Sevens For Business, Snake Eyes For The Public


By David Johnston

Doubleday -- 312pp -- $22.50

As recently as the 1960s, the legalized gambling industry was con trolled by the mob. Now, it is controlled by such major corporations as Hilton Hotels, Holiday Inns, and Circus Circus Enterprises. Good news, right?

Not according to Temples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Business. As David Johnston, an investigative reporter for the Philadelphia Inquirer, sees it, the new owners are worse than the old. His arguments are persuasive and disturbing. To be sure, the big gambling companies don't break your legs if you welsh on your debts. But their massive campaign to expand legal gambling could have a much more pernicious impact on America than anything envisioned by the mob.

The mob's legal gambling operations were confined to Las Vegas, and its financing was restricted mostly to cash skimmed from table games. Corporate gambling interests have much greater resources and far broader horizons. The big casino companies have better management, marketing savvy, and access to the capital markets. During the 1980s, gambling companies raised $5 billion from junk-bond offerings alone. Through partnerships with deficit-plagued state and local governments, which see gambling as a painless tax, they have gotten at least one form of commercial gambling legalized in every state but Utah and Hawaii.

Today, gambling companies are pursuing what Johnston calls a plan "to profit by infecting America with an incurable case of gambling fever." They are promoting everything from riverboat casinos to seductive video slot and lottery machines, which they hope to install in taverns across the country. They're close to getting casinos built in major cities such as New Orleans and Chicago. And they've been very successful in sanitizing gambling's seedy, back-room image and making it socially acceptable. By 1995, according to consultant Eugene Martin Christiansen, annual gambling losses by Americans will reach $40 billion. That translates into immense profits for gambling interests. According to Johnston, Hilton's four Nevada casinos have twice the revenues of the company's 264 franchised hotels combined.

Johnston disagrees with executives who claim gambling is harmless recreation. For many, even most, players, it may be. Still, he argues, it tends "to prey on the foolish, the compulsive, and the weak." In part because gambling is sanctioned, even promoted, by government, millions of people who had never so much as stacked poker chips are being lured into gambling compulsively. And though gambling is one of the fastest-growing industries in the U.S., Johnston questions its economic value. He quotes Hugo Schnekloth, an Iowa legislator and gambling foe, this way: "Gambling is an awful poor foundation to build an economic system on. Casinos don't make anything. They just take money from a lot of people and give to a few." Witness Atlantic City's crumbling downtown.

The mob and the casino companies have one thing in common: a propensity to corrupt state gaming regulators. Much of Temples of Chance is devoted to exposing the feckless performance of New Jersey's Casino Control Commission and its Gaming Enforcement Div., a story Johnston covered for nearly four years.

Although regulators insist that the Atlantic City casinos are the country's most tightly regulated, Johnston offers evidence to the contrary. When entertainer Merv Griffin sought to take over ailing Resorts International Inc. from Donald Trump in 1988, regulators ignored Griffin's association with a stock-manipulation scheme. Griffin said he was unawares. Casinos, Johnston charges, routinely and knowingly welcome mobsters and drug dealers, who use gambling to launder money, while regulators usually look the other way.

Although regulators are supposed to ensure the "financial stability" of casinos, they regularly make exceptions. They certified the Resorts International deal even though, as one commissioner admitted, "we knew Resorts couldn't make it." Resorts later filed for bankruptcy. Perhaps most egregious, says Johnston, was a ploy in 1990 by Donald Trump, then under great financial pressure, to make a mortgage payment on his Trump Castle casino. Trump's father lent him the necessary cash by buying $3 million worth of chips. The loan violated rules prohibiting anyone without a license from putting money into a casino. Yet regulators, says Johnston, helped Trump get it done and let him avoid any penalties. One Casino Control Commission commissioner who opposed the plan, W. David Waters, called the episode an "outrage."

Temples of Chance too often veers off the point, providing, for example, portraits of high rollers. The book would have benefited from less detail on Atlantic City machinations and more on the social impact of universal gambling. Still, the basic theme comes across as loud and clear as the bells signaling a slot-machine jackpot: For everyone but the house, gambling is a bad bet.