NATIONAL GAMBLING IMPACT STUDY COMMISSION

THE HONORABLE ROBERT TORRICELLI

We'll move now to our first panel, and, ladies and gentlemen, please join me in welcoming our inviting panelist, Senator Robert Torricelli and Senator Frank LoBiondo -- Congressman. I've just given you a wonderful promotion. Congressman Frank LoBiondo.

The Senior Senator from New Jersey, Senator Frank Lautenberg, is unable to be with us today, but has sent his remarks to the Commission on videotape. We'll view that tape at the conclusion of the remarks of the panel members who are here and present today.

Our first speaker in the Honorable Robert Torricelli, who represented the Ninth District of New Jersey from 1983 until his election to the United States Senate in 1996. Please join me in giving him a very warm welcome.

(Applause.)

SENATOR TORRICELLI: Members of the Commission, Ms. James, thank you very much for this opportunity and welcome to Atlantic City. I hope you enjoy your time here and, more than that, the opportunity to see people of our city who work and live here.

As you meet people in Atlantic City and you tour this community, I'd like you to remember one thing about New Jersey's judgment to institute casino gaming 20 years ago. Atlantic City was not a dying town 20 years ago. Atlantic City was dead.

The State of New Jersey engaged in a very long and thorough and very serious debate about whether to change our state constitution and bring casino gaming into New Jersey. It wasn't an easy decision, and there was real reason for trepidation.

What it would mean to bring gaming into a poor community; traditional problems in our state of organized crime; and so it was a judgment that was close and difficult, but one for which now there is no regret. This which you're about to experience is an extraordinary success story.

Let me paint a picture for you if I could, if only briefly, of the Atlantic City of these 20 years. Before gaming 20 years ago, 25 percent of all the people of Atlantic City had made a judgment about this community with their feet. They left town. In the preceding 15 years, another 25 percent of the people of Atlantic City had left. More people were leaving Atlantic City than any other urban community in New Jersey.

Unemployment, at 25 percent, was as high or higher than any other urban center in the nation. Average income in Atlantic City was the poorest of any urban community in New Jersey.

It cannot be overstated and it cannot be said enough. Casino gaming saved Atlantic City and its people. Casino revenue now constitutes more than two-thirds of the entire municipal budget of this community.

In our state, where education is paid for almost entirely by local real estate taxes, 79 percent of Atlantic City's property taxes are paid for by casinos. I hope every member of the Commission, in spite of your schedules and all the testimony you're going to receive, will take the time to join Mayor Whelan on his own tour of the city. You will be impressed by what you see, as well, as I might add, the commitment of this mayor and the quality of local officials the community has now produced.

Let me turn for a moment now and look at the casinos themselves and how they've operated and who works in them and what it's meant to their lives.

More than half of the labor force of Atlantic City now works directly in the casino industry. That may be the less important part of the tale. We were discussing with Kay James before the session began the most important part for the workers here may be the difference in the incomes.

Before casino gaming, the average per capita income in Atlantic City was 96 percent of the national average. That might not sound too bad to you unless you consider the cost of living in New Jersey compared with the national average.

Today average wages in Atlantic City are 135 percent of the national average. Welfare rolls in Atlantic City are now reduced by more than 50 percent. Every aspect of life has been touched and changed. Even, indeed, if you were to visit later today the Atlantic City Rescue Mission, I ask you to consider this. The Rescue Mission is not here because of casino gaming. There was always a Rescue Mission in Atlantic City. The difference is now it is funded and adequately serves the community because of casino funds.

I am in many ways an unusual advocate of the gaming industry in New Jersey because for those of you who do not know our geography, you cannot travel further in the State of New Jersey without leaving our bounds than you do when you reach my home. The congressional district that I represented for many years is as far as you can travel in our state, and that bears some significance in the strength of conviction New Jersey feels about our gaming industry because the benefits of the industry have genuinely reached every citizen and community in our state.

The primary vehicle for delivering these benefits has been the casino reinvestment funds, the New Jersey Casino Redevelopment Authority (CRDA). Through its mandate, $800 million CRDA funds have been redistributed in the State of New Jersey.

The Catholic Community Facility in Newark, a Vietnam veterans memorial in Monmouth County, a waterfront park in Mercer County, and yesterday when we were inaugurating Government Whitman to her second term, it was in a new Performing Arts Center in Newark, compliments of money from the casino industry.

Indeed, in northern New Jersey in our great urban centers, both Hudson County Executive Janiszewski and Essex County Executive Treffinger have told me that without CRDA funds reinvesting in social services, they could never meet the needs of some of the new construction and new services that are being delivered in those urban centers.

New Jersey has insured that non-casino housing has also matched job creation step for step. Twenty years ago it wasn't only the loss of people. It wasn't simply the fact that people who had been employed were moving onto welfare rolls in record numbers. The housing stock of Atlantic City was deteriorating all around us.

In recent years, in an incredible statistic, on a per capita basis Atlantic City has built more new housing than any other city in the nation. Casino redevelopment funds have been a part of the story. Two hundred and fifty million dollars in new housing.

The northeast inland redevelopment area, which you may see in your tour, $80 million created a middle class community of 1,200 homes paid for 100 percent with casino funds.

In education it has been much the same story. A high school which was not only inadequate, but no longer in some respects even safe replaced with an $83 million new high school facility.

To put this in perspective, casinos may not be in every way what Mr. Leone and others have seen Nevada come to represent with Las Vegas. This is a large state with a diversified economy. But even so, it's instructive to note that with 50,000 workers directly in casinos and 40,000 workers indirectly, this is probably New Jersey's second largest industry.

Even in a state of this size with eight million people, it is not simply an ancillary industry, but a major engine of real estate growth and employment opportunities.

For the nation and for our larger state revenues, it surprises many to know that with 34 million visitors Atlantic City is the nation's most popular destination for tourists. They're not staying long enough, and they're not spending enough money, but we're working on it. They are, however, coming in record numbers, voting with their own tourist dollars, an affirmative answer to Atlantic City's role as a tourist attraction in the nation.

For the state, as well, with revenues beyond what this has meant for individual communities through redevelopment funds or property taxes for Atlantic City, it's also an extraordinary story. The State of New Jersey has received $8 billion in casino taxes and fees. This is the most heavily taxed industry in New Jersey and probably the most heavily taxed industry in America.

What does it mean for every taxpayer in our state? Well, first, it means that nearly five percent of all New Jersey taxes are paid by casino revenues. That's five percent in taxes that are not on our property taxes or not paid in income taxes. These casinos are paying not only their way, but they're replacing tax dollars many of the rest of us would have to pay otherwise.

And the one benefit which I am the most proud, as you visit not only our city, but our state, perhaps our most progressive and important program for senior citizens is our prescription drug program, where for a modest fee any person who lives in this state and is a senior citizen and qualifies under the income caps of the program, can get a prescription drug filled compliments of a fund paid for by casino revenues.

That puts a burden on all of those who criticize this industry, who rightfully see things that we could do better, where the industry could do more, to answer a question that we in New Jersey asked 20 years ago. If there were not a casino industry in New Jersey that was profitable and growing, where would that five percent of state revenues and taxes be generated? Who would pay for the prescription drugs or the senior citizen centers or the educational facilities?

To some it's an academic question about when they consider the relative virtues of casino gaming. To New Jersey, it's something we have to think about all the time. We are building our state on many pillars. One of them is this industry.

And yet in a frank conversation, let us return to another judgment of 20 years ago. I was fortunate to work in the Governor's office at that time as a young law student. Many of us did not realize the full financial benefit that would come to New Jersey. We had hopes, but we weren't sure.

We did, however, live with another fear, and that is that casinos in Atlantic City and this industry would attract some of the worst elements in our society; that organized crime and petty thieves and others would come to Atlantic City and enter our state, ruin the industry, and victimize our people.

Let me be clear on this issue. Not only is there no industry in America more regulated than the casino industry. There are no casinos in the world that are more tightly supervised and regulated than casino gaming in the State of New Jersey.

New Jersey had reason to fear organized crime entering this industry. Today New Jersey has every reason to be proud. We won the fight.

The Casino Control Commission employs 700 regulators for 12 New Jersey casinos. By comparison, the federal government employs approximately 30 regulators for some 200 casinos that it occasionally visits and pretends to oversee. This is an extraordinary story.

The investors in casinos in the State of New Jersey include some of the most respected names in corporate America: Hilton, ITT, Harrahs, names that would make any community in any state proud to have them a part of their business community.

And yet there are those who try. Five thousand five hundred individuals applied for employment with casinos and were told by the State of New Jersey they did not meet the standard. Two thousand businesses sought to do business with Atlantic City's gaming industries and were told they were not good enough.

We haven't just been careful. We have been near certain that no one was going to ruin this experience for our state. We were given all of the benefits as possible with as few of the costs as were necessary.

And, of course, this leaves us with the people who live in this community who took the risk, led the decision, and now have the most at stake. This is where the real benefits have obviously been.

There's another story behind the rising incomes and the new housing. Half of all the employees in the casinos of Atlantic City are members of minority communities. Near 40 percent are women. It is not as though there were a variety of industries hoping to come to Atlantic City from which many of these employees could choose. This industry was created through good leadership of Democratic and Republican governors. It was created, and it worked. It created a life for people who otherwise might not have had it.

I know that casino gaming is not the right answer for every community in America. The urban ills of the United States will not all be answered by casino gaming. It was the right formula for Atlantic City. We made an important judgment. We wanted the casino gaming, but we wanted it localized, controlled, and not throughout the State of New Jersey. It was the right formula. It was the right decision.

Other communities will have to answer for themselves what will best serve opportunities where there appear to be none, how you reverse the fortunes of dying communities. It is a complex and a difficult question of our time. In New Jersey for Atlantic City, the answer was casino gaming.

We met our responsibilities. We've met our objectives. We kept the mob out. We increased jobs and wages. We reduced welfare. We created a success. We have no regrets.

We're pleased you're here to look at our city and our industry. We're open to yours or anyone's suggestions and ideas, but we hope as you leave Atlantic City you will take the message out across the nation as well. Casinos have worked in New Jersey. They've created an opportunity. This is an industry that works.

Thank you very much.

CHAIRMAN JAMES: Thank you, Senator Torricelli.

Now we'll hear from the Honorable Frank LoBiondo.

COMMISSIONER DOBSON: Madame Chairman.

CHAIRMAN JAMES: Commissioner Dobson.

COMMISSIONER DOBSON: I know we're on a tight schedule, but may I ask a question of the Senator?

CHAIRMAN JAMES: certainly.

COMMISSIONER DOBSON: Senator, I appreciate your welcoming the Commission to Atlantic City. I note, however, in an interview with The New York Times yesterday that you were highly critical of this Commission, as you have been on a number of occasions, questioning the objectivity of the Commission and so on.

I'd like to give you an opportunity to elaborate on that and explain the source of your criticism.

SENATOR TORRICELLI: Well, it's a frank question, so you'll get a frank answer. It would not have been my judgment to have created this casino Commission. It was not my judgment that the United States government needed to consider the operation of casinos, whether they should operate or their legitimacy, any more than we needed a review of the automobile or the pharmaceutical industries.

The industry is a reality. It is working. It is a success.

It is also my judgment that this was a decision made by the sovereign State of New Jersey and the sovereign States of Nevada and other communities that we would be free to do our own analysis.

Nevertheless, the Commission is a reality. I respect many members of this Commission. Several of you have been friends of mine through the years. You have a mandate, and I want to see you accomplish it.

Nevertheless, I am concerned that in a large and varied nation where different communities have different standards and set different objectives for themselves that anyone might pass judgment on the legitimacy or the moral efficacy of an industry that is so important to my state simply because they do not see it to be advantageous to their own community. This nation requires a degree of respect for those differences.

Nevertheless, I am convinced from my conversations with Ms. James and other members of the Commission that I am hoping that there is a rising objectivity. I do regret that this couldn't have been set right at the outset. As you know, I sought, along with Senator Bryan and Senator Reid, to appear at the opening meeting of the Commission. I was, frankly, surprised that the United States Senators representing the two principal gaming states of the nation were not invited to provide opening testimony. I am more than a little comforted that we've compensated for that today with a very gracious invitation.

Nevertheless, having had time for Mr. Wolf, who had some decided views against our industry and its operation, to have time to testify, for us not to, I thought got us off on the wrong foot. You've seen that more than reflected in my comments.

Nevertheless, for whatever mistakes were made, they are corrected. We are on course, and I think we can do some good.

COMMISSIONER DOBSON: One other question. Considering the fact that you've raised the issue of objectivity and considering the harshness of your comments in Las Vegas recently, especially about myself -- incidentally, my name is James Dobson, not Pat Dobson, and I head up the Focus on the Family organization, not the Family Research Council -- but given your criticism of me and some other members of this Commission, I wonder about your own objectivity behind the comments that you made today, considering the fact that Common Cause has listed you as ranking sixth in the Congress in recipient -- as a recipient of gambling contributions.

Does that in any way color the presentation that you made today?

SENATOR TORRICELLI: Well, I think the burden of objectivity falls on you. You are a member of a Commission that has a mandate to take an objective view at casino gaming in the United States. I will not defend my objectivity because I have none. I believe in this industry. I believe in Atlantic City. I am here as an advocate, not as an objective observer.

And so whatever standards of objectivity might be appropriate are best applied to the Commission and to yourself, not to me. I am an advocate.

COMMISSIONER DOBSON: Then I will accept your report as subjective.

SENATOR TORRICELLI: Mine and I assume every other witness you receive. Few witnesses will come before you because they seek to share the relative merits of all points of view. That's part of a hearing process.

(Laughter.)

CHAIRMAN JAMES: Thank you very much.

Any other questions?

(Applause.)