Hitting the jackpot

On Jan. 13, Jim Hodges stood on the steps of the South Carolina capitol to take his oath of office as governor. He basked not only in the glow of the newly polished copper dome, but in the adulation of a new rejuvenated Democratic Party. After 12 years of Republican control, the little-known state legislator had overcome a huge deficit in the polls to unseat David Beasley, the telegenic young governor with strong ties to Christian conservatives.

The 143-year-old blue granite capitol building still flies the Confederate flag and memorializes the six spots where Gen. Sherman's Union cannonballs struck. This scene was a fitting symbol for state Democrats who in 1997 were all but broke in both money and morale.

That all began to change a little more than a year ago when Mr. Beasley took up a public fight to ban the state's booming video poker industry, calling it a "cancer that is destroying lives and families."

The governor's death threat to the $2.3 billion-a-year industry roused operators and convenience store owners like one of Sherman's cannon blasts. With about 30,000 machines in operation-roughly one every square mile or one for every 100 residents-Mr. Beasley may have underestimated the number of people who profited in some way from gambling. They returned fire with unprecedented millions of dollars in contributions and advertising, churning out "Ban Beasley" bumper stickers and billboards and hammering the state's dismal education performance. Their campaign helped Democrats turn an undercurrent of discontent with Mr. Beasley's first term into a flood.

Mr. Hodges, a 41-year-old textile company lawyer and respected state legislator, exploited that discontent with the campaign slogan, "It's all about schools." He promised to make gambling work for the people of South Carolina by earmarking revenues to improve public education. But for many in the state, the campaign was all about power: the power of an industry that for two decades had resisted every regulation and won every major court battle-and now has elected its own governor.

Anti-gambling groups see the November elections in South Carolina and elsewhere as evidence of a new boldness by gambling interests to influence openly the political process with their cash and organized employees.

"We're seeing gambling interests throwing money and muscle in much greater force now, that five or 10 years ago would have been inconceivable," said Tom Grey, executive director of the National Coalition Against Legalized Gambling, as he attacked "the 800-pound gorilla that is now out of the cage and ... feeding on governors and state constitutions."

After years of blunting the industry's expansion plans, Mr. Grey saw gambling interests help beat governors in South Carolina and Alabama, and win issues in Missouri, Arizona, Wisconsin, and California. "The money just came out in droves."

He sees a growing acceptance of gambling now that 37 states have government-run lotteries and an increasing push toward more innovative forms like video gambling where revenues may be drying up.

In Kenosha, Wis., often cited as one of America's most livable cities, gambling interests spent $450,000 to win the right to put a casino in a failing dog track. Missouri casino operators spent roughly $10 million on a successful campaign to have the voters overturn a decision by the state supreme court limiting riverboat gambling. And in California, Native Americans and Las Vegas gambling interests spent more than $100 million in a battle over expanded gambling on Indian reservations.

Flush with cash, the gambling industry almost never has to take "no" for an answer. Gamblers in Illinois have spent huge sums to wear down opposition over the last six years, arguing that the state loses millions in revenue to dockside gambling in neighboring Indiana, Iowa, and Missouri. After years of resistance, a plan is now moving through the legislature that will bring riverboat casinos right to Chicago's doorstep.

Mr. Grey, a Methodist minister, says such wins occur when people become desensitized to the moral issues of gambling. "What gambling did is to repackage itself and call it 'gaming' or 'entertainment.' They packaged it as economic development and jobs. Then government saw it as a painless revenue stream that does not require raising taxes."

When gambling becomes purely an economic issue, opponents invariably lose. In South Carolina, video poker interests provided a steady flow of money and fundraisers that enabled Democrats to pounce on Mr. Beasley's miscues and pound his 30-point lead into an 8-point defeat.

"I'm telling you if Beasley had shut his mouth and went ahead and got elected, he could have changed South Carolina, molded it into any direction he wanted to. He could have been a stealth candidate. He didn't have to say 'I'm going to annihilate video poker,'" says Fred Collins, the state's largest video poker operator with more than 4,000 machines, and Mr. Beasley's most vocal opponent. "I'm not going to be run out of business by some boy-wonder governor."

After branching out from juke boxes and pinball machines, the 63-year-old Mr. Collins now licenses machines in seven states. He takes credit for bringing the first video poker machines to South Carolina and has proudly watched the industry grow to $667 million in gross profits, or $23,000 per machine.

Just how much of that money went to the Hodges election effort can only be guessed because state laws do not require such reporting. Of the $3.8 million in donations the Hodges campaign reported, $800,000 was "directly tied" to video poker, according to Election Commission reports. Soft money was another matter: USA Today estimates that some $6 million was spent to elect Mr. Hodges. Those outside expenditures-unregulated and unreported-seem to have come mostly from gambling interests. That money, coupled with the Democratic National Committee's successful get-out-the-vote strategy targeting black voters, helped create a record turnout for an off-year election.

Although the campaign to defeat Mr. Beasley was unprecedented, it was hardly the industry's first foray into state politics. For years, video poker interests have held sway with key state senators. That paid off last year when friendly senators staged a filibuster to kill a House bill that would have banned video poker.

Such efforts have made South Carolina a national model of unregulated, unchecked gambling. "Other areas know if they want to know what will happen to them, all they have to do is look at South Carolina," says Frank Quinn, a psychologist who has studied gambling problems in the state. He sees South Carolina at the "epicenter" of a wave of gambling that is swamping other countries, including Spain, Canada, Australia, and England.

Video poker is proving to be particularly insidious because of its addictive qualities, its convenient presence in neighborhood shops, and the number of new women and elderly gamblers it is bringing in, according to Mr. Quinn.

"I have an elderly couple 68 years old and both disabled who lost everything they owned-their house and savings-and they are still $50,000 in debt," he says. "The only money they will ever have is their disability checks."

Since video poker machines are readily available with a 25-cent minimum bet, new players are easy to hook. In South Carolina, even children can play the games, though they cannot receive cash payouts. The machines deal five-card hands of poker at the rate of 12 hands a minute so that even at the minimum 25-cent bet, a player could lose $180 in an hour.

Researchers have called it "video crack," and with good reason. One in five South Carolina video poker players shows signs of problem gambling; one in 20 has considered suicide as a result of the games; one in four has played for more than five consecutive hours; and one in three has gambled away the last dollar in his pocket, according to a 1997 study by Mr. Quinn, who formed his South Carolina Center for Gambling Studies after receiving funding from a group opposed to video poker.

His report came in the wake of the state's most publicized gambling tragedy: the death of 10-day-old Joy Baker. Her mother had taken her in the car to pay a few bills and stopped by a video poker casino to play her last $20. More than seven hours later, the infant's father found her still locked in the car in the parking lot, dead of heat stress and dehydration.

For his part, Mr. Hodges has said the people of the state will decide the fate of video poker: Voters will have a chance to ban it or approve it in a statewide referendum. He also advocates taxing the machines at as much as 30 percent, taking care not to use the money for recurring spending until voters decide whether the gambling should stay or go.

Critics deride the plan, pointing out that gambling interests welcome taxation and regulation because it means that governments come to rely on the revenue stream, making it that much tougher to outlaw.

"Jim Hodges is beholden to no industry, including this one," insists the governor's spokeswoman, repeating his contention throughout the campaign. But skeptics are watching closely to see how gambling interests will attempt to influence the man they helped to put in the governor's mansion.

"My experience has been that it is an extremely difficult industry to regulate," says Travis Medlock, a Democrat and former state attorney general who publicly sided with anti-gambling forces in support of Mr. Beasley.

Mr. Medlock, the son of a Methodist minister, says he resented the alliance made between video poker interests and Democrats because it "assaulted the humane concerns I stood and fought for in my legal and political career for 40 years." The industry hurts the working poor and the undereducated and is "anti-family and anti-education," he says. The money spent on video poker comes from working families-not tourists-who could otherwise spend it on food, clothing, and education.

Dick Harpootlian, the state Democratic chairman and a lawyer for the gambling industry, sees it differently. "There's nothing wrong with taking money from an industry that employs 26,000 people that the incumbent governor has sworn to put out of business. He put their backs to the cliff and said 'Beat me or die,' so they did work and they were generous. I tell you this, the 26,000 people voted. They got their brothers and sisters to vote and they aggressively voted."

Moral choices ought to be made by the people, he says-if not by the individual, then by the majority.

"We believe in this state, apparently, that you have a right to take your life savings and pump it into a machine and bet it and lose. People voted in 1994 to have video poker," said Mr. Harpootlian.

While polls show that two out of three South Carolinians support a state lottery for education, video poker is perceived more negatively, with about half believing it should be banned.

But anti-gambling voters often lack the passion of those who profit from the machines. That was a problem Rick Fisher, pastor of the 2,500-member Lexington Baptist Church, noticed last year while trying to organize active opposition against video poker.

"The very first thing we tried to do is help our people understand what the Bible says about this issue," according to Mr. Fisher. But he found it difficult to convince other churches to join his crusade. "For one, a lot of Christians are out there playing the games," he says. Another problem was that some churches did not believe they could speak out against video poker because of denominational differences or because it would have been seen as partisan support for the Republican governor.

Thanks to Mr. Fisher and others, informal groups of church leaders and business people have begun meeting to chart a plan of broad, bipartisan action in anticipation of a referendum in which the gambling industry will have a huge financial advantage.

At one such meeting, story after story was recounted of a friend or business that was affected by someone with problem gambling.

"The point is, if gambling can come into successful communities, if the political leadership, if the business community, if citizens don't care enough and don't have enough pride, if they are so greedy that they want a casino or gambling to come pay their taxes and take care of them-then we are in deep trouble," Mr. Grey says.

And if gambling interests in a little state like South Carolina can wrest effective political control, the industry is sure to replicate its success elsewhere. "What South Carolina now has is the flag of video poker flying over the capitol," Mr. Grey says. "It is an example nationally of gambling run amok."