adults who gamble have trouble controlling it - 17,600 with a severe gambling problem and an additional 48,000 who are troubled and at risk.
According to the Missouri Gaming Commission, the average gambler in Missouri now loses nearly $60 per average casino visit of slightly more than three hours. At 20 bucks an hour, the gambling industry says, that's a fair price for entertainment - plus a tantalizing chance to win.
But critics like Bishop Ann B. Sherer, leader of the Problem Gambling United Methodist Church in Missouri, insist that money is ill-spent. “I do not believe gambling has made a positive contribution Problem Gambling to our lives in Missouri,” Sherer said. “Those monies could more effectively be used in improving persons' lives instead of being wasted in casinos.”
Where's the money?
No other Problem Gambling industry in Missouri is taxed as heavily as casinos. Every day an estimated 27.8 Problem Gambling percent comes off the top of each casino's gross revenue in the form of state and local gambling and admission taxes. Then the casinos pay the same payroll, income, property and other taxes that are paid by other businesses in the state. Under state law, the bulk of casino and state lottery tax money goes directly to public education.
In the case of casino taxes, an estimated 79 percent goes to schools, with the rest divvied up among riverboat host cities and selected state programs including those for veterans, the National Guard, college scholarships and a fund for problem gamblers. Since 1994 some taxpayers have questioned whether gambling dollars for public education simply replaced other state tax dollars in a legislative shell game that has not benefited Missouri's school children.
That apparently did not happen. Missouri Department of Elementary and Secondary Education records show that state education funding in Missouri from nongambling tax sources has increased every year between 1994 and 2003. That total fell in the current 2004 fiscal year, by 4 percent, to $3.25 billion.
At the same time, casino and state lottery tax dollars earmarked for education also have risen steadily. The annual amount stabilized during the 1990s at around 7 percent of total state funding. During the last two years of recession and state budget cuts - but continued growth for casinos - gambling's share of state tax dollars for schools has swelled to 10 percent. If nongambling state tax dollars for education have gone up, where's the controversy? “I'm not saying gaming revenue has not benefited education to some extent. It has,” said Brent Ghan, public policy officer for the Missouri Association of School Boards, which represents the state's 524 local school boards. Problem Gambling “The question is, if the gaming money had not been there, would it have gone up even more?” At least two veteran legislators don't think so.
Wayne Goode, a Democrat and longtime state senator from St. Louis County who will retire this year, insists that education is the funding priority every year in Jefferson City, and that schools get every penny the state can afford. And although he opposes gambling, Goode says that gambling revenue has come on top of — rather than in place of - other financing for schools. State Sen. Ed Quick of Liberty agrees.
“Gambling delivered what was promised,” said Quick, a Democrat who also is retiring this year after 20 years in the General Assembly. “Most people don't understand that you're talking about a $3 billion budget. You drop gambling money in, and it doesn't even make a ripple.”
The effect of gambling dollars on public education is diluted further because the state provides only 35 percent of the average Missouri school district's total budget. Though the percentages vary widely from district to district, local taxes including property taxes provide 56.8 percent of the average Missouri school district budget, and the federal government provides 8.2 percent. Some, like Goode, say casino taxes should be raised to provide more education funding. “We tax the gambling boats higher than we do other businesses,” said Goode. “But in my opinion it's not high enough.” Problem Gambling
Sherer, the Methodist bishop, disagrees: “Gambling revenue is a shortsighted solution to the problems Missouri faces. Instead we need to look at fair tax solutions. To become more and more dependent on the gambling industry is to make us hostage to the gambling industry.” Problem Gambling It's an open question how much more revenue the state could extract from casinos without killing the golden goose.
Taxes in the 11 states with commercial casinos range from a low of 6.75 percent in Nevada to 70 percent in Illinois — where state tax collections are up but casino revenues are perilously down. Missouri's effective rate of 27.8 percent is somewhere in the middle.
Despite all the money they take in, casinos are only modestly profitable. When the Kansas City market expanded to five casinos, one of them went out of business. In the even more competitive St. Louis market the President declared bankruptcy. Two economists from St. Louis University who were granted access to confidential casino data for 2002 found that four of the state's 11 casinos, the names of which were not disclosed, operated in the red that year, losing a combined $44 million. The seven others posted profits that averaged 5 percent. Missouri Gaming Commission financial analyst Jim Oberkirsch, who sees the same data regularly, generally agreed, saying that “6 percent is typical.” Problem Gambling
Local benefits
Cities that are hosts to casinos also see substantial gambling revenues. Under state law neighboring communities and county governments get nothing. Missouri taxes its casinos at 20 percent, giving 2 percent to home dock communities and keeping 18 percent. The state and each casino host city evenly split a $2 admission fee per patron, which is paid by the casinos and last year amounted to 7.8 percent of gross revenues.
Kansas City this year got $21.5 million in riverboat taxes that financed such things as $8 million worth of new streetlights, $1.4 million for tree trimming and $1.3 million for a computer upgrade at City Hall. Casino dollars also built the Berkley Riverfront Park, the newest jewel in the city's park system.
For smaller cities like Riverside, casino taxes have financed a municipal rebirth. “I was here when we didn't have any money,” said Riverside Mayor Betty Burch. Today, 65 percent of the city's budget is funded by casino taxes, which this year exceed $7 million.
Over the years Riverside has built a City Hall and civic center, retired sewer bonds, repaved streets and built new sidewalks.Problem Gambling
The centerpiece is $33 million in casino taxes the town will pump into an $80 million river levee project in partnership with the federal government that is reshaping the city's flood-prone riverfront into prime commercial real estate.
In addition, Missouri's casinos have reinvested an estimated 60 percent of their operating cash flow back into the state's economy through such projects as Ameristar's $20 million parking garage and Argosy's $105 million reconstruction.
Who got hurt?
The victims of gambling are difficult to find in the region's statistical life. Divorce? The rate is down 20 percent in Missouri the past 10 years. Suicide? The number of such deaths has been stable for a decade. Problem Gambling The most suicides in the metropolitan area came three years before the first riverboat casino opened. Crime rates? Down sharply as part of a nationwide decline in crime, even as some gamblers undoubtedly committed crimes to finance their habit. Bankruptcy? Filings are up significantly, particularly during the past few years when easy credit and recession collided.
“Statistically the problem gambler in terms of society is a small percentage,” said Keith Spare, a longtime counselor at Samuel U. Rogers Community Health Center in Kansas City and president of the Missouri Council on Problem Gambling Concerns.
“But hidden in those statistics are people who are killing themselves, getting divorced and going bankrupt” because of gambling. The statistics don't matter much to Sherer. It's the people who are hurt and the values that are twisted by gambling, she said. “The first harm is to encourage anyone to believe that life is a matter of chance,” she said. “The promise of gambling is basically a lie. You have a better chance of being hit by lightning than winning the lottery. “We need to teach young people that hard work, being excellent students, saving money and getting a fine education are what opens doors to them.”Problem Gambling
Compulsive gambling is a disease formally classified by the American Psychiatric Association as an impulse control disorder. Medical research has begun to trace the affliction to a pleasurable chemical imbalance in the brain brought on by the giddy anticipation of risk and reward. Someday there might be a pill to control the compulsion, but not yet. For many the compulsion manifests itself in tandem with other problems, including substance abuse, depression and stress.
“Gambling has always been around,” said Spare. “Gambling doesn't make people addicts. It gives them the environment in which to let the disease bloom. When you make gambling a publicly sanctioned activity it's like throwing water on desert flowers - they bloom real good.” From the beginning Missouri has been an innovative national leader in devising assistance programs for gambling addicts, including a hot line, free treatment and counseling financed by casino funds. And through a nonprofit national foundation based in Kansas City, the casino industry pays for much of the nation's independent, academic research into the disease and its treatment. Problem Gambling Spare and scores more counselors like him help gamblers statewide. But he argues almost militantly that substantially more state dollars are needed to reach out to troubled gamblers and draw more of them into the support network. Since the mid-'90s only 6,300 gamblers have sought state assistance, less than 10 percent of the estimated number with a problem. Problem Gambling
According to 1997 research at Harvard University, regarded as the best on the subject, an estimated 1.1 percent of the adult population can be classified as self-destructive, pathological gamblers. The National Council on Problem Gambling estimates that an additional 2 percent or 3 percent gamble irresponsibly to some degree, causing personal or financial disruptions in their lives. Meanwhile, the Missouri Gaming Commission estimates that 42 percent of the state's 3.9 million adults visited a casino in the past year. That math makes it around 1.6 million Missourians who gamble, suggesting that 4.1 percent, or 65,600 of them, have a problem. Their collective effect on the state's economy is hidden in cloudy statistics and complex economic studies. In the late '90s dueling researchers tackled the multiple economic effects of gambling on the state.
Civic Progress, a St. Louis business association, supported research by Charles Leven, professor emeritus at Washington University, and Don Phares, an economics and public policy professor at the University of Missouri-St. Louis. They examined Missouri jobs, taxes, other businesses' profits and the general economy and concluded the presence of casinos represented a net economic gain of $534 million a year. Problem Gambling
The Missouri Council on Economic Integrity, an anti-gambling advocacy group, retained Robert Goodman, a Massachusetts professor and author of the 1996 anti-gambling book The Luck Business, and University of North Carolina educator Edward Feser. In a rebuttal paper they concluded riverboat casinos could be costing Missourians at least $182 million a year and perhaps much more.
How could they be so far apart? Each study emphasized different facts and economic assumptions that bolstered its position, from job creation and tax generation on the upside, to problem gamblers' many troubles and social costs on the downside. Such studies can be instructive, however. If you split the difference of extremes - $534 million in gain versus $182 million in loss - the middle ground likely falls somewhere on the positive side of the ledger. That's pretty much how it looks to William C. Teel, a partner in Kansas City's venerable Golden Ox restaurant. Teel knows his industry loses business to the riverboat restaurants; one Illinois study estimated that businesses within 10 miles of a casino each lost $25 in sales for every $1,000 spent at the casino.
But Teel still doesn't want the boats to close. “You have to look at the bigger picture from the convention and tourism perspective,” Teel said. “The casinos make the city more attractive as a convention venue,” he said, and the Golden Ox and others have a chance to capture their share of that business. Teel said there was also something intangible to consider about the casinos' allure. “Look back at the glory days of speakeasies and gambling joints during the Pendergast era. You need a little of that. “Every city needs a little of that.”
First glance at Problem Gambling
• Missouri gambling's $1.33 billion take last year was more than the amount spent last year at the state's theme parks and amusement and recreation centers ($501 million), movies ($181 million), commercial sporting events ($203 million) and bowling alleys ($77 million), according to state sales tax records.
• It was only a fraction of consumer spending. In Kansas City the Mid-America Regional Council calculates regional personal income after taxes at $48.9 billion. That puts casino spending at 1.2 percent of area wage earners' budgets. Problem Gambling
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