The presence of too-young customers has been a continuing problem in the nation’s second-largest gambling resort.

The state Casino Control Commission approved a measure on Wednesday granting casino security officers expanded power to detain people suspected of being too young.

The legal age for casino gambling and drinking in New Jersey is 21. State statistics show hundreds of underage patrons are either arrested or detained inside Atlantic City casinos each year.

Several gambling halls have been hit with hefty fines for allowing underage patrons to gamble or drink.

On Tuesday, Governor Pat Quinn signed a Bill into law that will bring thousands of video gambling machines into state restaurants and bars. The move is being made to try and close a budget deficit and help pay for a $31 billion public-works system.

The Bill only authorizes local jurisdictions to make their own rules regarding how many machines will be allowed in their bars. With over 15,000 liquor licenses, the state could add a maximum of 77,000 new gambling machines.

The next step in the gambling expansion process will be for the Illinois Gaming Board to come up with regulations of the new law. The Board has two months to develop the regulations. The state will receive thirty percent of the revenue generated from the new machines.

Illinois is moving the same way as the rest of the country when it comes to expanded gambling. They already have riverboat casinos and slots at state racetracks, but now the slots will be offered in many more places. It will provide an opportunity for much revenue in Illinois.

Each bar, restaurant, or truck stop that has an alcohol license will be allowed by law to carry up to five gambling machines. The actual number of machines the establishments will contain will be up to local authorities.

But the First State is well positioned. Armed with sports betting — offered by no other state east of the Mississippi — and table games, experts say Delaware could become a gambling destination to give Atlantic City a run for its money.

Gambling has proved a lucrative business for cash-starved states, providing revenue that doesn’t require raising income and business taxes.

Maryland and Pennsylvania — which have recently legalized slots gambling — are taking a serious look at legalizing table games so as not to be left in Delaware’s wake. New Jersey, which already has the full spread of casino games, has gone to court to get into sports betting.

Few expect Maryland or Pennsylvania to move quickly enough to prevent Delaware from taking an early lead in table games. With three decades as the unchallenged gambling mecca of the East Coast, New Jersey has the most to lose.

The big question among those who follow the gaming industry is whether Delaware will build casinos that will attract new crowds and whether the three locations where gambling is already allowed will expand substantially.

Gov. Jack Markell, who initially proposed adding up to three new casinos, now says he is waiting for a study, due by October, on what impact new venues would have on the current racinos: Dover Downs, Delaware Park and Harrington Raceway.

“What’s most important is that we have the sports lottery as an advantage,” Markell said.

House Majority Leader Pete Schwartzkopf agrees that sports betting will give the state an edge, but said authorizing new projects, such as the proposed resort DelPointe in Millsboro, would help the state become a destination.

“It would tap the more than 5 million people who come to the beach area,” said Schwartzkopf, D-Rehoboth Beach.

Keith Foley, an analyst for Moody’s Investor Services who was the primary author of a study on gambling in the region, likens the changes in the mid-Atlantic and Northeast to “keeping up with the Joneses.”

Foley predicted that Pennsylvania will legalize table games within five years. He found Maryland a tougher call. Much of the fight among the states will be focused on luring gamblers from the greater Philadelphia area, many of whom now go to Atlantic City.

“Atlantic City had a monopoly in the Northeast,” Foley said. “Unless Atlantic City has something that distinguishes itself, why go to Atlantic City?”

Pennsylvania shuddered on May 14, when Markell signed the sports betting and table games legislation, said David Y. Miller, associate professor at the University of Pittsburgh Graduate School of Public and International Affairs.

“We’ve been forced by financial issues to get into the gambling business in the first place,” Miller said. “In a good fiscal condition, we probably would never have done much more than get our toe wet in gaming.”

Just starting to realize the fruits of legalized slots-only casinos, Pennsylvania lawmakers must now consider a response to the threat Delaware poses to the new stream of gaming money, Miller said.

The traditional voices against gambling from the central part of Pennsylvania were all but silent during the slots debate because Pennsylvania’s finances were so dire, Miller said, adding that he expects more opposition to any proposal to expand gaming.

Miller believes Pennsylvania legislators eventually will approve table games, but probably not for a few years. But if Delaware severely cuts into casino revenues around Philadelphia, they could be forced to act sooner.

Two of Pennsylvania’s newest casinos — Harrah’s in Chester and Sands Casino in Bethlehem — could see the impact of Delaware’s threat first, since both are only short drives from the state line — Harrah’s is less than 10 minutes away. The impact to the economy in the Philadelphia area could also speed the process, if the city’s legislative delegation gets behind the effort.

“The Philadelphia delegation historically has been very powerful,” Miller said.
Maryland plays catch-up

Maryland might be a little further behind in the process of getting into table games, mainly because it still hasn’t gotten its newly approved slot machine operations up and running, according James Karmel, associate professor of history at Harford Community College in Bel Air, Md.

Karmel, whose research focuses on gambling, doesn’t foresee Maryland making the move within the next two years, but does see table games eventually.

It took Maryland more than a decade to sign off on slot machines, from the time the idea was first suggested in the mid-1990s until last fall, when voters approved the measure in a referendum.

Former Democratic Gov. Parris N. Glendening, who served from 1995 to 2003, was staunchly opposed to any gambling beyond horse racing, Karmel said.

After Glendening left office, Karmel said, the Legislature fought over site locations, how much the state would give in tax credits or incentives, and what the impact on communities could be.

But with those politics out of the way and the overwhelming support that the slots referendum saw in the fall, Karmel said, it could be much easier to get table games approved.

“They want to see how the slots work out,” he said.

Once Delaware implements its gambling additions, there will be one thing New Jersey won’t have: sports betting.

But New Jersey state Sen. Raymond Lesniak, D-Union, is working to change that.
Challenge to U.S. law

Lesniak filed a suit in U.S. District Court in Trenton to overturn the federal law that bars sports betting in all but four states: Delaware, Nevada, Oregon and Montana. Those states were grandfathered in because they had at least experimented with sports betting before the federal law was passed.

Lesniak found inspiration for the lawsuit after a large illegal gambling ring was discovered in New Jersey around Super Bowl Sunday. If betting was rampant in the state, and it was legal and taxable in Nevada, why shouldn’t New Jersey be able to do the same?

“It was a waste of legal resources to deal with this illegal activity when people can just go to Nevada and do the same thing legally,” Lesniak said. “Then came, of course, the big budget crunch that all of the states are feeling with the economy going down. Then Delaware’s move to have legalized sports betting, it’s going to have a direct impact on the state of New Jersey.”

New Jersey Gov. Jon Corzine threw his support behind the lawsuit last month, which could delay arguments that were expected to be heard in federal district court this fall.

Lesniak is confident of getting a favorable ruling within a year.

“This is not a hail Mary pass,” Lesniak said. “It’s not a slam dunk, either. I consider it something like Tiger Woods lining up a 15-foot putt that he has to make for a championship. I think the odds are in our favor that we’re going to win this.”

Much depends on what Delaware does with its advantage.

In Markell’s initial proposal to legalize sports betting, the authorization of three new gambling sites was included. But that addition was quickly stripped out when the racinos put up a fight.

Foley said Moody’s examination of casino competition on the East Coast concluded that capital investment, reflected in the grandiosity of the casinos, would be a deciding factor.

New Jersey casinos haven’t had large construction or redesign investments in the past decade, aside from the Borgata, Foley’s report found. New casinos, like those in Pennsylvania, have surpassed Atlantic City.

On Friday, New Jersey — the nation’s second-largest gambling market — got its first look at the impact of the Sands Bethlehem in Pennsylvania, a short drive from some of its best marketing areas in northern New Jersey and New York. For June, the first full month that the Sands was open and traditionally one of the strongest months for Atlantic City, revenue at New Jersey casinos fell 13.6 percent from a year ago.

If Delaware were to improve current sites or construct new sites that include the kind of amenities seen at Atlantic City’s Borgata, it could become more of a tourist destination, especially given the added attraction of sports betting, Foley said.

Two proposals for new casinos have been floated: DelPointe, which has a plan and is attempting to get slots approval in the Legislature; and a less solid proposal to add a casino in Wilmington, either on the Riverfront or the Seventh Street Peninsula.

Double threat

Karmel said Delaware building a top-notch facility, especially in Sussex County, could pose a big threat to Maryland and New Jersey.

There are plans to build a casino at Ocean Downs in Ocean City, Md., but the casino won’t include a hotel or restaurants. And it won’t have table games.

Karmel said New Jersey’s last advantage would be the beach and proximity to the boardwalk.

“If you put something like that on the beach in Delaware, there goes Atlantic City’s competitive edge,” Karmel said. “A big, nice luxurious casino on the boardwalk in Rehoboth would be a big draw, even to people in South Jersey who could just hop on the ferry.”

Dover Downs CEO Ed Sutor, who runs the only casino in Delaware that currently has an adjacent hotel, said the company built the high-end hotel to attract bigger-budget players from out of state, who must pass Harrington or Delaware Park to reach Dover.

“A hotel extends the amount of play time over two days,” Sutor said. “It’s part of our marketing strategy. We go after the upper end of the market. We like to cater to people who have better budgets, and we put in amenities that these customers are used to because we know they also go to Atlantic City.”

On the other hand, he said, Harrington uses a local busing program to attract players, mostly from Delaware.
New money

Schwartzkopf, who has authored a bill to give gambling at DelPointe the go-ahead, said supporting new venues should be simple: They could bring in more out-of-state gamblers and create hundreds of jobs in Delaware.

“Harrington says they already tap the beach market, but I don’t believe that,” Schwartzkopf said. “People aren’t going to drive two hours to the beach and then drive an hour to Harrington.”

Schwartzkopf said DelPointe would keep gamblers from going to Ocean City to gamble and thus keep tax dollars in Delaware. He pointed to the project’s proposed hotel, restaurants and indoor water park.

“Some of the legislators have the wrong idea about this. They’re trying to protect a single casino,” Schwartzkopf said, referring to the notion that another facility would run Harrington out of business. “The state is still the winner in this thing.”

Schwartzkopf isn’t opposed to putting a casino in Wilmington, but added that DelPointe still remains in line with the goal of protecting the horse racing industry since it has a harness racing license.

And Sutor is sticking to the industry’s original argument: Any new casinos would be detrimental to the current three casinos and possibly drive Harrington out of business, resulting in a loss of jobs.

“If we put in the additional casinos, it will just whack up this existing pie into smaller pieces, and we don’t think that is good for the existing casinos or the horse racing industry or the state,” Sutor said.

The presence of underage customers has been a continuing problem in the nation’s second-largest gambling resort.

The state Casino Control Commission approved a measure on Wednesday granting casino security officers expanded power to detain people suspected of being too young.

The legal age for casino gambling and drinking in New Jersey is 21. State statistics show hundreds of underage patrons are either arrested or detained inside Atlantic City casinos each year, and thousands more turned away at the door.

Last year, 403 underage gamblers were caught inside Atlantic City casinos.

Several gambling halls have been hit with hefty fines for allowing underage patrons to gamble or drink.

One of the most infamous cases in New Jersey involved a 17-year-old girl, Debra Kim Cohen, the daughter of an Atlantic City police detective. In 1987, she was treated as a high-roller, gambling away thousands of dollars at the blackjack tables and getting VIP treatment in return, including free limo rides, drinks, hotel rooms and expensive meals.

Five casinos paid $18,000 in fines related to her gambling, and made donations of $162,000 to compulsive gambling programs. She paid a $750 fine.

Last year, several high-profile underage gambling or drinking cases were decided in Atlantic City.

In November 2008, the commission fined Bally’s Atlantic City $157,500 for allowing an underage woman to gamble numerous times. In February, the Borgata Hotel Casino & Spa was fined $105,000 for allowing underage gambling.

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Back then, most critics attacked it on moral or religious grounds. But another less strident group questioned its legality under the Delaware Constitution, Pertzoff said. Now, as the state crafts legislation that would enable Delaware to have straight gambling like roulette or craps at Delaware’s three racinos, the constitutional critics have been virtually silent, she said.

“I haven’t heard anybody bring it up as a constitutional issue. It’s just kind of dissipated. It’s a ho-hum issue,” said Pertzoff, executive director of the Delaware Council on Gambling Problems.

That’s not surprising, said gaming lawyers. As states have looked for ways to generate revenues and fuel their lackluster economies, America is experiencing an expansion of state-sponsored gambling, said gaming lawyers. Every state, including Utah, has looked at expanding gambling since the 1970s, said I. Nelson Rose, a senior professor at Whittier Law School in Costa Mesa, Calif., who has worked with the state. He calls this the third wave of legalized gambling since Colonial times — when all 13 colonies established lotteries to raise revenues.

What allows a state like Delaware to advance from state-supported sweepstakes to casino-style gambling is an expansive interpretation of the lottery provision in the state constitution, lawyers said. State lotteries began their resurgence in the mid-1960s amid the growing opposition to tax increases, said Roger Dunstan of Sacramento, Calif., who wrote a comprehensive history of gambling in the United States.

Today, lawmakers in many states, including Delaware, use the lottery exception in their constitutions to cover nearly all games of chance — from craps to baccarat — that are under state control, gaming lawyers said. The technological revolution has aided in the enlarged definition of what constitutes a lottery, Dunstan said.

“The historical definition of lottery is: A person pays consideration for the opportunity to win a prize in a game of chance,” said Anthony Cabot, a gaming lawyer in Las Vegas, who has taught gaming law at the Boyd School of Law at the University of Nevada, Las Vegas.

“That opens up virtually anything.”

Legislators who legalized state lotteries in the 1960s and 1970s meant the term “lottery” to be interpreted expansively, Cabot said. What’s more, courts have predominantly upheld this broader view.

Today, some states classify poker, dominoes and backgammon as games of chance and therefore lotteries, Cabot said.

“Lotteries are more than drawing tickets by lot,” Cabot said.

That became evident in May, when the Delaware Supreme Court issued an advisory opinion on the question of the permissibility of sports betting under the state constitution. The court concluded the recently passed sports betting legislation satisfies certain requirements of the constitution’s lottery provision.

Kenneth Nachbar, a lawyer with Morris, Nichols, Arsht & Tunnell, who argued for the National Football League in the recent Supreme Court proceeding, said the league is evaluating a possible legal challenge to the sports lottery in court. He wouldn’t elaborate as to what any challenge to sports betting might involve or in which court an action would be brought.

But there have been no murmurings of a legal challenge to table games in Delaware, said lawyers and others involved in the recent gaming legislation. And given the more recent history of court decisions involving lottery games, challenges to state-supported lottery games as not permissible under the constitution can be difficult to win, lawyers said.

“Because it’s so clear,” Rose said. “States can define lottery any way they want.”
No shortage of history

The current expansion of legalized gambling in the country is nothing new, gaming experts said.

Since its earliest days, Americans have been making wagers, Dunstan writes in his history of gambling.

In Colonial times, playing the lottery was considered a civic responsibility, he wrote. Proceeds helped build churches, libraries and establish Ivy League colleges, like Harvard, Princeton and Columbia.

Lotteries were so popular, they even became an issue in the push for American independence after the English crown tried to prevent lotteries it didn’t approve, Dunstan writes.

The second wave was set off by the nation’s westward migration and the Gold Rush, Dunstan wrote. San Francisco was the epicenter of gambling in the mid-1800s.

“The market for gambling space was so strong that a mere canvas tent, 15 by 25 feet, cost $40,000 annually, payable in advance with gold dust,” he wrote.

Lotteries returned after the Civil War in the South to help rebuild the war-torn region, Dunstan writes.

Public opinion began to turn, in the wake of scandals and the rise of Victorian morality. The Delaware Constitution of 1897 prohibited all types of gambling, including lotteries and pool selling. By 1910, virtually all forms of gambling were illegal in the United States, he wrote.

It wasn’t until the Great Depression that the mood changed again. Legalized gambling began to make its current comeback as states looked for ways to jump-start their economies. Horse racing and pari-mutuel betting led the way. In 1931, Nevada legalized most forms of gambling to boost tourism.

New Jersey created the first financially successful modern lottery in 1971, according to Dunstan. Within two years, Delaware, which in the past had successfully adopted some of New Jersey’s revenue schemes — and gone one better — was busy amending the state constitution to permit lotteries.

“Whenever you have bad economic times, tough choices have to be made,” said Ed Sutor, chief executive of Dover Downs Hotel & Casino in Dover.

It’s been called “painless” tax, because it’s voluntary, Sutor said.

Gambling is also market-driven, Dunstan said.

“People have to want it. If nobody liked to gamble, the government wouldn’t make any money,” he said.
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Indeed, an early version of sports betting in Delaware in the 1970s failed to excite consumers. It lost money and was soon abandoned.

“From what players tell me, it was a horrible game,” Rose said.
A tough ruling to challenge

When Delaware lawmakers revised and rewrote the gambling provision in its constitution in 1973 to permit “lotteries under state control for the purpose of raising fund,” it meant more than buying tickets for a sweepstakes, gaming lawyers said.

“In doing so, it construed the term lottery broadly,” U.S. District Court Judge Walter K. Stapleton ruled in a 1977 lawsuit filed by the National Football League against Delaware’s governor.

“Lotteries” means public gaming systems and includes “all types of lotteries,” Stapleton decided.

That was further affirmed in May by the Delaware Supreme Court after Gov. Markell asked the justices for their opinion on whether sports betting is a permissible lottery under the constitution. The General Assembly had passed a bill that calls for a state “sports lottery.”

The justices concluded the “sports lottery” as defined by the legislation satisfies the state-control requirements of the constitution’s lottery provision. What’s more, the justices concluded the constitution allows for lotteries to involve an element of skill, but only where chance predominates.

Any constitutional challenge to table games would have to overcome the conclusions of these courts.

What’s more, a plaintiff would have to challenge the constitutionality of each game — for example, roulette, craps, blackjack or three-card poker — individually, lawyers said.

Any plaintiff would have to have a “strong economic interest,” to undertake such litigation, Cabot said.

Then there is the issue of who has standing, or the right to make a legal claim, in a Delaware court. Under the 10th Amendment of the U.S. Constitution, the powers to legalize gambling are reserved to the state, not the federal government, according to Robert Faiss, a Las Vegas gaming law attorney.

If an action is brought in federal court, the judge has to apply state law, Rose said.

“And the state law has already been decided,” he said.

As Dover Downs invests $2.5 million to gear up for table games, it is completely comfortable with the constitutionality issue, Sutor said.

Bud Hicks, a gaming lawyer in Reno, Nev., who is past president of the International Association of Gaming Attorneys, said the racinos in Delaware wouldn’t be moving forward to start table games if there was any doubt as to its legality.

Certainly, Gov. Markell’s legal counsel is confident.

“We believe table games are constitutional,” Michael Barlow said. “The legal test is established.”