Gambling in America—An Overview - Historical Review

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Ancient Times

Archeologists have discovered evidence that people in Egypt, China, Japan, and Greece played games of chance with dice and other devices as far back as 2000 B.C According to Encyclopedia Britannica, loaded dice have been found in ancient tombs in Egypt, the Far East, and even North and South America. (Loaded dice are weighted or shaped to make a particular number come up more often than others.)

Dice are probably the oldest gambling implements known. They were often carved from sheep bones and known as knucklebones. They are mentioned in several historical documents, including the Mahabharata of India, which is approximately 2,500 years old. A story in the New Testament of the Bible describes Roman soldiers throwing dice to determine who would get the robe of Jesus. Roman bone dice have been found dating from the first to third centuries A.D. The Romans also gambled on chariot races, animal fights, and contests between gladiators.

The Medieval Period

During medieval times (approximately 500–1500 A.D.), gambling was legalized by some governments, particularly in what is now Spain, Italy, Germany, and the Netherlands. England and France were much less permissive, at times outlawing all forms of gambling. French king Louis IX (1214–70) prohibited gambling during his reign for religious reasons. Still, illegal gambling continued to thrive.

During the eleventh, twelfth, and thirteenth centuries, Christian powers in Europe launched the Crusades—military expeditions against Muslim powers that held control of areas Christians considered holy lands. Gambling was permitted, but only for knights and those with higher titles. Violators were subject to severe whippings. Even among the titled gamblers, there was a legal limit on how much money could be lost, a concept that later would come to be known as limited-stakes gambling.

English knights returning from the Crusades brought long-legged Arabian stallions with them that were bred with sturdy English mares to produce fine racehorses. Betting on private horse races became a popular pastime among the nobility. Card games also became popular in Europe around the end of the fourteenth century. According to the International Playing-Card Society, one of the earliest known references to playing cards in Europe dates from 1377. During the late 1400s and early 1500s, lotteries began to be used in Europe to raise money for public projects. Queen Elizabeth I (1533–1603) established the first English state lottery in 1567.

Precolonial and Colonial America, and Seventeenth- and Eighteenth-Century Europe

Native Americans played games of chance as part of tribal ceremonies and celebrations hundreds of years before America was colonized. One of the most common was a dice-and-bowl game in which five plum stones or bones carved with different markings were tossed into a bowl or basket. Wagers were placed before the game began, and scoring was based on the combination of markings that appeared after a throw. The Cheyenne people called the game monshimout. A similar game was called ta-u-seta-tina by the Arapaho and hubbub by New England tribes.

Colonists from Europe brought gambling traditions with them to the New World. Historical accounts report that people in parts of New England gambled on horse racing, cockfighting, and bullbaiting. Bullbaiting was a "blood sport" in which a bull was tethered in a ring or pit into which dogs were thrown. The dogs were trained to torment the bull, which responded by goring the dogs. Spectators gambled on how many of the dogs the bull would kill.

In 1612 England's King James I created a lottery to provide funds for the settlement of Jamestown, Virginia, the first permanent British settlement in America. Lotteries were later held throughout the colonies to finance the building of towns, roads, hospitals, and schools and to provide other public services.

Many colonists, though, disapproved of gambling. The Pilgrims and Puritans fled to America during the 1620s and 1630s to escape persecution in Europe for their religious beliefs. They believed in a strong work ethic that considered labor morally redeeming and viewed gambling as sinful because it wasted time that might have been spent in productive endeavors.

Cockfighting, bear- and bullbaiting, wrestling matches, and footraces were popular gambling sports throughout Europe during the sixteenth and seventeenth centuries. The predecessors of many modern casino games were also developed and popularized during this time. For example, the roulette wheel is often attributed to French mathematician Blaise Pascal (1623–62). He is also famous for the Pensées in which he presents "Pascal's wager": "If God does not exist, one will lose nothing by believing in him, while if he does exist, one will lose everything by not believing." Pascal concludes: "We are compelled to gamble."

Gambling among British aristocrats became so customary during the early years of the eighteenth century that it presented a financial problem for the country and led the reigning monarch, Queen Anne, to take legal action in an attempt to control it. Gentlemen gambled away their belongings, their country estates, and even their titles. Large transfers of land and titles were disruptive to the nation's economy and stability. The queen, who reigned from 1702 to 1714, responded in 1710 with the Statute of Anne, which made large gambling debts "utterly void, frustrate, and of none effect, to all intents and purposes whatsoever" (9 Anne, ch. 14, § 1). In other words, large gambling debts could not be legally enforced. This prohibition has prevailed in common law for centuries and is still cited in U.S. court cases. Queen Anne is also known for her love of horse racing, which became a popular betting sport (along with boxing) during her reign.

A surge of evangelical Christianity swept through England, Scotland, Germany, and the American colonies during the mid- to late 1700s. Many historians refer to this as the first "Great Awakening." It was a time when conservative moral values became more prevalent and widespread. Evangelical Christians considered gambling to be a sin and dangerous to society, and religion became a powerful tool for bringing about social change.

In October 1774 the Continental Congress of the American colonies issued an order stating that the colonists "will discountenance and discourage every species of extravagance and dissipation, especially all horse racing, and all kinds of gaming, cockfighting, exhibitions of shows, plays, and other expensive diversions and entertainments." The purpose of the directive was to "encourage frugality, economy, and industry."

Into the Nineteenth Century

In general, gambling was tolerated as long as it did not upset the social order. According to "Gambling in the South: Implications for Physicians" (Southern Medical Journal, September 2000), Georgia, Virginia, and South Carolina passed versions of the Statute of Anne during the colonial period to prevent gambling from getting out of hand. New Orleans became a gambling mecca during the 1700s and 1800s, even though gambling was outlawed during much of this time. In the 1830s almost all southern states outlawed gambling in public places, although there were some exceptions allowed for "respectable gentlemen."

In 1823, eleven years after becoming a state, Louisiana legalized several forms of gambling and licensed several gambling halls in New Orleans. Even though the licensing act was repealed in 1835, casino-type gambling continued to prosper and spread to riverboats traveling the Mississippi River. Professional riverboat gamblers soon developed an unsavory reputation as cheats and scoundrels. Several historians trace the popularization of poker and craps in America to Louisiana gamblers of this period. Riverboat gambling continued to thrive until the outbreak of the Civil War in 1861.

From 1829 to 1837, America's president was Andrew Jackson (1767–1845). The Jacksonian era was associated with a new attention to social problems and focus on morality. A second "Great Awakening" of evangelical Christianity swept the country. According to I. Nelson Rose of Whittier Law School, gambling scandals and the spread of conservative morals led to an end to most legal gambling in the United States by the mid-1800s.

Frontier gambling, both legal and illegal, in the Old West peaked during the mid- to late nineteenth century. Saloons and other gambling houses were common in towns catering to cowboys, traders, and miners. Infamous gamblers of the time included Bat Masterson, Doc Holliday, Poker Alice, and Wild Bill Hickok. Reportedly shot in the back while playing poker in 1876, Hickok held a hand of two black aces and two black eights, which came to be known as the "Deadman's hand."

Across the country, private and public lotteries were plagued by fraud and scandal and fell into disfavor. By 1862 only two states, Missouri and Kentucky, had legal lotteries. Lotteries, which were objectionable to many southern legislators on moral grounds, had been banned in most southern states by the 1840s, but then reinstated after the Civil War to raise badly needed funds. In 1868 Louisiana implemented a lottery known as "the Great Serpent." Although it was extremely popular, the lottery was ridden with fraud and eventually outlawed by the state in 1895. Casino gambling, which had been legalized again in Louisiana in 1869, was also outlawed at the same time.

Gambling in general fell into disfavor as the nineteenth century ended. In England, Queen Victoria (1819–1901) ruled, and the Victorian era was characterized by concern for morality and the spread of conservative values. These attitudes spread through American society as well. Gambling fell out of favor as a pastime for respectable people. In the United States, many eastern racetracks and western casinos were pressured to close for moral and ethical reasons. As new states entered the Union, many included provisions against gambling in their constitutions. For example, in 1896 Utah forbade all games of chance in its constitution. By federal law, all state lotteries were shut down by 1900.

The Twentieth Century

THROUGH THE 1920s. As the twentieth century began, there were forty-five states in the Union. The territories of Oklahoma, New Mexico, and Arizona gained statehood between 1907 and 1912. According to Rose, the closure of casinos in New Mexico and Arizona was a precondition for statehood. In 1910 Nevada outlawed casino gambling. That same year, horse racing was outlawed in New York, and almost all gambling was prohibited in the United States. The only legal gambling options at the time were horse races in Maryland and Kentucky and a few isolated card clubs.

GROWTH IN NEVADA IN THE 1930s AND 1940s. The 1930s were a time of reawakening for legal gambling interests. Many states legalized horse racing and charitable gambling again. Nevada went even further. In 1931 its legislature passed Assembly Bill 98, which relegalized casino gambling in the state. The bill came to be known as the "Wide Open Gambling Bill." Historians point to several reasons for the legalization. Frontier gambling was widely tolerated in the state, even though gambling was officially illegal. Also, Nevada, like the rest of the country, was suffering from a deep economic recession, and the state was sparsely populated and poor in natural resources. Nevada's divorce laws were also changed in the early 1930s to allow the granting of a divorce after only six weeks of residency. People from other states temporarily moved into small motels and inns in Nevada to satisfy the residency requirement. At the same time, construction began on the massive Hoover Dam project in Boulder City, Nevada, only thirty miles from Las Vegas. These two events brought thousands of construction workers and visitors, all potential gamblers, into the area.

Although small legal gambling halls opened in Reno (in the northern part of the state), they catered for the most part to cowboys and local residents and had a reputation for being raunchy and wild. In April 1931, however, the first gambling licenses were issued in Las Vegas. The first big casino in Las Vegas, El Rancho Vegas, was opened in 1941 on what would later be known as "the Strip."

Many in the business world doubted that casino gambling in Nevada would be successful. The casino hotels were mostly small, sometimes converted dude ranches, operated by local families or small private companies. They were located in hot and dusty desert towns far from major cities, had no air-conditioning, and offered few amenities to travelers. There was virtually no state or local oversight of gambling activities.

Prohibition was enacted under the 18th Amendment and went into effect in 1920. It became illegal to import or sell alcoholic beverages in the United States. Prohibition remained on the books, but was widely violated, until 1933. During the Prohibition Era, organized crime syndicates operated massive bootlegging rings and became very powerful and wealthy. When Prohibition ended in 1933, organized crime families switched their focus to gambling. Mobsters in New York and Chicago were among the first to see the potential of Nevada. Gangsters Meyer Lansky and Frank Costello sent fellow gangster Bugsy Siegel to the West Coast to develop new criminal enterprises. Siegel invested millions of dollars of the mob's money in a big and lavish casino in Las Vegas that he was convinced would attract top-name entertainers and big-spending gamblers. The Flamingo hotel/casino opened on December 26, 1946. It was a failure at first, and Siegel was soon killed by his fellow mobsters.

POST–WORLD WAR II: THE 1950s. Nevada's casinos grew slowly until after World War II (1939–45). Postwar Americans were full of optimism and had spending money. Tourism began to grow in Nevada. Las Vegas casino/resorts attracted Hollywood celebrities and famous entertainers. The state began collecting gaming taxes during the 1940s. The growing casinos in Las Vegas provided good-paying jobs to workers who brought their families with them, building a middle class presence. In 1955 the state legislature created the Nevada Gaming Control Board within the Nevada Tax Commission. Four years later, the Nevada Gaming Commission was established.

It was also during the 1950s that one of the most important organizations dedicated to problem gambling was founded. In January 1957 two men with gambling problems decided to start meeting together regularly to discuss their gambling obsession, the problems it had caused them, and the changes they needed to make in their lives to overcome it. After meeting for several months, each realized that the moral support offered by the other was allowing them to control their desire to gamble. They decided to start an organization based on the spiritual principles used by Alcoholics Anonymous and similar groups to control addictions. The first group meeting of Gamblers Anonymous was held on September 13, 1957, in Los Angeles.

CORPORATE GROWTH: THE 1960s. During the 1960s, the casinos of Las Vegas continued to grow. By this time, organized crime syndicates used respectable "front men" in top management positions while they manipulated the businesses from behind the scenes. Publicly held corporations had been largely kept out of the casino business by a provision in Nevada law that required every individual stockholder to be licensed to operate a casino.

One corporation that was able to get into the casino business was the Summa Corporation, a spin-off of the Hughes Tool Company, with only one stockholder—Howard Hughes. Hughes was an extremely wealthy and eccentric businessman who owned the very profitable Hughes Aircraft Company. He spent lots of time in Las Vegas during the 1940s and 1950s and later moved there. In 1966 he bought the Desert Inn along the Strip in Las Vegas. Later, he bought the nearby Sands, Frontier, Castaways, and Silver Slipper casinos.

Legend has it that mobsters threatened Hughes to get out of the casino business in Las Vegas, but he refused. He invested hundreds of millions of dollars in Las Vegas properties and predicted that the city would be an entertainment center by the end of the century. In 1967 the Nevada legislature changed the law to make it easier for corporations to own casinos.

In the early 1960s New Hampshire was the first state to relegalize the lottery. It was called the New Hampshire Sweepstakes and was tied to horse racing results to avoid laws prohibiting lotteries. New York established a lottery in 1967. During the 1970s twelve other states followed suit, and most were located in the northeast.

GOVERNMENT REVIEW IN THE 1970s. In 1970 the U.S. Congress created the Commission on the Review of the National Policy toward Gambling to study Americans' attitudes about gambling and their gambling behaviors, and to make policy recommendations to state governments considering legalizing gambling activities. The results were published in Gambling in America: Final Report of the Commission on the Review of the National Policy toward Gambling (October 15, 1976). The commission found that 80% of Americans approved of gambling and 67% engaged in gambling activities. It was concluded that states should set gambling policy without interference from the federal government, unless problems developed from organized crime infiltration or conflicts between states.

Federal statutes against racketeering were enacted at the federal level in 1971 to combat organized crime. Nevada officials overhauled the casino regulatory system, making it more difficult for organized crime figures to be involved. Corporations and legitimate financiers began to invest heavily in casino hotels in Las Vegas and other parts of the state.

Also during the 1970s, the National Council on Problem Gambling, the first treatment program for pathological gambling, was established by Dr. Robert Custer, and Maryland established the first state-funded treatment program. In 1978 the first legal casino outside of Nevada opened in Atlantic City, New Jersey.

During this decade, Native American tribes began operating bingo halls to raise funds for tribal operations. As the stakes were raised, the tribes faced legal opposition from state governments. The tribes argued that their status as sovereign (independent) nations made them exempt from state laws against gambling. Tribes in various states sued, and the issue was debated in court for years.

NEW FORMS OF GAMBLING AND GROWING POPULARITY IN THE 1980s AND 1990s. In 1980 the American Psychiatric Association recognized pathological gambling as a mental health disorder and listed it in its official publication, Diagnostic and Statistical Manual of Mental Disorders (DSM; the 1980 version of the DSM is known as DSM-III). Pathological gambling was listed under disorders of impulse control and described as a "chronic and progressive failure to resist impulses to gamble." During the 1980s many states began setting up programs to deal with problem gamblers. In 1989 Harrah's Entertainment became the first commercial casino company to officially address problem gambling with Project 21, an educational project aimed at the company's employees and minors, and Operation Bet Smart, a training program to help frontline casino employees learn about and recognize potential problem gamblers.

Lotteries were legalized in twenty-three states and the District of Columbia during the 1980s and 1990s. It was during 1988 that the first multistate lottery game was begun. Lotto America went through several revisions before becoming the Powerball game in 1992.

In February 1987 the Supreme Court's landmark ruling in California v. Cabazon Band of Mission Indians (480 U.S. 202) opened the door to tribal gambling. The Indian Gaming Regulatory Act was passed by Congress in 1988. It allows federally recognized Native American tribes to open gambling establishments on their reservations if the state in which they are located already permits legalized gambling.

Between 1989 and 1996, nine more states legalized casino gambling: South Dakota, Iowa, Mississippi, Illinois, Colorado, Louisiana, Missouri, Indiana, and Michigan.

In 1995 the American Gaming Association (AGA) was formed. The AGA is a trade organization that represents the commercial casino industry. Within the industry, casino gambling is universally called "gaming." Some critics claim that this represents an attempt by the industry to give gambling a more wholesome and respectable image. The AGA defends the use of the term, saying that it has come to be used interchangeably with the word gambling.

The AGA collects and publishes data about the industry and is an advocate for the industry regarding regulatory and legal issues. It founded the National Center for Responsible Gaming (NCRG) in 1996 to fund research on gambling problems among adults and youth. The first grant was given to Harvard Medical School for Estimating the Prevalence of Disordered Gambling Behavior in the U.S. and Canada: A Meta-Analysis.

During the mid-1990s Internet gambling sites began operating. By 1997, fifty to sixty Internet casinos were in operation, most based in the Caribbean. By the end of the decade, there were approximately six hundred to seven hundred Internet gambling sites.

In 1996 Congress authorized the National Gambling Impact Study Commission (NGISC), a federally funded group, to study the social and economic impacts of gambling in the country. The NGISC, which held its first meeting in 1997, included nine commissioners representing pro- and antigambling attitudes. Existing literature was reviewed, and new studies were ordered. The commission held hearings around the country at which a variety of people involved in and affected by the gambling industry testified. The NGISC's final report in 1999 concluded that with the exception of Internet gambling, gambling policy decisions are best left up to state, tribal, and local governments. The commission also recommended that legalized gambling not be expanded further until all related costs and benefits were identified and reviewed.

Also during 1999, Pathological Gambling: A Critical Review, published by National Academies Press, identified and analyzed all available scientific research studies dealing with pathological and problem gambling. The studies were reviewed by dozens of researchers on behalf of the National Research Council, an organization administered by the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The effort was supported by the NGISC. Although the researchers were able to draw some general conclusions about the prevalence of pathological gambling in the United States, they cited the

FIGURE 1.1

lack of scientific evidence as a limiting factor in their ability to draw more specific conclusions.

MILESTONES OF THE TWENTIETH CENTURY. One well-respected journal on gambling issues is The WAGER, short for The Weekly Addiction Gambling Education Report. The WAGER is published as a public education project by the Division on Addictions at the Harvard Medical School. In December 1999 the journal asked its readers to rank thirteen gambling events of the twentieth century in order of their importance. The results are shown in Figure 1.1. The legalization of gambling in Nevada in 1931 was voted the most important gambling event of the century. The introduction of the first modern state lottery in New Hampshire in 1964 was ranked second. Publication of Pathological Gambling: A Critical Review in 1999 was ranked third.

The Twenty-First Century

In 2000 California voters passed Proposition 1A, amending the state constitution to permit Native American tribes to operate lottery games, slot machines, and banking and percentage card games on tribal lands. Previously, the tribes were largely restricted to operating bingo halls. According to the National Indian Gaming Association (NIGA), more than two hundred tribes were engaged in Class II or III gaming in twenty-eight states in 2003. Class II and III gaming includes bingo, lotto, card and table games, slot machines, and pari-mutuel gambling.

South Carolina began operating a lottery in January 2002, following voter approval in a 2000 referendum. In November 2002 voters in Tennessee and North Dakota approved referendums allowing lotteries in their states. Both began operating in early 2004.

Table 1.1 shows the legal gambling options offered in each state as of August 2004. Charitable gambling was the most common type of legalized gambling, operating in forty-seven states and the District of Columbia. Gambling on horse races was also very prevalent, both at live venues and via offtrack betting. Lotteries operated in forty states and the District of Columbia during 2004. Although tribal casinos were less common, they were operating in more than half of the states. Gambling at greyhound races, racinos (horse and dog racetracks with

TABLE 1.1

Gambling operations by state, 2004
State Charitable gambling Horse racing Lottery Tribal casinos Greyhound racing Card rooms/mini casinos Commercial casinos Racinos Slot machines at other businesses Jai Alai
*Certain counties only
**Approved in 2004
***Bingo only
SOURCE: Created by Kim Masters Evans for Thomson Gale, 2004
Alabama Yes* Yes Yes*** Yes
Alaska Yes Yes***
Arizona Yes Yes Yes Yes Yes
Arkansas Yes Yes
California Yes Yes Yes Yes Yes
Colorado Yes Yes Yes Yes Yes Yes Yes
Connecticut Yes Yes Yes Yes Yes
Delaware Yes Yes Yes Yes
D.C. Yes Yes
Florida Yes Yes Yes Yes Yes Yes Yes
Georgia Yes Yes
Hawaii
Idaho Yes Yes Yes Yes
Illinois Yes Yes Yes Yes
Indiana Yes Yes Yes Yes Yes
Iowa Yes Yes Yes Yes Yes Yes Yes
Kansas Yes Yes Yes Yes Yes
Kentucky Yes Yes Yes
Louisiana Yes Yes Yes Yes Yes Yes Yes
Maine Yes Yes Yes Yes
Maryland Yes Yes Yes Yes
Massachusetts Yes Yes Yes Yes
Michigan Yes Yes Yes Yes Yes
Minnesota Yes Yes Yes Yes Yes
Mississippi Yes Yes Yes
Missouri Yes Yes Yes Yes
Montana Yes Yes Yes Yes Yes Yes
Nebraska Yes Yes Yes Yes
Nevada Yes Yes Yes Yes Yes Yes
New Hampshire Yes Yes Yes Yes
New Jersey Yes Yes Yes Yes Yes
New Mexico Yes Yes Yes Yes Yes
New York Yes Yes Yes Yes Yes
North Carolina Yes Yes
North Dakota Yes Yes Yes Yes Yes
Ohio Yes Yes Yes
Oklahoma Yes Yes Yes **
Oregon Yes Yes Yes Yes Yes Yes Yes
Pennsylvania Yes Yes Yes
Rhode Island Yes Yes Yes Yes Yes Yes
South Carolina Yes Yes Yes***
South Dakota Yes Yes Yes Yes Yes Yes
Tennessee ** Yes
Texas Yes Yes Yes Yes Yes
Utah
Vermont Yes Yes Yes
Virginia Yes Yes Yes
Washington Yes Yes Yes Yes Yes
West Virginia Yes Yes Yes Yes Yes
Wisconsin Yes Yes Yes Yes Yes
Wyoming Yes Yes Yes***

casino games), commercial casinos, minicasinos, card rooms, and games of jai alai (which is similar to handball) occurs in a handful of states.

Industry analysts believe that many sectors of the American gambling market are reaching maturity. In other words, the growth spurt of the past few decades is likely over. Commercial casino gambling has not spread beyond the eleven states in which it operated in 1996.

In November 2003 voters in Maine rejected a referendum that would have allowed tribal casinos in their state. They did approve a racino measure allowing slot machines at horse racetracks. In 2004 New York installed its first video lottery terminals at racetracks, and Oklahoma enacted racino legislation. Allowing machine gambling at existing gambling venues like racetracks is generally more acceptable to voters and politicians than full-fledged casino gambling. However, this is not true in

TABLE 1.2

Public opinion on the acceptability of social issues, May 2004
Morally acceptable % Morally wrong %
SOURCE: Adapted from Lydia Saad, "Summary Table: Moral Acceptability of Issues," in The Cultural Landscape: What's Morally Acceptable, The Gallup Organization, June 22, 2004, http://www.gallup.com/content/default.aspx?ci=12061 (accessed June 22, 2004). Copyright © 2004 by The Gallup Organization. Reproduced by permission of The Gallup Organization.
Divorce 66 26
Gambling 66 30
The death penalty 65 28
Buying and wearing clothing made of animal fur 63 31
Medical testing on animals 62 32
Sex between an unmarried man and woman 60 36
Medical research using stem cells obtained from human embryos 54 37
Doctor-assisted suicide 53 41
Having a baby outside of marriage 49 45
Homosexual behavior 42 54
Abortion 40 50
Cloning animals 32 64
Suicide 15 79
Cloning humans 9 88
Married men and women having an affair 7 91
Polygamy, when one husband has more than one wife at the same time 7 91

all states. Throughout the early part of the twenty-first century Kentucky legislators rejected bills that would have expanded gambling at the state's racetracks.

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