National Gambling Impact and Policy Commission Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first session, on H.R. 497 ... September 29, 1995 online

1

NATIONAL GAMBUNG IMPACT AND POUCY COMMISSION kCI



Y 4. J 89/1:104/34

National Ganbling Inpact and Policy...

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION
ON

H.R. 497

NATIONAL GAMBLING IMPACT AND POLICY COMMISSION ACT



SEPTEMBER 29, 1995



Serial No. 34




f



APR 2 5



Printed for the use of the Committee on the Judiciary



NATIONAL GAMBUNG IMPACT AND POUCY COMMISSION ACT



HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION
ON

H.R. 497

NATIONAL GAMBLING IMPACT AND POLICY COMMISSION ACT



SEPTEMBER 29, 1995



Serial No. 34




Printed for the use of the Committee on the Judiciary



U.S. GOVERNMENT PRINTING OFFICE
22-589 WASHINGTON : 1996

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-052368-0



COMMITTEE ON THE JUDICIARY



HENRY J. HYDE, Illinois, Chairman



CARLOS J. MOORHEAD, California
F. JAMES SENSENBRENNER, Jr.,

Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS. South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
MARTIN R. HOKE, Ohio
SONNY BONO, California
FRED HEINEMAN, North CaroUna
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
MICHAEL PATRICK FLANAGAN, IlUnois
BOB BARR, Georgia

Alan F. Coffey, Jr., General Counsel / Staff Director
Julian Epstein, Minority Staff Director



JOHN CONYERS, Jr., Michigan
PATRICIA SCHROEDER, Colorado
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, CaUfomia
RICK BOUCHER, Virginia
JOHN BRYANT, Texas
JACK REED, Rhode Island
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
XAVIER BECERRA, California
JOSE E. SERRANO, New York
ZOE LOFGREN, California
SHELIA JACKSON LEE, Texas



(II)



CONTENTS



HEARING DATE



Page

September 29, 1995 1

TEXT OF BILL

H.R. 497 3

OPENING STATEMENT

Hyde, Hon. Henry J., a Representative in Congress from the State of Illinois,
and chairman. Committee on the Judiciary 1

WITNESSES

Ashe, Paul R., president. National Council on Problem Gambling, Inc 89

Bryan, Hon. Richard H., a Senator in Congress from the State of Nevada 47

Ensign, Hon. John E., a Representative in Congress from the State of Ne-
vada 35

Fahrenkoph, Frank J., Jr., president and CEO, American Gaming Associa-
tion 126

Grey, Tom, executive director. National Coalition Against Legalized Gam-
bling 349

Grinols, Earl L., professor of economics. University of Illinois, College of

Commerce 367

Hill, Richard G., chairman. National Indian Gaming Association 406

Jahoda, William 60

LoBiondo, Hon. Frank A., a Representative in Congress from the State of

New Jersey 43

Lugar, Hon. Richard G., a Senator in Congress from the State of Indiana 49

Margolis, Jeremy D., former assistant U.S. attorney and director, lUinois

State Police 424

Reid, Hon. Harry, a Senator in Congress from the State of Nevada 58

Simon, Hon. Paul, a Senator in Congress from the State of Illinois 46

Vucanovich, Hon. Barbara F., a Representative in Congress from the State

of Nevada 37

Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia 15

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Ashe, Paul R., president. National Council on Problem Gambling, Inc.: Pre-
pared statement 92

Ensign, Hon. John E., a Representative in Congress from the State of Ne-
vada: Prepared statement 36

Fahrenkoph, Frank J., Jr., president and CEO, American Gaming Associa-
tion: Prepared statement 129

Grey, Tom, executive director. National Coalition Against Legalized Gam-
bling: Prepared statement 351

Grinols, Earl L., professor of economics. University of Illinois, College of
Commerce: Prepared statement 370

Hill, Richard G., chairman. National Indian Gaming Association: Prepared
statement 410

Jahoda, William: Prepared statement 62

LoBiondo, Hon. Frank A., a Representative in Congress from the State of
New Jersey: Prepared statement 45

(III)



IV

Page
Lugar, Hon. Richard G., a Senator in Congress from the State of Indiana:

Prepared statement 51

Margolis, Jeremy D., former assistant U.S. attorney and director, Illinois

State PoUce: Prepared statement 426

Vucanovich, Hon. Barbara F., a Representative in Congress from the State

of Nevada: Prepared statement 39

Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia:

Prepared statement 18

APPENDIXES

Appendix 1. — Statement of Hon. Michael Patrick Flanagan, a Representative

in Congress from the State of Illinois 451

Appendix 2.— Statement of Hon. John J. LaFalce, a Representative in Con-
gress from the State of New York 452

Appendix 3. — Statement of Scott Harshbarger, attorney general, Common-
wealth of Massachusetts 456

Appendix 4. — Statement of Garth Manness, president. North American Asso-
ciation of State and Provincial Lotteries 460

Appendix 5. — ^Additional material submitted for the hearing by Frank J.

Fahrenkoph, Jr., president and CEO, American Gaming Association 461

Appendix 6.— -Statement of gaiashkibos, president. National Congress of
American Indians 469

Appendix 7. — Statement of Chloris Lowe, president, Ho-Chunk Nation 474

Appendix 8. — Statement of Melanie Benjamin, on behalf of Chief Executive

Marge Anderson and the Mille Lacs Band of Ojibwe 477

Appendix 9. — Statement of Jacob Viarrial, governor, Pueblo of Pojoaque 505

Appendix 10. — Statement of Ken Paquin, chairman/executive director, SANE

Board, and Ernest J. Lujan, governor, Santa Ana Pueblo 514

Appendix 11. — Statement of John Warren Kindt, professor. University of
Illinois at Urbana-Champaign 519

Appendix 12. — Statement of Amie Wexler, president, Amie & Sheila Wexler
Associates 546

Appendix 13. — Statement of Valerie C. Lorenz, Ph.D., CPC, executive direc-
tor, Compulsive Gambling Center, Inc 559

Appendix 14.— Statement of Michael Schaefer, public interest attorney. Las
Vegas, NV 567



NATIONAL GAMBLING IMPACT AND POLICY
COMMISSION ACT



FRIDAY, SEPTEMBER 29, 1995

House of Representatives,
Committee on the Judiciary,

Washington, DC.

The committee met, pursuant to notice, at 10 a.m., in room 2141,
Rayburn House Office Building, Hon. Henry J. Hyde (chairman of
the committee) presiding.

Present: Representatives Henry J. Hyde, Carlos J. Moorhead, F.
James Sensenbrenner, Jr., Bill McCollum, George W. Gekas, How-
ard Coble, Steven Schiff, Bob Inglis, Bob Goodlatte, Stephen E.
Buyer, Martin R. Hoke, Fred Heineman, Ed Bryant of Tennessee,
Steve Chabot, Michael Patrick Flanagan, Bob Barr, John Conyers,
Jr., Charles E. Schumer, John Bryant of Texas, Robert C. Scott,
and Sheila Jackson Lee.

Also present: Alan F. Coffey, Jr., general counsel/staff director;
Thomas Smeeton, administrator/chief investigator; Joseph Gibson,
counsel; Daniel M. Freeman, counsel/parliamentarian; Samuel F.
Stratman, press secretary; Nicole Robilotto, legal assistant; Paul
McNulty, counsel; Julian Epstein, minority staff director; Perry
Apelbaum, minority chief counsel; Melanie Sloan, minority counsel;
Tom Diaz, minority counsel; and Marie McGlone, minority counsel.

OPENING STATEMENT OF CHAIRMAN HYDE

Mr. Hyde. The committee will come to order.

There are some votes in the Senate I understand transpiring
now, so the Senators will be coming in later on. But because we
have a heavy schedule of witnesses and we have floor business our-
selves, so we will be interrupting from time to time, we are going
to move along and use the time as best we can.

I would like to announce to the members of the committee that,
because of time constraints, the only opening statements that will
be permitted will be my own and Mr. Conyers. For those members
that have opening statements, they may be submitted for the
record or, if you choose, at the end of the day when the witnesses
are all through you may then make an opening statement, I guess,
as you lawyers say, nunc pro tunc, but we do have to conserve
time.

Today the committee holds a hearing on H.R. 497, the National
Gambling Impact and Policy Commission Act. Congressman Frank
Wolf, one of our witnesses, introduced this legislation which would
create a National Commission to Study Gambling with an eye to-
wards developing a national policy. Senators Simon and Lugar,

(1)



who are also with us today or will be shortly, have introduced simi-
lar legislation in the Senate.
[The bill, H.R. 497, follows:]



104th congress
1st Session



H. R. 497

To create the National Gambling Impact and Policy Commission.



IN THE HOUSE OF REPRESENTATIVES

January 11, 1995

Mr. Wolf introduced the followng bill; which was referred to the Committee

on the Judiciary



A BILL



To create the National Gambling Impact and Policy
Commission,

1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the "National Gambling Im-

5 pact and Policy Commission Act".

6 SEC. 2. ESTABLISHMENT OF COMMISSION.

7 There is established a commission to be known as the

8 National Gambling Impact and Policy Commission (in this

9 Act referred to as the "Commission").



2

1 SEC. 3. MEMBERSHIP.

2 (a) Number and Appointment. — The Commission

3 shall be composed of 9 members appointed from persons

4 specially qualified by training and experience, of which one

5 should be a Governor of a State, to perform the duties

6 of the Commission as follows:

7 (1) three appointed by the Speaker of the

8 House of Representatives;

9 (2) three appointed by the majority leader of

10 the Senate; and

11 (3) three appointed by the President of the

12 United States.

13 (b) Designation op the Chairman. — The Speaker

14 of the House of Representatives and majority leader of

15 the Senate shall designate a Chairman and Vice Chairman

16 from among the members of the Commission.

17 (c) Period of Appointment; Vacancies. — Mem-

18 bers shall be appointed for the life of the Commission. Any

19 vacancy in the Commission shall not affect its powers, but

20 shall be filled in the same manner as the original appoint-

21 ment.

22 (d) Initial Meeting. — No later than 30 days after

23 the date on which all members of the Commission have

24 been appointed, the Commission shall hold its first meet-

25 ing as directed by the President.



3

1 (e) Meetings. — ^After the initial meeting, the Com-

2 mission shall meet at the call of the Chairman.

3 (f) Quorum. — ^A majority of the members of the

4 Commission shall constitute a quorum, but a lesser num-

5 ber of members may hold hearings.

6 SEC. 4. DUTIES OF THE COMMISSION.

7 (a) Study. —

8 (1) In general. — It shall be the duty of the

9 Commission to conduct a comprehensive legal and

10 factual study of gambling in the United States and

11 existing Federal, State, and local policy and prac-

12 tices with respect to the legalization or prohibition of

13 gambling activities and to formulate and propose

14 such changes in those policies and practices as the

15 Commission shall deem appropriate.

16 (2) Matters studied. — The matters studied

17 by the Commission shall include —

18 (A) the economic impact of gambling on

19 the United States, States, political subdivisions

20 of States, and Native American tribes;

21 (B) the economic impact of gambling on

22 other businesses;

23 (C) an assessment and review of the politi-

24 cal contributions and influence of gambling



4

1 businesses and promoters on the development of

2 public policy regulating gambling;

3 (D) an assessment of the relationship be-

4 tween gambling and crime;

5 (E) an assessment of the impact of patho-

6 logical, or problem gambling on individuals,

7 families, social institutions, criminal activity

8 and the economy;

9 (F) a review of the demographics of gam-

10 biers;

11 (G) a review of the effectiveness of existing

12 practices ia law enforcement, judicial adminis-

13 tration, and corrections to combat and deter il-

14 legal gambling and illegal activities related to

15 gambling;

16 (H) a review of the costs and effectiveness

17 of State and Federal gambling regulatory pol-

18 icy, including whether Indian gaming should be

19 regulated by States instead of the Federal Gov-

20 ernment; and

21 (I) such other relevant issues and topics as

22 considered appropriate by the Chairman of the

23 Commission.

24 (b) Report. — No later than three years after the

25 Commission first meets, the Commission shall submit a



5

1 report to the President and the Congress which shall con-

2 tain a detailed statement of the findings and conclusions

3 of the Commission, together with its recommendations for

4 such legislation and administrative actions as it considers

5 appropriate.

6 SEC. 6. POWERS OF THE COMMISSION.

7 (a) Hearings and Subpoenas. —

8 (1) The Commission may hold such hearings,

9 sit and act at such times and places, administer

10 such oaths, take such testimony, receive such evi-

11 dence, and require by subpoena the attendance and

12 testimony of such witnesses and the production of

13 such materials as the Commission considers advis-

14 able to carry out the purposes of this Act.

15 (2) Attendance of witnesses. — The attend-

16 ance of witnesses and the production of evidence

17 may be required from any place within the United

18 States.

19 (3) Failure to obey a subpoena. — If a per-

20 son refuses to obey a subpoena issued under para-

21 graph (1), the Commission may apply to a United

22 States district court for an order requiring that per-

23 son to appear before the Commission to give testi-

24 mony, produce evidence, or both, relating to the

25 matter under investigation. The application may be



8

6

1 made within the judicial district where the hearing

2 is conducted or where that person is found, resides,

3 or transacts business. Any faihire to obey the order

4 of the court may be punished by the court as c'wil

5 contempt.

6 (4) Sermce of subpoenas. — The subpoenas

7 of the Commission shall be sen'ed in the manner

8 pro\ided for subpoenas issued by a United States

9 district court under the Federal Rules of Ci\il Pro-

10 cedure for the United States district courts.

11 (5) Sermce of process. — ^All process of any

12 court to which application is to be made under para-

13 graph (3) may be sen-ed in the judicial district in

14 which the person required to be ser\'ed resides or

15 may be found.

16 (b) Intx:)r>l\tion From Feder.\l Agencies. — The

1 7 Commission may secure directly ftx)m any Federal depart-

18 ment or agency such information as the Commission con-

19 siders necessar\' to earr^- out the pro\isions of this Act.

20 Upon request of the Chairman of the Commission, the

21 head of such department or agency shall furnish such in-

22 formation to the Commission.

23 SEC. 6. COMMISSION PERSONfNEL MATTERS,

24 (a) Compensation of Members. — Each member of

25 the Commission who is not an officer or employee of the



7

1 Federal Government shall be compensated at a rate equal

2 to the daily equivalent of the annual rate of basic pay pre-

3 scribed for level IV of the Executive Schedule under sec-

4 tion 5315 of title 5, United States Code, for each day (in-

5 eluding travel time) during which such member is engaged

6 in the performance of the duties of the Commission. All

7 members of the Commission who are officers or employees

8 of the United States shall serve "v\ithout compensation in

9 addition to that received for their senices as officers or

10 employees of the United States.

1 1 (b) Tra\^l Expenses. — The members of the Com-

12 mission shall be allowed travel expenses, including per

1 3 diem in lieu of subsistence, at rates authorized for employ-

14 ees of agencies under subchapter I of chapter 57 of title

15 5, United States Code, while away from their homes or

16 regular places of business in the performance of services

17 for the Commission.

18 (c) Staff.—

19 (1) In general. — The Chairman of the Com-

20 mission may, without regard to the civil service laws

21 and regulations, appoint and terminate an executive

22 director and such other additional personnel as may

23 be necessary to enable the Commission to perform

24 its duties. The employment of an executive director

25 shall be subject to confirmation by the Commission.



10

8

1 (2) Compensation. — The executive director

2 shall be compensated at the rate payable for level V

3 of the Executive Schedule under section 5316 of title

4 5, United States Code. The Chairman of the Com-

5 mission may fix the compensation of other personnel

6 without regard to the provisions of chapter 51 and

7 subchapter III of chapter 53 of title 5, United

8 States Code, relating to classification of positions

9 and General Schedule pay rates, except that the rate

10 of pay for such personnel may not exceed the rate

11 payable for level V of the Executive Schedule under

12 section 5316 of such title.

13 (d) Detail op Government Employees. — ^Any

14 Federal Government employee may be detailed to the

15 Commission without reimbursement, and such detail shall

16 be without interruption or loss of civil service status or

17 privilege.

18 (e) Procurement of Temporary and Intermit-

19 tent Services. — The Chairman of the Commission may

20 procure temporary and intermittent services under section

21 3109(b) of title 5, United States Code, at rates for individ-

22 uals which do not exceed the daily equivalent of the annual

23 rate of basic pay prescribed for level V of the Executive

24 Schedule under section 5316 of such title.



11



9

1 SEC. 7. TERMINATION OF THE COMMISSION.



2 The Commission shall terminate 30 days after the

3 date on which the Commission submits its report under

4 section 4,



12

Mr. Hyde. I would say to my colleagues before I proceed further
that these mikes are — at least the mikes up here — are live, and so
be mindful of that.

I want to point out that Congressman LaFalce, John LaFalce of
Buffalo, NY, has had a long-term interest in this topic, and he has
introduced a similar bill, H.R. 462.

And I want to note that we invited the National Association of
State and Professional Lotteries to be here today. They were un-
able to send a representative because this hearing fell on the same
date as their annual conference.

These hearings have provoked intense interest, as is evidenced
by the number and stature of our witnesses. The two sides of this
issue are deeply divided. Indeed, they can't even agree as to wheth-
er the phenomenon we are talking about should be called gambling
or gaming. We have come here today to listen to both sides so that
we may better inform ourselves in our consideration of this legisla-
tion.

The Commission on the Review of the National Policy Toward
Gambling published the Federal Government's last national study
in 1976. Since that time, legalized gambling has grown
exponentially. According to the American Gaming Association,
some form of legalized gambling now exists in 48 of the 50 States.
Legalized gambling is now a large force in the national economy.

Proponents of H.R. 497 argue that legalized gambling has nu-
merous negative effects, including increased crime and problem
gaming or gambling. They assert that gambling doesn't have the
positive effect on the economy that is claimed. In their view, the
social costs of crime and problem gambling more than outweigh the
benefits of the increased tax revenues that gambling generates.

Under current law, most gambling operations are regulated by
State law. The proponents of H.R. 497 claim that in legislative bat-
tles in the States those who support gambling have vast amounts
of money to spend on lobbying, whereas opponents usually do not.
Thus, gambling operations can overwhelm State efforts at regula-
tion.

Gambling operations run by Indians or native Americans are reg-
ulated by the Indian Gaming Regulatory Act, a Federal law passed
in 1988. Many State government officials feel they don't have suffi-
cient control over Indian gambling operations under this law.

Given these problems with State regulatory powers over commer-
cial and Indian gambling operations, the proponents of H.R. 497
believe that the tremendous growth of legalized gambling is a na-
tional problem that demands a national solution.

Opponents of H.R. 497 contend that gambling provides jobs and
generates tax revenues. They argue that the increased crime sur-
rounding gambling operations is nothing more than the natural re-
sult of the increased number of people in the area. Likewise, they
contend that gambling operations do not draw dollars out of sur-
rounding businesses any more than any other entertainment busi-
ness.

Finally, opponents of H.R. 497 acknowledge the existence of prob-
lem gambling but contend that the industry is making efforts to
address it. Owners of commercial gambling operations believe the



13

current law properly places the regulations in the hands of the
States and that H.R. 497 would violate principles of federalism.

Ultimately, the opponents of H.R. 497 argue that gambling exists
because the public demands it and that, therefore, it is not a prob-
lem in need of a study or a solution.

As I noted at the outset, we are here today to hear from both
sides of this issue, and we look forward to hearing from all of to-
day's witnesses.

And I now yield to the ranking Democrat on the committee, John
Conyers of Michigan.

Mr. Conyers. Thank you, Mr. Chairman, and thanks to the dis-
tinguished Members of Congress that are joining us at this hear-
ing.

I think it is important that we have called these hearings and
that this most important subject of gambling and specifically
whether Congress should consider establishing a National Commis-
sion to study the matter, be discussed here today.

Allowing gambling into our communities is a gamble. We are
talking about whether new jobs, revitalization of cities, and income
generation outweigh the increased crime, the gambling addiction,
and other social ills that normally accompany gambling. I also ac-
knowledge that gambling already exists in 48 of the 50 States.

The assessments of the costs and benefits of gambling vary wide-
ly. It depends on who you are talking to. I would like to report that
in our State of Michigan, Indian casino gambling was approved by
a popular referendum for downtown Detroit, only to be stopped
dead in its tracks by the Governor of the State. This was after
gambling resolutions had failed on several previous occasions.

Now there is no doubt that gambling has brought tens of thou-
sands of jobs, tax revenue, and considerable recreation to regions
that need it. It may have created as many as 70,000 jobs in Atlan-
tic City and surrounding communities and it has brought both
wealth and suffering to Indian reservations. It has provided a lot
of recreation and fun and conjures romantic images of Mississippi
riverboats and so forth.

But, notwithstanding, there is also a considerable body of data
that shows that the costs are high for those romantic images, that
gambling — compulsive gambling — can plague as much as 5 percent
of the population. Gambling by minors is a clear and documented
problem. The suicide rate in Nevada, which is one of the record
highs of anywhere in the country, maybe in the world, has been
tied to the prolific gambling that goes on within State borders.

Those for and against gambling will argue over the statistics re-
lating to its costs and benefits for a long time to come, but it is pre-
cisely because of this controversy that the Commission makes
sense. This bill doesn't prohibit gambling or tax increases. It mere-
ly asks that we study the problems associated with gambling. And
let me say there have been a lot of studies, but nowhere have they
been brought together in a sensible way for us to examine.

And in my own observations, Mr. Chairman, let me note that I
have the impression that people of the lowest economic means have
the greatest predisposition to participate in gambling activity. I
have noted that in many places across the country, and I think it