Today, gambling in the United States is in its third wave.
Further expansion of casino-style gambling will continue along regional lines, with the bulk of the visitors drawn from the areas surrounding the new jurisdiction. The first wave started during the Colonial period and died out almost totally before the Civil War. The second wave started shortly after the Civil War, driven by the South’s need to raise revenue to rebuild, and ended because of scandals, including the notorious Louisiana Lottery scandal of the 1890s.
As a result of these scandals, voters became so disenchanted with gambling that they began to include anti-gambling language in their state constitutions. The third wave of legalized gaming began in the 1960s with the introduction of the New Hampshire sweepstakes in 1964.
Since then, a total of 36 states have introduced lotteries, which generated revenue of $11.5 billion in 1992.
Much of the motivation for the growth of legalized gaming manifests itself in the search by state governments to increase tax revenue and to extend the tax base in order to maintain existing programs. Lotteries traditionally have been the legalized gaming of choice for state governments, and to keep revenue growing lotteries have continued to turn to new games including multi-state lotteries and ‘video’ lotteries, in which participants play small stakes games such as Poker, Keno, and Blackjack.
New games, however, have not kept lottery revenue growing as fast as the increasing reliance of states on this form of financing. This has led to a heightened interest in other forms of legalized gaming.
Native American gaming has accelerated this process as states feel the loss of potential tax revenue are seen as ‘painless’ and ‘voluntary’— much easier for politicians to propose than other tax alternatives.
There are, however, other fundamental changes that are helping drive the jurisdictional growth of gaming.
Several factors point to the continued growth of gaming, but the overriding cause is the increase in disposable income associated with the move from an industrial economy to a service economy.
Increasing productivity gives individuals more leisure time, and competition continues to keep the cost of manufactured goods down, leaving households with more disposable income.
Disposable income has increased also because of demographic factors, including the arrival of the baby boom generation at their peak earnings age, the tendency of families to have fewer children to support, and the prevalence of double-income households.
Moreover, an increasing proportion of household incomes is being spent on services, including leisure and entertainment, of which gambling is one part.
In addition, much of the population has not been exposed to casino gaming; thus, it has added cachet as a new entertainment and leisure product.