The crime issue has been and will continue to be an essential issue in debates over the legalization of gambling. Opponents of gambling make almost shrill statements about how organized crime infiltrates communities when they legalize gambling. They also suggest that various forms of street crimes – robberies, auto-thefts, prostitution - come with gambling, as do embezzlements, forgeries, and various forms of larceny caused by desperate problem gamblers.
On the other hand, proponents of gambling contend that the evidence of any connections between crime and gambling is rather weak. They contend that the stories of Mob involvement with gambling are a part of the past, but not the present, and that even then the involvement was more exaggerated than real. Most cases of increased street crime are passed off as owing to increased volumes of people traffic in casino communities. Moreover, proponents of legalized gambling even argue that because gambling may lead to job growth in gambling communities, crime may actually go down, the reason being that employed people are less inclined to be drawn to criminal activities than are people without jobs. They also suggest that by legalizing gambling, society can fight the effects of illegal gambling.
Opportunities for Crime
Criminologists have identified opportunity as a factor in explaining much criminal activity. The kinds of crimes that are purportedly found in association with gambling indicate the efficacy of “opportunity” theories of crime. For instance, the several types of crime that might be associated with the presence of casinos include inside activity concerning casino owners and business associates and employees, crimes tied to the playing of the games, and crimes involving patrons. Organized crime elements may try to draw profits off the gaming enterprise through schemes of hidden ownership or through insiders who steal from the casino winnings. Managers may steal from the profit pools to avoid taxes or to cheat their partners.
Organized crime figures may become suppliers for goods and services, extracting unreasonable costs for their products. Crime families have been the providers of gambling junket tours for players and, in New Jersey, for various sources of labor in the construction trades. Organized crime figures also may become involved in providing loans to desperate players, and the existence of the casinos may facilitate laundering of money for cartels that traffic in illegal activities such as prostitution and the drug trade.
Another set of crimes attends the actual games that are played. Wherever a game is offered with a money prize, someone will try to manipulate the games through cheating schemes. Cheating may involve marked cards, crooked dice, and uneven roulette wheels. Schemes may involve teams of players or individual players and casino employees. Cheating is also associated with race betting and even with lotteries. In some cases, the gambling organization may attempt to cheat players.
The greatest concern about crime and gambling involves activities of casino patrons. On the one hand, they present criminals with opportunities. Players who win money or carry money to casinos may be easy marks for forceful robberies as well those by pickpockets. Hotel rooms in casino properties are also targets. Players are targeted by prostitutes and also by other persons selling illicit goods, such as drugs. On the other hand, desperate players may be drawn to crimes in order to secure money for play or to pay gambling debts. Their crimes involve robberies and other larcenies, as well as white-collar crime activity—embezzlements, forgeries, and so on.
Studies of Crime and Gambling
The issue of crime and gambling has been well studied for generations. Virgil Peterson, director of the Chicago Crime Commission, issued a scathing attack on gambling in his Gambling: Should It Be Legalized? (1951). He asserted that “legalized gambling has always been attractive to the criminal and racketeering elements” …. “[C]riminals, gangsters, and swindlers have been the proprietors of gambling establishments” …. “[M]any people find it necessary to steal or embezzle to continue gambling activity” (120–121)…. “The kidnapper, the armed robber, the burglar and the thief engage in crime to secure money for play”.
In a 1965 article that seemed prophetic, considering future events in New Jersey, Peterson wrote, “The underworld inevitably gains a foothold under any licensing system. If state authorities establish the vast policing system rigid supervision requires, the underworld merely provides itself with fronts who obtain the licenses, with actual ownership remaining in its own hands; and it receives a major share of the profits” (Peterson 1965, 665).
Other stories of the relationships between organized crime and gambling are plentiful. While Peterson was gathering information for his book, the Senate Committee on Organized Crime was holding hearings under the leadership of Estes Kefauver in 1950 and 1951. The committee was specific in identifying gambling as a major activity of organized crime.
In the 1960s, Ovid Demaris and Ed Reid wrote the Green Felt Jungle (Reid and Demaris 1963), a shocking account of the Mob in Las Vegas. Demaris continued the saga with his Boardwalk Jungle (Demaris 1986), an early account of casinos in New Jersey. His story was built upon a journalistic account of crime involvement in Atlantic City’s first casino by Gigi Mahon, The Company that Bought the Boardwalk (1980). The role of organized crime was tangential to the activities of the first company that won a casino license in New Jersey and persisted with involvement in labor unions that served companies constructing the casino facilities.
The issue of organized crime and gambling has lost much of its punch over the past thirty years, however, as major corporations have emerged as the most important players in the gambling industry. Nonetheless, gaming control agents and other law enforcement agencies from the local, state, and federal levels must remain vigilant lest organized crime elements return to the gambling scene. In reality they have never completely left the scene. In the 1990s, they were still found seeking inroads to the management of casino operations in one San Diego County Native American casino. They actually infiltrated the operations of the White Earth Reservation casino in Minnesota, and the tribal leader was indicted for wrongdoing in connection with his Mob ties. The slot machine operations in restaurants and bars of Louisiana were compromised by organized crime elements, and indictments ensued. As the twentieth century ended, organized crime interests maintained ties with several Internet gambling enterprises operating in other countries.
The major concern over gambling has, however, turned toward ambient crime – personal crime that appears in the atmosphere around gambling establishments. In September 1995, L. Scott Harshbarger, Massachusetts state attorney general, commented to the U.S. House Judiciary Committee that “one of the noted consequences of casino gambling has been the marked rise in street crime. Across the nation, police departments in cities that have casino gambling have recorded surges in arrests due to casino-related crime. In many cases, towns that had a decreasing crime rate or a low crime rate have seen a sharp and steady growth of crime once gambling has taken root….” (Quoted in Gambling under Attack 1996, 785). Although there were many statements from law enforcement officials that echoed Harshbarger’s thoughts, there were also those who disputed the claims.
Empirical Studies
Much of the data for the studies mentioned above was anecdotal or came from personal testimony of law enforcement personnel. Other entries into the literature have been based upon similar kinds of evidence. Such studies may be interesting, but they have only a limited value. Anecdotes may not always be precise or accurate.
More solid data have come from analyses of criminal statistics. George Sternlieb and James Hughes’s study of Atlantic City revealed that crime increased rapidly in the community after the introduction of casinos in 1978. Pickpocketing activity increased eighty-fold, larceny increased over five times, and robberies tripled, as did assaults (Sternlieb and Hughes 1983, 192). Simon Hakim and Andrew J. Buck found that the levels of all types of crime were higher in the years after casinos began operations. The “greatest post-casino crime increase was observed for violent crimes and auto thefts and the least for burglaries” (Hakim and Buck 1989, 414). As one moved farther from Atlantic City in spatial distance, rates of crime leveled off (415). On the other hand, Joseph Friedman, Simon Hakim, and J. Weinblatt found that increases in crime extended outward at least thirty miles to suburban areas and to areas along highways that extended toward New York and Philadelphia (Friedman, Hakim, and Weinblatt 1989, 622).
Similarly a study of Windsor, Ontario, found some crime rates increasing after a casino opened in May 1994. Overall, previous decreases in rates of crime citywide seemed to come to an end, whereas rates in areas around the casino increased measurably. The downtown area near the casino found more assaults, assaults upon police officers, and other violent crimes. Particularly noticeable were increases in general thefts, motor vehicle thefts, liquor offenses, and driving offenses (Windsor Police 1995).
Not all the evidence points in the same direction. Several riverboat communities in Iowa, Illinois, and Mississippi saw decreases in crime rates following the establishment of casinos. Moreover, several scholars, including Albanese (1985, 44) and Chiricos (1994), demonstrated that higher incidents of crime in Atlantic City were a result, in large part, of increases in visitor traffic. If numbers of tourist visitors were included in permanent census figures, crime rates would be stable or might even be less than they were before casinos came to Atlantic City. A study by Ronald George Ochrym and Clifton Park compared gaming communities with other tourist destinations that did not have casinos. They found that rates of crime were quite similar. Although crime statistics soared following the introduction of casinos in Atlantic City, so too did crime in Orlando, Florida, following the opening of Disney World. If the casinos themselves were responsible for more crime, gaming proponents suggest that Mickey Mouse also must cause crime (Ochrym and Park 1990).
Casino proponent Jeremy D. Margolis, a former assistant U.S. attorney, discounts the crime factors as well. In a December 1997 study for the American Gaming Association, he summarized the literature of crime and gambling studies by pointing to these conclusions: “Las Vegas, Nevada has a lower crime rate and is safer than virtually every other major tourist venue. Atlantic City, New Jersey’s crime has been falling dramatically since 1991. Joliet, Illinois [a casino community] is enjoying its lowest level of crime in 15 years. Crime rates in Baton Rouge, Louisiana have decreased every year since casino gaming was introduced” (Margolis 1997, 1).
My study (Thompson, Gazel, and Rickman 1996) found a mixed pattern of crime and gambling associations in Wisconsin. We examined crime rates for major crimes and arrest rates for minor crimes in all seventy-six counties from 1980 to 1995. Our analysis compared counties with casinos to other counties. We also considered the impacts of crime on outlying nearby counties. We considered all crime data prior to 1992 to be data from counties without casinos. We looked at the incidence of crime in fourteen counties with casinos for 1992, 1993, and 1994 as data from casino counties, whereas 1992, 1993, and 1994 data from other counties was considered noncasino county data. We utilized a technique called linear regression for our analysis.
The introduction of casinos did impact the incidence of serious crimes in the casino counties and counties adjacent to two casino counties. For each 1 percent increase in the numbers of major crimes statewide, the numbers of major crimes in the casino and adjacent counties significantly increased an additional 6.7 percent. Reduced to simple language, the existence of casinos (or nearness of casinos) in the selected counties explains a major crime increase of 6.7 percent beyond what would otherwise be experienced in the absence of casinos. As there were approximately 10,000 major crimes in these counties in 1991, we can suggest that casinos brought an additional 670 major crimes for each of three years after casinos came. The largest share of casino-related crimes were burglaries (10).
Our analysis of Part II (minor crimes, as defined by the Federal Bureau of Investigation [FBI]) looked at data on the numbers of arrests in each county of the state. Overall, we found that increases in arrests for all Part II crimes in casino counties and counties adjacent to these counties constituted a number 12.2 percent higher than that found in other counties. Although Part II arrest numbers overall are related to the presence of the casinos in Wisconsin, not all categories of Part II arrests could be linked to the casinos. Relationships could be demonstrated for arrests for assaults, stolen property, driving while intoxicated, and drug possession.
Assaults increased 37.8 percent more in these counties than for the state as a whole. Arrests for stolen property increased 28.1 percent more in the casino-adjacent counties. Certainly this finding complements the demonstrated increase in incidents of burglary. Drunk driving arrests increased 13.9 percent more in the casino and adjacent counties than in the other ones, and drug possession arrests increased an extra 21.9 percent. Although the percentage increase was not as great as for some other categories, the most significant relationship between the presence of crime and casinos was driving while intoxicated.
Although the general comments and anecdotal evidence suggest ties between casinos and forgery, fraud, and embezzlement, no strong linkages were found in our data. We did find significant associations between casinos and forgery and fraud within the casino counties, but these relationships did not extend to surrounding counties. No relationships were established with embezzlement arrests. This does not mean they might not exist at a future time. This kind of crime, when it is linked to gambling, takes time to develop. This type of crime is also associated with problem or pathological gambling. First, the cycle of pathological gambling takes time to develop. Second, as the cycle is developing, the pathological gambler is using all possible legal means to get funds for gambling. Only in later desperation stages will the gambler turn to illegal means for funds.
The presence of additional crime also imposes additional costs on the society. We used standard criminal justice costs of arrests, court actions, probation, and jail time, as well as property losses, in our analysis. We concluded that an additional 5,277 serious crimes per year cost the public $16.71 million, and an additional 17,100 arrests for Part II crimes cost society $34.20 million each year. The data suggest that casinos may be responsible, directly or indirectly, for nearly $51 million each year in societal costs due to crime generated as a result of their existence.
Political Crimes and Gambling
Gambling interests (and potential gambling interests) have money. Often their profit margins may be very large, especially in monopoly or semimonopoly situations. The interests are willing to spend their money to advance their causes. The very open bribery of Louisiana legislators in the late nineteenth century by operators of the state’s lottery led to the reforms that ended that lottery and precluded the reestablishment of any state lottery until 1964. Gambling interests will still invest large sums of money into political action. Often their targets are referenda campaigns. The California Proposition 5 campaign of November 1998 was the most expensive ballot initiative campaign in U.S. history. Nevada casino interests put $26 million into the campaign, and tribal gambling interests in California invested nearly $70 million. Prior to 1998, a 1994 campaign to legalize casinos in Florida that drew almost $18 million from the casino industry had been the most expensive referenda campaign in history.
The casinos and other gambling enterprises also invest large sums of money in lobbying campaigns and public persuasion campaigns. This is the political process in the United States, one that thrives on the clash of interests and the clash of issues. It is a Madisonian system in which rival interests protect their turf by making their positions known and by commandeering the facts that will help them persuade policymakers that they are on the correct side when the issues rise to decision points on the public agenda.
Some of the interest might go too far. After all, the potential benefits can be extraordinary. In some jurisdictions, forces desiring casino licenses or contracts with government-controlled gambling operations have crossed the line. A former governor of Louisiana, Edwin Edwards, was a leader in the efforts to get casinos and gambling machines into his state. Rumors about bags of money being brought into state offices filled the air from the beginning—but those are just rumors. Federal Justice Department officials gathered the facts, and he was indicted more than once for taking bribes. The new century began with the former governor on criminal trial; since then he has been convicted and awaits incarceration. Officials in Missouri were charged with the same kind of wrongdoing, and several resigned during the 1990s. One Las Vegas gambling interest withdrew from pursuing casino activity in Missouri because of the exposure of political activities considered inappropriate. Another company remained an active Missouri player but only after removing key company officials. In the 1980s, both Atlantic City and Las Vegas were rocked by FBI sting operations, which involved undercover agents offering bribes to influential public figures in exchange for their intervention in the casino licensing process. The Atlantic City operation – called ABSCAM (a code name based on Arab and scam)—resulted in the resignation of U.S. senator Harrison Williams (D-New Jersey) from office. Several local officials in Nevada saw their political careers also end when they were exposed for taking bribe offers.
Lines between acceptable and even honorable political activity and unacceptable or even illegal activity can be blurred. The incentive remains, however, for continued activity and even intense activity. Citizens, political leaders, law enforcement officials, and industry operatives must always be on watch for wrongdoing; if they are not, the industry will suffer in the long run.
Legalization as a Substitute for Illegal Gambling
Advocates of legalizing gambling suggest that there is a certain quantity of illegal gambling existing in any society and that the process of legalization will serve to eliminate the illegal gaming and channel all gambling activity into a properly regulated and taxed enterprise. As with the other evidence, the research here is also mixed. Nevada certainly had a large amount of illegal gambling before “wide-open” casino gambling was legalized in 1931. Since 1931, there has been very little evidence of illegal casino gambling games in Nevada. Illegal operators simply obtained licenses from the state government.
Similarly, David Dixon found that illegal bookmaking was effectively replaced by legal betting when Great Britain passed legislation in 1960 permitting betting shops (Dixon 1990). Opposite results have been found elsewhere, however. An examination of casinos in Holland by William Thompson and J. Kent Pinney found that legalization in 1975 seemed only to promote an expansion of illegal casinos that had operated before laws were passed for government-operated casinos (Thompson and Pinney 1990). Clearly the illegal operators were not permitted to win licenses. Also, the government placed many restrictions on its own casinos—they had to be located (at first) outside cities; they could not advertise, give complimentary services, or operate around the clock. Illegal casinos found new places to advertise—at the doors of the legal casinos when they closed at 2 a.m. David Dixon also found that when Australia established its government-operated betting parlors, illegal sports and race betting underwent a major expansion (Dixon 1990). Additionally, Robert Wagman explained that the efforts to get rid of the illegal operators in the United States might actually have achieved an opposite effect (Wagman 1986).
Some law enforcement officials are now saying that indications are that the lottery may actually be helping the illegal game. Players are being introduced to the numbers concept in the state-run game, and then they switch to the illegal game when they realize they can get a better deal. The legal state game has solved the perennial problem faced by the illegal games of finding a commonly accepted, and widely available, three-digit number to pay off on. Most of the illegal street games now simply use the state’s three-number pick (Wagman, 1986).