Wagers of Sin

The not-so-secret agenda of America's anti-gambling guru

Freedom can hardly be used very freely when a person's mind and spirit have been warped by a system which limits the range of his choices in order to maintain itself. That is, you're hardly exercising a real choice by picking among a set of gimmicks promoted by business to make you feel you have a choice.

–Robert Goodman, After the Planners (1971)

Legalized gambling is a highly controlled, monopolistic business that preys on the most vulnerable people in our society. There is hardly much free choice when jobs are scarce or don't pay well, and when government and private casino companies spend hundreds of millions of dollars on behavior modification studies and advertising to tell people they can change their lives through gambling.

–Robert Goodman, The Luck Business (1995)

When the first of these passages was written, Robert Goodman was a self-described radical architect who was busy waging "guerrilla architecture…to promote the political consciousness of the people" and to "expose the repression of the established order." By the time the second passage appeared two-and-a-half decades later, Goodman had emerged as one of the most articulate, respected, and ardent opponents of the next great vice to come under intensive governmental scrutiny: legalized gambling.

One might think that Goodman's interests and objectives had changed substantially between his days as a revolutionary firebrand and a sober analyst, but as the passages quoted above suggest, there is a common thread: Robert Goodman's writings are a testament to his lifelong hostility to private property, the free market, and the idea that average people can be trusted to know what's best for them.

Yet since its publication two years ago, The Luck Business: The Devastating Consequences and Broken Promises of America's Gambling Explosion has become the bible of the national anti-gambling movement and a standard reference for journalists and politicians on both ends of the political spectrum. The cover of the paperback edition displays fulsome panegyrics from the Chicago Tribune, The Baltimore Sun, The Boston Globe, The Washington Monthly, and The New York Review of Books. As co-sponsors of the 1996 bill that established the National Gambling Impact Study Commission, charged with investigating the social and economic effects of legal wagering, conservative Rep. Frank Wolf (R-Va.) and liberal Sen. Paul Simon (D-Ill.) both cited chapter and verse from The Luck Business in numerous speeches before Congress.

Although he will have no official role on the federal gambling commission, which is just beginning its two-year inquiry into state-sponsored, commercial, Native American, philanthropic, and charitable gambling, Goodman's intellectual presence will be felt strongly. Indeed, Congress created the panel last summer after Goodman promoted the idea in The Luck Business.

It is easy to see why anti-gambling partisans–including conservatives who view gambling as immoral–would embrace Robert Goodman's writings. Much of the public debate over gambling focuses not on the question of whether people should be free to gamble but on how legal gambling enterprises affect state and local economies. There is by now a good deal of evidence to suggest that legalized gambling has led to job creation, enhancement of tax revenues, and the revitalization of depressed local economies. To cite one example, a June 1997 report on the effects of legalized gambling in Connecticut prepared by a consulting firm, the WEFA Group, concluded that "legalized gambling, primarily at Native American casinos, has been an economic engine for the State." According to the report, between 1991 and 1996, legalized gambling was responsible for a net increase of more than 22,000 jobs, which produced a $619 million net increase in wages and salaries.

Goodman, however, insists that nearly all of the economic benefits that are supposed to flow from casinos are illusory, while their social and economic costs are enormous. That this catastrophe-in-the-making has gone unrecognized is due in large measure, he avers, to the skillful waging of a massive propaganda campaign by the well-heeled gaming industry, which has managed to bamboozle gullible politicians into believing that gambling is a panacea for their states' economic woes.

According to Goodman, the consequences of this deception have been staggering: Local businesses are destroyed as gambling siphons away consumer dollars. State funds that could otherwise be used to support "industrial extension programs" are instead spent on advertisements aimed at enticing "the most vulnerable people in our society" to squander their hard-earned money on games of chance. As a consequence, claims Goodman, hundreds of thousands of people eventually become addicted to gambling, which leads to alcoholism, child neglect, poor job performance, family break-up, financial ruin, and even suicide. Young people are socialized in a culture of gambling, producing an explosion of illegal underage gambling and a new generation of compulsive gamblers.

Goodman's one-sided view of gambling's effects is echoed by advocacy groups such as the National Coalition Against Legalized Gambling. But Goodman insists that he is no mere political activist who is pushing an agenda. He means to be taken more seriously than that. During an appearance at the National Press Foundation in Arlington, Virginia, in January, he took issue with those who have described him as a journalist. "I am a researcher," Goodman declared.

But that assertion is strongly disputed by a number of prominent scholars who specialize in gambling studies and who question his bona fides (though the 60-year-old Goodman teaches environmental design at Hampshire College, he holds no advanced degrees). "Goodman is certainly not a researcher or an economist," says William Eadington, an economist who directs the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. "He's a compiler, and very much a journalist." Goodman's work is "not based on accepted economic theory," says economist Gabrielle Brenner of the Ecole des Hautes Etudes Commerciales in Montreal. "He doesn't seem to understand the most basic principles of consumer economics." Writing in the Journal of Macromarketing, David Rados of Vanderbilt University described The Luck Business as "a Halloween book, one that aims to frighten the reader but is marred by one-sided and incomplete arguments that will convince only the credulous." Experts in the field of gambling studies also note Goodman's failure to publish in peer-reviewed journals or appear at academic meetings.

Richard McGowan, a professor of economics at Boston College and a Jesuit priest, calls Goodman an "anti-gambling ideologue" who poses interesting questions about the societal impact of gambling but whose conclusions are based solely on personal bias. Goodman's work on gambling is case-oriented, which is a far cry from traditional economic analysis, McGowan explains. Modern economists who wish to study the economic impact of some phenomenon typically employ sophisticated quantitative methods, such as time-series analysis, regression analysis, and various types of formal modeling. In contrast, Goodman's method consists of selecting individual cases that confirm what he already believes and then drawing from them a set of predetermined conclusions. McGowan dismisses Goodman's approach as "methodologically unsound."

It is not mere academic snobbery that explains these scholars' harsh assessment of Goodman. Rather, Goodman invites such criticism by continually portraying himself as a disinterested academic researcher. For example, his latest venture is the "United States Gambling Research Institute," which he founded this year in Northampton, Massachusetts. A promotional brochure states that the USGRI will offer "critically needed objective information about legalized gambling" and "provide balance to the ongoing debate over new forms of legalized gambling." Moreover, the institute promises to "conduct original research and evaluate the work of other researchers." The opening sentence of The Luck Business announces that in "1992…I became the director of the United States Gambling Study." But the official-sounding name of this entity is misleading. In reality, Goodman himself fashioned both the name and the "study"–and appointed himself director–with modest grants from the Aspen Institute and the Ford Foundation.

Even Goodman's critics, however, have failed to identify the motive that lies behind his anti-gambling zealotry. As Goodman is quick to point out, he himself is a gambler who enjoys "card games, mostly poker," so he is not opposed to gambling per se. Rather, Goodman objects to the "gambling industry"–and especially to the support he believes that industry receives from state governments.

In the concluding chapter of The Luck Business, Goodman argues that instead of allowing the states to "promote" gambling, the federal government should develop a national industrial policy that would favor "those technologies and industries that are most critical to the country's economic future, and…provide these industries with specially targeted government support, including outright grants for research and development, loan guarantees, tax breaks, tariff protection from foreign competitors, research at government labs, and guaranteed availability of government as a client and buyer of products." Even sympathetic readers may have been puzzled by the inclusion of this policy prescription in a book whose ostensible subject is legalized gambling. However, if one peruses The Luck Business together with Goodman's two previous books, it becomes apparent that his ultimate goal is to channel anti-gambling sentiment into support for centralized economic planning.

The Luck Business is best understood as a continuation of themes developed in After the Planners (1971) and The Last Entrepreneurs (1979). Goodman himself draws the thread, telling REASON: "The reason I got interested in gambling was that I was looking at what cities and states were doing to improve their economies. Quite a number of them had either gone into or were considering gambling as a form of economic development." Read in sequence, the three works suggest that Goodman's analysis of the economic effects of gambling is driven by his overarching commitment to a vision of planning and regulation that he calls "community socialism."

That term is missing from The Luck Business, and also from Goodman's congressional testimony and numerous media interviews on the subject of legalized gambling. But it recurs throughout the two earlier volumes. Indeed, there is much in Goodman's pre-gambling oeuvre that foreshadows the methods and biases that would eventually inform his writing on gambling. In After the Planners, he abandons any pretense to objective scholarship, declaring at the outset that "it is no longer possible for us to masquerade as 'disinterested,' 'objective' professionals." (The book is dedicated to "all those brave people who won't put up with it.")

Goodman's goals are succinctly stated in dozens of passages such as this: "Our problem is not simply to destroy capitalism, but to do this through the creation of a culture which will not tolerate the repressive and competitive values which capitalism has already induced us to accept." And this: "[W]e must aim at creating a cultural existence, a way of life, which requires just outputs. For example, if a community decides that a better architectural environment or a better educational program is to be produced, its way of measuring the usefulness of these programs would not result from calculating how much more money will be made through `keeping the workers happy' or by giving them more skills, but rather from evaluating the effects of a better architectural environment and better forms of education on the quality of people's lives."

Attention to "the quality of people's lives" is one of Goodman's central preoccupations. But "quality of life," like "social justice," is a notoriously slippery standard that usually means whatever the person invoking it wants it to mean. In Goodman's case, it clearly has nothing to do with the preferences of actual people as expressed in the marketplace. For example, if you derive pleasure from, say, drinking single-malt scotch or playing games of chance, you might think that having access to these things would enhance the quality of your life. But Goodman has long denied that individual persons are in a position to know best what is good for them.

Thus, when it comes to something like architecture, Goodman suggests in After the Planners that decisions about economic and even personal living arrangements are best left to collective political processes. He exhorts planning professionals to use their technical knowledge, and the authority it conveys, to transform societal values. "Design opportunities," he writes, "can be used as a way of explaining the advantage of community-ownership and management of all income-producing ventures–the factories, the housing, and the shopping places." Architects can further acquaint people with the satisfactions of community socialism by designing "communal buildings, where people share facilities and spaces, [which] would present an alternative to the present single-family house or apartment unit." Although he champions neighborhoods against technocracy, Goodman conjures a familiar tableau, that of the masses being disabused of their vulgar tastes and prejudices by a political cadre.

In The Last Entrepreneurs, Goodman deplores when businesses search for greater profits by moving plants and jobs from states with high taxes and militant unions to low-tax, non-unionized states. Rather than acquiesce in a pernicious game of "regional rotation" among private firms, he urges policy makers to recognize that economic instability provides a rationale for increasingly aggressive state interventions. The possibility of widespread business failure should be seized upon as "the opening wedge to develop public, locally owned enterprises," including factories, energy companies, and banks.

Any potential resistance to such proposals could be countered, Goodman suggests, by using the example of existing state-run enterprises to win acceptance for the creation of more advanced forms of socialism. It is in The Last Entrepreneurs that Goodman reveals his nascent interest in legalized gambling, endorsing "the idea of linking state lotteries and gambling to the creation of other state-organized operations. While public gambling can hardly be considered a traditional path to socialism, it might be useful to consider it as a step….The problem is not getting more states to run gambling operations but how to refocus existing gambling enterprise to create more progressive forms of socialism. A regional socialist movement could use the precedent of government gambling operations to demonstrate that public ownership is no longer a radical departure."

These passages make clear why, in The Luck Business, Goodman reserves his harshest criticism for private, commercial forms of gambling–especially casinos. State-run lotteries are of interest only insofar as their worst features and practices can be used to smear commercial gambling enterprises. Indeed, one of the book's most striking characteristics is its refusal to acknowledge important distinctions among the various forms of legal gambling. Legal gambling enterprises in the United States have become extraordinarily diverse, encompassing pari-mutuel betting at horse and dog racing tracks, charity bingo, state lotteries, and commercial and Indian casino gaming. A recent addition to this mix is "convenience gambling"–the placement of slot machines and video poker terminals in restaurants, drug stores, and gas stations. Given such variety, it hardly makes sense to view gambling as monolithic.

The Luck Business, however, repeatedly makes invidious generalizations about "gambling" and "the gambling industry" on the basis of evidence drawn mainly from the experience of state lotteries. Thus Goodman criticizes public officials for spending huge sums to advertise and promote "gambling," without acknowledging that broadcast advertisements for casino gambling are generally restricted–and in no way sponsored–by government. And rather than draw attention to the fact that lotteries alone are creatures of the state, Goodman tries to portray "the gambling industry" as universally benefiting from "government subsidies." As happens throughout the book, a sweeping indictment is supported by anecdotal evidence from one small corner of the industry. Here, "government subsidies" turn out to be tax reductions for horse-racing tracks in half a dozen states.

All of this goes a long way toward explaining why Goodman, in his critique of legalized gambling, gives short shrift to the simple theory that people gamble because they regard gambling as a pleasurable form of entertainment. To Goodman, legalized gambling, like capitalism in general, is a system designed to enable business owners to oppress workers and exploit consumers. The fact that Americans paid 154 million visits to casinos in 1995 merely confirms the extent of their victimization. To see what people really want, we must look not to the votes they cast with their pocketbooks but to their involvement in mass political movements. Thus, insists Goodman in The Luck Business, it is "crucial to understand that gambling is spreading in America not because of a popular movement clamoring for more opportunities to gamble, but because of aggressive lobbying by the gambling industry and the promotional efforts of politicians."

Such an analysis leaves unanswered the question of why people gamble. Lobbying by casino developers can only have the effect of lifting government prohibitions against gambling. It cannot force people to the blackjack tables and slot machines. Casino companies, and the politicians who appreciate the tax revenues to be reaped from legal gambling, understand that a great many people like to gamble and that, if given the opportunity, they will.

Why people gamble has long fascinated social scientists, and there is a wealth of research on the matter, including a famous study by eminent sociologist Erving Goffman. In the 1960s, Goffman worked as a blackjack dealer and croupier in Las Vegas and concluded that gambling was a surrogate for the risk taking that has been removed from daily life courtesy of the modern, bureaucratic state. Similarly, other researchers, such as psychologist Igor Kusyszyn and sociologist Felicia Campbell, have concluded that gambling provides positive stimulation for participants.

In The Luck Business, Goodman ignores such work, presumably because it contradicts his view that bettors are suckers who approach gambling as an investment opportunity, rather than as a form of entertainment. That false premise becomes the launching pad for a wide-ranging critique of "the new culture of chance" and "the new speculators." The latter are middle-class investors who, during the 1980s and early '90s, joined the wealthy in pursuing "new strategies for speculating in real estate, the stock market, and collectibles." It troubles Goodman that during this period, "income for people with investments grew three times faster than for those who were working for their money." In the grand tradition of socialist populism, Goodman celebrates honest labor while denigrating idle speculation, and he warns that this "broad shift in the American economy toward popular speculation is directing increasing amounts of human and financial resources into unproductive activities." By Goodman's reckoning, the new speculators include casino gamblers, owners of mutual funds, and even children who "by the age of ten,…already know about speculating in old baseball cards, comic books, or Barbie dolls." To the list of dangers that the modern world poses to the spiritual health and well-being of our kids, Goodman adds the corrosive allure of "an old Mickey Mantle card or first-edition Superman comic book."

Of course, Goodman is not content to depict gambling as just another socially useless investment strategy. Gambling is worse than the others because it takes a huge toll in "social costs." We learn, for example, that "the American Insurance Institute estimated that 40 percent of all white-collar crime had its roots in gambling"–an item subsequently repeated in The Economist. Trouble is, there is no such organization as the "American Insurance Institute." Goodman's citation on the matter uncritically passes on a claim made in an obscure publication. As for the 40 percent figure, it cannot be taken seriously: U.C.-Irvine criminologist Paul Jesilow notes that to arrive at this datum, one would have to identify all white-collar crime–a nebulous category that includes everything from a worker stealing a pencil from his employer to insider stock trading and antitrust violations–and ask all the perpetrators why they did what they did.

Goodman's tendentious use of statistics is nowhere more evident than in The Luck Business's discussion of "problem gamblers," a group he says comprises "between 1.5 to 6.5 percent of the adult population." The notion that so-called problem gambling is sweeping the country as legal gambling becomes more accessible is perhaps the most potent weapon of those who deplore gambling's "social costs," which, says Goodman, include suicide, divorce, job loss, and the aforementioned "white-collar crime." But Goodman doesn't define "problem gambling" in The Luck Business.

In contrast to problem gambling, "pathological gambling" is a clinical term recognized by the American Psychiatric Association. Psychiatrist Richard J. Rosenthal defines it as "a progressive disorder characterized by a continuous or periodic loss of control over gambling; a preoccupation with gambling and with obtaining money with which to gamble; irrational thinking; and a continuation of the behavior despite adverse consequences." Recent studies estimate that between 1 percent and 3 percent of the U.S. population suffers from pathological gambling, though some psychiatrists argue that the South Oaks Gambling Screen–the questionnaire used to diagnose the condition–yields results that are over-inclusive. Moreover, the estimate includes not only the currently afflicted but also those who suffered in the past and have since overcome their condition.

Goodman allows that he "can't define [problem gambling] precisely." Problem gamblers, he says, include pathological gamblers and others with "serious" behavioral problems related to gambling such as chasing losses and borrowing money they don't repay. "Whether you're a pathological or problem gambler," says Goodman, "depends on how extreme your behavior is."

A book written to educate and inform–written, that is, "to provide policymakers and the general public with a more accurate basis for making their decisions" (to quote from the preface to The Luck Business)–would take note of all this. Goodman, however, tells us nothing of the disagreements among psychiatrists over the diagnostic criteria and prevalence rates for pathological gambling. Throughout The Luck Business, he uses "problem gambling" as a synonym for "pathological gambling," attributing to problem gamblers the dysfunctional characteristics that psychiatrists associate solely with pathological gamblers. And by citing the higher problem gambling rate, Goodman invites the reader to conclude that pathological gambling is much more prevalent than it really is.

Goodman's tactic of blurring distinctions so as to cast commercial gambling in a negative light is by no means confined to his writings. Appearing last December on The News Hour with Jim Lehrer, Goodman was asked to comment on the fact that Americans, according to interviewer Margaret Warner, "are wagering tremendous amounts of money, I think something like $480 billion wagered, more than they spend on spectator sports and music events and movies combined."

Here was a perfect opportunity to correct a common misconception about the economics of gambling. "Margaret," Goodman might have replied, "those numbers are apples and oranges. The amount of money wagered is many times greater than the amount of money lost (or spent). With casino games, between 85 and 95 percent of the money wagered is returned to bettors in the form of winnings. The wager figure is so high because the bettor's money is used many times. A gambler with $50 to bet on slot machines, for example, could stretch that money over the course of an entire day. By the time he was eventually cleaned out, he may have wagered more than $500. But he's only spent $50 out of his own pocket."

Instead, Goodman's response was to claim that the situation is considerably worse than Warner's numbers indicate, because "what we're getting, essentially, is a small group of people in this country wagering huge amounts of money, getting in trouble over their gambling, or wind [sic] up writing bad checks, going bankrupt, committing fraud, embezzling money from where they work."

To challenge the notion that casinos inject cash into local economies by encouraging people to increase their personal spending, Goodman invokes an iron-clad version of the "substitution effect," which holds that the money consumers spend on newly available goods and services represents money withheld from pre-existing businesses. For Goodman, a dollar spent in a new casino must come at the expense of some other establishment. Though plausible, this is not necessarily the case: Consumers can alter their work and spending habits and new forms of entertainment can coexist with, and need not supplant, existing options.

In any case, worrying that consumers might decide to visit casinos in preference to non-casino hotels and restaurants smacks of little more than a desire to selectively protect certain businesses from would-be competitors. Isn't it true that every dollar spent on food served in restaurants is a dollar not spent on food sold at retail grocery stores? If we are willing to protect restaurants from competition with casinos, shouldn't we consider protecting grocery stores from competition with restaurants? Goodman's analysis raises such questions, but instead of confronting them directly, he breezily dismisses those who "maintain that the free market, not government, should dictate which businesses succeed and which fail." The criteria for selecting government's favored businesses are never spelled out.

What is more, Goodman's invocation of the substitution effect characteristically ignores the interest of the individual consumer. Economists Reuven and Gabrielle Brenner have noted that when people divert money from an established business with which they previously traded to a new competitor, they are expressing their judgment that the new product is more valuable to them than the old one. For government to deprive consumers of the opportunity to transfer their purchasing power in this way is to perpetrate an injustice against them. Dwelling on the effect of "substitution" on businesses, the Brenners point out, ignores the gain to society that comes from fulfilling consumers' wishes.

In the concluding chapter of The Luck Business, Goodman returns to the canard that all gambling enterprises–not just lotteries, but private gambling operations as well–are subsidized by state governments. "Gambling," asserts Goodman, has been adopted by the states "as a kind of ad hoc industrial policy." As an alternative to government support for this "parasitic economic activity," Goodman argues for an expanded industrial policy that would favor "productive enterprises." Since he furnishes no criteria by which we might distinguish the parasitic from the productive, we may surmise that by "productive" Goodman means those enterprises that produce things of which he approves. Calling an industry "parasitic" tells us nothing more than that the person using the epithet doesn't like that industry.

As the Brenners point out, "the truth is that the gambling industry is like any other entertainment industry. It uses hotels, machines, computers, video equipment, croupiers, and what not; new games as well as technologies for selling the games are being invented. There is no difference between this industry and, let us say, that linked with the production of operas, plays, or ballets–instead of hotels, theaters and concert halls are being built." What happens, the Brenners ask, when government restricts people's entertainment choices? "They either go elsewhere to spend their money, or they have less incentive to work."

One can appreciate the profound disappointment that Goodman must have felt when, instead of leading to "more progressive forms of socialism," state lotteries during the 1980s and '90s paved the way for a new form of private enterprise–casino gambling. At times it seems that what most upsets Goodman is not that hapless gamblers are losing their money, but that increasingly their money is, as he remarked on The News Hour, "going into the pockets of the people who run the gambling companies….Now, essentially, what we've done is privatized a sector of our tax system." Lotteries may be a bad bet for gamblers–they typically return only about half of the money wagered–but at least the money bettors lose goes into the state's coffers.

It seems unlikely that Goodman will succeed in his effort to lay the groundwork for a comprehensive national industrial policy–and ultimately, the "community socialism" that he championed in earlier writings. But he has already done much to shape the current debate over legalized gambling. By focusing on "gambling's broken promises," Goodman has succeeded in transforming what should be a personal-freedom issue into one dominated by macroeconomic considerations. Curiously enough, he has been assisted in this by casino executives, their lobbyists, and sympathetic politicians, who have proved quite eager to trumpet the economic benefits that gambling brings, but who have said little in defense of the proposition that tax-paying, law-abiding citizens have an inherent right to spend their time and money on pastimes that do no harm to others.

The economic effects of the different forms of legalized gambling, considered in various contexts and circumstances, are empirical questions that await the federal gambling commission. Even an objective study, however, runs the risk of becoming overly preoccupied with gambling's economic costs and benefits–which can be quantified–while ignoring the not-inconsiderable benefit that people derive simply from being free to spend their time and money as they wish. The greatest danger posed by the National Gambling Impact Study Commission, however, is that it will embrace Robert Goodman's tactic of using anti-gambling politics as a vehicle for further expanding the power and jurisdiction of the managerial state.

Robert Detlefsen ([e-mail]) is a senior research fellow at the Competitive Enterprise Institute.