Today's decision by the South Carolina Supreme Court to outlaw the state's $2.8 billion video poker industry is the most remarkable defeat for gambling in memory. Other states have blocked gambling--as Alabama did by defeating a lottery referendum this week--but this marks the first time in 50 years that a state has outlawed gambling and uprooted a living industry.
The South Carolina decision is a triumph for anti-gambling activists, who have been hammering the Palmetto state for years. Yet, weirdly, it is also a victory for gambling--at least the kind of gambling that Americans want.
To understand why, you have to realize how ugly the South Carolina video poker industry is. Those who have not visited South Carolina recently don't know what a favor the Supreme Court has done the state. Gambling everywhere in America has produced its share of social disarray and political sleaziness, but nothing remotely equals South Carolina, whose poker industry was built on lies, legal chicanery, and just plain crime.
Most Americans don't realize South Carolina even has legal gambling, yet it has 7,000 places to gamble--more than any state and three times as many as Nevada. It has 34,000 gambling machines, more than all but three states. South Carolina is--and there is no other word for it--blighted by gambling. About one-quarter of all South Carolina retail businesses offer gambling. Every place you can think of that might have gambling has gambling: Convenience stores, bars, restaurants, bowling alleys, truck stops, etc., are fogged with cigarette smoke and filled with people who don't have much money playing games they can't win for five, 10, 20 hours at a stretch. (I'm not exaggerating. I have seen this.) Video poker operators grossed $750 million last year, and their take has been growing 20 percent annually. And all this has occurred in a state that never intended to legalize gambling.
The video poker industry finessed itself into existence. South Carolina law clearly banned gambling. But in 1986, as a favor to a big local businessman, a state senator stuck a tiny amendment in the back of a gigantic budget bill. The amendment erased two words--"or property"--from an obscure South Carolina law. It passed without any debate--public or private--and without legislators knowing what they had done. It legalized video gambling, allowing game owners to pay jackpots to video poker winners. It wasn't until 1989 that the state even realized what had happened.
Having legalized itself through the backdoor, the industry proceeded to duck, skirt, or break every law passed to control it. When the state banned big jackpots by forbidding machines to pay more than $125 to a player in a day, poker operators ignored the law. They continued to offer multithousand dollar jackpots: If a gambler hit the jackpot, he was simply paid $125 a day for as many days as it took to empty the pot.
When the state banned casinos by limiting operators to five machines on one "premises," operators surmised that "premises" meant, essentially, anything with a wall and a door. Then they jammed 40 or 60 or 100 machines into a single building and subdivided it into endless five-machine closets. (They call these places, with a sick sense of euphemism, "video malls." More dismal casinos you cannot imagine. At one "video mall" where I spent several days, the only food on offer was Tootsie Rolls.) Unlike virtually every other state with gambling, South Carolina does not tax gambling revenues, does not forbid children to play the machines, and does not ban felons from owning them. Gambling experts call it the "Wild West" of gambling.
The video poker industry's latest trick was buying itself a governor. After Republican Gov. David Beasley tried and failed to ban video poker last year, the industry went to war against him. It spent at least $3 million--and almost certainly a lot more--to defeat Beasley's re-election bid. By one estimate, video poker supplied more than 70 percent of Democratic gubernatorial candidate Jim Hodges' war chest, plus another million from a single poker operator on his own anti-Beasley operation, plus another million or more in soft money for the Democratic Party. (The chairman of the state Democratic Party is the leading lawyer for the poker industry.) Beasley, a popular Republican governor in a thriving Republican state, lost to a little-known, uncharismatic Democrat. The poker money swamped him.
But despite Hodges' victory, the backlash against video poker grew. The overwhelming image of American gambling is of Vegas glamour, but the new reality is "convenience gambling." This is the industry euphemism for the infiltration of gambling into everyday life (which is indeed convenient for the businesses that make millions off it). Traditionally, Americans have separated gambling, exiling it to the desert of Nevada, the horse track, or the beach. But convenience gambling has brought it next door, in the form of video gambling in places such as Montana, South Dakota, and Louisiana, and in the form of scratch-off lottery games all over the country. South Carolina is by far the most extreme example of convenience gambling.
Experts deplore convenience gambling. It is extremely dangerous to addicts: Every trip to the store becomes a temptation. (Video poker, which is fast and requires skill, is known as "video crack" because it is by far the most addictive form of gambling. According to the only study of South Carolina gamblers, the state seems to have a problem-gambling rate twice as high as Nevada's.) Convenience gambling also addicts businesses. South Carolina hooked previously independent gas stations, convenience stores, bars, and restaurants on gambling dollars.
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