Gambling in American History

New Hampshire has prided itself on being a low-taxation state. It is one of a very few states that has never had a state income tax or sales tax. In the 1950s and 1960s, however, the costs of government were going up, and because the state was familiar with gaming – it had legalized both horse-race and dog-race wagering decades before, and charitable bingo games were popular – political leaders felt that there was a better way of raising revenues than raising taxes. In 1963 the legislature came up with a novel idea: sell sweepstakes tickets in the manner used with the Irish Sweepstakes. The state was close to large population concentrations in Massachusetts, Connecticut, and New York. A rationale behind the idea was that the state could gain public revenues from nonresident gamblers. Tickets cost three dollars each, and persons purchasing them had to register their names and addresses for drawings. Winners would have horses assigned to them, and the grand prize winners would be those whose horse came in first. There was considerable interest in the sweepstakes, but the ticket sales fell far below expectations. The state was quick to change the lottery format after New York adopted a more direct lottery ticket sales procedure in 1966, and then after New Jersey revolutionized ticket distribution methods as it began its lottery in 1970.
As New Hampshire modernized its lottery in the 1970s, sales picked up, and revenues became an important part of funding for education in the state. New Hampshire formed a partnership with Maine and Vermont to offer the Tri-State Lotto game. Subsequently, they became part of the Powerball consortium. The state had become a winner through a process of imitation.
The legalization of casino gambling for Atlantic City seemed also to call for imitation in the minds of many. After the momentum for casinos gained speed in the early 1980s, Gov. Hugh J. Gallen appointed a Commission for Gambling in 1982. The commission studied jai alai betting, offtrack betting, and casinos. The commission came out against all three forms of gambling. Its strongest criticisms were aimed at the casino industry, stating, “for the little promise it holds out as a source of state revenue, [the casino industry] will bring with it serous disadvantages. It will burden the state government and local communities with the cost of policing its operations and providing municipal services for the mass of patrons needed to make it run on a paying basis. It will devastate the existing family-oriented vacation industry”. A bill to establish casinos was defeated in the legislature. Since 1982, there has been no serious push to legalize casino gambling. <

During the early 1950s considerable negative attention was cast upon the casino industry as a result of the national Kefauver Committee hearings on organized crime. The state responded with regulatory reforms. Legislation in 1955 established a specialized three-member full-time Gaming Control Board, which was administratively located with the Tax Commission. In 1959 the Tax Commission was eliminated from the state’s casino regulatory picture. A five-member Nevada Gaming Commission was created. This part-time group serves as the final voice for the state on gaming matters. In a sense it is the “supreme court” for gaming.
As a result of these changes, Nevada now has a two-tier structure for regulating gambling. The Gaming Control Board acts essentially like a policeman and a tax collector for the casino industry; the Nevada Gaming Commission makes final decisions on licensing casinos and formulating regulations as well as handling disputes that cannot be resolved by actions of the Gaming Control Board.
The three board members are appointed by the governor for four-year terms. One member is designated as chair by the governor. He or she must have five years of experience in public or private administration. A second member must be a certified public accountant or have expertise in finance or economics. The remaining member must have law enforcement experience. Board members may not be engaged in any partisan political activity during their term of service. They may not have any financial ties to casinos, nor may they be employed by any casino for one year following their board service.
The board oversees the work of a staff of over 400 individuals, who are organized into several divisions. The investigations division checks into the backgrounds of persons who wish to have gambling licenses. The cost of this background check process is paid by the license applicant. An enforcement division works in the casinos to ensure that all the games are honest and that all gaming laws and regulations are being obeyed. An audit division checks accounting procedures in the casinos and makes sure that all flows of money are accurately recorded and reported for purposes of taxation. A tax, license, and administration division collects gambling taxes and publishes reports on casino activity in the state. There is also a corporate securities division that monitors the financial condition of casinos that are owned by publicly traded corporations. An electronic laboratory investigates all gaming devices to ensure their integrity.
The five members of the Nevada Gaming Commission are also appointed by the governor for four-year terms. They, too, must not have an interest in any casinos, nor may they be involved in partisan politics. The commission has no staff.  It gives final passage to rules and regulations and makes final decisions regarding disciplinary action against any gaming interest – action that can also include revocation of a license. In 1969, the legislature created a seven-member Gaming Policy Board headed by the governor. The board was charged with making recommendations to the legislature for reforms in the gaming law. It has met only occasionally over the past thirty years.
Although the state’s gaming regulatory structure is considered one of the finest arrangements for regulating gaming in the world, local governments (counties or cities) are still involved in the process. They must also license casinos, and they collect fees separately from the state fees and taxes. The state gaming tax has risen to 6.25 percent of the gross gaming win, and casinos must also pay a variety of fees based upon the number of tables and machines in the facility. <

Nevada became “the” gambling state by a series of historical accidents as well as by deliberate policies. As late as the 1840s, Nevada was basically an unexplored region of barren desert and mountains. Paiute, Washoe, and Shoshone Indian tribes had traversed parts of the state and established some communities, but their numbers were small, and their lifestyle was often nomadic, as they would live in the climatically comfortable mountains during the summer and then descend to the desert floor in winter months. The climate and terrain made the area one that most people moving westward sought to avoid or to cross in great haste. Mark Twain described the journey with humorous detail in Roughing It (Twain 1872).
One critical aspect of Nevada’s geography that is pertinent to its economic development is its proximity to California. The two states have the longest land border of any two states in the United States. People rushed to California in the late 1840s as gold was discovered. The new state of California was populated by all sorts of prospectors and other independent get-rich-quick entrepreneurs during the 1850s. The area that became Nevada was made part of Utah Territory in 1850. The volume of gold strikes in California began to wane in the late 1850s just as the great Comstock Lode was discovered near Virginia City, Nevada, in 1859. A mad silver rush paralleled the earlier California gold rush, except this time the fortune hunters came to Nevada from California. The first waves of population left an indelible mark upon the character and outlook of politics in the state. The influx of the new population was accompanied by desires to cut off political relationships with Utah Territory and its religiously oriented government. President Buchanan signed a bill on 2 March 1861, just two days before he left office, which established Nevada Territory out of the western one-third of Utah Territory. Buchanan had been rather hostile to the nature of Utah society throughout his presidency, and the new status for Nevada was his parting shot against a community that seemed almost diametrically opposite to that found in Nevada.

Slot machines are found throughout the state in bars, taverns, restaurants, convenience stores, and grocery stores.

The issue of gambling was quickly placed on the public agenda of the new state. President Lincoln appointed New Yorker James Nye to be territorial governor. Nye was not a prospector, and Nye did not care for gambling. He recoiled at the prevalence of sin institutions when he settled down in Nevada and persuaded the new legislature to prohibit gambling. A person who operated a game could be charged with a felony; a person who played at a game could be charged with a misdemeanor.  In spite of the law, the games continued.
After statehood was achieved in 1864, the legislature reversed its thinking. In the 1867 session a law was passed legalizing casino games. It was vetoed by the first elected governor, H. G. Blasdel. Two years later, the legislature repeated its action, and when the bill was vetoed again, they overrode the veto. The new law barred local governments from passing ordinances against gambling. Any person was able to get a license to operate a game from the county sheriff for a fee ranging from $1,000 to $1,600 (depending upon the population of the county). The fee was split equally between the state and county treasuries.
By the turn of the twentieth century, the Populist movement was gaining strength across the United States and in the Silver State. In concert with temperance organizations, civil leaders attacked the local sin industries. A ballot initiative sponsored by such groups sought to make both gaming and prostitution illegal in Reno. When the voters turned down the measure in 1909, the sponsors approached the state legislature. There they were successful, and gaming ceased to be legal on 30 September 1910. Another way of saying the same thing was that illegal gambling began on 1 October 1910.
By 1911, the legislature had second (and third) thoughts. Certain card games were legalized, only to be made illegal again in 1913. In 1915 limited gaming was permitted again. Enforcement of the gaming limits was sporadic at best and nonexistent as a rule. In lieu of fees when gaming was legal, operators now paid bribes to local officials, who pretended that gaming did not take place.
A move to legalize gambling was revived in 1931 when state assemblyman Phil Tobin of Humboldt County introduced the legislative measure. Although opposition was voiced by religious groups, Tobin’s bill passed the assembly on a 24–11 vote, and the state senate on a 13–3 vote. On 19 March 1931, Governor Balzar signed both the six-week divorce law and the measure to legalize casino gambling. A second law passed later in 1931 permitted local governments to regulate gambling and fixed fees for gaming statewide.  The fees were shared, with 75 percent going to local governments and 25 percent to the state. Licenses were granted by county commissions, and all regulations were enforced by the sheriffs.
In 1945, the state legislature decided that state control was necessary, as several outside operators were planning larger and larger casino projects. The state Tax Commission was given the authority to license casinos, which had previously received licenses from county boards. Subsequently the process became one of dual licensing. The state also imposed a 1 percent tax on the gross gaming wins of the casinos. The Tax Commission was empowered to collect the tax. Two years later the state attorney general ruled that the Tax Commission could deny a license based upon its assessment of the character of the applicant. In 1949 the requirement that applicants must be of good character was written into the law. The Tax Commission was given a staff for casino regulation for the first time.

The state of Nevada is clearly the primary gambling state in the United States. For almost half of the twentieth century it was the only state to permit casino gambling. Even today, nearly one-third of the casino gambling activity in the United States occurs in Nevada. The state has over 300 unrestricted casino license holders offering both table games and machine gaming, and 235 of these have gaming wins in excess of $1 million dollars per year. Another 2,000 restricted locations each have fifteen or fewer gaming machines. The casinos are found in each of the seventeen counties of the state and in every city of the state except for Boulder City – which was a federal enclave until the 1950s. No other North American jurisdiction allows such widespread locations for casinos; instead, most confine casinos to specific communities. The casinos produce revenues of approximately $8 billion per year from gambling and $6 billion more from other sources. The casinos employ nearly 200,000 persons, representing one-third of the employment in the state. The taxes from gambling and other aspects of casino enterprises constitute approximately half of the public revenues of the state and its local governments. No other jurisdiction in the world receives as large a share of its public budgets from gambling taxes.
Although casino gambling is found in all but one jurisdiction in the state, there are certain important concentrations of casinos in the state. Of course, the primary gaming center is the Las Vegas Strip, a four-mile-long section of Las Vegas Boulevard, which has 19 of the 20 largest hotels in the world – all with casinos. Downtown Las Vegas has a dozen large properties located around Fremont Street. The town of Laughlin on the Colorado River at the southern tip of the state has 10 casinos. In the northern part of the state, the traditional gaming city of Reno (and its suburb, Sparks) has 35 major casinos, and the Lake Tahoe resort area has 5. <

The Netherlands Antilles consist of two of the three “ABC” islands (Aruba, Curaçao, and Bonaire) of the southern Caribbean and the Dutch half of the island of St. Martin/Sint Maarten. These islands are autonomous in their domestic affairs, but they report to the government at The Hague in matters involving international affairs. Casino policy is in the latter category. St. Martin/Sint Maarten is an island of thirty-seven square miles; sixteen square miles (Sint Maarten) are on the Dutch side, and twenty-one square miles (St. Martin) are controlled from Paris as a subperfecture of Guadeloupe. The casinos on the French side have not been developed to attract large numbers of tourists; on the other hand, the Dutch casinos operate within large resort hotels. The seven Dutch casinos have gambling junkets and offer credit for high-stakes gamblers.
Bonaire and Curaçao were governed jointly with Aruba until that island won independent national status in 1986. Bonaire has two casinos, one of which – the Flamingo Beach Casino – is the only casino in the world where players may be barefoot. The dealers too may be barefoot, but they always wear black ties. Curaçao has six casinos, all of which are in resort hotels and are located on beaches or next to the harbor. <

Nebraskans voted for a lottery in 1993. The state has also permitted live keno gaming statewide. As a result of these decisions, the Santee Sioux, Winnebago, and Omaha tribes have won the right to have casino table gambling on their small reservations.
For many years Omaha was the site of the very successful Aksarben thoroughbred racing track. Competition from a dog track in nearby Council Bluffs, Iowa, as well as from Iowa riverboats destroyed the prospects for profits at the track. Efforts for full casino gambling at the track failed (although it has been the site of a keno game). The track is permanently closed. <