Wagering on vice: with government's eager help, gambling has grown from a marginal vice to a major social malady -- and government, not surprisingly, is the main beneficiary. (Culture War).

Disclosure that self-appointed "virtue czar" William J. Bennett has a large and expensive gambling habit triggered the predictable wave of "gotcha!" stories in the press. The June issue of The Washington Monthly described how Bennett has rolled up over $8 million in gambling expenditures at various casinos over the past decade. With a palpable sense of vindictive glee, the left-leaning journal cited Bennett's observation from The Book of Virtues, his best-selling collection of moral parables: "We should know that too much of anything, even a good thing, may prove to be our undoing."

For his part, Bennett insisted that his gambling habit -- while exorbitant by most people's standards -- was firmly leashed. "I've made a lot of money and I've won a lot of money," Bennett told the publication. "When I win, I usually give at least a chunk of it away [in charity]. I report everything to the IRS....I adhere to the law. I don't play the 'milk money.' I don't put my family at risk, and I don't owe anybody anything."

Of course, Bennett has more disposable income than the typical habitual gambler. Relatively few gamblers can afford to wire $1.4 million over a two-month period to cover losses, or absorb a $625,000 loss during a single casino visit, as Bennett did, according to casino records reviewed by The Washington Monthly. But Bennett is the credited author of several best-selling books (some of which, including The Book of Virtues, were ghostwritten), and a high-profile speaker who commands $50,000 an appearance.

"You can roll up and down a lot in one day, as we have on many occasions," explained Bennett. "You may cycle several hundred thousand dollars in an evening and net out only a few thousand.... You don't see what I walk away with. They [casino operators] don't want you to see it."

In fact, casino owners would have no reason at all to withhold news of such winnings from the public, since the gambling industry thrives on the illusion that people can beat "the house." But according to the information compiled in The Washington Monthly's story, Bennett's performance at video poker and slot machines has offered the house little cause for worry. In Atlantic City and Las Vegas, the twin capitals of the Mob-created gambling industry, Bennett is a "preferred customer" at several casinos.

Such favored big-money gamblers -- called "whales" in industry parlance -- frequently receive such perks as free hotel rooms, limousine service, and complimentary meals. Casino owners gladly offer these incentives, serenely confident that the "whale" will rack up losses, providing a huge return on the casino's investment. "There's a term in the trade for this kind of gambler," commented a casino official. "We call them losers."

The Political Can

Bennett, a longtime Democrat who became a Republican while serving as Ronald Reagan's secretary of education, is tightly aligned with the "neoconservatives," a political faction founded by disciples of Communist icon Leon Trotsky who have captured the "mainstream" Right. Predictably, neocon scribblers leapt to Bennett's defense.

According to syndicated neocon columnist Jonah Goldberg, "there is no scandal. Yes, Bennett made mistakes. And yes, I can surely see why some religious conservatives who take a dim view of gambling might be disappointed in the man." Former presidential speechwriter David Frum blamed the expose on the machinations of Clinton partisans who recall Bennett's role in the impeachment drive. According to Frum, these vindictive Clintonites "have regarded any infraction and deviation by any anti-Clintonite as news that can be legitimately blared from the rooftops." For Robert A. George of the neocon-dominated National Review, Bennett's misbehavior was not as serious as that of left-wing moralizer Jesse Jackson. Declares George, "legal gambling is not as serious as cheating on your wife or having a child out of wedlock."

But neither Bennett's critics on the hard Left, nor his defenders on the neocon soft Left, discussed how his recent career as a moralizer--which facilitated his extravagant gambling habit--was a lucrative spin-off from a "public service" career devoted to increasing the size and intrusiveness of government.

As secretary of education, and then as the first director of National Drug Control Policy (aka "Drug Czar"), Bennett presided over huge and expensive federal programs that grew larger and more profligate under his watch. The Department of Education and the federal war on drugs exemplify self-sustaining bureaucratic undertakings devoted to perpetuating problems, rather than solving them. The trick is to identify a scandalous social problem--such as our collapsing educational system, or widespread and growing consumption of narcotics--that can be widely condemned, and battled at great expense, without being solved.

In a sense, this political racket is a variation on the strategy used by casinos to hook their "whales." Just as gambling houses lure people by dangling before them irrational expectations of sudden wealth, the feds urge the taxpaying public to believe that an end to illiteracy, drug addiction, or other deeply entrenched problems can be obtained by spending just a little more money, or giving Washington just a little more power to regulate and regiment our lives. Casinos would not exist if gamblers could consistently "beat the house," and federal agencies devoted to "curing" social ills would go out of business if they were ever to solve such profitable problems.

Bill Bennett, the federal apparatchik-turned-compulsive gambler, bridges both variations of this con game. But the media's focus on Bennett's behavior eclipsed a far more interesting story illustrating the growing alliance between government and the gambling industry.

Seizing the Casinos?

In April, shortly before Bennett's gambling addiction was made public knowledge, illinois Governor Rod Blagojevich proposed that the state government seize control of the state's casinos and riverboat gambling. According to an April 25th wire service report, Blagojevich's "budget and policy teams are 'aggressively' exploring the idea of taking back the casino licenses and hiring a company to operate them for the state's profit."

Blagojevich cites the example of a casino owned by the provincial government of Ontario, Canada, and operated by a separate management firm. "It's conceivable, for example, that the state could own [the casinos] ... and hire Harrah's or MGM to do the management and pay them a management fee," commented Blagojevich. "But instead of the profits going to the casino industry, they would go to the state and the difference would be the cost of the management fee that they would get for their services."

By way of justifying his radical proposal, Blagojevich followed a well-established script by using schoolchildren as political "human shields": "Sometimes you have to say, 'Can you get more money for schools by taking an approach that maybe you wouldn't do at other times.'" His proposed casino seizure is a logical outgrowth of the state's fiscal crisis, and it may foreshadow similar initiatives in statehouses nationwide.

Like every other state, Illinois confronts a severe budget crunch, combined with a steadily worsening economy and an entrenched class of tax-fattened constituencies (such as public employees' and teachers' unions). Tax increases are politically perilous, and tax consumers are intractable. Governors and statehouses are increasingly looking to legalized gambling as a potential source of revenue. Over roughly the past decade, 26 states joined New Jersey and Nevada in legalizing casino gambling and other aspects of the "gaming industry."

In 2002, casinos in Illinois reported $1.83 billion in receipts after paying winners. Last July, the Illinois state legislature passed a sizable tax increase on casino profits, including a 50 percent tax rate for the top-grossing casinos. The "gaming industry" responded by publishing a study entitled "A Better Deal for Illinois," claiming that rolling back gambling taxes and expanding the number of gambling venues would boost the state's ailing economy by $2.2 billion.

That proposal assumed that the Illinois government would be satisfied to take in a larger tax haul from vastly increased private gambling revenues. But the state's gambling industry failed to take into account the nature of its partner in vice. A privately owned casino profits from voluntary customer participation; the state, however, has the power to seize what it wants through force or the threat of the same. In any public-private partnership, including those that promote and profit from vice, the state is always the senior "partner"--as the Illinois so-called gaming industry is learning to its chagrin.

"For the past 12 years, Illinois casinos have invested billions of dollars into their businesses," complains Tom Swiok, executive director of the Illinois Casino Gaming Association. "Having the state literally confiscate these businesses and destroy this investment is preposterous." Professor Bill Thompson of the University of Nevada-Las Vegas has published a study of the gambling industry, and he points out that state ownership and control of casinos would make an already corrupt industry much worse. "We have private casinos in Nevada," notes Thompson. "Government regulates them and, when they cheat, they go out of business. What happens when the government owns the casino? Are they going to close it down?"

Profiting from Vice

The rapid proliferation of state-supported gambling across the country has followed an incremental process described by Tom Grey of the National Coalition Against Legalized Gambling (NCALG). "The first wave, such as a state-run lottery, focuses on what could be called charitable concerns, usually providing money for better schools," Grey told THE NEW AMERICAN. The pioneering effort of this type was an "education" lottery devised by Georgia's Democratic Governor Zell Miller in 1991 called "Helping Outstanding Pupils Educationally," or HOPE. Such a lottery "opens the door a crack, letting in the so-called gaming industry. Once they're inside, they entice the political class with visions of a huge, politically safe revenue stream from casino gambling. This blows the door off the hinges."

Grey notes that during the mid-1990s, three prominent Republican governors--John Engler of Michigan, George Pataki of New York, and Tommy Thompson of Wisconsin--used revenue from Indian casinos to fund welfare reform. But as Grey points out, "State-sponsored gambling is essentially a regressive tax--it hits the poor hardest. So these gambling-funded welfare 'reform' systems did put people to work--[while] creating a system that feeds on an addiction that puts many people on welfare rolls."

The much-touted economic benefits of state-supported gambling are also illusory. A study of riverboat gambling by University of Illinois economist Earl Grinols concluded that "the net effect of gambling was that roughly one job was lost for each gambling job created." In 1994, the Illinois Better Government Association surveyed 324 businesses near riverboats; 51 percent reported no increase in sales from gambling-related customers, and 12 percent reported a measurable decline in sales. In many communities, notes The American Enterprise magazine, "casinos serve as a gigantic sump, sucking sales from surrounding businesses."

A cursory glance at a casino's economic habitat will illustrate that suction effect at work. The typical casino is surrounded by pawn shops, "paycheck loan" services, and other institutions devoted to impulsive liquidation of personal and family assets by gambling addicts who, unlike Bill Bennett, often gamble away their family's "milk money." The National Gambling Impact Study, commissioned by Congress in the mid-1990s, reported that the presence of a gambling facility within 50 miles roughly doubles the prevalence of pathological gamblers in the region.

According to Bennett, "I view [gambling] as drinking. If you can't handle it, don't do it." The problem with that formulation, according to Anita Bedell, executive director of Illinois Church Action on Alcohol and Addiction, is that the gambling industry couldn't exist without a large and expanding population of addicts. "The industry knows that a small percentage of people have an exploitable weakness that will turn into an addiction," Bedell told THE NEW AMERICAN. "But for the industry to grow it has to target 'normal' people, as well. This is why Harrah's [casinos offer] 'Total Rewards Cards' and other incentives for people to become repeat customers--and potential addicts."

Corrupt Entente 

Making gambling a state-sponsored enterprise, supposedly to create a major conduit for government revenue and to solve the problem of the private "gaming industry," is incontestably the worst approach. The state revenues raised by gambling are profits realized from encouraging addiction, alcoholism, bankruptcy, crime, broken homes, and (in extreme cases) suicide. In addition, the state's cut of gambling proceeds feeds constituencies that will not go away if the "gaming industry" suffers a bad year. This expansion of government proceeds stealthily and without the opposition that accompanies proposed tax increases. "A line that industry lobbyists have successfully used here [in Illinois] is to tell legislators, 'You can vote for gambling and be O.K.--it's not like a tax increase,'" Anita Bedell told THE NEW AMERICAN.

In our present economic climate, NCALG's Tom Grey explained to THE NEW AMERICAN, "state governments are moving deeper into a reliance on gambling, but at the price of more corruption. This relationship undercuts the principle of public accountability that representative government's based on. Not only are governments in the position of pushing an addictive product, but there is no check on the revenues generated by that addiction." In some states, Grey concludes, "government 'of the people, by the people, and for the people' is becoming government of, by, and for the gambling interests. Taking into account the [underworld] origins of the gambling industry, this is a very frightening prospect."