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Gambling in America

From Sin City to Atlantic City, from high-end resorts to offshore cruises, gamblers have more choices than ever before to get their hit
Michael Kaplan
From the Print Edition:
The Best Places to Gamble, Sep/Oct 02

It's Saturday night in Uncasville, Connecticut, a little town in the middle of nowhere. Common wisdom holds that the place should be dead. And it is. Until you proceed down a new four-lane road, buffered by dense forest and illuminated by a long parade of headlights. At the end of the road resides a natural, flowing river, beautifully landscaped foliage, and a hard-angled building that shimmers like an enormous multifaceted diamond. You've arrived at Mohegan Sun, a casino that serves as a three-dimensional exemplar of everything that gambling wants to be in the twenty-first century: sleek, efficient, alluring and immensely profitable.

Inside, the place is anything but dead. Situated on land belonging to the Mohegan Indians, a tribe that predates the American Revolution, the casino offers the kind of scene you'd never expect to find on a reservation. Decorated in a style that's more haute Southwest than pure Native American, the casino has enormously high ceilings draped with what appear to be woven rugs. The elevator walls are made of textured aluminum, giant glass sculptures hang in the lobby, and an entire wall has been done up to resemble a stone waterfall -- complete with percussively rushing currents. A neo-Four Tops act performs in the casino lounge, animatronic wolves perch on faux mountains that bookend blackjack tables, and the restaurants (including a Michael Jordan steakhouse, a Mediterranean place under the stewardship of celebrity chef Todd English, and a seafood eatery overseen by Jasper White) rival those of Las Vegas.

The casino feels comfortably crowded. Blackjack action is lively, craps tables swell with high-betting exuberance, and the poker room is SRO. Considering all of this, you might be only mildly shocked to note that Mohegan Sun is one of the most successful casinos in the world. What's truly shocking, however, is that the most successful casino in the world, Foxwoods Resort and Casino, is only 15 minutes away. Suddenly, northern Connecticut is the place to be on a Saturday night. A spokesman for the Sun -- which has just completed a $1 billion expansion to become the largest casino in North America and, it's been said, the world -- attributes the casino's success to blessed proximity and only one nearby competitor: "There are 22 million people within an hour-and-a-half drive of us [an estimated one-third of them have gambled at one of the two casinos during the last year]. And our property can compete with anything in the world."

He's not kidding. Together, Mohegan Sun and Foxwoods take in $2 billion annually in total gross revenues. And while that might be a drop in the bucket compared to the estimated $100 billion that gambling in America generated during 2000, it's a pretty good sum of mostly tax-free cash -- especially when you consider that prior to 1983, the Mashantucket Pequots, who own Foxwoods, weren't even recognized as a tribe.

In a broader sense, the figures speak volumes about what many Americans like to do with their free time and extra income: gamble. Even in the wake of 9/11, Vegas slowed down for little more than a hiccup before regaining its footing and climbing back. The American Gaming Association reports that casinos attracted 53.2 million visitors in 2000, and gaming stocks rose more than 40 percent, on average, in the past year. Forty-seven states have some kind of legalized gambling (including lotteries and bingo) and 30 states allow casinos of some sort to operate.

Even though casino gaming remains controversial, it holds a special allure for legislators during cash-sensitive times like these. Considering that commercial casinos (including riverboats) grossed an estimated $28 billion in taxable revenue during 2001 (up from $26.8 billion in 2000), the allure is downright magnetic. Steve Rittvo, president of the Innovation Group in New Orleans, a company that does feasibility studies for the casino industry, routinely articulates the appeal of gaming. "Budget deficits, border wars -- states watching dollars crossing to other states -- and the success of Native American casinos have all led lawmakers to seriously look at gaming opportunities," says Rittvo. "[When it's legalized] gaming becomes part of a city's entertainment mix. Gaming subsidizes tourist marketing. It generates more money, more jobs, more air travel. It's getting to the point where not having casino gambling can be a liability." Punctuating the point, state and federal revenues from taxation from all gambling enterprises reached $27 billion last year.

Mainstream hotel chains, not necessarily famous for gambling in the way that Bally Park Place or MGM Mirage might be, are getting in on the act as well. Hyatt Gaming Management Inc., for example, owns or manages several casinos in the United States, Canada and South America. Its casino building process is as intensely strategized as any hotel construction. "We like to be in areas that are less than competitive, where we can provide a product unique to the region," says Larry Lewin, president and chief executive officer of Hyatt Gaming, explaining why Hyatt has avoided the Las Vegas Strip and focused instead on Middle America. This approach obviously works, as the Hyatt gaming empire generated more than $600 million in adjusted gross gaming revenues last year.

Not only are Americans gambling more than ever, they are doing it in increasingly varied ways: on Indian reservations, aboard riverboats, inside state-monitored casinos, at the track, on the Internet and over the telephone. We're betting on sports, horses, dogs and table games that range from classic (blackjack) to newfangled (Caribbean stud) to, let's be honest here, just plain dumb (casino war). What we're not yet doing is regularly watching gaming on TV, though that may change in the near future. Poker star and casino consultant Lyle Berman is taking gambling to the next level by turning it into a spectator sport. This past Memorial Day, Berman launched the first leg of what's been dubbed the World Poker Tour.

His plan is to videotape 13 poker tournaments around the world (employing a technique that allows viewers to see players' cards), boil the matches down to 60 or 120 minutes of compelling television, and broadcast the events every week. He maintains that there has already been interest from four media outlets. Berman is so bullish on the concept that he vows to broadcast the show himself if he does not have a deal by mid-January. "In a few years we will have this running four hours a week, just like the PGA," predicts Berman, speaking by telephone from his debut tournament at the Bellagio. "TV studios don't want one event" -- like the World Series of Poker -- "they want continuity. They want 13 weeks. My company has put up the money for this [somewhere in the vicinity of $3 million], and now is the perfect time. Poker is legal in many states. We estimate something like 50 million people play the game. It won't be long before we broadcast live or with a 10-minute tape delay. Almost every tournament will be open to outside players -- anybody with the entry fee. I see this as being like bowling or tennis. We're trying to elevate poker to a sport. It's not gambling, per se. It's a sport with big prize money."

Regardless of what Berman wants to call it, the boom in casino gambling -- including poker and blackjack and everything in between -- can be largely attributed to Native Americans. In 2000, Indian casinos accounted for an estimated $10.4 billion slice of the U.S. gambling pie and they likely represent the fastest growing segment. They owe much of their success to the tax breaks accorded them. For instance, while the slot machine revenues at Foxwoods and Mohegan Sun are taxed at 25 percent -- accounting for around $333 million in state revenues annually -- table game proceeds are exempt from taxation.


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