Race to the bottom

In 1979 at the Cheltenham Mall in Philadelphia I struck up a conversation with a middle-age man sitting on a bench in a rumpled dark suit and two-day stubble. He was insistently Persian (not Iranian) and had slept in his car, having lost house, wife, and self-respect at the Atlantic City casinos across the Delaware River. There were nights he couldn't cross the Ben Franklin Bridge to get back to Pennsylvania because he had gambled away the 25-cent toll. It was my first exposure to gambling addiction.

Atlantic City is an interesting case. Though New Jersey lawmakers heralded its 1978 debut in the luck business as "a unique tool of urban redevelopment," and in spite of a 14-year monopoly on the East Coast, the gold rush proved a flash in the pan, and the town discovered that only Las Vegas can be Las Vegas.

There are several reasons. (See The Luck Business by Robert Goodman.) One is that the Nevada site was a desert to begin with, having no economy but cattle and mining, so gambling didn't compete for dollars with (and eviscerate) other local businesses. Moreover, people sleep over in Las Vegas; Atlantic City is awash in "day trippers"-they come in, they go out, they do not pass Boardwalk, they do not drop dollars in restaurants and T-shirt emporiums. (Atlantic City casinos ply patrons with cheap victuals, the better to keep them from leaving the premises.) The once-popular beach resort lost over 25 percent of its population and tripled in crime. The only one making money is Donald Trump.

It's not only the folks pulling one-armed bandits who are suckers. Other states started tripping over themselves to be the next Vegas, little knowing Atlantic City is in the cards for them. The proliferation of gaming in recent decades is a perfect storm of the following factors: economically distressed regions with budget shortfalls; politicians with no appetite for true tax reform and much for short-term glory; a national psychological shift from seeing gambling as the refuge of organized crime elements to socially acceptable entertainment; economic impact studies underwritten by the gambling industry; community leaders eager to parrot these studies; deep-pocketed campaign contributions by the gambling industry to officials at every level.

The same year Atlantic City's Resorts International opened its doors, Aleksandr Solzhenitsyn prophetically said at Harvard's commencement: "Political and intellectual functionaries exhibit this depression, passivity, and perplexity in their actions and in their statements, and even more so in their self-serving rationales as to how realistic, reasonable, and intellectually and even morally justified it is to base state policies on weakness and cowardice."

Question: What do you call an industry that doesn't produce a product? Answer: gambling. America is morphing from a manufacturing economy to a slot-machine economy. Goodman is troubled by "the growing tendency to rely on economic ventures of chance, as opposed to those involving skill and real work." That's the moral argument.

If you don't care a crapshoot about moral arguments, maybe you're moved by "big government" arguments. Government gets into gambling to fix its fiscal woes and ends up bailing out the gaming industry. When the novelty of a particular luck enterprise wears off and revenues flatten, the casino or racetrack asks officials for tax relief, subsidies, extended credit, and looser regulations. It seeks and it receives-because by now the government's soul is in hock to Mephistopheles, having changed its role somewhere along the line from watchdog to promoter of a formerly criminal activity. "Said the fly to the flypaper, 'I'm gonna getcha.' Said the flypaper to the fly, 'Gotcha!'"

Government, not Donald Trump, ends up picking up the tab for infrastructure, collateral business failures, gambling addiction, increased crime, etc., all the while taking less and less of the house winnings. Why am I reminded of Dan Gallagher in Fatal Attraction, who intends just a one-night stand and ends up desperately trying to placate his mistress from hell?

Pennsylvania just passed its decades-awaited property relief bill. We are very confident that the $400 million necessary will roll into state coffers in 2008 when our 14 new proposed slots locations start producing. Reminds me of a Woody Allen joke: "Doc, my brother's crazy; thinks he's a chicken." "Why don't you commit him?" "I would, but I need the eggs."