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The business of gambling

Casinos generate billions of dollars in revenue each year

By Marsha Walton

Commercial casinos in the United States generated nearly $29 billion in gross revenue last year.




Gaming and Lotteries
Casinos and Gambling
Las Vegas (Nevada)
Tourism and Leisure

CHEROKEE, North Carolina (CNN) -- Until the late 1970s, playing the blackjack tables or the slot machines were not regular pastimes for middle America. A trek to Nevada was the only way to get the excitement and ambience of a casino without leaving the country..

But over the past quarter century, both tribal gaming and communities seeking economic improvement, such as Atlantic City, New Jersey, and Biloxi, Mississippi, have changed casino visits in the United States from relatively rare excursions to a more common leisure activity for the middle class.

"By and large, it's a form of recreational entertainment for folks to spend their discretionary income. It's one of the many, many entertainment choices they have out there today," said Thomas O'Donnell, executive director of Harrah's Cherokee Casino in Cherokee, North Carolina.

"I think the acceptance level and the professionalism that was brought to it, those things combined, I think, have grown the business to be as we see it today," he said.

According to the industry group the American Gaming Association, 11 states now have commercial casinos, 28 states have Indian casinos and 40 states and the District of Columbia have lotteries. The 445 commercial casinos in the United States generated nearly $29 billion in gross revenue last year. (Top 25 Business stories)

Polls by the Gallup Organization show state lotteries are the most popular form of gambling among Americans. About half of U.S. adults report buying a lottery ticket in the course of a year. In 2003, according to the North American Association of State and Provincial Lotteries, U.S. lottery sales topped $45 billion dollars.

In 1931, Nevada legalized gambling in an effort to jumpstart the economy during the Great Depression. In 1963, New Hampshire legalized a twice-yearly state lottery.

But when the foundering seaside resort of Atlantic City, New Jersey, opened its first casinos in 1978, the city also opened a new chapter for the betting public.

Tribal gaming

When the U.S. Supreme Court issued a ruling on tribal gambling in 1987, few people speculated on what a dramatic impact it would have on the economic future of many Native Americans, or what a draw the slot machines and blackjack tables would have on middle America.

A casino opened by the Eastern Band of the Cherokee Nation in North Carolina in 1995 changed everything from jobs to education to health care for the tribe. And the improvements are dramatic, says former Chief Joyce Dugan.

"It offered us a means of economic development that might be lasting," said Dugan, who was chief from 1995 to 1999. "But even then, as we made that decision, we didn't know if it would last."

Dugan, a former special education teacher and superintendent of schools, says the tribe thought long and hard before deciding to partner with Harrah's Entertainment to open a casino. Now nearly 4 million people a year visit their no-alcohol casino, according to Cherokee Chief Michell Hicks

Before the casino, Dugan said, many in the region worked for six months when tourists visited the Great Smoky Mountain National Park, but had to rely on some form of welfare during the winter. And as manufacturing and textile plants in the area closed or moved overseas, the economic picture was not a healthy one for the tribe or anyone else in the region. (Listen to some community members' opinions)

"We were poor, almost totally dependent on the federal government for subsistence. And that's not good for a people to have to depend on someone else. It tears at your spirit. And this is what Indian tribes have gone through throughout the history of this country. Gaming is helping us out of that mentality and now we're helping ourselves and that's exciting," said Dugan.

To comply with guidelines set by the National Indian Gaming Association, Indian gaming has to benefit tribal members. NIGA , a nonprofit group, was formed in 1985 to deal with gaming and business issues facing 184 Indian Nations.

In the case of the Cherokees, the tribe decided that half the casino profits would go directly to tribe members each year; the other half would go to tribal coffers for projects that would benefit the entire community.

"We have approximately 13,000 members; each member is receiving approximately $7,000 per year from the casino profits," said Hicks, the current chief.

The other portion of the profits goes to education, health care, housing and infrastructure projects.

A gambling future

Most Americans now live within a three- to four-hour drive of a gambling site. That means more temptation for problem gamblers. Some casinos make the Gamblers Anonymous hotline number available to people who ask and can direct those with a gambling problem to help.

But some researchers say the proliferation of casinos, lotteries and racetracks can add to the difficulties faced by problem gamblers.

"Availability helps people get into trouble," said John Welte, senior research scientist at the Institute on Addictions at the State University of New York at Buffalo.

"We found that people who live within 10 miles of a casino had twice the probability of being a problem gambler than people who do not live within 10 miles," he said.

Welte conducted a national gambling study in 2000, which found that fewer than 5 percent of Americans are "problem gamblers."

Most people do gamble without any problems, he said, and some simple guidelines like setting a dollar limit, setting a time limit and not drinking alcohol or taking drugs while gambling can help keep the activity under control.

"We never want anyone to come thinking they are going to win to pay their house payment or their lighting bill. That's the wrong reason to play," said Dugan, who is now director of external relations and career development for Harrah's Cherokee Casino.

"We want them to come and have an experience like they would going to a movie or to a ball game. And we want them to manage their budgets to do that," she said.

The gambling industry continues to grow, taking on forms other than brick and mortar casinos. Cable television channels and local bars are full of "Texas Hold 'Em" poker.

"I don't think anyone predicted the appeal and the popularity it has grown to," O'Donnell said. "A lot of that has to do with the sophistication and the science and the marketing. It's a game that appeals to those who are very competitive, like being on the edge, the risk, the strategy."

And according to the American Gaming Association, online gambling, with more than 2000 Web sites, has grown from zero in 1995 to a more than $6 billion industry today. And that is expected to grow to more than $16 billion by 2009.

"Internet gambling has become a substantial phenomenon in the gaming industry space," said Las Vegas attorney Anthony Cabot, a specialist in gaming law.

Online gambling sites, he said, "show the power of the Internet to both create and carry a gaming trend."

But the laws on this form of gambling in the United States are still somewhat murky.

"Internet gambling on horse racing is legal; sports wagering on the Internet is probably illegal; and the rest of it: There's no federal law that addresses it," said Cabot.

Cabot said even if there is state or federal legislation aimed at restricting or controlling online wagering, it will continue to grow.

"There are always going to be workarounds," he said. "Legislators will have a hard time ever stopping online gaming. In fact, it will probably be impossible to stop online gaming."

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