WILLIAM THOMPSON

Q: How does public administration connect with the gambling industry?

Thompson: Public administration studies the bureaucracy in government. When I moved to Nevada, I started studying the gambling business and the regulation of the gambling business as part of my studies in public administration.

Q: How was the industry changed since you started in 1980?

 Bill Thompson, University of Nevada, Las Vegas. He  is a professor of public administration at the University of Nevada, Las Vegas.  He was interviewed in the early spring of 1997 Thompson: It's a lot bigger now. Through the 1980s, lotteries grew across the country, but it was at the end of the 1980s that casino gambling spread into all the regions of the country. First, with Native American gaming. Then riverboat gaming. The small mountain town gaming in South Dakota and Colorado. But, now, also, with major land-based casinos coming on-line in places like Detroit and in Louisiana -- and in five of the ten provinces in Canada, as well.

And this has changed Las Vegas, from being a renegade city with a renegade industry, into being a world center or a world industry. And a legitimate industry -- the gaming industry.

Q: So, gambling is now a mainstream American business then?

Thompson: It's a mainstream, American business. It's a main-stream, American activity. Over 60% of the American adults gambled last year or over the past twelve months on some activity. Over 80% will say that gambling is legitimate and casinos are OK -- even if not for me, it's OK to have them in society. There's still a reluctance to have gambling in one's home town. But, generally, there's an acceptance of the activity.

Q: Has it been good for America?

Thompson: It's -- not necessarily good for America. It's been wonderful for Las Vegas, though. As casinos have spread around the country, our gambling revenues and visitor volume have gone up. The question -- is it good for America or not? Well, gambling is not a productive industry. There is no product -- after a person's gone through the gambling experience, their labor and their time spent has not added to the wealth of society. It's just wasted time, so forth. It is a pleasure, like other entertainment, but in that regard, it's an expensive pleasure. And it's very expensive for some people.

It is an entertainment that has some very high costs for some people. The externalities are much higher in the gaming industry-- we're talking about compulsive gambling and the crime that's associated -- much higher with gambling entertainment than with other sources of entertainment.

So, there are costs attended to it. Also, it is a diversion from time. Time that could be more usefully, usefully spent. So, for the nation as a whole, I don't think it's positive. If we have more and more gambling, but perhaps we don't have too much at the moment. It's not destructive of society, yet.

Q: Why has it grown so rapidly in the last five years? Thompson: There's several things involved in the growth of gaming. But I think -- the gaming industry of Las Vegas is very responsible. The gaming industry of Las Vegas is familiar with the product and, as other jurisdictions opened up, they went out and they built facilities. Not only that, but they went to other jurisdictions and they said, "legalize." There's a recognition in the industry that if you can be the first in to a jurisdiction, as Resorts International was into Atlantic City in 1978, there are phenomenal profits, phenomenal profits to be made. So, there is a business incentive that is driving the spread of gaming.

Also, politicians are greedy for what they consider to be free money. They consider gambling tax like money falling off of trees. Well, it's not. It's money that comes out of people's pockets. But the politicians say, "This money is acceptable money. Whereas money that we get from a direct tax in terms of sales or property tax or income tax, that kind of money is not acceptable to the public." So, the politicians like it.

And then the general public. They're more familiar with it, so they enjoy it. And they're sold the proposition -- it's gambling or taxes -- and they say, "Welllllllll, yeah, let's take the gambling. Let's not, not take the higher taxes." But as more people participate, there is a feeling of comfort with gambling.

Also, compared to other sins, my goodness, we have sins in our society -- gambling's one of the smaller sins today. And so, you get in this notion of it's, well, it's a victimless crime. Let people do it on their own. It's other people's business. I think also, as a society, we're very reluctant to get involved in other people's morality.

Q: And it is paying my taxes at the same time.

Thompson: And it's paying my taxes. And, also, there is an underlying freedom issue. People should be free to spend their money as they want. So, you get-you get all political, all parts of the political spectrum on all sides of the gambling issue.

You get libertarians say that people should be free to gamble. You get people on the far right saying businesses should be free to make profits. Then you get people on both sides of the political spectrum, saying gambling's wrong.

Q: You've told me something before about 'the winning formula.' Tell me about that.

Thompson: Sure. Well, this is another reason, I think, gambling is spreading across the country. It's got tremendous word-of-mouth advertising. You know, when people come to Vegas and they go back to Michigan, they tell people, well, if they talk about Las Vegas, they're going to say, "Hey, we visited these beautiful sights. We saw a volcano. An Elephant. We saw all these things." Or they say, "We won!!" "We won!!" Now, if they talk about the volcano and the elephants and all the great sights, that means they lost. But they never say, "We lost." It's the only product where winners talk and the losers stay quiet.

Q: They would say they won $5000, but what's the chances that they actually walked out of town with $5000.

Thompson: Well, that's it also. If you hear the stories about gambling and they don't have to produce the money and show it. The people will hit a $5000 jackpot, then they'll keep playing. Well, what they do, is they keep putting the money back in. Eventually, everybody's ahead and then everybody gets way behind. When they leave town, they remember hitting the jackpot. The remember the $5000 -- either coming out of the machine or the lights flashing. But the memory doesn't hang on to all of those times they were putting the dollar in, the dollar in, the dollar in -- they might end up with zero and might have lost their whole stake of three or four hundred dollars, but they'll go away thinking, tonight, I hit a $5000 jackpot.

And when it comes time to talking to friends. They'll say, "What about gambling?" And they'll say, "Oh, I went to Vegas and I hit a $5000 jackpot." Not, "I went to Vegas and I was out there for three days. I was up and down and I lost $500."

Q: It's a fascinating phenomena.......it's delusional.

Thompson: People will lie to themselves, also, in calculating the money because they don't want to tell themselves that they are fools or they were foolish about gambling. So they'll, they'll remember the good things and then they'll calculate -- I remember flying out of here once and asking a person -- something I don't do anymore, but I asked him, "How did you do?" And he sort of frowned at first, and then he said, "Well, you know, considering the bargain in the hotel -- the rates are much lower, show only costs $25.00 -- hey, I was getting free drinks and the buffet, my goodness, I could eat all I wanted for $5.95. You know, considering that over the last three days, I broke even." Well, this is somebody that lost their tail. But, in their mind, they fed it in that they broke even, because now they feel good about themselves.

And we want people, when they leave town, to feel good about themselves. So, even if they're losing all their money, we want them to remember the lens, and to think of all the bargains and all the things they saw for free and the fun they had in Las Vegas. And then, by word of mouth, Vegas is a positive experience, repeated over and over again.

Q: Even if you lost money?

Thompson: Even if they lost money. And that makes people keep coming back to Vegas. And also, when someone does win money, it's such a fantastic event, that the word spreads. Everybody has a cousin that hit a jackpot or know somebody who knows somebody -- and that keeps bringing people out here.

So, as long as people come occasionally, it's not bad for them. It's good recreation for them, where it's occasional.

Q: That's the hard part.

Thompson: That's the hard part. If you get into this cycle of some wins, you can pretty well get sucked into it. And the trouble with gambling today is, when you go back to Ohio, you know, you're so close to Windsor, or you're in Michigan, you're still close to Mt. Pleasant or you're in Buffalo, you're close to Niagra Falls, Ontario. The casinos are everywhere. And it's a trip if you're hooked on it. I mean, it's a serious business. As I say, not a monkey business about messing around.

Q: How important is regulation to gambling?

Thompson: Regulation is critical.

The whole industry falls apart if people think the games are rigged or they're dishonest or one person has a better chance than another person. Everybody knows the games are chance games, and that there are winners and losers and they know the chances and the odds favor the casino by a small margin. People will not come here to gamble in a dishonest industry.

Q: You know California card rooms...you called it before a kind of 'Vegas in the 1940s.' What do you mean?

Thompson: The card rooms of California, the games are unregulated. There's no one to assure the player walking in from the street that the game is going to be honest. A player sits down with other players -- and actually with the card rooms, they play against each other. And many of the games, in many of the games, the players are speaking foreign languages -- other languages, not English. It's very easy to be cheated in the games or for the dealer to be in collusion with a player. Or one player to be in collusion with another. And the casino doesn't care. Because the casino just charges people to sit at the table. They have a seating charge. They get their money, no matter who wins or loses. So, the casino is not concerned about whether the game's honest.

Then there is no state government regulation in California. It's a formula for disaster. And, it's certainly a type of gaming that cannot, possibly attract tourism. So, you know all the gambling is done by the local people, so there can be no economic gain for communities with unregulated card rooms.

Q: What does it mean to have an $8 billion industry with virtually no regulation whatsoever?

Thompson: It makes no sense. Because, without regulation, as I said, there's no possibility of having tourism built around it. There's no possibility of bringing money into the communities. You get some little communities that cash in on taxes, but the bills are being paid by all the people that surround the communities. Not all of the people, but the gamblers who come from 20, 30 miles away.

There is no economic benefit for society. The jobs that are produced are taken away from people -- it's money that's taken away from people that live close by. Other businesses in the area, lose jobs. So, there's no positive growth.

And with it being unregulated, the chance of dishonesty is extremely high, extremely high.

Everything sleazy in gambling is happening in the card rooms. There's lots of loose money. There's cheating at the games. It's unregulated. There are players that are in collusion with dealers, with themselves against other players at the table. When the money's won, it's loose money. It's held. There are drug deals on the floor. There's prostitution rampant in many of the card rooms. There is just no security force that is concerned about these things.

The security in the casino is, to make sure, probably, there isn't a murderer on the floor. That maybe if someone wins, they can get to their car without being mugged. But also, is to guarantee that the people sitting at the tables are paying their charge per minute or half hour or per hand -- however the seating charge is assessed. And to make sure that the money that goes to the cage of the casino is secure and is protected.

Q: They aren't much concerned then about money laundering, loan sharking ....

Thompson: Oh, absolutely, not. If money laundering and loan sharking is going on, that just hypes the business. If the drug people must come to the tables and pass the money around, that just means more people are sitting at the table and the casino is making more money. There is no concern.

Now, this isn't in all the card rooms. But this is the major card rooms, the big ones. The ones that are making lots of money for these little communities.

Q: What are the chances that these operators in the California card rooms are playing by the rules?

Thompson: Well, what are the rules? They set the rules. They set the games out there. They have dealers that go through the rules. And, most of the time, the game's an honest game. But, what are the rules they have to operate by? They just have to have rules such as more clientele comes back in. If people are money laundering and they're playing the games to establish that they have income, the casino's going to cooperate and, you know, give them a check and pay them in some way that they can certify, that here, see, my money was legitimate money.

Why would they have to go along with IRS money cash transfer regulations, if there is no one there watching? Watching this? I'm saying, there is no incentive for the owners to play, to play by the book, because there is no book -- other than, keep busy and take your cut.

Q: And actually, there seems to be a likelihood they aren't given the economic incentives.

Thompson: Well, there's that. And also, the funny rules they have in California. They don't let corporations come in and run the casinos. So, here you have a potential of SEC regulating the corporation and California says, "No, we don't want that kind of entity in our casino. We want privately owned, individual business men running these casinos." And that probably compounds the situation where it's very conducive for improper things to go on in the industry.

Q: Does it make any sense to you that the U.S. Marshals, part of the Federal Government, have been operating a gambling business, a card room and by the Bicycle Club in the L.A. area for the last six years?

Thompson: No, it's incredible that our Federal Government is in the gambling business at all. When you look at the way the Federal Government has regulated Native American gaming across the country, it's been a disaster. And I'm not saying that gaming is dishonest. I'm saying the regulation has been in a shambles since the Indian Gaming Regulatory Act was passed in 1988. That's an example of how they regulate casinos. Imagine how it would be for the Federal Government to run a casino. And there is one such casino -- the Bicycle Club in Bell Gardens, California.

Q: What does that say?

Thompson: That there's something messed up in Washington, D.C.. And if Washington D.C. is sponsoring a study of gambling in American, they ought to study themselves, first. The Federal Government has no business running a casino. They don't even know how to regulate casino gambling in America.

Q: The law says that they are required to get rid of an asset...this one has been so many years. And they say, 'we just can't find a buyer. '

Thompson: It suggests to me the Marshals are in collusion with the casino operators. They don't want to get rid of the casino operators. The way that the operators stay in business, is to have the Marshals maintain ownership of the casino. If they sold to somebody else, maybe the place would be cleaned up. If they could sell to one of the casino corporations, perhaps, it would move in and it would clean up the operations and develop something that would be positive for California.

Q: They've been making five million dollars a year, for the last six years.

Thompson: Well, they probably have a budget situation where the profits go into the Marshals Fund. You know, Janet Reno probably says, well, that's the Marshals business. And the Marshals are saying, "We're taking care of the money." I doubt they're making five million and sending it to the U.S. Treasury. If they want to send the money to the U.S. Treasury, they would sell it as fast as they could. And that's why I find it amazing that some people on the religious rights say, "Well, we've got to have federal regulation of gambling." I'm saying, "There's your Federal Government in gambling."

Now, I think we need -- I agree that we need a federal study of gambling. But, maybe, the Bicycle Club's and the U.S. Marshal Service is the first thing that should be studied by the Gambling Study Commission.

Q: What would you say if I told you that the Federal Government, through the Bicycle Club, contributed more than 1.6 million dollars to California legislators to affect gaming legislation?

Thompson: I would say it's just incredible. The fact that the Federal Government -- an operation of the Federal Government -- is making political contributions at all. I doubt if all of the casinos in Las Vegas contributed that much to state candidates in the state of Nevada for the election....

And they were probably influencing the legislation so there wouldn't be regulation of the card clubs in California. It is phenomenal that the federal government, an entity of the Federal Government, is giving campaign money to anybody. I mean, one of the questions is -- was that the Clinton White house or the Bush White House. They gave it to both sides.

Q: Dan Lungren, the Attorney General, says, "Gee, they're treating us like a banana republic here. They're, you know, using money to influence elections......our legislature."

Thompson: They're using gambling money to influence legislation in American government?! But the gambling money is being used by the Government to influence the government -- and the influence is a negative one. The influence is one not to have regulation. It's just incredible. It's just incredible.

Q: Tom Grey said, "I'm confident that if we go to the people, the people will say no to gambling. However, I can't feel that confident about the money because they might just, you know, win anyway by going to the legislature with money and buying it."

Thompson: They can go to the legislature. But they can also go to the people and Michigan showed the formula for having the people say, "Yes, we want casinos." Michigan voted for casinos, basically, because there was a casino in Windsor, Ontario and the residents of the Detroit Metropolitan area were spending a million dollars a day in Windsor. And they saw the money leaving. They're thinking, guess what --Niagra Falls, Ontario has a casino and now Buffalo money is leaving the United States.

New York's going to be softening up toward casino proposition over the next year or two. Then other places in the United States will also. And Ohio, had this proposition, we need a casino because Windsor has one. It wasn't the same thing. But now, Ohio is going to say, "We need a casino because Windsor has one." It wasn't the same thing. But now, Ohio is going to say, "We need a casino because Detroit has three casinos." And the people in Toledo are going to listen. And if New York has a casino, the people in Pennsylvania are going to listen.

And, the thing could be spreading. I don't think the formula favors the opposition at the moment. It's still going to be difficult to pass a casino proposition.

Q: But, with the kind of money that the casino industry has...

Thompson: You know, if you can spend 10-20 million dollars -- and when you put New York up -- it's been put off maybe a year in New York, but when you put up a state like New York, having four or five monopoly casinos, it will be worth 50 to 100 million dollars to put that money on a campaign because, collectively, those casinos are going to make over a billion dollars a year.

Q: So, they might put up over 50 million dollars?

Thompson: I would think so, certainly, over the course of the next few years. They've got to get the political maneuvering. And right now, in New York, the question for the legislatures is not, do we have casinos or not, the question is, where will they be located? They've already bought off the mayor of New York city, Juliano, Governor Pataky -- they've bought off on the proposition, we will have casinos. The argument in New York is where and if the money's now got to flow to the right combination of politicians, so you get the right combination of locations in New York and then have -- because they would have voted for a casino back in January, when they turned it down in New York legislature. They would have voted pro, had that formula been put together, but that's going to take some money to put the formula together.

Q: What you're saying, then, is despite what the activists say about the popular votes, it's not going to matter an awful lot?

Thompson: The activists are busy patting themselves on their backs-- as gambling is spreading across the country more rapidly than ever before. There are negative voices being raised about gambling. The activists are being heard. The media is listening to them. The major media -- New York Times, Washington Post, Wall Street Journal -- they're carrying negative stories about gaming. But they're not stopping the spread of gaming. That's going to be stopped with realism and with some counter-political forces, but I don't see them.

Q: What's that counter-political force?

Thompson: Yeah, well, who would be against gambling -- who in my church will put money in the plate against gambling? What's in it to spend money against gambling? Yet, the pro-casino people say, "Look, there's jobs. There's taxes."

Well, those aren't necessarily true, true results of gambling. I think the national study commission, if it's done fairly -- and the Gaming Commission's going to be well represented on it -- can show that gambling works some places, doesn't work other places, and it can be a guideline for some standards for how casinos are established.

I think we need some federal standards, and maybe even some legislation about campaign contributions from the gaming industry. They, certainly, should be under the same rules that contributors are for federal elections.

Q: Well, generally, though, money translates into political power, that's the oldest thing in the world.

Thompson: Money is political power. Money is the mother's milk of politics.

Q: If, then, the gambling industry keeps growing.....and throws off the kind of money it throws off... what does that suggest in the long run?

Thompson: In the long run, a lot of negative consequences for society. If there's no restraint within the gambling industry, we're moving it toward the Internet. We're moving toward slot machines on airplanes. We're moving it towards slot machines in bars all across the country -- very accessible gambling. Accessible for everybody. And that means accessible for children.

We're going to have a society that is not going to be a healthy society. So, I think the onus is on the industry to put on some restraints. The onus is on the industry to tell the government, look, we need some limits and where are they?

And, also, it would be healthy for the casino industry to not have gambling everywhere, to have selected resort centers. Of course, we're one of them, here in Nevada. But there could be other centers like this in the United States. They can have the same kind of economic growth that we have, but there can't be 50 centers like this. We can't have one within an hour's drive of everybody.

Q: Do you see the industry moving towards that sort of restraint?

Thompson: Well, the National Gaming Study gives them the opportunity to seriously listen to people that make these arguments. If the National Gaming Study Commission just comes out and says, "All gambling's good."

Yes, the National Gaming Study Commission is going to begin operations within, oh, probably a week's or within a month they'll be actually getting into their studies.

If the Gaming Commission decides there's nothing wrong with gambling that a few little things can't fix or let's be concerned about compulsive gambling. Let's put 1-800 numbers on the slot machines. If that's all the further they're going to go, they might as well pack up their work right now. It will have been a failure and it will result in the industry covering up the problems of gambling.

The problems of gambling are economic flows...is gambling good for different communities? And it's my position it's good for some and it's bad for others. But we've got to know what the costs are. We have to honest input/output analyses of the economic flows of gambling. We have to honest studies of crime and gambling -- honest studies of the prevalence of compulsive gambling, the costs of compulsive gambling.

If we have these studies, maybe we can build toward a consensus on what the limits in gambling should be. I think we can get a consensus we not have Internet gambling. I think we can get a consensus we not have gambling in televisions in people's homes or through telephone lines. Probably we could get a consensus that slot machines not be located in taverns, in every tavern in America. And, maybe, we can get a consensus that lotteries should not sell tickets to children. And that, maybe, they shouldn't be pumping out advertisements, constantly, saying gambling is good and it's wonderful. You know? Gamble and help Johnny read, things like that.

Before 1988, it was really a two-state industry. It really was. 1988, 1989 were the breakthrough years. In 1988, Congress passed the Indian Gaming Regulatory act that changed Indian gaming from Bingo to casino gaming -- that wasn't the intent of the Congressman, Senator from Nevada wrote the law thinking he was stopping Indian gaming, changed from bingo to casinos. And that was also the year that the South Dakota voters voted for casinos.

And then, in 1989, the legislature in Iowa said river boats and, pretty soon, we have eleven states with commercial gaming. 20 states with Native American casino gambling and it's all across America. A majority of the people live in states that have casino gambling.

Q: And, you know, these states all have a stake in casino gambling that they didn't have before.

Thompson: They -- never had a stake before and they're trying to bleed casinos as they did their lotteries. And the trouble is, it's not outside money coming from - into the - from the outside into the state...with the exception of a few places. Mississippi brings outside in. New Jersey's probably a break-even proposition. But we do a very good job in Nevada of bringing outside money in.

Q: I heard you say in a lecture that money doesn't grow on trees. Now, how does that relate to gambling, when you have a business?

Thompson: Well, it seems everybody in the industry thinks money grows on trees. Casino operators think they can go in and just pluck it off trees if they can be the first one in. Politicians think if we have gambling, we're going to get free tax money -- and then, of course, the players. They want something for nothing.

But it even goes beyond that. It's people like the citizens of Nevada that don't want to raise taxes to pay for public services. They say, well, let the casinos do it. Or, we've got the casinos now negotiating with the legislatures about who is going to pay for the new roads and schools we need. And they say, well, let's raise room taxes on tourists and let's raise sales tax because sales tax -- the tourists pay most of that. And everybody says, "Ah, what a happy solution."

It's just a shirking of responsibility, this notion that we can get something for nothing, something for free that gambling money is money falling off trees. Money comes out of people's pockets. And gambling is just a shifting of money around. And it's very important for us to know that and to know what kind of pockets the money comes out of.

I think for our casinos on the strip, we don't have a problem. It's tourist money and it's affluent people. But when we go into the bars of Las Vegas and the grocery store, we find poorer people, that are local residents gambling and they have problems. They have a sickness with the gambling. And we don't realize that. We just sort of close our eyes to the fact there's a problem and when you look around America, much of the gambling is local gambling like we have in our supermarkets, it's not positive at all and it doesn't help society.

Gambling, itself, can be positive or negative. But when it's local people, when it's poor people, when it's people that can't afford it, when it's people that are habitual gamblers it's very, very bad for society.

Q: We keep hearing -- well, California has to have casino gambling -- this is the me-too, phenomena -- because we're losing all this money in Nevada. All our people are taking their money.... billions of dollars. And we'll get all those billions back if we have casino gambling.

Thompson: Sure. Sure.

Q: That makes sense, right?

Thompson: No, it doesn't.

Q: Why?

Thompson: Unless you examine the flows of the money. California's not losing that money because their players send their money to Nevada, but we've got to spend our money someplace. And we don't manufacture thing in Nevada. And you know what? We don't grow food and there's a lot of food consumed in our casinos.

We take the money from the casinos, we ship a large amount of it back to California to purchase food and to purchase other supplies. We purchase about 90% of the goods we buy in Nevada through California.

Q: So, California's not losing.

Thompson: If they're not manufactured in California, the wholesalers in California -- California gets the money back. Now, they probably break even on the proposition because not only do they get the money Californian's gamble here back, they get the money Pennsylvanian's gamble here. We also ship that to California. 90% of our expenditures go to California.

And so, California, when you consider all of the flows of the money, they come out, they come out OK. They don't really lose on the proposition. And, they don't have the regulatory costs of gaming. Nor do they have the social costs that go along with our gambling. And they have fewer people that are habitual gamblers because they don't have the casino gambling as readily available in California as we do here.

Q: So the argument that somehow we've got to rush to get a casino in California just to save this money.....

Thompson: It's false economy because there's not a recognition that the money flows, the money flows both ways. There's a thought that money flows here. What's it do here? It stops and falls into a hole in the ground?

Actually, we spin it through our economy, once. We have it one of the lowest multipliers because the money won't spend several times here. It will spin through once and, boom, it's out of state -- 90% of it back toward California.

So, California isn't hurt by us having gambling. They might be helped because we draw -- we draw in people that want to come to the Grand Canyon. They come to Vegas but they also want to do Disneyland. By having Vegas here, we add to the collective draw of this region -- that does not hurt California.

Q: So the argument that's behind ['the me-tooism' ]is not a correct economic argument?

Thompson: Two things. The people that say that don't see the full flow of monies. And secondly, there should be a realization, if you have a casino in your midst, your people will gamble a lot more. And you will lose money if the owner of the casino lives somewhere else. You will lose money to Washington D.C., because they will tax the profits. They will also tax the winnings of the players, the money has already been taxed once -- because you pay taxes on the money you put down on the table. But when you get it back, now you have to pay income tax. So, Washington gets that money.

They will lose money to their state capital city that they didn't lose before. And, then, there's suppliers. Every casino needs a slot machine and guess where they're made? They're made right here.

You know, California has a casino, they're still going to be shipping money to Nevada. Now, it's to be purchasing slot machines. Now, the money is shipped over here because the owners of the casinos live here. It's a different formula -- but the flow, you have to look at the flow without casinos, with casinos and recognize that, when you have casinos, your people are going to be gambling a lot more than they are now.

... more people play more. All sectors of society play the lottery, but there's a disproportionate play among poorer people. Secondly, lotteries just extract money from the local community. There is no influx of outside money for the lotteries. Beyond that, the states extract an extremely high tax.

If you consider that a lottery ticket costs $1, well, you put 50% you put 50 cents into a pool and redistribute the 50 cents, and it costs you a dollar for the ticket. Well, you bought something that's valued at 50 cents. You just paid a 100% sales tax. That's an extremely high tax. And it's an extremely high take-out for a gambling organization. It's one of the worst bet in our society -- worst bets that we have in our society, with a 100% take-out, or a 100% surcharge on the cost of gambling.

So, it's not a good bet, it's extracted from the community. States lose money on the deal because the supply companies are expensive. Usually, oh, 5% or so of the lottery costs go to a supplier. So the State actually loses money on the deal. But, the State government picks up a lot of money.

And -- but I don't think they realize what the options are, if people had the money in their pockets and they were spending it on consumer goods. First of all, society would be more wealthy, because at the end of the purchase there would be a consumer good. And the State would also pick up a sales tax on that consumer good.

Q: Oh, but you're giving money to help education. And so that's better than casino gambling, right?

Thompson: No. The casino, casino taxes, lottery taxes -- it's the same thing. Maybe the best thing would be a sales tax, a property tax, and equitable income tax. It would be a fairer tax distributed to full society. Why should just a select group of people pay for the education? Ah, but in Georgia, there are free-collar scholarships, isn't this wonderful?

Poor people playing the lottery in Georgia are shifting money to middle class kids going to the University of Georgia. Is this the way we tax public services? Take from the poor, give to the middle class and the wealthy people? That everybody that earns a B average gets a free college education at the University of Georgia. Are these poor kids? Or are these middle class kids?

It's a -- it's sort of a tax .... Welfare for the middle class and the rich paid, for by the poor. The lottery ticket is a bad mechanism for redistributing goods and services in society.

Q: You said....casinos aren't bad, but a lottery seller on every corner is bad.

Thompson: Well, I'm saying, certain kind of casino gambling can have economic benefits. It can result in money coming into society.

Also, casinos can be restricted such, that the motif of casino gambling attracts money from middle class and upper middle class people. It doesn't disproportionately attract money from the poor.

The lottery disproportionately attracts money from poor, attracts from local residents. There's no economic gain with the lottery. And it's Government run and it's almost like the Government putting campaign money into an election in California. The Government is telling people to gamble and it's good. And I think it's much better to have free enterprise situation, have the private competitors.

Q: Well, that's the thing. Terry Lanni tells me, he would love to be able to advertise the MGM the way the lottery can advertise its product. But he can't. It's against the law for him.

Thompson: Terry Lanni wants to advertise the MGM -- why shouldn't he be able to advertise it? Like any other product that's a legal product, advertise it. But when he advertises it, it's private money advertising that product. It's not Government tax-payer owned money pushing gambling.

And I'm thinking, it's one thing for private money to push it -- and we have lots of problems with that. But it's quite another for our government to be pushing government on ourselves. I think it's completely out of bounds and out of the role that is assigned to government.

Q: What's the message that the Government's sending out when it puts millions of dollars in promoting: "Hit the lottery, be a millionaire!"

Thompson: Something for nothing. Money grows on trees. You don't have to work. You don't have to try. You don't have to give a damn. Just let it roll. Let it roll. Don't be concerned about tomorrow. Live today. Get rich quick. These are terrible messages. These are the message the Albanians learned from living under Communism that, you know, work doesn't mean a damn -- we can never get ahead. And so now they have become free and the first thing they spend money on is phony pyramid schemes. And now their society is falling apart because the schemes fell apart.

Well, their [Albania] government promoted the pyramid schemes. They get the result. And that's going to be the result in America if our government is promoting gambling.

With private enterprise,competitive enterprise, you get checks on these promotions. And you won't have the false promotion of this is the way to raise your child. You will educate your child by coming to Vegas. Wouldn't that be a great ad? "Come to Vegas and Educate Your Child!" I don't think so. I don't think so. We would laugh if we saw ads like this and laugh at the people making the ads.

Q: How much responsibility should we lay on government for promoting gambling, because during this period with so much promotion......this activity has been increasing. Is it related?

Thompson: Government legitimized gambling and the casino industry is cashing in on it. A lot of the spread of casino gambling has been, sort of a secondary, tertiary, result of gambling -- promoting lotteries, saying, gambling, risk-taking for money is legitimate. It's good. It can be positive.

It's almost like the church Bingo game. You know? Raise money for the churches, except the church Bingo games didn't go on radio and television and advertise. They didn't put, you know, "Give every agent 5% for selling Bingo cards." They sort of kept it in the church. And they kept the profits in the church. They didn't go into some state treasury, where politicians could do all sorts of funny things with the money.

Q: There has been an unintended consequence, you were just describing.

Thompson: The lotteries by advertising and telling people it's good to gamble, they've spread the legitimacy of gambling. And one of the secondary or tertiary results of this, has been people have endorsed casino gambling across America. And casino gambling has spread

Q: So, the Terry Lanni's of the world should be thankful for what the lotteries have done?

Thompson: I think he should applaud the lottery for what they've done. I don't think it's been beneficial for society, but it's been very beneficial for the casino industry. And I, quite honestly, believe the Supreme Court is going to be knocking down barriers to casino advertising in the very near future -- advertising of legal casinos, as they've done for legal alcohol products and so forth. So, we're going to see more advertising of gambling, in the future. But the lottery started it.
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