Majoritarian Cities: Policy Making and Inequality in Urban Politics

Chapter 6 - The Popularity of Gambling Meets the Need for Economic Development

162 chaPter 6 The Popularity of Gambling Meets the Need for Economic Development This chaPter exaMines the process of locating riverboat casinos in Gary in the mid-1990s. The two main issues addressed are the level of public support for the casino proposal as well as the tangible impact of the casinos on the city and region. In recent decades, several forms of legalized gambling have become increasingly common across the United States. Further, as discussed in chapter 2, during the 1990s public support increased for casino gambling, and a sizeable majority of Americans have come to believe that casinos contribute to local economic development. Although the economic decline of Gary has been more severe than most municipalities, the city is a clear example of these larger national trends with regard to public support for casino development. At a time when casinos were still prohibited by state law, Indiana authorized a nonbinding referendum in Gary in 1989 asking residents whether traditional land-based casinos should be allowed to be built. The referendum passed by a comfortable margin. This event, as part of a growing procasino movement, led the Indiana legislature shortly thereafter to begin considering various bills legalizing limited numbers of casinos in the state. After several failed attempts, in 1993 the legislature passed a law authorizing a restricted number of riverboat casinos on Lake Michigan and the Ohio River, including two in Gary. In 1995, the city elected Scott King, its first White mayor in several decades, and one of King’s first major tasks was negotiating a development agreement with the owners of the two riverboats. Both development agreements ultimately stated that the riverboats would strive to hire significant numbers of Gary residents, and pledged substantial monies and other economic benefits for the city, county, and state. Even though many of Gambling Meets the Need for Economic Development 163 these benefits have been realized, the riverboats have consistently fallen short with respect to the employment goals for Gary residents. And because of nagging delays in the use of casino revenue to fund a downtown hotel, Mayor King diverted existing revenues to cover additional costs for the construction of a downtown ballpark. This act was very unpopular with local legislators and citizens, and contributed to King’s eventual departure from office. On balance, the riverboats have provided some economic benefits for Gary and the surrounding region and by several indications have had the support of city residents. Yet much more needs to be done to revive this formerly thriving urban area. Clearly riverboat casinos alone cannot begin to replace the employment and wealth generated over a period of decades by the many manufacturing facilities that no longer exist in Gary and northwest Indiana. But the prospect of riverboat casinos represented a viable form of economic development in a deindustrialized city, and while public support for this measure reflected the hard realities of life in Gary, it also reflected the increasing popularity of gambling across the country. the rise of gaMbling in the united states Legalized gambling has exploded in the United States. After the tax revolt in the 1970s in California, state governments began to examine alternative forms of raising revenue, and gambling advocates argued forcefully for the adoption of lotteries and casinos as well as other gambling operations. By the turn of the twenty-first century, roughly three-quarters of the states had overturned previous bans on lotteries (Mason and Nelson 2001, 6), and all but two states had some form of legalized gambling (National Gambling Impact Study Commission 1999, 1–1). Although the increase in lotteries has been dramatic, several types of casino-related gambling have also become increasingly important revenue sources for state and local governments. By 2006, twelve states had created legislation that authorized non–Native American land-based or riverboat casinos, and twenty states allowed Native American casinos (Policy Analytics 2006, 20). During the 1990s, Indiana became part of this nationwide trend of casino gambling. As Elaine Sharp has written, casino gambling is a “politically attractive alternative to conventional tax increases on existing businesses and residents when governments desperately need new infusions of revenue” (Sharp 2005, 68). 164 Majoritarian cities However, the proliferation of gambling in the United States has not been without controversy. After New Jersey voters legalized casino gambling in 1976, seventeen states attempted to follow suit between 1978 and 1988. But initially only South Dakota passed legislation authorizing casinos...