capitalism

202 Gambling
displacing—even cannibalizing—rival service and entertainment
businesses, such as hotels, restaurants, and theme
parks. Worse, it is alleged, this displacement is achieved by
ruthlessly exploiting the addictions of compulsive gamblers,
thereby causing financial distress, destabilizing families,
and fueling welfare dependence and crime.
Many of these charges lack merit. Cannibalization
appears to mean little more than vigorous competition.
Additionally, many of the crime statistics that underlie the
claim that gambling breeds crime have been based on dubious
measurements. For example, early analysis of Atlantic
City crime figures shortly after the arrival of casinos suggested
that per capita crime had markedly increased.
However, these crime statistics failed to take account of the
swelling local population due to casino-related tourism; the
effect was that estimates of crime were heavily inflated.
When the crime statistics for Atlantic City were readjusted
to take account of this and other elementary crime-reporting
errors, the resulting crime levels were unremarkable.
Still, nobody denies that there are those who, for whatever
reason, gamble in ways that have a negative impact on
themselves or others. Although the severe cases are thought
to be uncommon, the actual numbers are often elusive.
Again, for the most part, measurement and classification
problems haunt efforts to reliably estimate prevalence.
Indeed, there is no clear consensus on what sort of behavior
should be labeled compulsive or problem gambling. Nor
is it clear that problem gambling, however it is defined, has
been exacerbated by legalization. One study on gambling
behavior in Connecticut found that “probable pathological
gambling rates may actually have fallen ...and have certainly
not risen, during a period [1991–1996] in which one
of the largest casinos in the world [Foxwoods] was opened
in the state.”
Moreover, to the extent that compulsive gamblers
behave badly toward others, it is not always due to gambling.
Ronald A. Reno estimates that “one to three percent
of the adult population are pathological gamblers,” but
notes, “about half of compulsive gamblers experience problems
with alcohol and substance abuse,” which constitutes
an important confounding factor.
However, from time to time, truly pathological gambling
can result in genuine human misery. Of course, the
same—or worse—is true of alcohol abuse and a number of
other legal activities. As in the case of alcoholism, the question
is whether problem gambling is better addressed on a
voluntary basis, rather than through prohibiting the activity
entirely. Self-help programs, such as Gamblers Anonymous
(GA), insist that treatment, at least, must be voluntary. As
the GA literature makes clear, the
compulsive gambler needs to be willing to accept the fact
that he or she is in the grip of a progressive illness and has a
desire to get well. Our experience has shown that the
Gamblers Anonymous program will . . . never work for the
person who will not face squarely the facts about this illness.
In any case, lawmakers in a free society must ask not
simply whether the choice to gamble is harmful solely to
the gambler, but whether this choice clearly involuntarily
harms others. Negative neighborhood effects may on occasion
be just grounds for government to step in, at least in
instances where the intervention can be shown to be effective
and where it does not lead to other, more harmful
effects. But this is rarely the case. Historically, gambling
prohibitions have done more harm than good. As Reuven
and Gabrielle Brenner note, when
a comprehensive law prohibiting all forms of gambling
was passed in Nevada in 1909 ...the result was that government
revenues from licensing were lost, a large number
of games were played, and corruption and “protection”
became widespread, bribes coming to seem like little more
than a form of license.
The repeal of this law in 1930 changed all of that. The
impact of legalization was that eventually the gambling
industry in Nevada, which features a massive corporate
structure, was characterized by honesty toward its customers.
In another example cited by Brenner et al., “New York’s
legislature in 1960 passed a series of new antigambling
laws whose purpose was to facilitate convictions and, by
increased penalties, to have a detrimental effect on gambling.”
But the results were disappointing. Gambling and
the organized crime associated with it persisted, but few
convictions were obtained. If it had a significant effect, it
was on the police, for whom, the Knapp Commission
found, gamblers’ protection money was the main source of
bribes. A typical policeman on the gambling squad was able
to get $300 to $1,500 per month, and his or her superiors
got additional sums.
That widespread gambling legalization has substantially
decreased mob influence in the gambling industry is
beyond dispute. Whether government oversight played an
important role is debatable. This question is important
because, naturally enough, industry representatives are
eager to deal with any concerns the public might have about
the honesty of their enterprises. Although concern about
mob influence has led some to call for more strenuous government
licensure and oversight of the entire industry, such
an approach is certainly not without cost nor is there any
indication that it is needed. By artificially raising the cost of
entry to the casino industry, licensure serves to protect current
industry participants from new competition. Moreover,
to the extent that a license becomes a valuable commodity,
public officials overseeing the licensing process are easily
put in a compromising position. If the intent of government
licensure is to shore up the integrity of the industry, it is not
doing a terribly good job, as critics of former Louisiana