Interview with J. Terrence Lanni, Chairman of MGM Grand, Inc. and member of  the  Federal Gambling Commission.  The Commission was recently created by Congress to study for two years how legalized gambling impacts America.  He was interviewed in the early spring of 1997.


Interview: J. Terrence Lanni

I've always found gaming just to be an extension of entertainment. You might enjoy going to the movies. You might enjoy a good play. You might enjoy every different sport that might take place and gaming is just another aspect of it. It kind of reminds me of when I talk to friends of mine who say they're going to go to Las Vegas. And they say, "Well, I'm going to do..." You know? They spend a couple days and "I'm going to see these shows and I'm going to these signature restaurants. And I might even take in a UNLV -- University of Nevada, Las Vegas Basketball game -- and I'm going to take five hundred dollars along to gamble with." I think it's just part of an entertainment budget. It's just part of the whole process. So to me, it's just kind of fun.

What do you think is the thing that's most misunderstood about your business?

Lanni: I think people, generally, overlook that this is truly, a business and needs to be run as a business.....And the second aspect of it is just the fact that I don't think people have any understanding of the regulatory process, how strict it is and how thorough it is.

In your keynote address at the American Gaming Summit in December. You spoke about how the industry must become 'pro-active.' What do you mean by that?

Lanni: Well, I think that as a result of the fact that I had been named to this Federal Gaming Commission ...it was a time that I thought that I had an opportunity to share with the industry that everything that we do is not perfect. And it's really time, on a pro-active basis, to understand that. And, many areas we've been very good.

I think when it comes, as an industry, generally, we've been very good about helping local, charitable causes in the areas in which we operate. We tend to be very, very generous; individuals within the industry; the industry itself. That part, I think we get very good grades on.

I think from a regulatory standpoint, and the decency of the individuals involved in the industry, following those processes, we're very good at.

What we've been very weak is in one specific area, is dealing with compulsive, behavioral problems relative to gaming. That has been a problem. And we haven't really handled it well. We've done a good job when it comes to teaching, in many instances, our employees to understand when people have problems with alcohol, the standpoint of stopping them from gaming -- or not giving them their keys back at valet. Or a bartender who won't serve them anymore drinks at one of our restaurants or bars in our various facilities. That, I think, we've been very good, reasonable and conscious, good citizens in that regard.

But problem gaming, is an area that I know that on this Federal Gambling Commission, which is going to be a two year commission to study social and economic impacts, that's going to be a major issue. And there's not enough knowledge on that subject. There's a center in Kansas City, Missouri -- the Center for Responsible Gaming -- for which a number of us are major contributors...which is a group of individuals who head that are very impartial. And they, actually take the monies that are afforded by the industry, to give to various medical schools, such as Harvard to do studies. To try to find out what is the actual percentage of the population of the United States that has problems with gaming?

I've seen studies that say 1%. I've seen studies at 5%. And many in between. The issues we need to get a better handle on how many people have problems with gaming and then come up with a solution -- and it's not going to be a solution that will ever guarantee that every single person will be cured of that particular problem. But we need to deal with it. We need to aggressively deal with it.

I mean, people have compulsive behavior in many areas. Many people are using credit cards well beyond their means. People are using food well beyond what is good for their health. Many people use alcohol well beyond the social entertainment aspect of alcohol. And people gamble beyond the level they should gamble. And we need to understand, and to address that.

I think the first step is to get an understanding of what percentage of the population is compulsive an addicting gambling. And how do we deal with that on a rational and reasonable basis? Let's just say that it comes out at 3% -- and maybe alcohol is 3%, alcohol abuse. This country tried with...prohibition...to block everyone from enjoying alcohol as a social aspect of life rather than an abusive aspect of life. Now, probably 3%, 4%, 5% of the people were abusive of it. What did they do? They drove it underground. They made it an organized crime income stream beyond belief. It allowed Canadians to make a great deal of money, of running fast speed boats across the Detroit River, brining liquor into the United States.

And, it took it off the taxation roles and drove it underground. And I don't think that's the proper answer for people who have addictions with anything. I don't think it's right to deny the 97% of the people, who can properly handle each of these aspects of life, the right to participate in them.

But it doesn't mean that we don't have a responsibility of dealing with them on a forthright basis. I'd like to see this industry position itself as the beer industry has. Reasonable. Friends don't like friends drive drunk. Know when to say no. Rather than position ourselves, frankly, the way the tobacco industry has, that says there's no such thing as health problems with smoking.

The growth of Las Vegas.....

Lanni: ..Absolutely phenomenal.

Something new, gets someone to say, "Hey, you know? I haven't been to Las Vegas now for a couple months. We have to go see it." So, I really believe that there's a lot of flexibility in the addition of the critical mass, the development of new visitors to Las Vegas.

They built a critical mass here that's absolutely amazing. And it's a great value. A lot of people forget that. You can get rooms, a very nice room, clean room with a clean bathroom for $19.00 a night or you can spend thousands of dollars a night in the major suites of some of these hotels. It offers food levels -- McDonald's level up to an Emeral Lagasse's or Wolfgang Puck's Spago. It offers every aspect of entertainment from Seigried and Roy in our David Cassidy's EFX show to levels -- we have lounge shows for free.

So it really affords everyone an opportunity -- at every economic level -- of enjoying themselves. And it's great value. And I don't know who can compete with it on a critical mass of the 101, 000 rooms currently or the levels of entertainment that are available -- as well as the panoply of restaurants that are available in the city.

So I see great things for Las Vegas as it moves forward. Does it have problems? Sure. I think that transportation is an issue that has to be dealt with. Certainly, water is an issue that has to be dealt with -- because of that growth. This is the fastest growing city in the United States -- 5,000 people a month moving here. It has 65% of population of the entire state here. It's now larger than the city of Detroit in population.

I think they're expecting, one, to be entertained. Two, they want to win. But generally, I know people who bet $200 or $500 or $1000 to gamble...some say, I want to double my money. I want to make 50% more than I start with. They have goals. But I think, generally, a goal -- when you come to a casino -- is to be entertained; to have a good time; enjoy all the ancillary aspects of the facility; And, to have some fun gambling.

But I don't think most people who come and play the slot machine are expecting to win the megabucks, multi-million dollars. But I think the people who buy lottery tickets, that's their hope. Not their expectation, necessarily, but I think that's their hope. But, again, that's just my belief. I don't have any evidence to support it.

The new government commission on gambling....

I think that number one, that we would like to achieve from this, is to get some very good statistical understanding. Let's do away with all the various hyperboles that have been presented in this industry. What are the statistics? What are the people who have problems with gaming? What are the people who have been harmed by it? Let's get all the negatives out. Then, also, let's get over on the good side of the ledger...what are the good things that it's done? What has it done to reduce unemployment? How many people have been taken off welfare? Let's line them up, fairly. Get independent agencies of the government -- which are associated with this Commission -- to do those studies.

So, from that as a base, I think that we can then evaluate it, and determine, as a Commission, is it properly regulated? Is it properly operating? Is it socially acceptable? Is it helping more than it is hurting? Take a look at all of those factors and then write a report that will be submitted at the end of two years to a combination of the President of United States, to the Speaker of the House and the Majority Leader of the Senate with our recommendations -- if any recommendations.

The last time they had a National Gaming Commission, it was concluded in 1973 and it reported that the regulatory systems were more than adequate. The taxation was more than adequate. And it should be left in the hands of the state, not the federal government.

I thought it interesting, the number of the opponents, who happened to be members of the religious right who, you know, argue consistently, for less federal government control are supporting federal government control over this industry -- which I think is interesting. Or federal government taxing this industry.

What other industry pays a gaming tax before it even pays corporate income tax? I mean, we aren't a privileged industry. We pay gaming taxes of various levels on our gross casino revenues. So I think that the world will understand that there is a lot of taxation that takes place....a fair evaluation of that and whatever recommendations that might come from that understanding.

Answer those critics who say, these guys are predators....

Lanni: I think the answer to that is one, I don't think of myself as a predator. As I've said, I don't know what the percentage is, but I think even our opponents would say, that the vast majority of people, who participate in the gambling, gaming, entertainment, resort experience are doing it in controlled states, well within their means to enjoy themselves. And it's legal. And, in my opinion, it's moral.

Now, for the people who abuse it, it's no different than if I had a credit card company. There are people who are going to abuse that. It's no different than if I owned one of the food companies. People are going to abuse food. It's no different than if I were working in -- a Chief Executive officer of a major alcoholic beverage company. People are going to abuse it.

But do you deny the vast majority of the people, the enjoyment of an endeavor? Because some people abuse it? I don't think you do. I think what you do, is you forthrightly deal with the people who have problems and you do your best to help them.

I'll give you a quote and see if you can guess who said this, "Your chances of winning in a casino -- you have two chances of wining in a casino: slim and none. And Slim's out of town." And this person goes on to say, that, "These casino companies, they make so much money -- but they're not putting enough back. And if they don't start doing that then, you know, the -- it's going to break -- the industry's going to break the country." Who do you imagine said that?

Lanni: I really don't even want to hazard a guess. Maybe Tom Grey, I don't know.

Lefty Rosenthal.

Lanni: I think, again, when it comes to the situation, it's --what do we do to reinvest? I don't think, as an industry, there are too many entities or individuals who are as aggressively involved in community activities and supporting various programs. I'm not so sure there are too many industries that have the record that this industry has in taking people off of welfare.

One of the great things about this industry, is it does not take a great deal of time to understand the basics of some of the job responsibilities, here. And these are good paying jobs. They are jobs that have good benefits associated with them.

We have a program here - I'll just give you one example, and I think it's just an example of many -- when MGM Grand was beginning it's development and construction phase, the determination was that we would need approximately 7,000 people to be hired.

In some states, there are requirements to reach out to the community -- disadvantaged people. New Jersey has this requirement. I suspect that Michigan will. Nevada does not have this requirement. But on a voluntary basis, this company went to sixty different agencies, in the city, county and state of Nevada and made a commitment to those agencies to hire 1200 of the 7000 people -- people who are disadvantaged. No requirement. It didn't get a lot of publicity, but it was a commitment to the community. By the time this place was finished -- and opened -- the end of 1993, this company, with those 60 agencies, placed 1583 people in this organization. 58% of those people, after three and a half years, are still working at this company.

Now, the other 42% just didn't fall off the wagon. This is a growing industry in a growing town. And many of them had opportunities elsewhere where they went elsewhere for more senior positions. And 58% retention rate is equal to the general retention rate of this industry, because of the growth, they're moving on to other places.

We're very proud of that. Do we talk about it a lot? No. But that's one example of what this industry does on a very voluntary basis.

Is that what you would call pro-active?

Lanni: I think it's very pro-active. And I think it's responsible. I mean,one thing the Tom Grays of the world and I can certainly agree on -- the worst thing in the world is a person not to have a job. As much as he doesn't like gaming, I think a person on welfare without a job and without a future is more of a problem for him -- I know it's more of a problem for me. And, we have to address that issue. It's happened in so many instances.

In that group of people that we hired, we took some 583 people off the welfare roles in the state of Nevada. Saved the state of Nevada 3.5 million dollars in their general fund -- this one little company in this industry. Others do it. Not mandated, not required. Is it pro-active? It's responsible...yeah, it's all those things.

Look ahead -- five years, ten years -- what's this industry going to look like?

Lanni: Well, I think it's going to be much more, on an on-going basis, perceived to be another form of pure entertainment business. I think there'll be little difference between a major motion picture studio, a hotel/casino, entertainment casino, a non-gaming entertainment resort -- I think they're going to be very, very similar.

I think it's going to be a much more acceptable on that basis. Ten years from now, the issue of gaming won't be an issue. I mean, gaming is one of the oldest professions in the world. Go back to the cave man days, they find it on the drawings and etchings on the walls of the caves. Gaming has been here for a long period of time.

And you expect it to become mainstream ten years from now?

Lanni: I think it's mainstream now. But I think, even the issues and the things that we've talked about today, won't be talked about in the future. I think that will go away. People won't think about it, because there is going to be that pro-active approach. We're going to know, just like alcohol, that people abuse it. And we're going to deal with it.

We'll know that people abuse credit cards and people abuse food and they abuse gaming. And the industry's going to have a good track record -- which it doesn't have to this point. As I said earlier, we have really been remiss in that area. And we -- pro-active approach -- and maybe a Tom Grey can sit back in his retirement and say, "You know, I got those people to be much more focused in that regard." And if he's the catalyst, great. More power to him.

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