The MacNeil/Lehrer Report; Casino Gambling and Economic Revival

ROBERT MacNEIL: Roulette, blackjack and craps became legal today in Atlantic City, New Jersey -- the first state outside Nevada to permit casino gambling. But not only gamblers are watching the action. Across the nation, many states and cities are wondering if this is the way to economic revival and high tax revenues.

Good evening. All over the nation communities and states faced with rising costs and grumbling taxpayers have been turning to legalized gambling to raise revenues. All but three states -- Texas, Utah and Missouri -- permit some form of betting, like lotteries, bingo, horse racing and jai alai. Today New Jersey became the first state after Nevada to try to cash in on the glitter of Las Vegas, and the rest of the nation will be watching carefully.

Atlantic City, once one of the great American resorts, hopes casino gambling will be its economic miracle. It was approved in a state-wide referendum two years ago, with tax benefits dedicated to senior citizens and the disabled. But the odds may be as high for the state as they are for the gamblers. Tonight, with Charlayne Hunter-Gault in Atlantic City, we examine the chief controversy: will the economic benefits to the people of New Jersey outweigh the problems? Charlayne?

CHARLAYNE HUNTER-GAULT: Robin, there are a lot of unknowns here at the moment, but what casino gambling has definitely brought to Atlantic City is a hybrid. It`s the county fair, the Super Bowl, the Kentucky Derby, the Indy 500 and the New York City subway system at rush hour all rolled into one. There has been a steady stream of traffic all day, too, but the huge snarls that had been predicted have not materialized as of late this afternoon. Long before the official opening ceremonies this morning at ten, eager but orderly crowds of several thousand spilled out of the hotel doors all the way back to the once-famous boardwalk just a few yards away. Inside, the casino floor is supposed to be the size of two football fields with a capacity of 6,000, and it looks full to me.

Nothing moved forward, though, until Governor Brendan T. Byrne had cut the shiny orange ribbon and proclaimed the casino officially open. This is one of those occasions where the press in attendance is rivaling the event, sometimes forgetting and covering itself. Every network is here, along with their counterparts in the printed press. One reporter, live from the Instant Eye, led off his story this morning on the ribbon cutting with the fact that the room was packed with hundreds of reporters and cameras, secondarily reporting that there were also present state and city officials and dignitaries and crowds in the thousands. There were also about a dozen people from the Coalition for a Better Atlantic City, who picketed the boardwalk. "We the people of Casino City want what`s rightfully ours," one of the picket signs read; and a member of the predominantly black group explained that they wanted state and city officials to demonstrate the same concerns for housing, jobs and other critical social needs as they had for casino gambling.

One of the many proponents of legalized casino gambling in Atlantic City is New Jersey State Senator Steven Perskie. While an assemblyman, Senator Perskie sponsored the 1976 legislation that eventually got the dice rolling in Atlantic City. Senator Perskie, how did you earn the title, architect of casino gambling in New Jersey?

STEVE PERSKIE: Well, it was part voluntary and part involuntary. I had the fortune of being in the position of responsibility at the time the issue arose, and the issue was a legislative issue in that it required the state legislature to put a referendum question on the ballot to the people of New Jersey to achieve their support and approval of the concept. And I was representing Atlantic County, and my colleagues and I from this area introduced the legislation, saw it through the legislature; it went on the ballot; we formed a committee here in Atlantic City known as the Committee to Rebuild Atlantic City, composed of our local business people and our labor people and our civic leaders; and we campaigned throughout the state raising the necessary support to get the question passed.

HUNTER-GAULT: Why did you think it was so important?

PERSKIE: It`s vital to the rebuilding of Atlantic City. Atlantic City has suffered a unique combination of problems over the years. It`s an urban area, and as such has the typical urban blight and urban decay that you associate with big cities. But it`s also a resort community, and as a resort only had a ten- or twelve-week economy each year, the summer season. And that kind of twin economic pressure eventually destroyed any stable economic base. And we could not achieve the attracting of investment capital to come here and to build the kinds of hotels and convention facilities that we needed to compete with the other convention and tourism centers in the country. And the gambling, therefore, was hit upon as the means to attract the investment capital to keep us competitive.

HUNTER-GAULT: Well, you have all the crowds here today, as we have all around us here, but what do you expect this to do? Do you expect this to reverse that trend?

PERSKIE: Yes. The crowds that are here today is a little bit confusing in our long-range goal. Our long-range goal is certainly to have crowds, but it`s to attract them not necessarily just through the casino rooms, because other areas have, and will certainly have in the future, casino rooms. Our goal is to attract them through hotel facilities, nightclubs, convention rooms, all of the allied elements of a tourism and convention city. That`s what we`re going to attract here in the first quality stages of the next several years.

HUNTER-GAULT: There are a number of critics of this whole idea...

PERSKIE: To be sure.

HUNTER-GAULT: ...and the mayor is not a critic but even he has talked about the difficulty of, say, the soaring costs of homes, the rising land values, the fact that traffic wasn`t a problem today but it`s anticipated that it will be. How much long-range planning really went into this? I mean, were those things taken into account?

PERSKIE: Very definitely. The city is right now engaged in the final stages of the enactment of a master plan to govern the land use and the programs that will be concerned with city development over the next decade. The Casino Act, of course, didn`t directly relate to that; that was concerned with the regulation of the casino industry. But we are concentrating now at the implementation of the master plan stage on getting the funding to do the housing, to do the traffic pattern design, to build the convention facilities that we need to implement the rebuilding of Atlantic City. Atlantic City`s rebuilding is not going to be limited to a few casino rooms; it`s a physical restructuring of the face of the community.

HUNTER-GAULT: All right. Just quickly, because we have to move on, the demonstrations this morning -- the blacks, the elderly --are saying that they`ve been left out, not only in terms of the planning for housing but also in terms of being involved in the job development and so on.

PERSKIE: The concern is definitely legitimate, but I think that it`s misplaced at the moment. The whole fundamental principle here was to bring the casino industry in as a lure to attract investment capital, with which investment capital we can solve our social problems; we can build the housing and create the jobs and the schools and the like. We now have a casino and all of our problems haven`t been solved, nor could they have been with one casino. So I think that the coalition`s goals are legitimate, and I share them completely and I know the city`s leadership does, but it`s a process that we`re going to have to build toward. And the housing will come when we get the money from the economic base with which to build it.

HUNTER-GAULT: Any estimate as to how long that`s going to take? Five years, ten years?

PERSKIE: No; it`s a gradual process we`re starting now. Some things will be accomplished within this calendar year, others will wait next year and the year after, just as we will be getting new casinos each year..

HUNTER-GAULT: Thank you. Robin?

MacNEIL: The first time the gambling issue was put to New Jersey voters in 1974 they turned it down. Then they hired Sanford Weiner, a political consultant, to organize the second referendum. With the added attraction of aiding the elderly and the disabled, that referendum passed. Now Mr. Weiner is organizing a similar campaign for people who want casino gambling to revive the sagging fortunes of Miami Beach. Mr. Weiner is with us in the studios of Public Television Station WPBT in Miami. Mr. Weiner, what benefits do you assess New Jersey people outside Atlantic City will get from the casinos in terms of tax revenues and so on?

SANFORD WEINER: Well, our projections in New Jersey during the campaign would be that the people in New Jersey would get a minimum of $37 million after the first six casinos had been built. Since the campaign, we understand that those projections were very, very low in terms of what`s happening now, that Resorts International and the crowd I just saw there will probably give back to the State of New Jersey a minimum of six or seven million dollars this year, during its first twelve months of operation. That`s a lot of money, and most of that money is earmarked to go to the senior citizens in New Jersey to pay for some of their special problems. That, with sales taxes and other taxes that will be coming forth probably over the next two years New Jersey will see anywhere from $40 to 60 million, I do believe.

MacNEIL: Was the idea of aiding the elderly and the disabled your idea when you were organizing the referendum?

WEINER: No, the New Jersey state legislature, in writing the bill that Senator Perskie helped author, put that into the referendum, so that when- we began the campaign that was already done for us.

MacNEIL: I see. Without some sort of "good cause" element to it like that, do you think the referendum would have passed?

WEINER: No, I think you have to show in a state like New Jersey that the people as a whole benefit, that it can`t just be a benefit for a place like Atlantic City, that everyone had to benefit from it. And I think without showing that statewide benefit to everyone living throughout New Jersey it probably would have lost.

MacNEIL: I see. What is the -- if I might call it that -- good cause element in your campaign for Miami Beach?

WEINER: Well, the campaign for Miami Beach, based on the same principle, will give money back to education in the State of Florida, and also money back to help local law enforcement in the State of Florida.

MacNEIL: At what stage are you in that campaign?

WEINER: We`re at the stage now where we`re trying to gather some 256,000 signatures to place the measure on the ballot, and we have till July 31 to do that.

MacNEIL: How did you make a calculation in the case of New Jersey that the tax revenues would actually be such and such? How do you calculate how much a casino takes in, how much money the gamblers actually spend, and what goes to the casino and what goes to the state?Can you just tell us a bit about that?

WEINER: Well, that`s based on a great amount of research. A firm called Economic Research Associates, out of Washington, D.C., furnished the material on New Jersey and they`re furnishing the material here in Florida. And they do their projections based on what x amount of square footage in a casino will yield, what the average profits per person on a given day are - - usually like forty dollars per person -- and then by multiplying by ...

MacNEIL: That`s what the average gambler loses in a day?

WEINER: That`s correct.

MacNEIL: I see.

WEINER: And based on figures like that, they`re able to project, based on x_ number of people through a casino on x day, the size of the casino, the average number of machines, about how much money a casino will make.

MacNEIL: I see. Well, we`ll come back. One of the organizations which opposed casino gambling as a form of economic development called itself Casinos No Dice. Its secretary was the Reverend Dudley Sarfaty, who`s on the staff of the New Jersey Council of Churches. Mr. Sarfaty, how do you assess the benefits to the people of New Jersey in terms of revenues from the gambling operation that`s opened in Atlantic City?

Rev. DUDLEY SARFATY: Well, of course there haven`t been any revenues yet, there have only been expenditures and projections. The expenditures are very heavy. We`re having to increase our law enforcement facilities, expand our state`s second major highway, all this being done at taxpayers` expense. There are a lot of costs in terms of police and fire protection for the City of Atlantic City. The promise was that an amount of money would come out of the t-7ashington-based estimate that would give about $18.75 to each senior citizen and disabled person in the State of New Jersey, but that does depend upon having six casinos going. And we apparently don`t have enough building space to have six casinos until several totally new buildings are built, or at least as a minimum are renovated. So it`s very iffy, and it`s very hard to sit here the first day the casinos are open and project what`s going to happen. But it does seem that it`s going to cost us almost as much in public services as it is going to bring to us in tax benefits.

MacNEIL: Do I understand correctly that your objection -- even though you`re a clergyman -- is not a moral one to gambling in itself but is more on the economic practicalities?

SARFATY: Yes. "Though I`m a clergyman" is a phrase that makes my clerical collar rise up around my ears. I hear a kind of carnival atmosphere down in Atlantic City, and for people to find the meaning of their life out of a carnival atmosphere does strike me as theologically superficial. That`s the basis.

MacNEIL: But then, lots of Americans do find that a satisfactory way to spend their time.

SARFATY: I don`t think it enhances social justice in the total community, and personal relationships in the family, for that to be the major joy that one has in living. As far as the economic benefits are concerned, since casinos don`t manufacture anything, since they`re not a service industry that benefits the community, and since for entertainment they`re quite expensive, because I can go to the movies for much less than forty dollars, I think you see that unlike a toothbrush manufacturer, who buys things within the state and then spends money within the state, produces durable goods within the state, and the money that he spends goes through the economic system of the state, that you don`t have that in casinos.

MacNEIL: So your argument is that the economic proposition and benefit to the citizens of New Jersey generally is dubious and has yet to be proved, is that...?

SARFATY: Oh, it has yet to be proved; it`s easy to make promises on television showing dollar bills falling down out of the sky on top of the state or recordings of a lonely, injured war veteran in a wheelchair in a house in Camdem or an old widow in a house in Teaneck, but the promises that these people would be taken out of their plight are far from sure. In fact, I`d say it`s very uncertain. The desire to have a beautiful Atlantic City is fine with me; I`ve been there and I like the town. But the fact that the poor and the minorities are not even now in the swing of things, they`re not hired in this given casino in the ratio that the casino claims, by spot checks that our staff has done. So we`re very dubious that it`s going to get people to go to the boardwalk. The major concerns and the arguments of the Casino Control Commission were about the games, the rules, the control and the criminal aspects; and the casino industry seems to want to make a profit and not to put people on the beach or enjoying the new music hall, or whatever gets built in the town.

MacNEIL: Senator Perskie made the point earlier that a lot of the benefit they hope to get economically would not only be from the casino but from the hotels and convention centers and so on.

SARFATY: Well, I was told the Resorts Hotel forbade the Knights of Columbus to have a convention there, presumably, as in Nevada, because they weren`t heavy enough gamblers. So I don`t even know whether the town is going to be welcoming more conventions or whether they`ll be trying to bring people in on junkets and fill up the hotels with gamblers.

MacNEIL: Let`s go back to Atlantic City. Senator Perskie, have you been listening to Mr. Sarfaty?

PERSKIE: With great interest.

MacNEIL: What do you say to his general point that the economic benefits are very dubious at the moment?

PERSKIE: Well, you have to understand that part of our major argument always was, and is today, a long-term argument. The whole economic program is predicated on a major redevelopment in the city, a major construction program extending well over a billion dollars over a five- or ten-year period, of putting thousands of construction people to work. The facilities that we hope to build here and that we are seeing here in this facility are what is known as labor-intensive, by which I mean, for example, that a 1,000-unit hotel will employ, exclusive of the several hundreds in the casino, somewhere between 1,400 and 1,800 people. For a community that now has about 15,000 part-time jobs -- part-time meaning ten weeks a year -- this is a phenomenal increment in our economic impact. We hope to -- we will create a fifty-two-week economy, and we will probably double our full- time jobs; and those jobs that we now have -- the average family, for example, in Atlantic City now earning about $6,100 a year, will come substantially closer to the state average of just under $10,000 a year.

MacNEIL: Aren`t those pretty impressive arguments, Mr. Sarfaty?

SARFATY: Well, not for the citizens of Atlantic City. The night before last there were ninety-one white employees and ten minority employees working visibly in the hotel, and it seems to me that if Resorts wants to hire within the community and improve the economic situation of the people with the ten-week jobs, they could have gotten on the stick with that a long time ago.

PERSKIE: Well, let me indicate if I may that a part of the initial start-up problem is that particularly since this is the first casino in New Jersey it`s very difficult to get experienced supervisors at a casino. Resorts has hired, as I understand it, almost exclusively local people as the initial dealers, but the supervisors, the pit bosses, the higher-level casino operatives are all imported from out of the state. Resorts has been subjected, as all operators will be, to very stringent affirmative action requirements under both the code and the statute that covers casinos, and they are so far in general compliance, and they will as they live it be brought into specific compliance in any given employment area where they may not make it now.

MacNEIL: Mr. Weiner in Miami, what do you say to Mr. Sarfaty`s argument that the costs to a state like New Jersey in having to increase the infrastructure in added police forces and state agencies to give surveillance to the gambling operation greatly cut down on the amount of revenues -that the state could expect?

WEINER: Well, obviously there Reverend that the costs are equal. enforcement, for added traffic, and cause as you know in New Jersey the their own investigations... are some costs. I disagree with the the servicing cost for added police not for the investigative cost, be companies themselves are charged for

MacNEIL: May I just interrupt -- that investigation is to check on the potential employees to make sure that they do not have a history of involvement with organized crime.

WEINER: Right. The companies themselves are forced to pay that. My answer to it is I think those are wonderful problems to have. Obviously, traffic control will cost some money; obviously some servicing money will be there. But not to the extent of $40, $50, $60 million a year. You know, as I sit here looking at that crowd in that casino and remember Atlantic City two years ago and a year ago, where at this time in the summer that particular hotel there was like a ghost town. And to see those thousands of people sitting around Steve, to be worrying about traffic problems, to worry how to handle the crowd for a place that was dead, I have great faith that those people there are going to solve it over the long run, and I just think they`re glorious problems to be facing.

MacNEIL: Glorious problems, Mr. Sarfaty?

SARFATY: Well, they`re glorious if the projections come out. I was talking to one of our consultant professors at Rutgers today who told me there was a vast difference in income between the MGM casino in Reno and the one in Vegas, and that it`s totally impossible to project on the basis of floor space what the income of your casino is going to be. So we still have the pig that hasn`t come out of the poke.

MacNEIL: What happens if the pig doesn`t come out of the poke, if gambling is not as successful as the projections? Has any harm been done? Presumably if it didn`t work and didn`t pay the operators it would ultimately wither and die and it would be just an unsuccessful business enterprise. Isn`t it worth trying?

SARFATY: The taxpayer will have paid a great deal in the meantime. The man in the wheelchair and the old lady in the apartment are not going get what was promised to them, so I wouldn`t be happy to see it wither and die. The hotels would be left, abandoned, and a loss to the companies that built them, and I don`t think that would keep the smile on Mr. Perskie`s face, either.

MacNEIL: I`d like to ask Senator Perskie this: is it a legitimate argument and not a bit of a red herring, Senator, to talk about so many millions of dollars coming to the state treasury when the needs of New Jersey are so vast? I mean, even if it`s $37 million, the New Jersey State budget this year is over four billion dollars. It`s a very small amount relative to the whole, is it not?

PERSKIE: Robin, you`re absolutely right, and in our arguments for the referendum and today, we emphasize not the direct money that`s going to the State of New Jersey or even to the senior citizens; we have always used those as secondary-level effects. The primary purpose of this referendum was not to put money in the state treasury and not to provide the money for the senior citizens, although that was a part of it. The primary purpose was to rebuild Atlantic City, the primary purpose was to attract the capital here to give us the facilities that will enable us to compete for the next fifty years as a tourism and convention and resort city. That was the focus, and that was the purpose.

MacNEIL: I see. Well, would you then say to people in other cities or other states who might see this program and who are wondering whether they should go into this sort of operation to revive flagging economies that the benefit, such as it is, is more arguable for the community where the gambling is located than for the state as a whole?

PERSKIE: No question in my mind about it. During the referendum, for example, we suggested that this kind of an approach would not work in a Newark or in a Camden or in a Trenton. And for those of your listeners who aren`t from this area, those are the major urban cities of New Jersey. Because nobody, frankly, goes to Newark for a vacation, or on a convention. The fact is that the circumstances, as I indicated earlier, that faced Atlantic City were unique, the combination of being a resort community and an urban area; this kind of solution I think is uniquely appropriate to a city that faced the kinds of problems that Atlantic City faces.

MacNEIL: Okay. Charlayne?

HUNTER-GAULT: There have been a couple of references to law enforcement and money going back into law enforcement, but those have been rather oblique in terms of what really seems to be paramount in many people`s minds, and that is the whole problem of organized crime. Let me just go to New York and ask Mr. Sarfaty: the Twenty-First Century Fund and the Fund for the City of New York concluded in a study a few years ago that the nation seems to be moving toward an unhappy compromise, a future in which legal gains that create new problems co-exist with illegal operations whose attendant problems remain unsolved. What do you have to say to that?

SARFATY: We haven`t solved the problem as yet. The investigation of Resorts International hasn`t even been completed, and there are a lot of allegations floating around that no law enforcement body that I know of has run down to the ground.

HUNTER-GAULT: For example.

SARFATY: There are allegations of Resorts` effort to sell its operation at one time to Meyer Lansky, of shenanigans in the Caribbean; they have not been settled, and they haven`t been settled in public. And our Gaming Division in New Jersey still has the responsibility of following those down. Now, what`s going to happen when that`s settled, I don`t know. But the cost of bringing in the mob from New Jersey with companies that already sound suspicious, related to people that our state investigation commission and our attorney general and our state police have had the eye on certainly does make a problem.

HUNTER-GAULT: Senator Perskie, is the mob here?

PERSKIE: The mob may be in Atlantic City, as it probably has been for a long time, but it`s not in this casino, and it`s not in this hotel, and it`s not in any business that is doing business with this casino-hotel, because all of the businesses that are doing business with this casino hotel have been investigated thoroughly and have been researched and have been licensed, and as far as this casino-hotel itself is concerned, Mr. Sarfaty is correct that the investigative process is not completed; but it will be. And he says he doesn`t know what will happen; I do. one of two things. They will be cleared of any possible involvement or problem and they will therefore be licensed, or they will not be so cleared, in which case they will not be licensed. And there is no third possibility.

HUNTER-GAULT: All right. Well, in Atlantic City itself have there been any plans -- I mean, has the police force or other law enforcement agencies been beefed up to deal with this problem, not just in the casino but in the surrounding businesses and so on?

PERSKIE: Yes. The local police force has very little role to play in that effort. We have vested authority to deal with that in our higher level agencies, specifically in the Federal Bureau of Investigation, in the State Commission on Investigation at the state level, the New Jersey attorney general and the Division on Gaming Enforcement, the state police. These agencies have banded together to form a task force for Atlantic City, to monitor every business transaction that takes place in the community, who`s here, what they`re doing.

MacNEIL: Senator, I`m afraid we have to end it there. Thank you very much.

PERSKIE: Thank you.

MacNEIL: Thank you very much in Miami, Mr. Weiner; thanks for joining us this evening. Thank you, Mr. Sarfaty. Good night, Charlayne.

HUNTER-GAULT: Good night, Robin.

MacNEIL: That`s all for tonight. We`ll be back Monday night. I`m Robert MacNeil. Good night.