By John E. Yang
Washington Post Staff Writer
Tuesday, July 23 1996; Page A04

The House gave final congressional approval yesterday to a measure that would create a federal commission to examine the rapid growth of the $40 billion-a-year U.S. gambling industry and its impact on American society.

On a voice vote, the House sent the legislation to President Clinton, who has said he supported the bill. The gambling industry and Nevada lawmakers had fought a fierce battle to block the measure, which the Senate passed on a voice vote last week, and approval came after lawmakers agreed to weaken the commission's subpoena powers to meet the industry's concerns.

Yesterday, Frank J. Fahrenkopf Jr., head of the Washington-based American Gaming Association, the casino gambling industry's lobbying group, welcomed a "fair and balanced" examination.

The bill is a response to rising public apprehension -- led by an unlikely coalition of liberals and Christian conservatives -- over the explosive growth in legal gambling in the United States. From 1974 to 1994, the amount of money legally wagered annually has risen about 2,800 percent, to $482 billion from $17 billion. The gambling industry generates six times the revenue of all American spectator sports combined.

Two decades ago, only two states -- Nevada and New Jersey -- had legal casino gambling. Today, 23 states have casino gambling and only two states -- Hawaii and Utah -- ban any kind of legal gambling. "We need to know the implications of this growth," said House Judiciary Committee Chairman Henry J. Hyde (R-Ill.).

The study is "essential to the nation's understanding of what the incredible expansion of gambling in America means to our everyday lives," said Rep. Frank R. Wolf (R-Va.), the bill's sponsor. "The gambling industry has not taken seriously the magnitude of the problem." Wolf cited the destructive impact compulsive gambling has on families and the threat of political corruption.

The measure would create a nine-member National Gambling Impact and Policy Commission to study economic and social impact of gambling and report its findings to Congress and the president in two years. The commission could recommend changes in state or federal gambling policies.

Among the issues the panel would examine are whether there is a link between gambling and crime, current policies regarding gambling on Indian reservations and gambling on the Internet.

The president, House speaker and Senate majority leader would each select three of the commission's members. The measure does not limit spending on the panel; the Congressional Budget Office estimated it would cost $5 million over its two-year lifespan.

The commission would have the power to subpoena documents, but not people. It could ask for a witness to give more information about a document, but the person would have the choice of being questioned in person or supplying written responses. In addition, the information the panel gathers that is not available from public sources would be kept confidential.

The original House-passed version of the bill would have given the panel the power to subpoena both documents and witnesses and did not include any of the privacy provisions.

The changes, which were made to the legislation in the Senate, represent victories won by the gambling industry. Fahrenkopf praised them as "recognizing the privacy rights of our customers and the privileged business information of our companies."

Wolf, who had fought for strong subpoena power, said he was satisfied with how the matter was resolved. "The power is tough enough to get what they're asking for," he said.

In April, House Speaker Newt Gingrich (R-Ga.) told a fund-raising breakfast at the Mirage, one of the largest and most profitable casinos in Las Vegas, the commission's subpoena powers should be significantly weakened. The night before the event, which generated $70,000 for the reelection of freshman Rep. John Ensign (R-Nev.), Gingrich had dinner with Steve Wynn, chairman of Mirage Resorts.

Gingrich's remarks drew immediate criticism from Christian lobbying groups. Ralph Reed, executive director of the Christian Coalition, said at the time that "any stripping of subpoena power would not be acceptable to us or the pro-family movement." But yesterday Reed said he was "very pleased," with the final bill, which he said retained "the teeth of the commission. . . . This is a huge victory for the pro-family movement over the gambling industry, which really tried to hamstring the commission."

Opponents of gambling have said they believe that an examination of the casino industry's internal documents would show that it targets people who are compulsive gamblers. Experts outside the industry estimate that people with gambling problems account for only about 5 percent of all players -- but one quarter of casino and state lottery profits.

The American Gaming Association rejects charges that the industry's profits are built on the backs of problem gamblers, saying its critics have no proof to support those allegations.

To press its case in the GOP-controlled Congress, the gambling industry hired a number of well-connected Republicans. For example, Fahrenkopf, head of the year-old American Gaming Association, was Republican National Committee chairman under President Ronald Reagan. Another industry lobbyist, Kenneth M. Duberstein, was congressional liaison in the Reagan administration.