Gambling on Casinos -- and Losing; Will other states follow suit?

For years, New York's Democratic Gov. Hugh L. Carey had been a proponent of casino gambling here. Like dozens of other politicians across the United States, he saw casinos as a painless way of raising revenue at a time when severe federal budget cutbacks and increasing financial demands from the ''Big Apple'' were severely straining the state budget.

State Attorney General Robert Abrams also had favored casinos. But last year he issued an extensive report opposing the legalization of casinos. It hit like a bombshell, blasting away all hopes that legalization could come as early as 1982. As a result, Governor Carey did a virtual about-face and became an opponent of legalized gambling.

''Revelations . . . of myriad problems associated with New Jersey's casino gambling industry - in particular the soaring rate of casino-related crime in Atlantic City and recurring allegations of organized crime infiltration and influence peddling at federal, state, and local levels - were, for me, the final straw,'' Mr. Abrams said in the report. ''I am now persuaded that casino gambling in New York State would not be in the public interest.''

But the picture has changed somewhat since Governor Carey announced he would not seek reelection. One of his likely successors, Mayor Edward Koch of New York City, favors casino gambling. If Mr. Koch wins the governor's chair, casino gambling stands a much better chance of sprouting in New York State.

Here, as in many other states, casino gambling cannot become legal without a lengthy legislative and statewide referendum process. Since casino gambling would require a change in New York's constitution, the same casino measure would have to be passed in two consecutive sessions of the state Legislature before going to the voters for final approval.

Elsewhere, bills to legalize casino gambling are pending in as many as 40 states, including Massachusetts, New Hampshire, Rhode Island, Washington, and Oregon.

In many instances, some of the most vocal supporters of casinos are politicians. Often they're motivated by a need to find ways of replacing the shrinking federal dollars that used to support expensive social programs. The National Council on Compulsive Gambling, a group primarily devoted to helping establish programs for the problem gambler, reports that recently it has been getting an increasing number of phone inquiries from state officials who want to know more about the pros and cons of casino gambling.

Public officials see the ''legalization of gambling as a panacea for every revenue shortfall or economic crisis state government faces,'' according to a recent issue of Gaming Business Magazine.

At the same time, a political backlash against casino gambling seems to be spreading and solidifying. This backlash is not just the result of what officials have observed in New Jersey or Nevada. It also reflects concern in many other states about an increase in political corruption and organized crime activities following the legalization of other forms of gambling, such as lotteries or jai alai. In recent years, both Pennsylvania and Washington State have been rocked by political scandals linked to legal gaming. Officials in Florida, Massachusetts, and Connecticut say that their states have had numerous problems with organized crime involvement in various forms of legal gambling.

Several years ago, federal and state investigators looked into alleged organized crime involvement in Connecticut's state-licensed jai alai operation. In jai alai, a game something like handball that's very popular in Latin America , spectators bet on the winners. The Connecticut probes resulted in 11 state indictments, 15 federal indictments, and 13 convictions involving an organized ring of gamblers, jai alai players, and the management of World Jai Alai Inc., which ran the Hartford jai alai games.

Aside from concern about criminal involvement in legalized gambling, officials in Connecticut and other states worry about their ability to adequately regulate jai alai, parimutuel horse racing, or other forms of gambling.

Harvey Ziskis, a gaming expert who helped state and federal authorities investigate irregularities in Connecticut's jai alai games, says that ''legalized gambling regulation in this country today is marred by cover-ups by state and federal agencies, tax evasion, legislative manipulation, inadequate auditing procedures, and the lack of criminal and administrative enforcement of higher management officials.''

Legislators from eight Northeastern states have joined forces to oppose legalization of casino gambling. The group is called Legislators Against New Casino Establishments (LANCE). It's made up of lawmakers from Connecticut, Maine , Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

Thee aim: to oppose casino legislation wherever and whenever it appears in their states by pooling resources and information damaging to gambling interests. For instance, the coalition points to the increase in compulsive gambling, prostitution, street crime, and drug abuse after casinos moved into Atlantic City.

Casinos were promoted as a tax revenue bonanza for New Jersey, but local officials have sometimes been less than enthusiastic about the project. Atlantic County Executive Charles Worthington said in recent testimony before a state legislative committee that ''the way the entire system is set up, the benefits, the revenues, go to the state right off the top. But the entire cost of maintaining the infrastructure that generates those revenues . . . falls solely on Atlantic County . . . . While the casino industry appears to be a significant boon to the county, it's unfortunately a day late and a dollar short.''

But such reports haven't deterred those who see a revenue pot of gold. Tom LaVerne, executive director of NO DICE - We Love New York Inc., a privately funded anti-casino group in New York State, says more and more politicians in New York and other states are using the ''carrot'' of new tax revenues as a chief selling point for casinos.

''We've got to get it across that there is no 'net profit' in casino gambling ,'' Mr. LaVerne says. He hopes that LANCE will develop into a national organization to provide a coordinated thrust against casino development.

Proponents of legalization are on the move, too. They're beginning to employ new means to sell casinos to the public. In Massachusetts, legislation has been drafted to ensure that a portion of the state's share of revenue from proposed casinos goes to help the elderly.

Yet New Jersey's track record in this regard is poor. Politicians there promised that a sizable chunk of the casino tax revenue would go to programs for the the state's senior citizens, including badly needed housing assistance. But so far some $63 million has been diverted away from the these programs and used instead to help the state balance its budget.

In Florida, proponents of casino gambling are moving to twin a casino referendum measure with one that initiates a state-run lottery, hoping that this ''sweetener'' may help sweep in casino gambling. The proposed lottery is a sweetener in this sense: Polls show that the state's big elderly population favor a lottery much more strongly than they do casino gambling. For one thing, a lottery is viewed by many as an innocent pastime free of the criminal elements often closely associated with casinos.

A Florida referendum that would have allowed casinos only in Miami lost decisively several years ago. This was thanks largely to the opposition of former Gov. Reuben Askew, who pulled no punches in saying the industry was laced with criminal elements.

John Dombrink, an expert on the legalization of casino gambling with the Center for Law and Society at the University of California at Berkeley, writes that during the campaign preceding the 1978 referendum defeat of casino gambling in Florida, ''access to decisionmakers appeared to be the most important variable . . . . The proponents' access to decisionmakers was severely curtailed by the actions of the opposition forces. Opponents sought, by one campaign strategist's report, to 'make it difficult' for any opinion leader to come out publicly on behalf of legalization. . . .'' They did this by repeatedly charging that casino gambling had ties to organized crime and that it corrupted the political system.

Currently, opponents, led by a group called No Casinos Inc., are again stressing alleged ties between organized crime and casino gambling, together with the fact that the drug trade in the state already has fostered a heavy organized crime presence there.

Their arguments appear to be backed up by police findings in the Miami area. Arthur Nehrbass, chief of the Metro-Dade Police Department's organized crime bureau, says: ''We have . . . intelligence that says there is a lot of dispute between organized crime families in Chicago and New York as to their 'spheres of influence' when casino gambling becomes legalized.'' Lt. Roy Sommerhoff, in charge of the department's gambling unit, says that organized crime is already heavily involved in gambling activities in Dade County. He says the county's legalized bingo operations are ''organized crime controlled and infiltrated, and we can't even control that.''

The immediate goal of casino opponents in Florida is to stop the pro-gambling forces from gathering enough signatures to put casinos on the state ballot again.

This time around, however, in addition to hoping to use the lottery proposal as a springboard, casino proponents are trying to broaden the appeal of the referendum issue by including a local option clause that will permit communities other than Miami to have casinos if their voters so chose.

Shifting to the Northeast, there have been a plethora of proposals for casino gambling in Massachusetts, some of which are currently pending in its Legislature.

But the drive for casino gambling in Massachusetts was dealt a sharp blow recently when Gov. Edward J. King came out against it. As a result of this, as well as heated and organized opposition from the clergy, it may be years, if ever, before casinos are voted in, say close observers in the state.

But this doesn't mean the pressure for casinos will ease. Most experts say the push for casino gambling is likely to remain a fact of life in Massachusetts and other budget-pinched Northeast states for a long time.

What Massachusetts already has are so-called ''Las Vegas nights,'' run by charitable organizations to raise money. These affairs allow limited wagering on slot machines, roulette wheels, and other casino-type games. In the words of one critic, state Rep. Lawrence R. Alexander, ''Casino gambling has entered Massachusetts through the back door.''

John Conte, a former state legislator and currently district attorney for Worcester County, has charged that the ''nights'' are run by individuals with roots in organized crime.

But Mr. Conte has had a hard time convincing the public or politicians that criminal interests are entrenched in the Las Vegas nights, which mushroomed from 517 in l979 to 3,000 in 1981. Many view Las Vegas nights as merely leisure time activities, which have the positive objective of helping to support a charity or church.

Massachusetts Attorney General Francis X. Belloti, however, sees the activity as anything but innocent. ''Charitable gambling has become de facto casino gambling in this state,'' he said at a recent hearing held by his office. ''It's big business in which professionals are doing the dealing.''

Mr. Conte anticipates a number of indictments soon in connection with the Las Vegas nights. Already, some local officials have heeded his warnings and curbed the number of Las Vegas nights.

These developments in other parts of the country give a further idea of the ferment over legalized casinos:

* In North Dakota, lawmakers have legalized blackjack. Their action has created a kind of gambling ''mini-boom''--in controvery as well as dollars. Although the highest bet permitted is $2, some organizations running the blackjack games expect to net more than a quarter of a million dollars during the first full year of operations. Meanwhile, critics who oppose this form of casino gambling say that compulsive gambling and crime undoubtedly will rise in its wake.

* In Washington State, a series of bills have been introduced to legalize slot machines. The drive for casinos has taken a definite detour, but could start up again within the next few years. A referendum issue on casino legalization came extremely close to passing in 1978. The referendum required 60 percent of the vote for passage but received just slightly less.

There might be casino gambling in Washington State today had it not been for the FBI's ''Gam-scam,'' an investigation of gambling and political corruption that several years ago resulted in the removal of two top state legislators from office. After the scandal, former Gov. Dixie Lee Ray, who had supported casino gambling, came out against it.

* In Pennsylvania, a 1981 scandal in the state lottery has helped dampen the prospects for casino gambling in the near future. Many hotel operators who had been vocal proponents of casinos have done an abrupt about-face, worried that the Poconos and other resort areas may go the way of Atlantic City and lose their attractiveness as family resorts.

Last year, two Pennsylvania lottery officials, Nick Perry and Edward Plevel, were convicted of rigging a lottery drawing. Both have appealed their convictions. It is this kind of corruption that some Pennsylvania state officials say they can avoid if the state doesn't adopt casino gambling. Many officials, including Philadelphia Commerce Commissioner Richard Doran, say that Pennsylvania is just too conservative a state for casino gambling to ever get legislative approval.

* In Detroit, a majority of voters recently cast their ballots against sending a favorable advisory referendum (nonbinding) on casino gambling to the Michigan House. This was despite support for casino gambling from Detroit Mayor Coleman Young.

From these developments, and from numerous discussions with political figures and experts on casino gambling, it seems clear that many politicians across the country are being forced to carefully weigh the negative aspects of casino gambling.

The revenue appeal remains, certainly. But it's counterbalanced by the issues of organized crime involvement and the corruption of political ethics, as well as the social ills associated with gambling. The cost to society of compulsive gambling alone is staggering, according to a recent report by the Johns Hopkins Compulsive Gambling Counciling Center in Maryland. Pathological gambling ''ranks among the most expensive illnesses afflicting society,'' the report says. It notes that many problems gamblers lose their jobs. Even worse, it continues, many are driven to crime in an effort to find more money to ''feed'' their habit.

Such findings give new ammunition to groups like the National Council on Compulsive Gambling, NO DICE--We Love New York Inc., and Legislators Against New Casino Establishments.

The time seems to be past when states and communities can embrace casinos as simply a convenient economic cure-all. The losses, clearly, are mounting.