Sunday, February 09, 2003
Copyright © Las Vegas Review-Journal

GAMING CONTRIBUTIONS: Political Gamble

Seeking power and influence, gaming interests contribute increasingly to election campaigns

Click above for enlarged image. Illustration by Anton. Click above for enlarged image. Click above for enlarged image. Click above for enlarged image.

The American people in 2002 spent more than $26 billion on casino gambling, $4 billion on pornographic movies, and about $3 billion on election campaigns.

The difference is that consumers know fairly well what they got for the money they spent wagering and watching pornographic movies. What they received for their campaign contributions is harder to tell.

The gaming industry in 2002 spent more than $14.4 million on political campaigns: $8.2 million on campaigns for federal offices and $6.2 million on campaigns for state offices across the country, according to campaign finance reports. That's real money, but what did it buy?

"The wonderful thing about gaming money in politics is that it's pure. It comes without pretext. There's no interest in influencing outcomes. There's absolutely no ideology involved. Philosophy plays no role. Gaming interests are looking for power and influence," said Center for Responsive Politics senior fellow Larry Makinson.

Since 1990, the casino and gambling industry has contributed almost $40 million to candidates for federal office. About half of that was contributed in 2000 and 2002.

"This is a business. No one gives money to be nice guys. And it's not taking place in isolation. If you have a big influx of money, you'll have lobbying and the like. Money becomes a pointer, a good indicator, a dowsing rod of where the action lies below the surface," Makinson said.

The industry's contributions have increased tenfold since 1990. When ranked against total donations by industry, gaming's political action committees have steadily moved up in ranking from 75th in 1990 to 36th in 2002, according to the center's data.

Critics say the industry is looking for more than good government in return for its campaign contributions.

"Gaming companies see giving money as an investment in terms of politicians. They may not get their returns this year, but it's an investment and they will," said Tom Grey, executive director of the National Coalition Against Legalized Gambling.

"My sense has always been that gambling is driven by money and muscle, not people-pushing. George and Ethel never decide that their hometown needs a good casino and go to their elected reps to argue for one," he said.

Based on Federal Election Commission filings, the most generous Nevada-based gaming companies in 2002 in terms of total contributions to candidates for federal office, counting political action committee and personal contributions, were: MGM Mirage ($795,685), Mandalay Resort Group ($782,989), Harrah's Entertainment ($708,270), International Game Technology ($531,100) and Park Place Entertainment ($403,038).

Explaining all this money in politics, Harrah's spokeswoman Jan Jones said the campaign contributions buy the companies a visible presence in political and government circles.

PAC contributions also give the industry a voice in the halls of Congress, she said.

"They give the industry a voice, but I think people over-think campaign contributions. The elective process is based on candidates being able to get their messages out," Jones said.

There is no direct link between contributions and how officeholders will vote, she said, explaining: "If they have been with the industry in the past, they'll be with them again.

"(Campaign contributions) give you access so that you can offer your vantage point on issues that impact the industry," she said. "They also give your employees a more active role."

MGM Mirage spokesman Alan Feldman said PAC contributions are important for human resources.

"They provide an opportunity for employees to participate in the political process" by getting them information and giving them access to events and candidates for office, he said.

"PACs give us the ability to participate in events here, across the country and in D.C., help us show members of Congress our back door and support the campaign needs" of candidates who have been supportive or at least willing to listen, Feldman said.

But, Feldman notes, the gaming industry has no litmus test for its donations. "We've had lots of dealings with members who listen and then say they don't buy it."

At Mandalay Resort Group, Senior Vice President Mike Sloan said the alliances gaming companies build in the political process are not necessarily parochial and limited to their core business.

"We are a business. We are in the convention, entertainment and tourism businesses. There are policies at each level of government that can affect us," he said.

At Park Place Entertainment, spokesman Robert Stewart said nothing more or less is involved than what any other citizen might do.

"We support those officials and candidates who support positions we believe will be beneficial to the company, our employees, the gaming industry and the communities in which we operate," he said.

Issues in which the industry has interests include not just tax policy, but also transportation infrastructure, and money for airports and highway construction.

"Our contributions are intended to help those candidates who favor positions favorable to the industry stay in office," Stewart said.

Outsiders are quick to point out, however, that behind-the-scenes power to prevent action on new taxes or regulations can be at least as important as being able to influence votes on bills that do get passed.

"One of the things money buys is inaction. It's cheaper to keep Congress from doing something than getting something to pass," Makinson said.

In fact, the American Gaming Association was born out of the need for defensive positioning to protect the industry's status quo.

In 1994, the federal Treasury Department floated a proposal to finance the Clinton administration's proposed health care reform package in part with a gross receipts tax on the gaming industry.

"A variety of people in the federal government had the idea the gaming industry would make a good target. We ran into the need for an organization to explain to members of Congress and bureaucrats who we were," said MGM's Feldman.

"There had been such an absence of knowledge and they had been relying on such movies as `Bugsy' with Warren Beatty for information. The AGA exists to fill that vacuum," he said.

AGA President Frank Fahrenkopf said out of that experience the gaming industry realized it needed representation in Washington to protect itself and to explain key issues to public officials.

"Fundamentally, as an industry we don't have a congressional agenda like a lot of industries where we're constantly asking for favors," he said.

For that reason, the gaming industry trade association deliberately manages a small PAC that is used primarily for the purpose of attending certain key political events.

"The most important giving is done by individual companies in contributions to candidates, and in the form of soft money, at least before 2004 (when the new ban on soft contributions goes into effect)," Fahrenkopf said.

The AGA is responsible for building relationships with members of Congress and other officials, but takes a less direct and more educational approach.

"The AGA tries to sponsor fund-raisers for each of the major campaign committees; (at least) we used to, even though we don't know what specifically we can do with the new McCain-Feingold law. We're checking that out now," he said.

"In the past in each election cycle we've held a major event for each of the House and Senate campaign committees. We prefer bringing three, four or five members of the leadership to Las Vegas. We'll do a fund-raiser, and get two or three hours with the delegation before or after the event," Fahrenkopf said.

Issues of importance also arise from time to time such as the taxation of gratuities, sports gambling and capital depreciation, but primarily the AGA works to educate public officials and argues in favor of the industry "just being left alone," he said.

In addition to PAC giving, corporate leaders also make campaign contributions, but company officials insist their decisions are personal and not part of the PAC decision-making process.

Legally, that is necessary, but as a practical matter, the interests of corporate executives and the companies they lead often coincide.

"Individual CEOs get on a first-name basis with important politicians. They get to establish relationships with powerful politicians. That's what this money is all about. They want votes along the way, but sometimes all they want is to avoid votes on what's important to them," Makinson said.

Friends also are important at the state and local levels where contributions may or may not bring more direct benefits.

The gaming industry sources say contributions to state and local campaigns and for ballot initiatives can be at least as important as those to candidates for federal office.

"Power is at the local level here and, to some extent, the state level, much more than at the federal level. And the closer you get to lower levels (of government), or away from contributions to candidates, the harder it is to trace the money," Makinson said.

Contributions to candidates, however, generally lie at the heart of gaming interests and are much easier to trace.

"They're trying to win friends and influence. They understand there are ways to improve your odds: more friends, better friends, more influence," Makinson said.

In 2002, gaming industry sources contributed more than $6 million to candidates for state office nationwide, according to the most current data from the National Institute on Money in State Politics through November.

Of that, $1.7 million was contributed to candidates running in Nevada and $2.1 million to candidates running in California.

The most generous Nevada-based gaming companies in 2002 in terms of total contributions to candidates for federal office, counting political action committee and personal contributions were: International Game Technology ($158,000), MGM Mirage ($122,500), Station Casinos ($104,570), Coast Hotels & Casinos ($100,000) and Mandalay Resort Group ($92,000).

The $1.7 million in contributions from Nevada gaming interests was an increase from $1.1 million in 2000 and $1.4 million in 1998, with the differences explained partly because 2000 was not a gubernatorial election year.

"In Nevada, the gaming industry has used campaign contributions to help get control of the state Legislature. I don't think there's a legislator who hasn't received campaign contributions (from the industry)," said Las Vegas professor and casino industry expert Bill Thompson.

The system "is not totally bad," he said. "Contributors are buying the status quo (or nonaction), they're buying barriers to effective change.

"The industry is much more interested in protecting what it has than in spending money for change. What they get is predictability and stability," Thompson said.

Nevada is different because of the depth of industry involvement, he said, but contributors are looking for stability and influence in other states in the same way.

"There's nothing wrong with that. The industry is defending itself. Others do it, too. We are just the one state where (this) one industry controls every political office for all practical purposes," Thompson said.

The industry's contributions went to more than 1,000 candidates for state office, mostly targeted to legislative candidates who would actually debate and vote on expansion proposals if elected.

Just as significantly, the bulk of the money went to incumbents, who were statistically almost sure winners, or to incumbents who were not even up for re-election in 2002 and thus were sure to be voting on any upcoming legislation.

Similarly, over time, roughly half of the money contributed at all levels has gone to Republican candidates and half to Democratic candidates.

The gaming industry also has played a significant role in contributing to candidates for local office and ballot initiatives.

Gaming interests spent $5 million on Proposition 5 in California in 1998 allowing various forms of tribal casino gaming and more than $30 million on the three ballot initiatives in Arizona in 2002 largely to expand racetrack gaming.

At UNLV, Thompson said: "Money is almost fully determinative of propositions, but a politician with less money can sometimes beat a politician with more money."

Propositions are an exception to the game that casinos typically play with campaign contributions, he said.

"Propositions have a direct impact (on the industry locally). Also, there are no campaign limitations on contributions supporting ballot initiatives, and reporting requirements make it much harder to follow the money," Thompson said.

Makinson argues that except for ballot initiatives, campaign giving is a two-way street.

"One thing Congress does is keep action from taking place so the cash will keep rolling in," Makinson said.

He even argues some members of Congress introduce legislation they do not want to see passed so colleagues can raise more money to oppose it.

This is the game Washington plays, and participants learn quickly to play it well or get out of town, he said.