William Thompson


WILLIAM THOMPSON

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.

In this sense, it's like other entertainment industries. Yet, 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.

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, "Wellllll, 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.

It's interesting...they would say they won $5000, but what's the chances that they actually walked out of town with $5000?

Thompson: 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 memory doesn't hang on to all 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 tell 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."

It's delusional.

Thompson: It is. People will lie to themselves, also, in calculating the money because they don't want to tell themselves that they were foolish about gambling. So 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.

Even if you lost money?

Thompson: Even if they lost money. 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.

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.

If, then, the gambling industry keeps growing...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.

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.

I think we can get a consensus over some of these things and then build toward a responsible gambling industry. The industry talks about responsible gamblers. I'm thinking we need a responsible gambling industry and we need to build toward that in our society.

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.

We've heard it from several people in the course of our interviews -- 'California has to have casino gambling because we're losing all this money in Nevada.'

Thompson: If the flows of the money suggest that it's a one-way flow out, then, yes, California probably would have an economic advantage of having some kind of gambling block the borders. As Detroit is doing, blocking the money flowing into Canada.

California's not losing that money because their players send their money to Nevada, but we've got to spend our money some place. 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.

So, California's not losing.

Thompson: If 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 [Nevada]expenditures go to California.

And so, California, when you consider all of the flows of the money, they come out, they come out OK. 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.

This me-too, phenomenon. 'Oh, my God, we'd better -- --they got a lottery, we better have a lottery. ' You're telling me, basically, the argument that's behind that 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.

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 from -- what do we call? 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.

You said that 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 -- 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. And, if they're advertising their product, OK, they're advertising their product. But for the Government to tell us gambling is good, is, I think, a little out of bounds.

.

What's the message that the Government's sending out when it puts such heavy mone-- 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 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, private, 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.

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

Thompson: Government legitimized gambling and the casino industry is cashing in on it. Yeah. 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.

No, the lotteries have not been a good thing for America. But one of the results for Vegas is they've helped gambling spread. And with the spread of gambling,Las Vegas has become legitimized and more people are coming here and feeding our casinos.

join the discussion / what are the odds? / gambling: pro and con / interviews / timeline / facts & stats / tapes & transcripts / press
explore FRONTLINE

web site copyright 1995-2014 WGBH educational foundation

pbs

SUPPORT PROVIDED BY

NEXT ON FRONTLINE

Solitary NationApril 22nd

FRONTLINE on

ShopPBS