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Ten Years Ago, Missouri Rolled the Dice
 on Riverboat Gambling
By Rick Alm, The Kansas City Star, Mo.
Knight Ridder/Tribune Business News

May 27, 2004 - Ten years ago today, Missouri joined the modern era of riverboat gambling.

Then, gamblers stood in line to pay an admission fee to board one of the state's two riverboat casinos in St. Louis.

Kansas City joined the party June 22, 1994, when the Argosy Riverside Casino opened for business.

Much has changed since then, including the public's wariness of an industry founded in Las Vegas by organized crime figures.

The casino industry of the 21st century, though it sometimes runs afoul of regulators, is owned and operated by publicly traded corporations that are heavily regulated by states and the Securities and Exchange Commission.

"In the beginning, we were worried about the wrong people being involved," said Tom Irwin, the first executive director of the Missouri Gaming Commission.

After 10 years of reflection, "I think the casinos have been good, responsible citizens," Irwin said. "The one thing we finally need to do is accept them as citizens."

Mark Andrews energetically disagrees. Andrews, the founder and president of Casino Watch, the lone grass roots anti-gambling organization to spring up in the state, has battled the boats for more than a decade.

He acknowledges his side is probably losing the war. But he insists time is on his side.

"It's not easy to change public perception," he said, "but I think the public is getting a little more educated."

Andrews concedes "the money has come in," pumping up state and local government treasuries.

"But we haven't fixed anything," he said.

And the state still finds itself coping with annual budget shortfalls, Andrews added.

"In 10 years, all we've shown is that there's an illness side to this experiment with gambling embezzlement, bankruptcy and the breakup of families."

Worse, said Andrews, with the rapid spread of casinos during the '90s, "we've got a whole new generation of kids in America that are growing up wanting to gamble like Daddy.

"It's going to take its toll."

If the jury is still out on the social effects of casino gambling, its economic impact is clear.

Gambling has become a cash cow for state and local governments.

When the Missouri General Assembly was first considering riverboat gambling in 1991, a legislative research office estimated that the proposed gambling taxes "could exceed $27 million."

Indeed they did. In 2003, the state's 11 casinos paid a combined $363.3 million in state and local gambling taxes based on gamblers' combined losses of $1.3 billion.

This year, the boats are on pace for $1.4 billion in revenue and $384 million in taxes paid -- solidifying their place as the state's fifth-largest tax source, behind income taxes and various sales and gasoline taxes.

The bulk of that money goes to public education. But riverboat host cities and selected state programs also claim a share, paying for such things as new facilities for veterans, a new city hall in Riverside and dangerous-building demolition in Kansas City.

To commemorate the state's first decade of gambling, the Missouri Riverboat Gaming Association has issued a slick 29-page booklet to state lawmakers, civic officials and others that briefly recounts the industry's stormy history and staggering financial impact on the state.

The publication, "A Dynamic Decade" is also available at no charge online at www.mrga.org.

The publication is heavy on the upside, with facts and figures in defense of the proposition that casinos delivered what they promised and more -- jobs, tourism and money for public education.

It also touches base with a few of the controversies that have dogged the industry from the beginning.

"There are still people who argue that voters were misled by the 1992 referendum into thinking that all boats would cruise all the time," the booklet states in the chapter titled "Promises Kept, Predictions Exceeded."

It then quotes a Missouri Gaming Commission report from 1998 that termed such criticism a "myth" because of exceptions that were carved into the law from the beginning. The final straw came in 1993 -- before the first boats opened -- when the U.S. Coast Guard raised early alarms about the safety of massive passenger vessels traversing the currents of the Missouri and Mississippi rivers.

The result was permanently moored, off-river "boats in moats" and two-hour "cruises" that went nowhere.

Casino admission fees fell in early 1996 to competitive pressures, while "cruise" boarding times and long preboarding waiting lines for customers disappeared in 1999.

The last vestige of the restrictive rules placed on the industry, the $500 loss limit, has been under attack by the industry for a decade. But Andrews of Casino Watch said the loss limit's repeal "gets closer and closer to reality" each year.

To combat problem gambling, the state set up programs that have been widely copied in other jurisdictions. Since the mid-'90s, more than 7,000 people have voluntarily banned themselves from Missouri casinos under threat of arrest for trespassing.

Hundreds of gamblers and their families are receiving free counseling under another state initiative that pays for that long-term care. Hot lines staffed around the clock, paid for by the casinos and jointly administered by state agencies give gamblers immediate help and a link to other assistance options.

Andrews and other critics applaud such efforts, though they also would like to see a halt to casino expansions and a gradual rollback in the number of slot machines in the state.

Such drastic measures will take an act of the General Assembly, which has never warmed to such an idea because, Andrews said, "government is addicted to the money."

In setting up its casino regulations, Missouri learned from other states' mistakes. It steered clear of wide-open competition, which led to casino failures in some jurisdictions, but it also avoided strict caps on the number of slot machines or casinos, which fostered corruption.

After the first wave of Missouri casinos opened in early 1994 without hotels or much else in nongambling amenities, Harrah's North Kansas City set a soon-to-be-eclipsed standard by erecting a hotel and other entertainment and visitor attractions.

Irwin said the commission quickly saw the light. The casinos that followed were required to build more than walls around their slot machines. The industry responded by one-upping each other with more restaurants, nightclubs, movie theaters and architectural glitz.

Unlike Iowa, where financially struggling riverboats simply pulled up anchor and sailed away, Missouri Gaming Commission director Kevin Mullally said, Missouri's deliberate go-slow approach allowed markets to evolve with consumer demand. More importantly, he said, that policy kept more casino profits in Missouri.

Mullally said that over the past 10 years, the equivalent of 60 percent of Missouri casinos' operating cash flow has been poured back into those properties through casino expansions, remodeling, and additions such as parking garages and restaurants.

"They're putting money back into the state, discrediting the theory that there would be a giant sucking sound of that money leaving the state of Missouri," Mullally recently told a Kansas City Rotary Club audience.

Today, Kansas City probably has all the casinos its market can bear. But the commission is studying demand in St. Louis, where one or two new casino projects could be approved for construction this year.

Of the commission's grow-slow approach, Irwin said: "It was a fine line. But I don't know that I would have done anything differently."

"Now, every time I go by one of these places, I say to myself, 'I think we did it right.'"

-----To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com.

(c) 2004, The Kansas City Star, Mo. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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