After the dust settles

Material Information

After the dust settles an examination of the growth mentality after the implementation of a tourism based local economic development in Rocky Mountain communities
Berig, Corey
Place of Publication:
Denver, Colo.
University of Colorado Denver
Publication Date:
Physical Description:
vii, 87 leaves : ; 28 cm

Thesis/Dissertation Information

Master's ( Master of Arts)
Degree Grantor:
University of Colorado Denver
Degree Divisions:
Department of Political Science, CU Denver
Degree Disciplines:
Political Science
Committee Chair:
Robinson, Tony
Committee Members:
Morris, Glenn
Tecza, Thad


Subjects / Keywords:
Gambling -- Economic aspects -- Colorado -- Gilpin County ( lcsh )
Gambling -- Economic aspects -- South Dakota -- Deadwood ( lcsh )
Economic history ( fast )
Gambling -- Economic aspects ( fast )
Economic conditions -- Black Hawk (Colo.) ( lcsh )
Economic conditions -- Central City (Colo.) ( lcsh )
Economic conditions -- Deadwood (S.D.) ( lcsh )
Colorado -- Black Hawk ( fast )
Colorado -- Central City ( fast )
Colorado -- Gilpin County ( fast )
South Dakota -- Deadwood ( fast )
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )


Includes bibliographical references (leaves 85-87).
General Note:
Department of Political Science
Statement of Responsibility:
by Corey Berig.

Record Information

Source Institution:
|University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
181336870 ( OCLC )
LD1193.L64 2007m B47 ( lcc )

Full Text
Corey Berig
B.A., University of Colorado at Boulder, 1993
A thesis submitted to the
University of Colorado at Denver and Health Sciences Center
In partial fulfillment
of the requirements for the degree of
Master of Arts
Political Science

This thesis for the Master of Arts
degree by
Corey Berig
has been approved

Berig, Corey (M.A., Political Science)
After the Dust Settles: An Examination of the Growth Mentality after the Implementation
of a Tourism Based Local Economic Development in Rocky Mountain Communities
Thesis directed by Associate Professor Tony Robinson
This thesis is an examination of the continuing presence of the growth machine within
three former mining towns which decided to legalize small stakes gaming as an
economic development strategy. I will utilize a previous study that was conducted by
Patricia Stokowski as the starting point. She examined the presence of the growth
machine in Central City and Blackhawk Colorado when the initiative to legalize gaming
in Colorado was passed by statewide vote. Her study focused on the time period of
1991-1994, and documented the growth of the industry and also went on to show how
the local government was far more a partner with the industry. I will examine the
period of time from 1995 through 2005 for the towns of Blackhawk and Central City
Colorado picking up where Stokowski's study left off. In addition, the study is to include
a third former mining town, Deadwood, South Dakota. I will examine the overall
growth of the industry within these towns during this period of time, and document
government assistance to see if the growth machine is a phenomenon that occurs in the
beginning of a development, or if in fact it continues to remain as long as the
development is profitable
This abstract accurately represents the content of the candidate's thesis. I recommend
its publication.

1. INTRODUCTION....................................................1
Mining History..................................................6
Search for an Economic Development Plan.........................8
Legalized Gambling as the Economic Development Strategy........13
Native American Gaming.........................................20
Growth Machine & Creative Destruction..........................27
3. CHAPTER 2- STOKOWSKI'S RICHES & REGRETS........................34
THE GAMING INDUSTRY............................................46
Analysis of Data 1995-2005.....................................46
Number of Casinos & Devices....................................46
Measuring Annual Gross Profit..................................51
Assessed Value of Property.....................................53
Government & Political Actions.................................58
Re-interpretations of Existing Rules...........................60
Residency Requirement in Deadwood..............................63
Site Surveys: Sense of Community...............................64

5. CHAPTER 4- CONCLUSIONS/RAMIFICATIONS......................79
6. BIBLIOGRAPHY..............................................85

1. Homestake Mine in Lead, SD...............................................7
2. Gold production for Gilpin County.......................................10
3. Central City Opera House................................................11
4. Population Trends in Black Hawk & Central City..........................13
5. Foxwoods Casino: Leyard, Connecticut....................................23
6. Gambling Activity in the United States..................................25
7. Deadwood, South Dakota..................................................66
8. Cadillac Jack's Casino..................................................66
9. Deadwood Main Street....................................................67
10. Black Hawk: Riviera & Isle of Capri Casinos............................ 68
11. Central Station: Black Hawk.............................................69
12. Ameristar Casino Black Hawk.............................................69
13. Ameristar Casino Black Hawk.............................................70
14. Interior of Ameristar Casino............................................70
15. Arial Photo of Black Hawk...............................................71
16. Current Construction in Black Hawk: Facadism............................73
17. Current Construction in Black Hawk: Facadism............................73

1. Comparison of gaming legislation in Colorado versus south Dakota.....26
2. Number of casinos & devices: State of Colorado, total & per town,....47
and Deadwood, 1995-2005
3. AGP for State of Colorado, Black Hawk, Central City, Cripple Creek,..52
and Deadwood for the period of 1991-2006
4. Total assessed value by county & town 1992-2005......................57

The primary purpose of the resolution.. .is not to promote gambling.. .Keep in
mind that we are not talking about casinos.. .It is hoped that tourists will
continue to come to these towns year-round, not only to engage in limited
gambling, but to stay in the hotels, eat in the restaurants and shop in the
stores. State Senator Sally Hopper (Stokowski, 1997, p. 61).
In this statement made by former State Senator Sally Hopper, she was describing
the initiative to legalize gaming in Black Hawk, Central City and Cripple Creek within
the state of Colorado in the late 1980s. The initial thought behind legalizing gaming
was not to have a gambling industry, gambling was supposed to be a compliment to
the already existing tourism within these towns. There were to be slot machines
placed within the existing businesses in hopes that they might help draw a few more
people, and help capture a few more dollars per visitor. None of this was initiated with
the idea of making whole sale changes to these towns. The motivation was that the
residents of these towns enjoyed living there, but understood the economic troubles
they were facing, and so were actively looking for a solution that would enable them
to continue to reside in these communities.
This is not an uncommon scenario within the United States as our country's
economy has continued to migrate away from the traditional labor industries and
towards the service sector. Old manufacturing, mining, and other resource extraction
and processing communities have had to implement economic development strategies
in order to attempt to recapture some of their lost revenue. There are various
methods from which a community can choose; however the most popular way to bring

in more money to the local economy is through tourism. This is especially true when a
community is located in a mountain area or is near a natural feature like a lake. These
communities without much additional expense can attempt to draw more recreational
tourists for activities such as fishing, hiking or skiing. Other communities that are not
as blessed as others in regard to their surroundings will have to create the attraction.
In this situation some affected areas have decided to build retail outlets, retirement
villages, theme parks, historical/cultural museums or casinos.
This strategy, however, can lead to a common issue that plagues these
communities when they attempt to implement these strategies. There is a tension that
is automatically created within the town between the residents who want economic
development in order to save the historic character of the town, and therefore want
minimal change and those who are in favor of development for the opportunity to
make money, and who have little regard for the amount of change that takes place.
The latter group is composed of individuals who make up what is referred to as the
"growth machine". The growth machine theory developed by Harvey Molotch argues
that local government officials, industry leaders, and the local elite of the town often
conspire to push pro-growth policies, at the expense of local character. Growth
machine policies aim at increasing the amount of investment capital coming into the
area, and always aim at increasing the size of development projects. Growing
development projects tends to increase the potential profit for investors will increase
exponentially, but it also means an increase in the social costs (e.g., housing prices,
parking issues, traffic) incurred by the actual residents of the towns.

This growth machine process is exactly what occurred in Colorado's Black Hawk
and Central City. Two former mining towns, long removed from their glory days,
started with the idea to legalize gaming in order to supplement their local economies
and help save these towns that hold a great deal of significance to the state's history.
Once the initiative to legalize limited stakes gambling was passed, however, the
grassroots activists stepped aside, and the growth machine interests stepped to the
forefront. With the growth machine in place, dramatic levels investment capital flowed
into these towns and the result was a full blown gaming industry that included casinos.
The residents, for all their hard work, received casinos in place of almost all of the
town's existing businesses, and experienced the loss of all of the services those local
businesses once provided. Residents now have to deal with increased traffic, an
increase in the number of people within the town, plus the look and feel of the
community has changed dramatically.
Patricia Stokowski, in her study Riches and Regrets, analyzes the process of
legalizing gaming in Black Hawk and Central City. She documents evidence of the
growth machine, and describes how the size and the scope of the development
dramatically increased once the money began to flow into Colorado from outside
sources. She conducted an exhaustive investigation that included interviews with
officials as well as residents, a thorough examination of the local newspaper editorial
pagers in order to gauge community attitudes, and also tracked the numbers pertinent
to the gaming industry from its inception in 1991 through 1994.

The contention of this thesis is that in addition to being present at the inception of
gaming, the growth machine has remained active in these communities. These
developments generate a great deal of money, and the growth machine partnership
has been a continual presence, attempting to expand the industry and generate more
profits for its investors. I will use Stokowski's study as a starting point for my
examination of the industry between the years 1995-2005. I will examine the history
of the towns and what led them to this point where they chose to legalize gaming. I
will re-visit Stokowski's analysis and discuss the process that occurred in Black Hawk
and Central City. In addition to Black Hawk and Central City, I will also include the
town of Deadwood, South Dakota to the analysis as a comparison since the other two
towns are both located in Colorado, and subject to just its rules of operation.
I will then examine the gaming industry within all three towns and see if in fact it
has grown over the last 10 years, and what factors allowed it to do so. I will use three
of Stokowski's measures to attempt to demonstrate the industry's growth. The first
will be the total number of casinos in the towns as well as the total number of gaming
devices. The second figure I will track is the AGP of each town. AGP stands for
Annual Gross Profits and is defined as the amount of money taken in by the casinos
minus the amount that they have paid out to customers. The third and final measure
I will track is the Total Assessed Value of Property within each town.
In addition to the measures, I will also examine local government actions that have
taken place during this time period which have allowed the gaming industry to grow.
There have been a number of governmental actions that demonstrate that

government officials are not a casual or neutral observer of the gaming industry, but
are indeed a vested partner. The study will also include a visit to each site for
observations detailing the development. The observation will include a count of the
non-casino related businesses, and a search for businesses that cater to locals rather
than to tourists.

Mining History
The three towns of Black Hawk, Central City, and Deadwood were all founded
because of the mining industry. In fact, the states of Colorado and South Dakota were
in essence discovered by the gold rush of the 1800s, which drew hordes of people
west to find their fortune. In Colorado gold was discovered on May 6th 1859 in what is
now known as Gilpin County when the area was still considered part of the Kansas
Territory (Stokowski, 1997, p. 22). By the census of 1860 there were 32,277 residents
scattered in different towns throughout the mountains of the future state of Colorado
(Stokowski, 1997, p. 29). The process of gold discovery within South Dakota was very
similar. The first discovery was in 1874 just outside the town of Custer. This led to
the discovery in Deadwood which in turn led to the discovery of the Homestake Mine
in the town of Lead in 1877. Eventually there were 30 different mining camp
communities within the Northern Black Hills (Jensen & Blevins, 1998, p. 10).
While the onset of mining was prolific within these two states, as with any other
type of resource extraction industry, the resource is finite, and inevitably it becomes
increasingly difficult to maintain prior levels of production. Therefore the mining
industry within both Colorado and South Dakota slowly declined through the early to
mid portion of the 1900s to the point where it was almost non-existent. The low price
put on the commodity of gold compared with the cost of labor to extract it even saw

the Homestake Mine in Lead close its doors, which at one time was the largest North
American gold mine in operation. The picture below is an image of the Homestake
mine in Lead, South Dakota. This demonstrates how vital these types of labor
extraction industries are to these towns. The entire town of Lead is built around the
mine itself; it is the central feature of the town. When these industries slow down or
disappear within these towns it obviously creates a major problem the residents have
to resolve.
Figure #1: Homestake Mine in Lead, South Dakota

Search for an Economic Development Plan
With the mining industry dwindling, all three cities began to look for other ways to
bring money into their local economies. Unfortunately, this process is not that rare of
an occurrence in the United States, so these communities were not traveling an
unknown path. There happen to be a substantial number of examples of towns
implementing various economic development initiatives to recoup a portion of their lost
dollars. These plans vary a great deal and include everything from recreation, to
festivals, from retirement communities, to offering incentives to keep a company
operating or entice another company to fill their shoes. The state of Michigan recently
struck a deal with the Ford Motor Company to keep six of its factories open and
located within the state. In order to accomplish this feat, Michigan had to agree to
pay Ford Motor Company $300 million. This was done by the state to protect its
economy and keep 13,000 people employed whose jobs were in jeopardy (Schifferes,
2007, p. 1).
One of the most popular types of development plans revolves around tourism,
specifically attempting to enhance an already existing tourism business. These plans
are popular because they focus on promoting characteristics which a town already
possesses. Most of these plans focus on natural assets like mountains, or a lake, and
involve activities such as skiing or boating, or some other type of outdoor recreation.
Capitalizing on the recreational aspects of an area can offset loses in traditional labor
industries because it increases economic development by attracting new residents, and
retaining existing ones. In the 1990s the population growth within these recreation

counties was 20.2 percent, and they had a migration rate that was 2.5 times other
non-metro counties (Johnson & Beale, 2002, p. 16). The tourism industry within the
United States is a trillion dollar industry; it brought in $1.3 trillion in 2005, and
generated $104.9 billion of tax revenue for local, state, the federal government in the
same year (Travel Industry Association, 2007, p.l). There is a substantial amount of
money to be made if one can figure out a way in which to draw folks to your town.
This is the direction these towns went in when they initially began the
transformation from mining town to tourist destination. Their early examples of the
"tourist mode of development" focused on increasing their existing tourism business,
which meant they would attempt to make the most out of the festivals they hosted.
The transition from making revenue off mining to making it from tourists would not be
an easy one, but in Hoffmeister's study of Central City mining, he graphs the decline in
production over the period of 1860 to 1930 and describes perfectly how residents had
to view the transformation.
The bustle and excitement of the thriving mining town has passed, but
the glamour and the personality of the former periods will not die.
The rugged beauty of the region and the romantic history of the
camps that is written in every mine dump and in every weather-
beaten structure now act as a magnet to draw thousands of tourists
and resorters each year...The gold which was sent in earlier periods to
enrich the East is returning to the mountains to be spent by tourists
(Hoffmeister, 1940, p. 104).

100 Economic Geography
Figure #2: Gold production for Gilpin County (Hoffmeister, 1940, p. 100)
"The townspeople finally reconciled to the idea of a festival when they looked into their
cash registers; tourists were putting money there, not mining" (Stokowski, 1997, p.
51-52). In Central City, the main festival is put on by the Opera Association. In the
summer of 1931 Central City decided to renovate their opera house which had closed
its doors in 1917, and had since fallen into disrepair. On July 16, 1932 it re-opened
with a production of Camille starring the legendary Lillian Gish and received rave
reviews both in regard to the performance, but also the setting (Stokowski, 1997, p.
45). The Opera association continues to hold a festival each summer in Central City
from June 30th to August 19th and in the summer of 2007 it will be celebrating its 75th
anniversary. In addition to the summer festival, the Opera Association has also
purchased other historic buildings in town and has restored them as well.

Figure #3: Central City Opera House
In South Dakota, Deadwood was going through the exact same process: mining
had dwindled to near nothing and the town was focusing its attention on its existing
tourism as well. Deadwood, unlike Black Hawk and Central City, had a little bit of an
advantage given the regional tourism in the area. Deadwood, which is located in the
Northern Black Hills, is in the general vicinity of tourist destinations such as Mt.
Rushmore, Crazy Horse, and Sturgis in South Dakota, and Devil's Tower in NE
Wyoming. Apart from the spillover it received from the other destinations,
Deadwood's main festival that it hosts every summer is called the "Days of 76" festival.
The festival has been hosted for 84 years in Deadwood, and includes a rodeo, parade
and other local events.
Both Deadwood's "Days of 76" and the Central City summer Opera Festival have
been very successful over the years, and they each draw their share of visitors. The
Opera Festival certainly has boosted tourism within Central City. Between the years
1940 and 1950 attendance rose from 20,250 to about 55,000 opera patrons, and

general tourist visits during the summer festival reached about 450,000 (Stokowski,
1997, p. 52). The Opera Festival currently is estimated to draw 20,000 visitors per
summer to Central City. While this has certainly increased the vitality of the local
economy it unfortunately was not enough to sustain the town year round and replace
an industry such as mining. The summer months would be busy, but summer is
abbreviated at 8,000 feet, and that leaves a large portion of the year when these
towns were relatively empty. As a comparison, Mt. Rushmore, which is an example of
a true tourist destination, draws nearly 3 million visitors during a year fwww.nps.aov').
To add to the challenges of Central City and Black Hawk, these communities were also
witnessing a decline in their population during this period (Figure #4), and since the
Opera Festival was not going to be the salvation of the town, the search continued for
another economic development strategy.

Population Trends in Black Hawk & Central City
Census Year
Figure #4: Population Trends in Black Hawk & Central City
Source: webapps/population census
Legalized Gambling as the Economic Development Strategy
Some communities are not as fortunate as others and do not have major
natural features upon which to capitalize for recreational tourism, or they are located
off the beaten path in regards to traditional tourism in their region. These
communities, like our three mining towns, find themselves in a position where they
have to choose to create the tourist attraction in order to draw in visitors and money.
Taking their cue from larger entertainment capitals like Las Vegas & Atlantic City
municipalities across Canada and the United States have attempted to bolster their
local economies by undertaking new development which blends sports, entertainment,
and retail (Hannigan, 1998, p.2). Some communities have decided to create retail

attractions such as a mall and others have decided on an amusement park. Another
option, especially for smaller, rural communities is agri-tourism. Agri-tourism is a
whole host of activities that farming communities can put on in order to bring in
visitors. Some examples are farms that host seasonal events like haunted houses,
corn mazes, and pumpkin patches (Adam, 2004, p. 8). Communities and regions can
also focus on cultural/heritage, or ecotourism to try to boost their economy. A good
example of this is the Seaway Trail through New York and Pennsylvania. The idea
behind the trail is the fact that many rural communities do not have the large scale
majestic tourist attraction, but rather have a bunch of small dispersed areas that offer
varying degrees of activities and services. The region decided to partner together to
highlight the area as a whole and focus on what they collectively could add to the
travelers' experience, and in the process have been very successful creating a tourist
destination ("Building Bridges", 2004, p. 2). One of the most recent ways to create
the attraction is through a combination of cultural tourism and legalized gaming.
Gambling is legalized in rural or isolated areas, on reservations, and on river boats and
businesses are then themed to play on the area's history in order to attract more
After attempts to focus on their existing tourism business failed to produce the
results for which the mountain communities of this study were looking, the idea of
legalized gambling as an economic development strategy began to re-circulate.
Gambling had been an on- again, off- again fixture within these towns, and in a lot of
people's minds, gambling was an economic strategy that fit because it played on the

old west imagery of the towns. In Central City, gambling was a common component
of the summer Opera Festival since they re-opened the Opera House in 1932. The
intent, much like the actual gambling initiative, was to recreate a "mining town
atmosphere" by adding a few slot machines, and give an Old West flavor to the
festival. Gambling was, of course, still illegal in the state of Colorado, but enforcement
fell to the local level, and the local officials within Central City were not opposed to the
idea of earning some extra dollars. Gambling was allowed to occur in the Teller
House, which is a historic hotel within Central City, and the local businesses were
allowed to have slot machines as well (Stokowski, 1997, p. 49-51).
This type of back and forth regarding gambling in the town of Central City
occurred from 1932 forward; the only variable seemed to be the scale of the gambling.
At times businesses would cross the line in terms of its scale and draw the attention of
authorities outside the town, in particular Denver, and the town would have to scale
things back the following year, and then the process would repeat itself. There were
also a couple of early attempts to formally legalize gaming in Central City. In 1950 a
committee of town officials attempted to argue that Central City existed before the
state of Colorado, and therefore the state laws, especially the one prohibiting
gambling, didn't apply, and only those laws of the Territory of Colorado were valid.
As one might imagine, this line of reasoning was struck down by a state court rather
quickly, and the ruling included threats of prosecution in the future. There was also
an outside group which wanted to build a casino in Central City in 1962 using the

same territorial charter argument, but this attempt didn't even make it past the city
council given the previous experience (Stokowski, 1997, p. 48-53).
Both the states of South Dakota and Colorado also attempted to formally legalize
gaming in the early 1980s to no avail. Then the last piece of the puzzle was finally put
into place, which was tying the legislation of gambling to economic development as
well as historic preservation, and consequently the towns would see different results.
Deadwood would be the first to attempt this new line of reasoning regarding the
legislation of gambling. The organization to legalize gaming in Deadwood started in
1984. The mayor at that time, Tom Blair, along with owners of some prominent
properties such as Old Style Tavern No. 10, and the Franklin Hotel had a gaming
initiative that failed that year. Another significant event that occurred within that
same year was the condemnation of the Lawrence County Courthouse. This was
significant because it was following a speech by the Historic Preservation Center
director, who was trying to raise funds for the courthouse and ensure that Deadwood
would not loose its designation as a historic landmark, that the Deadwood You Bet
committee was formed (Jensen & Blevins, 1998, p. 12-13).
The committee initially ran a campaign in 1997 to have the state legislature
approve the measure so that it would appear on the ballot in November of 1998;
however the measure failed to pass by one vote on the floor. From here the
committee was then forced to gather the appropriate 29,000 signatures needed to put
the initiative on the ballot by petition (Jensen & Blevins, 1998, p. 13; Long, 1994).
The effort was a success and the initiative passed by 64 percent thus allowing the

addition of a constitutional amendment for legalized gambling in Deadwood. In March
of 1989 the legislature passed enabling legislation which included a required vote from
the citizens of Deadwood in April. Deadwood residents approved the measure with 75
percent voting yes, and a turnout rate of 60 percent (Jensen & Blevins, 1998, p. 15;
Long, 1994).
At this point in time, Deadwood became the first town in the United States since
Atlantic City in 1976 to legalize gambling. Deadwood was also the first community to
attempt to take the legalization of gaming economic development model, that had
been so successful at generating revenue in Las Vegas and Atlantic City, and apply it
on a much smaller scale, but they would not be the last. Colorado would follow suit
shortly after South Dakota, gambling would be legalized on Native American
reservations, and a number of municipalities throughout the Midwest would legalize
gambling on historic riverboats.
Opening day for Deadwood was 12 noon on November 1st 1989. The gaming
regulations in Deadwood initially called for a maximum bet of $5.00, a maximum
number of gaming devices per building of 30, and a requirement that a minimum of 50
percent of the enterprise ownership had to be local (Jensen & Blevins, 1998, p. 15;
Long, 1994). These regulations were put in place to attempt to eliminate the
possibility of gaming getting out of control and dominating the town, and it was also
meant to appease the anti-gaming faction which is significant within South Dakota. In
terms of taxation and the dispersal of revenues, South Dakota decided to levy an 8
percent tax on adjusted gaming revenues. 50 percent of the money would go to the

South Dakota Gaming Commission, 40 percent was earmarked for the general fund,
and the remaining 10 percent would go to Lawrence County. The historic preservation
committee received a $2,000 dollar yearly licensing fee for every gaming device, in
addition to any unspent monies from the Gaming Commission (Jensen & Blevins, 1998,
p. 16; Long, 1994).
As mentioned previously, Colorado followed suit after gaming was passed and
implemented in South Dakota with three separate proposals in 1989. Only one of
those three garnered enough signatures to make the ballot in 1990, and that was the
one to legalize gaming in the three historic mining towns of Central City, Black Hawk,
and Cripple Creek. The Always Bet Colorado campaign was able to place amendment
4 on the 1990 ballot to legalize small stakes gambling, and they stressed that gaming
would help preserve Colorado's heritage and restore Colorado's economy. The CCPI
(Central City Preservation Inc.), which was the primary force behind the push for
legalized gaming in Central City, and which was comprised of Central City officials and
business leaders put forth the idea that gambling would not only provide funds for
historic preservation, but could reduce Central City's mill levy, provide jobs with high
salaries, increase property values, and fund improvements to local services (Stokowski,
1997, p. 70-71). In addition, Bruce Schmalz, the mayor of Central City, and member
of CCPI, suggested that gambling would not change either the look of Central City or
the lifestyle of its residents (Stokowski, 1997, p.71).
The CCPI released a document which discussed "Legalized Gambling Pros, Cons,
and/or Possible Concerns" in which they made a number of assertions. The first

assertion was that gambling would revive the flavor of the true frontier gold mining
life. Secondly, they stated that gambling was merely a supplement to and not a
replacement of existing businesses in the area. And finally, even though gaming had
just recently begun in Deadwood, the committee insisted that the only issue
Deadwood had faced had been parking, and that other than being financially better
off, there had been little change to the local lifestyles and little change to the
residential property market (Stokowski, 1997, p. 70).
In the frequent claims that gambling driven economic development could occur
without upsetting historic lifestyle in these mountain communities, we see the tension
involved in the tourist/heritage economic development strategy. Central City, Black
Hawk, and Cripple Creek are pivotal parts of the history of the state of Colorado. All
three were settlements in the area before the state was formed, and there is
consequently great interest in insuring that these towns and their collective history are
preserved. Add to this the fact that these towns are obviously struggling economically,
and are losing population on a yearly basis. Then along comes a group of civic
minded elite that propose legalized gambling as the solution, and promise that it will
save the town economically as well as preserve the community itself and its history.
As a co-chairman of the Public Relations Committee speaking about the initiative at the
time stated, "This is a proposition where everyone can win" (Stokowski, 1997, p. 71).
With the way they framed the issue, no one could refuse it. The question simply
becomes whether or not the strategy can deliver everything to everybody considering
the obvious fact that there are contradictory goals within the economic development

strategy: one goal is to attract substantial new investment to the community; the
other goal is to preserve the historic way of life. Unfortunately, the more capital and
investment that flows into these communities, the more likely the result will be major
transformations to these communities.
Colorado's push for legalized gaming, which was undoubtedly assisted by what
had happened in Deadwood, combined with the efforts by the CCPI, was successful.
In November 1990, Amendment #4 was approved by a 57 percent to 43 percent vote
state-wide. The Colorado version of legalized gambling allowed up to 40 percent
taxation, with 50 percent of the revenues going to the state, 12 percent to Gilpin and
Teller counties, 10 percent to the effected towns, and 28 percent to historic
preservation within Colorado (Jensen & Blevins, 1998, p. 25; Long, 1994, p.12).
Opening day for the Colorado casinos occurred on October 1st 1991 (Jensen & Blevins,
1998, p. 26). The original provision limited gaming to historic structures restored to
their pre-WWI condition and allowed for no more than 35 percent of a building's
square footage to be used for gaming. It also contained a provision preventing local
elected officials, and local law enforcement officials from owning interests in the
gaming establishment. These provisions just like those in Deadwood were intended to
control gaming and preserve the integrity of the town.
Native American Gaming
While South Dakota and Colorado were paving the road to legalized gaming for
municipalities, there was also a push for legalizing gambling on Native American
reservations throughout the country. While the situations differ from each other in a

number of ways, the common thread that exists is that Native American reservations
tend to be rural and geographically isolated. Reservations have faced economic issues
for a number of years, and they are traditionally places with a high percentage of the
population living in poverty, and high unemployment primarily due to the lack of
employment opportunities (Hsu, 1999, p. 43-44). Native American reservations, just
like the gaming communities studies within this project, have been looking for
innovative ways to draw money into their local economies as well. With the success of
Las Vegas & Atlantic City, they began looking towards gambling as the economic
development strategy they wished to utilize.
The road to legalized gaming for reservations started in the 1960s when
government sponsored state lotteries were legalized. States began to allow non-profit
and other private organizations to run bingo games and other low stakes games in
order to raise revenues. In 1978 in the state of Florida, the Florida Seminole Nation,
due to increased competition within the bingo circuit, began holding a high stakes
bingo game. With prizes of $10,000 or more, people flocked to the Seminole bingo
game, but unfortunately this also drew attention from local law enforcement officials.
A series of lawsuits began over whether or not the reservations had to abide by the
state laws governing gaming. In 1981 a court of appeals ruled in Seminole Tribe v.
Butterworth that the reservation did not have to abide by the state limits, and in 1982
the Supreme Court refused to review the ruling ( Seminole Tribe of Florida v.
Butterworth, 1982).

While the courts ruled on the Florida case, this certainly did not make this debate
go away. There was another Supreme Court decision in 1987 concerning California,
(California v. Cabazon Band of Mission Indians). This decision reinforced the earlier
decisions that the states could not impose their civil regulations on the Native
American gaming operations. The decision also went on to explain that gaming
operations were in-line with the desires of the Federal Government for Native
American tribes in regard to their self-sufficiency. It was believed that gaming
operations would allow the tribes to achieve their self-determination as well as
economic self-sufficiency (Hsu, 1999, p. 46-48).
After the 1987 decision, Congress passed, and Ronald Reagan signed into law, the
Indian Gaming Regulatory Act of 1988. This act established a three member National
Indian Gaming Commission of which 2 members must be Native Americans. The
commission is empowered to regulate bingo type games on reservations and to
generate the rules for Native American gaming pertaining to contracts with outside
companies. The act also classified gaming into three different categories. Class I
gaming are small prize games between tribe members and which are regulated by the
tribe. Class II gaming includes bingo in its many forms, and nonblank card games.
These are the class of games regulated by the commission. Class III gaming includes
all casino style banked games as well as lotteries and pari-mutuel betting. This class
of gaming must be legal in the state and they require the tribe and the state to enter
into a compact with regards to the details of the rules of operation (Hsu, 1999, p.48-

After the Indian Gaming Regulatory Act was passed there was naturally a great
deal of growth in terms of gambling on reservations. Currently there are 406 Native
American gaming operations within 28 different states (AGA Survey, 2006, p. 4); this
includes the Foxwoods casino in Ledyard, Connecticut which is operated by the
Mashantucket Pequot tribe and happens to be the largest casino in the world (Hsu,
1999, p. 41). It has 320,000 square feet of gaming space, roughly the equivalent of
30 football fields. The four casinos contain over 13,000 slot machines, see over
40,000 people on a daily basis, and posses staggering revenue numbers such as
bringing in $3 million a day, and $1.5 billion per year (Inside Out Documentaries,
2003, p. 1-2).
Figure# 5: Foxwoods Casino: Leyard, Connecticut

In addition to the Native American casinos there has been a proliferation of gaming
activities across the country since the Deadwood & Colorado casinos opened. The
table on the following page shows the different types of gaming activity, and number
of gaming establishments active in the United States in 2006. Whether it has been
other land based casinos, riverboat casinos, or machines in race tracks there has been
an explosion of the gaming industry in the United States. In 2005 US commercial
casinos employed 354, 921 people, paid wages of $12.6 billion, contributed $4.93
billion in direct gaming taxes, and earned $30.29 billion in gross gaming revenue (AGA
Survey, 2006, p. 5, See Next Page for Chart).

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Source: AGA Survey, 2005, p. 4

Table #1: Comparison of gambling legislation in Colorado versus South Dakota
Fact South Dakota Colorado
Statewide Vote Yes Yes
Date of November 1988 November 1990
Community Vote Yes No
Gambling Begins Indian Gambling State Commission Maximum Number of Devices November 1989 Yes- 5 Reservations Yes- 5 members appointed by governor 30 Per Establishment October 1991 Yes- 2 Reservations Yes- 5 members appointed by governor Determined by pet. Of building space (35/50%)
Device Fee- State $2,000 $100
Device Fee- Local None Varies by Community
Number of Devices 1992 1,925 12,000
Number of Casinos 1992 77 76

Table #1 (Cont.)
State Tax
South Dakota
Revenue State General Fund
Lawrence County
Distribution Deadwood Historic
1990 Deadwood 1,800
Source: Long; 1994, p. 36
Based on casino revenues: has
changed annually
FY91/92 4,8 & 15%
FY92/93 2 & 20%
FY93/94 2,8 15 & 18%
State General Fund
Gilpin 8i Teller Counties
Black Hawk, Central City & Cripple
State Tourism Promotion
State Historic Preservation
Black Hawk 227
Central City 335
Cripple Creek 580
Growth Machine 8t. Creative Destruction
As more and more municipalities are looking to tourism developments as their
salvation for their local economies, it seems important to examine a common problem
and problematic issue associated with these initiatives. Since the origination of these
initiatives is to attempt to save these communities, and there is tremendous value in
the look and feel of these towns, the transformational effects of the growth machine,
and an associated characteristic that economist Joseph Schumpeter called "creative
destruction" can be a huge issue (Schumpeter, 1950). Creative destruction is the
unfortunate fact that many planning and investment elite believe that in order to make
way for new developments, new investments, and new consumers; old uses, old
neighborhoods, and old ways of living in a community must often be "creatively

destroyed" in the name of higher and better uses. This is one of the major criticisms
of capitalism by Schumpeter- the necessity to continually reinvent and destroy the
past, in order to bring in more money and a different future.
Schumpeter builds on the critique of capitalism put forth by Karl Marx in his
Communist Manifesto. After praising the bourgeois capitalist economy for its
productivity and the great advances that it has put forward, Marx analyzes the
problems with this fast moving productive capitalism. One of his main issues with
capitalism, which is the same issue which comes into play in these tourist
developments, is that everything within the capitalist economy is built to be torn down.
All that is solid- from the clothes on their backs to the looms and mills
that weave them, to the men and women who work the machines, to
the houses and neighborhoods the workers live in, to the firms and
corporations that exploit the workers, to the towns and the cities and
the whole regions and even nations that embrace them all- all these are
made to be broken tomorrow, smashed or shredded or pulverized or
dissolved, so they can be recycled or replaced next week, and the whole
process can go on again and again, hopefully forever, in ever more
profitable forms (Marx, 2006).
There is little value placed in the past and in historical significance, especially if it
comes in the way of so called advancement and the ability to make money.
The broad critiques of capitalism and its creative destruction were applied to local
political economies is the ground breaking theory of the "growth machine" by Harvey
Molotch in 1976. Molotch states that the purpose of a city or town, for those that
wield the most influence, is to grow capital and make money for the local elites and
capital investors, including businessmen, land developers, and the other members of
the real estate industry (Molotch, 1976, p. 2). Most politicians also tend to be

members of that local elite within a community, or at the very least are very closely
paired with it. They are vested, along with their acquaintances, in how local land is
disbursed and utilized, and they are in a position to benefit when that land increases in
value. They become local politicians because that is one of the major responsibilities
at the local level of government; they deal with land use and zoning issues in a way
that has a direct influence on the value of the land itself. The growth machine holds
that local politicians are in essence in partnership with capital investors, their business
colleagues, and their friends to push a pro-growth agenda in order to reap the rewards
because they are all heavily invested in the real estate market, and because city elites
are caught up in the notion that successful cities must grow land values and
investment returns faster than competing cities (Molotch, 1976).
According to Molotch, the elites within a city are driven by the demand to drive up
the exchange value of local land. In doing so, these elites often must creatively
destroy lower income uses and neighborhoods, and must drive out less productive
users of the land, people who Molotch says are committed to the "use value" of the
land. While "exchange value" focuses only on what profits can be made by upwardly
developing an area, "use value" describes the historic commitments that old time
residents have to their neighborhoods, the value of cultural history that a lower
income community might have, or the simple fact that a non-developed tract of land
can possess value as open space. As Molotch states, "...growth is a liability financially
and in quality of life for the majority of local residents. Under such circumstances,

local growth is a transfer of quality of life and wealth from the local general public to a
certain segment of the local elite" (Molotch, 1976, p. 7).
The concepts spelled out in the growth machine theory have actually been the
subject of an on-going debate regarding how cities grow. The more traditional and
mainstream school of thought originated at the University of Chicago and included
theorists such as Robert Park & Ernest Burgess. These theorists formulated their
theories during the 1920s and 30s and drew upon 19th century social philosopher
Herbert Spencer in order to develop their concept of city life, organization and
development (Feagin, 2002, p.4). The traditional theorists believe that development
and growth within a city is dependent upon demographic factors and the decisions of
many anonymous residents. No individual or small group of individuals has a major
determinant influence on urban land and building development. Urban housing and
land markets are believed to be "free" in the sense of Adam Smith and the invisible
hand; the determining factor is the competitive bidding among thousands of
consumers and firms (Feagin, 1998, p. 6).
As leaders in this school of thought, Park and Burgess published The City in 1925
spelling out their theory of urban ecology. Their theory proposed that cities were
environments like those found in nature, governed by many of the same natural
Darwinian evolutionary forces. The single most important of these forces was
competition. Park and Burgess believed that the struggle for scare urban resources,
especially land, led to competition between groups and ultimately to the division of the
urban space ultimately to the division of the urban space into distinctive ecological

niches or natural areas in which people shared similar social characteristics because
they were under the same pressures (Park & Burgess, 1925).
The traditionalist school is very demand driven, and when applied to the case
studies of Central City, Black Hawk, and Deadwood they do not seem to explain what
occurred in these towns very well. Certainly, there is a theory that pent up demand
for gambling led to the explosion of gaming throughout the United States, and that
certainly does account for some of the spread of gaming geographically across the
country. However, consumer choices and demand don't seem to explain the growth of
the casino industry within these particular towns, given the objective was the
preservation of these towns. The opposing theory comes from the critical school of
thought and includes theorists such as Joe Feagin (1998, 2002), M Gottdiener (1988),
H. Lefebvre (1996), and H Molotch (1976). They believe that the free market is an
illusion; there are certain select and powerful human agents who have a
disproportionate impact on the economic development patterns in cities. Working
within a capitalist framework of class domination, a small group of powerful decision
makers, including major investors, speculators, builders, and developers, do far more
to shape land and build markets than simply outbid their competitors (Feagin, 2002, p.
There are three main themes within the critical urban paradigm. The first is that
city growth and decline, internal city patterns, city centralization and decentralization
are shaped by both economic and political factors. The second major theme is that
there are two types of value when discussing space. There is exchange value, which

describes how capitalist investors see space as a commodity, as a means to an end,
which is profit. The other type of value for space is use value. This is how consumers
look at space, as a place to live and use. Critical school thinkers also highlight how
economic development practices often entail sacrificing "use value" to enhance the
"exchange value".
The third major theme with the literature of the critical theorists is the distinction
between structure and agency. "Structure" refers to the underlying power structure of
society which is alleged to determine and shape most of human life. This structure
includes the major institutions and elite agencies of a community and they are the
principle decision makers, and make those decisions in accordance with the structural
logic of profit-driven capitalism. Once again there are far more actors involved than
simply the consumers (Feagin, 1998, p. 9-11). The critical theorists believe that within
the capitalist framework there are people both within government and within business,
especially the real estate industry, who have an incredible amount of influence in the
shaping of growth and development within the city. In addition, when they are
making decisions about development, these people are focused on the exchange value
of the land they are dealing with and give little consideration to the use value of the
land and the residents who currently reside there or are in the general vicinity.
The next section of this thesis elaborate hoe growth machine theory is a good fit to
what occurred in Central City, Black Hawk, and Deadwood. The gaming initiative was
passed in order to assist those within the community who appreciated the town for its
"use value". After the initiative was passed, however, those within the growth

machine who were focused on the "exchange value" of the town took over, and the
town was changed to suit their goals as opposed to those of the residents. In the next
section we will take a look at Stokowski's pioneering analysis of the growth machine
presence in Black Hawk, and Central City during the initial phases of legalized
gambling, and see how the growth mentality took over and increased the size of the
development against the wishes of the local residents.

With the implementation of legalized gaming in these towns the growth
mentality that had previously been operating behind the scenes came to the forefront.
The contradiction between being able to provide an economic boost for these
communities by drawing in investment capital, while at the same time protecting the
current way of life for residents, became very evident as the construction began.
What was sold to the voter time and time again was that with the passage of these
initiatives there would be slot machines located within existing businesses, the
businesses would not be replaced, and there would be no casinos (Stokowski, 1997, p.
71). What actually occurred with the passage of these initiatives, however, was in fact
a casino gaming industry that took over the main streets of these towns. Somewhere
between the passage of the measures and the actual opening days for these towns,
things changed in terms of the projected scope of the gambling. In Colorado, the
change was apparent in hind sight as suddenly people were very politically correct in
how they referred to the development: it was referred to as "gaming" rather than
small stakes gambling, and the mention of the word casinos began to be uttered and
not quickly corrected (Stokowski, 1997, p. 90).
In addition to the subtleties of the language used by insiders, suddenly there
was a much more visible sign, that being "for sale" signs throughout the towns. In
Central City a "for sale" sign appeared the morning after the vote (Stokowski, 1997, p.
92). It is in real estate market speculation where the growth machine can really have

an impact on a development. The critical paradigm of urban studies refers to the real
estate market as the secondary circuit of capital; it is its own machine with its own
sources of investment capital, banking connections, mortgage brokers, and an
extensive array of supporting players (Feagin, 1998). Between November of 1990
when the initiative passed, and September 1991, the month before opening day, more
than $46 million dollars in property transfers were recorded in Central City and Black
Hawk (Stokowski, 1997, p. 92). The property sales for Gilpin County for 1991 were
$66.3 million dollars higher then the previous year, a parking lot in Central City sold for
$5 million dollars, and the Belvidere Theatre in Central City sold for $10 million dollars
(Stokowski, 1997, p. 92). The land speculation after the passage of the initiative in
Deadwood was just as frenzied as it was in Colorado. Buildings that were appraised at
low values like $75 thousand dollars before the passage of gaming were sold at rates
as high as $300 thousand dollars after gambling was legalized. In Deadwood, a
property that was a steeply sloped lot with an appraisal value of $4,000 dollars in 1990
was worth $756,250 dollars in 1991 (Jensen & Blevins, 1998, p. 74). These
dramatically increasing property values show that there were more than just local
interests involved in the heritage tourism development that was taking place: national
capital investors were taking notice through the capital circuits of the mortgage
market. The historic use value of these towns was quickly being turned into a worthy
investment: use value was dissolving into exchange value.
The real estate market often drives the growth machine; once property prices
began to skyrocket, the visions of a small scale gambling economy, put in place to

enhance the lives of the local residents, begins to disappear. As real estate values
raise exponentially, more and more people end up selling out to outside investors, who
then become increasingly powerful in driving the dynamics of the community. In
Deadwood, within the first nine months of legalized gambling more than 70 buildings
were converted from retail/wholesale enterprises to gaming parlors (Jensen & Blevins,
1998, p. 75). Often times, the owner of the building would opt for selling out to the
casino investors and break the current lease of the business that was occupying the
space. This process left many, like the manager of Floyd's Gifts and Jewelry in
Deadwood feeling that "they were sold a bill of goods in a good con game" (Jensen &
Blevins, 1998, p. 82). A manager of a jewelry store in Central City experienced the
same process, saying, gaming development was suppose to help local businesses
profit, but now we are all losing our leases" (Stokowski, 1997, p. 102). The campaign
for the legalization of gaming in both Colorado and South Dakota was supported and
to a great extent funded by local businesses within these towns, who only ended up
being evicted from their space once implementation began (Stokowski, 1997, p. 102).
Between the years 1980 and 1994 in the Colorado gaming towns, mining,
manufacturing, government services and retail trade all declined in number. A similar
trend occurred in Deadwood where the number of licensed businesses declined by a
third overall (Hsu, 1991. p.164-165).
These decisions by the owners of the main street buildings had major
repercussions throughout the towns themselves. Firstly, these buildings that were sold
would be occupied by casinos owned by outside parties and companies with extensive

gaming backgrounds. Isle of Capri for example owns a total of 11 U.S. casinos
including Isle- Black Hawk, and Colorado Central Station- Black Hawk
( isle.htmll. Ameristar Casinos which is a Las
Vegas based gaming company, and owns a total of 7 casinos, including one in Black
Hawk ( asca.htmU. Penn National Gaming which
owns 12 casinos, including Bullwhackers Casino in Black Hawk, and also owns a
number of horse tracks and off-track wagering facilities
( penn-htmll. In addition to these outside
influences, now there were going to be drastically fewer services available to residents
as well. Within the city of Black Hawk, residents could no longer buy essential items
like gas or a carton of milk (Stokowski, 1997, p. 101). A Central City official told one
interviewer, "You can't even buy an aspirin or a condom in this town anymore"
(Jensen & Blevins, 1998b, p. 117). As an additional person commented, "the towns
were beginning to feel more like theme parks, and less like centers of community"
(Stokowski, 1997, p. 101). The retiring sheriff of Deadwood unhappily commented
that he now had to drive 60 miles in order to buy a pair of socks (Jensen & Blevins,
1998b, p. 117).
This demonstrates the challenge with a created tourist economic development
plan; it may be initially based on heritage and preservation, but its success easily gets
out of hand once the growth machine takes hold; and local quality of life can suffer.
The real estate values rise, more people sell out, which means more casinos, which
means more construction, which means more drastic changes to the towns' look and

feel. The social costs for the local residents when the growth machine takes hold
increase exponentially as well. More retail services are lost, parking and traffic
congestion is far worse, and the sheer number of people increases. These are
dramatic changes for these former sleepy towns, as one resident put it, "The people I
see come up to gamble head right for the machines and don't care if they're in Central
City or Las Vegas" (Jensen & Blevins, 1998b, p. 117).
Patricia Stokowski in her study entitled Riches & Regrets (1997) is one of the few
to make the connection between the creation of a tourist based economic
development strategy and the potential risks of growth machine policies. Her study
focuses on the conversion to gaming that occurred within Central City and Black Hawk
in Colorado. She notes that things begin to change during the construction phase of
the project; this is when casino owners and industry representatives emerged as
powerful and influential figures in the communities. It was their speculative activities
that controlled the pace and the scale of growth locally, and their concerns also helped
to transform the agenda of community discussion issues (Stokowski, 1997, p. 108).
When Coloradoans were initially discussing the process of legalizing limited stakes
gambling in order to save the town, those who valued the town as a home, and valued
it because they used it were at the forefront. But soon after the initiative passed
those that valued the town as a commodity or viewed it in economic terms moved to
the forefront. This is where the disconnect between the two visions regarding the
future of the town begins to occur.

Stokowski's study also mentions that one of the problems of recognizing these
transformations early on is the speed at which the planning and construction occurred
once gambling was legalized. It is easy to look back and notice what incidents
occurred that pushed the development in one direction or another, but in real time, a
million things are occurring simultaneously during the development, which makes it
difficult to see them in their true light. Early indicators of pro growth agenda moving
into place, as mentioned before, were industry insiders describing the development
with words and phrases that included "gaming" and "casinos" (Stokowski, 1997, p.
110). This gave the first real indication that what was occurring was quite a bit
different from the initial concept of small stakes gambling in a small corner of an
existing hotel or bar. Words like "gaming" and "casinos" are not used to describe the
process of adding a few slot machines to existing businesses; these words conjure up
distinct images of Las Vegas and Atlantic City. The difference between gaming and
small stakes gambling is pretty stark, the difference is between an industry and small
time recreational betting, and obviously casinos means a far larger scale of gambling
than originally discussed.
Stokowski also points out that the priorities in the planning process seemed to
favor and focus on growth (exchange value), rather than on accommodating the
special concerns of local citizens (use value). Immediately after gambling was
approved by voters, the focus was on converting all of the buildings that sold over to
gambling and drawing casino investors, rather than focusing on how new businesses
and developments that might affect the day to day lives of the residents or build on

the community's historic heritage. There appeared to be little concern for the loss of
services within these towns, and the loss of services that serve residents, the mentality
was purely on casino construction.
Another political growth machine indicator was the tone of the public discourse
during the construction phase. As for the residents, negative letters to the editor, as
well as vocalizations about the general un-happiness and unrest of the community
increased as the construction period progresses, and it became more and more
apparent that there was a rather large gap between the preferences of the residents
themselves and those possessed by the coalition of developers, government officials,
and casino representatives (Stokowski, 1997, p. 110). From the growth coalition, the
tone also changed as the construction phase continued -it became more negative and
combative when plans were questioned or challenged. This should have made it very
apparent that there was more at stake here than small stakes local economic
development, in fact, there was the existence of powerful, external speculators to
whom maximizing the land use in Gilpin County by creatively destroying its existing
community fabric was clearly a political and economic benefit (Stokowski, 1997,p.
The final piece of evidence from the development of Black Hawk and Central City
that shows a growth machine presence was the battle over the stipulation that forbade
local government officials from owning an interest in the gaming industry while in
office. The pro-growth coalition contested this clause stating that the business elite
were the best managers so they of course were best suited for the government role as

well as their private enterprises. They were worried about the abilities and priorities of
anyone outside the business community taking over the reigns of local government.
They expressed concern over anti-gambling proponents taking over and negatively
impacting the industry and consequently the community. The new casino elite was
clearly arguing that if casino investors could not hold local office, then they could no
longer insure a favorable business climate and would no longer be in control. In the
end the provision stayed, and when opening day arrived there was a vacuum effect as
people resigned their elected positions so they could remain invested in the casino
industry; including Bruce Schmalz, and Bill Lorenz, the mayors of both Central City and
Black Hawk respectively (Stokowski, 1997, p. 110).
In Deadwood, since the gaming legislation included a provision that required 50
percent local ownership in each casino, and limited the number of gaming devices that
each structure could hold to a maximum of 30, there was not as much deviation from
the original concept put forth in the initiative; however they still had a number of
issues. Deadwood in the end had a full blown gaming industry that encompassed the
entire main street of their town. The real estate market exploded, there was a
significant loss of services, and as in Colorado, the residents had a great deal of
unplanned social costs which they had to endure.
A planner in Deadwood, Mike Wolf, quoted a casino owner saying, "If you don't
plan your community, we'll do it for you" (Stokowski, 1997, p. 254). This short
statement sums up very well the issue at hand with a tourist economic development
strategy such as gaming; the inflow of business capital is so over-whelming, with the

business and government elite alike pushing for expansion, that these towns have little
in place to control the pace or limit the development in any way, so the industry
representative, and growth machine elites end up planning the communities. This is
precisely what occurred in all of these towns, when the dust settled after the
construction period these towns all had a much larger casino industry then many of
the residents in the town initially anticipated or wanted.
To make matters worse for those valuing the old "use value" of the town, the
newly empowered growth coalition constantly seek strategies to make even more
money there, and to expand local industry. This is what Joseph Schumpeter describes
as the perennial gales of creative destruction, the essence of capitalism, that constant
need to re-invest, to re-develop, in order to secure more profit (Schumpeter, 1950).
In Deadwood, Central City, and Black Hawk they have experienced a continual
increase in the gaming industry even after the initial implementation and their
respective opening days. This has occurred both in the sheer numbers involved
(number of casinos, devices, and number of visitors), but also in the political arena.
This is where rules have been changed, such as increasing the betting limit, or their
interpretation has been changed, such as what constitutes a gambling structure. Also
new infrastructure has been built, such as new road into the community, much like the
expensive Central City Parkway that members of the city financed to provide easier
access for tourists through the mountains. These more recent indications of the
growing power of the mountain gambling growth machine are the focus of the rest of
this thesis.

In Stokowski's study she tracks the expansion of the industry in Black Hawk, and
Central City through 1995. This thesis will build off of her work; it will include the
town of Deadwood for comparison, and will track the movement of the industry in
these towns from 1995 to 2005. This will test the extent to which the growth machine
dynamics have endured and even been exacerbated in these towns. The findings will
be of interest for several reasons. First, there are a number of municipalities within
the country that are looking to tourism development as the answer to their problems,
whether it is gaming or not, and they need to be aware of the drastic changes that
such a decision could potentially hold for their town, both in terms of physical
changes, but to the culture of the town as well. Hopefully, revealing the fact that the
growth machine never ceases in its search for new growth will help local communities
have a more realistic assessment of the challenges and risks that come with any
"successful" economic growth strategy. It may help locals focus on designing
approaches that are more responsive to the residents, and that take into account the
possible social costs involved in such developments, and doesn't simply cater to the
desires of the business capital investor. In addition, on a national level, it would be
novel to think that if enough incidents like this come forward, that we would be
somehow able to change the perception of large investors' interests within our
country, and shed some light as to the extent to which these interests are not always
in line with common peoples' interests. At this moment in time, these large business
interests seem to have a free pass, few leaders or communities are willing to stand up

to the "growth agenda" and make people aware of the problems such an agenda can
create for fear of being labeled a Socialist, or anti-American.
In her study Stokowski traced a number of indicators of growth, but the three I will
focus on for 1996-2005 are the number of casinos, as well as the total number of
devices per town. I will also track the adjusted gross proceeds of each town per year,
and finally the assessed valuation of the real estate within these towns, especially the
commercial real estate on main street. In addition to the number we will be tracking,
I will also detail any political decisions taken that have enabled the gaming industry to
grow, be that rules changes, local infrastructure that was built with public subsidy, or
advertising and marketing for the town that took place.
During the period of 1991-1994, Stokowski examines the number of casinos and
the total number of devices in the towns of Black Hawk and Central City. In October
1991, after opening day there were 4 casinos in Black Hawk with 448 devices, and 7
casinos in Central City with 696 devices. One year later in October 1992, there were
19 Black Hawk casinos with 3,282 gaming devices, and Central City had 23 casinos
with a total of 4,029 devices (Stokowski, 1997, p. 126). By Sept 1995, the total
number of casinos in Black Hawk had shrunk to 19, however the number of gaming
devices was 4,992, in Central City the total number of casinos was 14 with a device
total of 3,936 (Stokowski, 1997, p. 126). As a sign that the casinos were becoming
less numerous but were increasing in the size, casinos were consolidating. We will
compare these figures to those from Deadwood, and then gather the information for

the next ten years to see what the composition of the towns has become since
Stokowski's study.
In regards to adjusted gross proceeds (AGP), which is simply the amount of money
taken in by casinos minus the dollar amount paid out, Black Hawk and Central City
combined showed a steady increase through the years of 1991-1994. In 1994
combined AGP was $110 million, in 1992 it was $177 million, 93 showed an increase to
$229 million, and 1994's total combined AGP was $280 million (Stokowski, 1997, p.
128-129). I will need to find the corresponding numbers for Deadwood for this period,
and then examine AGP for all three towns for the years 1995-2005 and see if these
figures have reached a saturation point and declined, or have just continued to climb.
I will also track the assessed value of the real estate in all three towns, especially
focusing on the commercial values which would reflect the real estate located along
the main street, since these are the areas which have undergone the most dramatic
changes. Finally, I will examine government actions that have, or have not allowed
the industry to expand such as the push for increasing the maximum bet allowed,
alterations to the rules such as allowing more devices within spaces, and what
determines the boundaries of that space. Finally, we will take a look at any
infrastructure improvements that were made by the local government and judge the
extent to which they were for the benefit of locals or for heritage preservation, versus
the benefit of the gaming industry.

Analysis of Data 1995-2005
Number of Casinos & Devices
Documenting the total number of casinos and the number of devices within these
towns helps to track what the trends have been. Using the Stokowski study as the
starting point let's first review the trends that she reflected up through 1994.
Contained within her study is Colorado's opening day for gambling occurred that on
October 1st 1991. On that day there were a total of 11 casinos open for business, 7 in
Central City and Black Hawk and 4 more in Cripple Creek. At the end of that month,
October 1991, there were a total of 21 casinos and 1,920 devices operating within the
state. By the end of October the following year, 1992, there were a total of 75 casinos
in operation with a total of 11,578 gaming devices. The top number of casinos in
operation within Colorado topped out at 76 in 1992, from that point forwards the trend
has been fewer, but bigger, casinos with more gaming machines. At the end of 1994
the total number of casinos in Colorado was at 59, and the number of devices stood at
12, 359 (Stokowski, 1997, p. 126-7).

Table: #2 Number of casinos & devices: state of Colorado, Central City, Black Hawk
and Deadwood, 1995-2005
Year St. State Cent. Central Black Black Dead Dead
Col. of Col. City City Hawk Hawk wood wood
Cas. Dev. Cas. Dev. Cas. Dev. Cas. Dev.
1995 58 12,744 14 3,978 19 4,848 86 1,845
1996 57 12,851 13 1 3,448 19 5,176 i 89 1 i 1,634
1997 54 13,361 12 3,384 19 5,410 99 1,492
1998 49 13,376 11 1 3,085 s 18 5,864 90 ' 1,308
1999 48 13,988 11 2,750 19 7,127 92 1,361
2000 45 14,588 8 1,962 19 8,430 90 1,300
2001 43 14,598 5 1,683 20 8,707 94 1,415
2002 43 15,545 5 1,606 20 9,721 106 1,617
2003 44 15,459 5 1,610 22 9,602 111 1,766
2004 45 15,681 5 1,565 22 9,462 112 1,886
2005 47 16,444 6 t 2,105 21 9,543 113 1,503
Source: Colorado Division of Gaming & South Dakota Commission on Gaming
When we continue the tracking for the next period, the years 1995-2005, we show
that this trend continues, the number of casinos steadily declines, but through
consolidation, and new construction, the casinos have gotten much bigger, and the
number of gaming devices continues to grow. We began in 1991 with a total of 1,920
gaming devices, and at the end of 2005 are at 16,444 devices in the state of Colorado.

The Ameristar Casino in Black Hawk that opened its doors on December 20th 2001 has
1,666 gaming devices; by itself it almost eclipses the total number the state had at its
inception (Colorado Division of Gaming, 2005, 2002 & 1998). Clearly this is not an
industry that has been largely in its growth, obviously just the opposite has occurred,
its growth has been dramatic. This however, points out an interesting trend that has
occurred in the state of Colorado in regards to Black Hawk and Central City.
Initially when gaming was implemented, Central City was the larger gaming venue
within the state. Black Hawk was close behind, but Central City had the larger number
of casinos and the larger casinos themselves. Central City then put a moratorium on
growth and new casino construction. This is what saw the tide turn towards Black
Hawk, investors wanted to be in the gaming industry and they initially chose Central
City, but if Central City was going to take too much time in making up their mind, then
they were going to take that money down Gregory Gulch to Black Hawk, the next best
thing. As you can see from the table above, once this occurred, and Black Hawk
waited with open arms, and less stringent requirements for development, investors'
money kept rolling in and Central City just continued to lose ground.
Deadwood has seen a similar trend, as the gambling industry has continued to
grow year after year. Deadwood has also seen some consolidation of its casinos, but
the growth has been more limited by the restrictions in place, primarily the maximum
number of gaming devices, by the activities of anti-gaming advocates, and the far
greater tribal casino presence in South Dakota, which competes with Deadwood.
Initially when gaming started in Deadwood there were 45 casinos, and a total of 863

devices (South Dakota Commission on Gaming, 2006). Soon after the first year, much
like that in Colorado there was a large influx of investment and a corresponding
increase in the number of casinos and gaming devices within Deadwood. In 1991 the
number of casinos jumped up to 83, and total devices numbered 1,171 (South Dakota
Commission on Gaming, 2006). From this point it has been a steady increase in both
the number of casinos and number of devices to where they are at in 2006, which is a
high point in regard to both figures, a total number of casinos at 114, with a total
number of devices at 3,131 (South Dakota Commission on Gaming, 2006).
The casino industry within South Dakota has increased more slowly than
Colorado for a number of reasons. The first reason is geography, Deadwood is located
by Rapid City and there is considerable tourism in this area with Mount Rushmore, but
in the end it can't compare to Central City and Black Hawk and their proximity to
Denver and its population base in terms of an investment. Also, the rules of operation
within each state are different and Deadwood caps the number of devices per casino
at 30 versus a percentage of floor space within Colorado. By looking at the numbers
just discussed, obviously Deadwood proprietors have obviously found a creative way
around the 30 per casino limit. We will discuss this in depth later in the paper, but for
now it is sufficient to state that it still constrains them far more than the Colorado law.
Another factor in the Deadwood industry that didn't allow for a larger increase in
the number of devices was the fact that they were able to raise the bet limit within
Deadwood casinos. This increase in the card game bet limit meant that card games
took more of a precedent over slot machines. An increased bet limit allowed

Deadwood to shift its focus and take advantage of the current popularity of poker in
the country. Card tables obviously take up more space than slot machines, and
require more employees to operate which both play into the flattening out of the
device totals in Deadwood. Deadwood also remained strict in its adherence to
preservation being one of the main reasons for the legalization of gaming. During the
process of casino construction building owners were far more limited in the changes
that they were able to make to their buildings compared to those in Colorado,
especially Black Hawk. In Colorado they even named the process as "facadism", the
process of keeping the front wall towards the street in place, and then proceeding to
raze the entire rest of the structure (Jensen & Blevins, 1998, p. 108).
The final reason that Deadwood will always be a little slower to move in terms of
increasing the size of the industry is that there is an odd alliance within the state of
those that are anti-gaming and those that are located off a reservation that has a
tribal casino- neither party wants to see an increase in Deadwoods gaming industry.
State law introduces other complications in allowing for an increase in the
Deadwood gambling industry. Under the current Bureau of Indian Affairs statutes,
tribes have to enter into contracts with the states when they start up a casino, and the
current gaming law of that state is what then applies to the tribal casino.
Consequently any change within the gaming law, such as an allowance to increase the
number of machines, or the bet limit, applies not just to Deadwood casinos, but to the
numerous tribal casinos throughout the state, which makes it more difficult to
liberalize gambling laws and limits. At end of 2006 South Dakota had 11 tribal casinos

to consider with thinking about changes to gaming legislation, whereas Colorado only
has 2 tribal casinos within the state (American Gaming Association, 2006).
Measuring Annual Gross Profit
As far as AGP, which again is simply the amount of money taken in from the
casinos minus the amount paid out, we see it tend to continue to steadily increase
over the years. It has had some minor setbacks, especially in Central City's case
around the years of 2002-2003, which affected the overall total for Colorado. All in all,
however, the AGP amount that Colorado possessed at the end of 2006, $782,098,818
million, is a long way from where it began back in 1991 at $23,128,786. It has
continued to grow despite the fact that the initial construction phase and consolidation
occurred early in the game within the 1990s, and despite the fact that most residents
believed that it's initial impact on the town was far too extensive. The AGP in
Colorado really seems to begin to jump when the larger casinos such as Ameristar
open their doors in Black Hawk in 1999- 2000. The percentage change in AGP for the
years 1999 and 2000 in Black Hawk was 30.05%, and 22.2%, these are the largest
changes in AGP year to year since the inception of gaming back in 1991 & 1992.
In South Dakota, the dollar amounts are not as staggering as those within the
Colorado casinos, but they are still very substantial, and reflect a lot of dollars flowing
through their casinos. Deadwood began their AGP figures in 1990 with a total of
$13,966,679 for their first year. Then, similar to Colorado, they witnessed their largest
jump in revenue when the next year had an increase of 132% (South Dakota Division
on Gaming, 2006). Deadwood has also witnessed a slow progression in the amount of

money coming through their doors, going from the initial $13.9 million in 1990 to the
$83.74 million they reported for FY 2006. Other than the jump between years one
and two of operation, it seems like they were incrementally climbing until they enacted
the increase in the bet limit in 2000. In that year they had a 16% increase in
revenues and have had a pretty sizable increase each year after that through 2006
(South Dakota Commission on Gaming, 2006).
Table#3: AGP for State of Colorado, Black Hawk, Central City, Cripple Creek, and
Deadwood for the period of 1991-2006.
Colorado State Black Hawk Central Cripple Creek Deadwood
1991 23,128,786 6,560,615 10,547,704 6,020,467 32,537,200
1992 180,093,096 56,210,733 71,368,424 52,513,939 38,052,314
1993 259,910,122 112,146,891 78,977,206 68,786,024 40,905,190
1994 325,342,947 173,703,259 69,701,708 82,279,673 42,287,755
1995 384,342,947 195,855,638 94,468,349 94,018,959 45,777,187
1996 411,666,442 219,911,097 88,869,900 102,885,444 43,454,947
1997 430,901,211 234,631,114 87,390,762 108,879,335 41,575,747
1998 479,217,577 272,007,738 93,979,630 113,230,209 42,490,250

Table#3 (Cont.)
Colorado State Black Hawk Central City Cripple Creek Deadwood
1999 551,319,150 354,913,835 73,793,917 122,611,399 42,942,195
2000 631,852,112 433,768,948 63,452,908 134,630,255 49,824,746
2001 676,674,192 478,326,427 59,730,077 138,617,688 50,709,301
2002 719,701,404 524,464,856 52,800,335 142,436,212 61,367,066
2003 698,285,082 505,851,055 49,908,926 142,525,101 64,677,569
2004 725,903,556 524,035,343 53,178,879 148,689,335 71,881,379
2005 755,499,720 531,878,276 72,610,402 151,011,042 79,459,827
2006 782,098,818 554,484,627 74,538,934 153,075,257 83,743,843
Source: Colorado Division of Gaming & South Dakota Gaming Commission
Assessed Value of Property
The final figure that I investigated in order to show evidence of the industry's
growth is the assessed value of property within these towns. This is an important
figure in these economic developments because once the real estate speculation
begins and the assessed value begins to rise, the whole project begins to spiral out of
control. It is the assessed value of real estate that has the ability to dramatically
increase the size of these developments overnight. Once the real estate speculation
begins and the prices of the lots go through the roof, suddenly more and more owners
are taking advantage of the opportunity to cash in and forgetting the opportunity to

have a business located where the tourists are traveling in order to gamble. It is also
the continuing increased value of real estate that prevents service and retail
businesses from coming back to town if a lot is vacant. The only enterprise that can
take advantage of the space is one that is going to be in the gaming industry, because
they are the only ones that have the potential to make enough money to cover the
mortgage, if one was in any other retail industry you would not have enough revenue
coming through the door on a monthly basis to make it feasible (Stokowski, 1996, p.
163; Eadington & Cornelius, 1997, p. 325-326).
As far as total assessed value of the property within these towns, Stokowski's study
begins in the year 1988. It only focuses on the property values of Central City, Black
Hawk and the total for Gilpin County where these towns reside. In that year the total
assessed value of Gilpin County was $37,596,870 million, within Black Hawk the value
was $2,262,330 million and the value of the property within Central City was
$4,705,440 million (Stokowski, 1997, p. 162-163). In 2005 the total value of the
property within Gilpin County was $301,167,240 million (Colorado Division of Property
Taxation, 2006). The total assessed valuation of the municipalities also shows some
interesting trends, particularly when it comes to Central City.
Initially when gaming was implemented Central City was the town that was
receiving the bulk of the investment capital, Central City had the larger casinos, and
this is very evident when looking at the value of the land within these towns between
the years of 1992 and 1997. You can see Central City jump out to large lead in terms
of value, but you see Black Hawk gradually closes the gap, as that city allowed more

investment and did not strictly enforce any type of regulations on that development.
As Central City decided to put a second moratorium on growth, and capital flowed into
Black Hawk, the total valuation for Black Hawk surpasses that of Central City and by
the year 2001 had tripled it (Colorado Division of Property Taxation, 2006).
Within the state of South Dakota there was a similar trend regarding the assessed
land value. Since Deadwood was not included in the original Stokowski study, I looked
at the assessed value numbers for Deadwood and Lawrence County for the period
1989 through 2005. In 1989 the value of land within the town of Deadwood was
$28.7 million, and the total for Lawrence County was $432.4 million. Lawrence County
has a much higher assessed land value when compared to Gilpin County, but
Lawrence County contains the cities of Deadwood, as well as Spearfish, which is a
burgeoning retirement community, and has witnessed its own value increase
dramatically over the same period (Lawrence County Dept, of Equalization). As far as
Deadwood it has seen its assessed value rise from the $28.7 million when gaming
began in 1989 to $114.9 million in 2005. The values have not jumped dramatically
from year to year like those in Black Hawk, but they have steadily increased over the
years since the inception of gaming. They have had three years where they witnessed
a small decline, but the overall trend has been that land within the town of Deadwood
has not flattened or decreased dramatically, it has remained at largely inflated rates,
enabling access to the town to those that are involved within the gaming industry, and
making it difficult for retailers in other industries (Stokowski, 1996, p.163, Eadington &
Cornelius, 1997, p. 325-326). The fact that Deadwood's land value has not

skyrocketed reflects that the community has been stricter in preserving the historical
buildings within their town, but they still have seen a significant increase from the
$28.7 million in assessment that they began with back in 1989.
As witnessed by the different experiences in Deadwood compared to those in Black
Hawk and Central City, there are mechanisms that can be put in place at the local level
to aid in controlling the growth machine and its effects on the community. The first
one which Deadwood took advantage off is to closely follow the guidelines for historic
preservation, and make sure that the construction adheres to these rules so that the
buildings within the town will not be so drastically altered. Other options are to use
zoning to control specific area that will be affected by the gaming industry. None of
our towns within the study took advantage of zoning options, and consequently they
saw gaming spread throughout their towns. The final option to control the growth
machine is to alter the manner in which assessments are done. As we described in the
section above one of the main reasons that gaming is able to take over is that other
retailers can not afford the increased value of the property. This is because the
traditional method of assessment is based on sales, communities that implement a
gaming development need to find an alternate method that is not based on comparing
recent sales of property in order to avoid the artificial inflation of values on these
properties, otherwise the market will dictate the values and this will lead to disruption
of the community (Eadington & Cornelius, 1997, p.326).

Table#4: Total assessed value by county & town 1992-2005
Year Gilpin County Lawrence County Central City Black Hawk Deadwood
1992 $117,054,970 630,731,556 4,082,000 $1,828,000 80,835,760
1993 $130,962,200 615,497,555 g V 76,322,000 ' 11,589,000 70,917,970
1994 $152,492,010 675,009,036 64,113,000 33,104,000 78,250,586
1995 $160,515,330 715,389,050 70,920,000 44,420,000 91,507,760
1996 $159,113,350 746,662,010 74,892,000 50,678,000 91,933,760
1997 $161,076,230 805,631,450 , 68,935,000 53,969,000 91,540,260
1998 $169,703,300 814,380,598 47,974,000 72,922,000 89,434,640
1999 $190,963,790 814,380,598 49,368,000 78,469,000 90,935,198
2000 $215,712,930 848,759,890 35,519,000 105,128,000 98,988,110
2001 $238,182,440 874,537,990 37,671,000 126,343,000 102,244,690
2002 $266,741,430 922,970,250 103,927,320
2003 $275,430,110 973,494,030 111,647,250
2004 $274,724,280 1,015,028,452 107,140,071
2005 $301,167,240 1,185,078,992 114,930,560
Source: Colorado Division of Property Taxation; Lawrence County Office of

Government & Political Actions
Bet Limit
In addition to this 1995-2005 data, I also wanted to analyze government and
political actions that have in that same period occurred since the opening days within
these towns that have enabled the industry to continue to grow. This is vital to the
argument because the central concept of the growth machine is defined as a quasi-
partnership between the elites of the town and industry, as well as the local politicians,
working in concert in order to maximize revenues. One of the most influential ways
that local government can encourage growth within the gaming industry is by allowing
changes to the rules of operation or by re-interpreting those rules. The gaming
industry from its inception has a weil discussed and established set of rules that apply
to its day to day operations, and none of these is more critical within either of these
states then the bet limit. The betting limits along with historic preservation were the
main reasons why the gaming initiatives were able to be passed; the gambling was
limited stakes, originally set at $5.00 maximum bet. This was what was appealing to
voters versus the no limit type of atmosphere at the larger gaming venues such as Las
Vegas and Atlantic City. Las Vegas and Atlantic City automatically conjure up images
and discussions about social issues like crime, the mob, prostitution, and compulsive
gambling that the originators of these bills wanted desperately to avoid.
With that being said, there has been a constant push within these towns to have
that limit expanded. In South Dakota the drive has been a success and the limit at the
Deadwood casinos is now at $100; the change was implemented in November of 2000

(Woster, 2000, p.l). There was urgency associated with this change because the fear
was that they were losing a portion of the gaming population who were unwilling to
have such a small wager limit, and these people were going to other venues. After the
new gaming limit was implemented, Deadwood casinos noticed a difference in terms
of their revenues, especially from the card tables. The change was implemented in
November 2000, and gross revenues rose 86% in December if that year. Rich
Turbiville, general manager of the Gold Dust Gaming Complex, "believes that the $100
bets make Deadwood competitive with casinos in other states, helping draw gamblers
that were not interested in the previous $5 limit" (Kafka, 2001, p.l).
This subject has been the subject of many conversations within Colorado as well;
the Colorado Gaming association in particular has discussed the possibility of
increasing the bet limit and expanding the operating hours. Right now, Colorado has
the lowest maximum allowed bet in the country, and the casinos must close at 2:00
a.m. Colorado's largest casinos are looking to attempt to put an initiative on the 2008
ballot. The desire to have a higher maximum bet stems from the belief that it will
increase the number of visitors to the towns, make the Colorado towns more of a
resort destination, and of course increase revenues (Vuong, 9/17/2006, p. 1). As
current president of the Colorado Gaming Association, and chief executive of Jacobs
Entertainment which owns the Lodge and Gilpin casinos in Black Hawk said after a
meeting with Senator Salazar on the issue, "As an industry, I think we need to do
something, our costs continue to climb. We need to get more people up the
mountain. We're just like any other business- we look for ways to grow our business"

(Vuong, 12/19/2006, p.l). In Colorado we will see if there will be any change to the
law; smaller casinos do not want to see it increase because they posses less space,
and are less able to make large changes to their establishments, and the anti-gaming
proponents do not want to see the bet limit increase because of a whole host of social
issues. As Bobbi Vollmer, director of a counseling clinic at the University of Denver
stated, two to five percent of gamblers become compulsive gamblers, it is good to
have a closing hour and the limited stakes help to slow people down (Vuong, 9/17/06,
p. 1). Also, in initial discussions on the subject during the campaign Gov. Ritter said
he was opposed to it, but the gaming industry is now at the point where they can
make substantial political contributions to key political figures. Fitz-Gerald, D-Jefferson
County, has received at least $9,000 in campaign contributions from the casino
industry since 2000 according to state records so we will have to wait and see (Vuong,
12/19/06, p. 1).
Re-interpretations of Existing Rules
Exactly What Constitutes a Structure in Deadwood?
Other rules changes that have occurred since the time of implementation have also
helped the industry grow beyond what was initially in place. One example of this is
the re-interpretation of what constitutes one structure in the town of Deadwood.
When gaming was implemented in the town of Deadwood, one of the regulations
stated, and still does in theory, that there will be a maximum of 30 gaming devices per
structure. Not long after gaming began, casinos started looking for ways to expand
the number of devices that they could have in their establishments. There was a

battle that erupted and was waged in the legislature beginning in February 1992 with
a bill attempting to do just that, increase the number of devices per casino (Jensen &
Blevins, 1998, p. 98). The main point of the bill was that the operating procedures
within the industry in Colorado base the maximum number of devices upon the
percentage of floor space used for gaming, and therefore possesses the ability to take
into consideration differences in square footage from one casino to another. Under
the rules of operation in South Dakota a larger space that could hold more devices was
still mandated to the same maximum as a casino that was struggling to fit 30 in their
building. The opposition to this bill believed that the whole point of the maximum is to
keep the casinos small, and to avoid what happened in Colorado which was the bigger
casinos putting the smaller casinos out of business because they simply could not
complete with them.
With little progress being made through the legislature in South Dakota, Deadwood
casino owners began to try the argument that their existing building was more than
one structure and therefore should be allowed to have more gaming devices. This
argument by casinos owners and their attorneys was embraced completely by the
South Dakota Gaming Commission. Buildings that were formerly thought to be one
structure were discovered to actually be multiple structures and the casino would be
allowed to possess more gaming devices (Jensen & Blevins, 1998, p. 102-103). An
example of this argument and the most common appeal was on the basis of a building
possessing multiple entry points. It would then be argued that each entry point was
used separately and that in light of this fact the building should be considered as

multiple buildings rather than one. A building on Main Street had originally housed the
post office and telephone companies with separate entrances. The building was then
consolidated as a Montgomery Ward store. Even though the wall making this building
two companies was tore down some forty years prior, this line of reasoning was
sufficient for the Gaming Commission to declare it two structures and allow a double
allowance of gaming devices (Jensen & Blevins, 1998, p. 103).
In one instance a building was granted multiple structure status because the
building had multiple mailing addresses that were used by different companies within
the building (Jensen & Blevins, 1998, p. 103). Also, if historically it housed more than
one business within it than that enabled the current occupant the right to claim it
being more than one structure and allowed them more gaming devices than the limit
of 30. For the French Quarter casino, it was enough to say that the original owner
started out with a "two- store concept in mind" (Jensen & Blevins, 1998, p. 103). It
seems that the enforcement of this clause within the gaming legislation became pretty
loose, to the point where one didn't have to make much of an argument to qualify for
more gaming devices. This just illustrates the point that Kay Lorenz, president of the
Casino Owners Association of Colorado, stated in no uncertain terms, "in light of the
benefits we produce for Colorado and our role in the broader tourism industry, limited
gaming is a partner with state government, not an adversary" (Jensen & Blevins,
1998, p. 104).

Residency Requirement in Deadwood
Another alteration in the gaming rules that allowed the industry to grow larger than
originally conceived applies specifically to Deadwood and was the residency
requirement on casino ownership. Deadwood was initially praised when gaming was
implemented in the state of South Dakota because they had a requirement that a
majority percentage of the ownership had to come from local interests. This seemed
to be a good way to ensure that the casinos remained small, and that investment was
limited in the development. A judicial decision in December of 1991 declared that this
clause was unconstitutional under the equal protection guarantees, and this in turn
opened up investment from outside interests (Jensen & Blevins, 1998, p. 97). This
was particularly important because of the Costner brothers, Kevin and Dan. Already
one of the larger players within the gaming industry in Deadwood with the ownership
of the Midnight Star casino, during the early 1990s they were pushing to build a large
casino, resort and conference complex just outside of Deadwood on an 85 acre tract of
land. The complex was initially called the Dunbar Project after the name of Kevin's
character in Dances with Wolves, and was going to dwarf any of the other Deadwood
casinos. It was the Costner brothers' outside influence that was continuing catalyst for
changes in the gaming legislation affecting the betting limit as well as the number of
gaming devices. Their plan was to have a destination resort outside of Deadwood,
complete with rail service from Rapid City, the largest population center. The Dunbar
Project currently is known as Tatanka. Tatanka is a life size bronze sculpture of Native
Americans involved in a buffalo hunt. It depicts how Native Americans used to chase

the buffalo off a cliff in order to kill them. While the current establishment doesn't
have gaming, the possibility of this continuing to develop into a casino in the future
always exists, and the project in its planning phase certainly had an impact on how the
industry was run within Deadwood.
Site Surveys: Sense of Community
One of the main resident complaints when the gaming industry took over and one
of the main ways in which the feel of the town itself changed dramatically is through
the loss of the former businesses and retail establishments. We discussed this in an
earlier section when we described how the casinos took over the main districts in
these towns because of the inflated assessment values and the lack of zoning and
planning put in place to contain the industry. Stokowski in a separate journal article
discusses this process and describes it as an undesirable lag. She is still focusing on
the towns of Black Hawk and Central City and describes how the economic parts of the
development, money taken in by the casinos and the taxes going to the governments
are in place well ahead of any of the community re-vitalization that was promised.
She also notes that if and when these actually take place they will have to be located
in a different part of town because of those inflated assessment rates (Stokowski,
1993, p. 39).
In order to show loss of services and also show whether or not these services have
been re-established within these towns we will approach this subject in a couple of
different manners. First I will conduct a site survey within the towns of Black Hawk,
Central City, and Deadwood. During the course of my trips to these towns I will

denote the number of retail shops which are in existence along the main street of each
of these towns, and see how many non casino businesses exist. In addition to our
observations, we will also conduct an on-line search within each of these towns for
services and see if there are business that are operating and where they are located
within the town, or if the residents have to commute to another town for those
The first of our site surveys was to Deadwood in October of 2006.1 had visited the
town on a couple of different occasions prior, but those visits were more of the
recreational variety. This time, I visited the town during the middle of the week, so I
did not experience the true number of people, and the parking and traffic problems
that might exist on a busy weekend, but it did enable me to get a better grasp of the
feel of the town and a better ability to observe the casinos themselves. Within the
town of Deadwood all of the businesses along the main street are either gambling
related or novelty stores. I did not observe a place to acquire groceries, or a hardware
store, stores that you would naturally associate with the main business district of a
community. All of the buildings had some form of gaming, or were stores that sold
Deadwood memorabilia. They had one gas station on the edge of town that was new
since my last visit, a kind of convenience store/ gas station. In terms on the size of
the casinos and the general feel of the town, the casinos remained in general rather
true to what I imagine their previous existence looked like (reference figure #7).
There were casinos such as the Cadillac Jack's that were made up of more then one
original structure, but they kept true to the old architecture, rather than demolishing

they connected multiple buildings together (reference figure #8). Also the big casinos
are the exception; the smaller casinos are more numerous on the main street of
Deadwood. Within Deadwood it looks as if they took the historical preservation part of
the legislation seriously, and have tried to keep the casinos in line with the way the
main street has always looked, and have not made any exceptions, all of the buildings
blended well with the surroundings. They have also made some nice aesthetic
improvements to the city such as the brick streets throughout, and the lighting
throughout the town. They also have done a good job keeping down the neon within
the town, there is a lot of signage, but none of it is too tacky.
Figure #7: Deadwood, South Dakota; Source: Deadwood Web Site
Figure #8: Cadillac Jack's Casino: Deadwood; Source: Deadwood Web Site

Figure #9: Deadwood Main Street; Source: Google Earth
My second site survey was to the towns of Central City and Black Hawk. This visit
took place on Thursday, February the 22nd, 2007, again it was a weekday so there was
not much in the way of traffic or parking issues, but there still were a fair number of
people up at the casinos. I took Highway 6 to Colorado 119 and entered through
Black Hawk, rather than taking Interstate 70 to the Central City Parkway. I have
visited Black Hawk and Central City as well, but it was back in 1991-92 when the
gaming towns had just opened their doors, and there was just a small strip of casinos

in Black Hawk, none of them was very sizable, and the only available parking was on
top of the mountain behind the town, and then you were shuttled down to the
casinos. I was frankly very surprised on this occasion when I entered Black Hawk via
119 because of the size of the casinos, and the number of large casinos located within
the first 200 feet of the town. They were all large, attractive buildings, and you could
see that they gave some thought as to the mountain location: none of the casinos
were brightly painted, and most had a western/alpine design, but they are gigantic
compared to those in Deadwood (reference figures 10-14).

Figure #11: Central Station: Black Hawk
Figure #12: Ameristar Casino Black Hawk

Figure #14: Interior of Ameristar Casino

Figure #15: Arial Photo of Black Hawk; Source: Google Earth
The biggest casino, and one of the newest is the Ameristar Casino in Black Hawk.
It opened up its doors for business in December of 2001. The casino has 1,640 slot
machines, 8 blackjack, and 18 poker tables. Inside it has a very Las Vegas or Atlantic
City feel to it, the interior is done very well, down to the plasma televisions at every
turn, and the effect of having the blue sky painted as the ceiling of the casino, a la
Caesar's Palace or the Parisian on the strip. It is a vast expanse of slot machines as
can be seen in photo #7 above. It also has multiple restaurants, and a club, Bar 8024,

which hosts concerts and other entertainment shows. As you can see in photos 5 &
6, it is a massive structure, and from photo #6 you can see how they carved away the
mountain in order to build the casino. And this is just the casino; they are currently
still building the hotel part of the structure. The hotel is going to be a 33 story, 536
room, hotel and spa, and is slated to open next year in 2008 (Ameristar Casino's Web
All throughout Black Hawk you can see that the preservation part of the gaming
legislation was not as valued as it was within Deadwood. Most of Central City and
Black Hawk is comprised of new construction, and in order to build these casinos the
construction and casino companies did what they needed to do. Evidence of the
natural landscape being removed for the construction is everywhere, and when they
didn't need to move large portions of earth, they fell back on their old standard
operating procedure of "facadism". This is the term associated with the construction
practice of keeping the front wall of the building, the preservation portion, and than
proceeding to gut the rest in order to convert it over to a modern building that can
hold a casino (reference figure #16 8t 17) (Jensen & Blevins, 1998).

Figures 16 & 17: Current Construction in Black Hawk; Facadism
This was within the town of Black Hawk; continuing up the road to Central City one
finds a much different setting. Central City, like Deadwood, has much smaller casinos
and they seem to be in historic buildings along their main street. It looked as if they
had stayed pretty close to the original concept of the gaming initiative that was
originally voted on. However, I still was unable to see any other services besides
gaming, and unfortunately there were far fewer people frequenting the Central City
casinos. There were also a number of vacant buildings that were for sale or lease.

Looking at the different towns, there is a stark contrast that reflects the fact that Black
Hawk was much more lenient, and embraced the large investment money and allowed
the casino owners to build in any manner they saw fit. This leniency is likely to force
Central City's hand, they are going to have to increase the size of the casinos they
have within their town or face some bad economic times because with the casinos is
Black Hawk and the distance between them being so small, there is no reason for a
gambler to stop in Central City.
One could then imagine Central City becoming the service center for Black Hawk;
providing the restaurants, coffee houses, and pubs, and allowing Black Hawk to house
the casinos. This however, is unlikely to occur because of the type of economic
development that gaming provides especially in a day trip destination. According to
Professor John Kindt of the University of Illinois- Urbana- Champaign, casino
developments cannibalize existing businesses in the area rather than complement
them. Casinos structure their establishment in order to keep patrons in the casino, no
clocks, or windows, and they provide a large discount on food that outside
establishments can not match. In addition, most casino patrons are lower and middle
class, and have a diminished amount of disposable income after visiting a casino, so
they would most likely not be in a position to shop at the local stores after gambling.
In almost every scenario observed, Kindt states that casino style gambling did not
grow the economy except for the gambling activities and their cluster of services
(Kindt, John, Winter 1995-96, p. 6-7).

As I mentioned before I took US 6 & Colorado 119 up from Denver, rather than 1-70
and the Central City Parkway, but I observed people coming into town from the
parkway, but as lots of disappointed Central City boosters have commented, such as
Beverly Miller, manager of a gift shop, Bevie Sue's Emporium in Central City, "it sends
people speedily on their way to Black Hawk" (Daily Reporter- Herald, 9/11/06). We
will discuss the Central City Parkway later in this paper, but for now it is important to
note that all of the cars that I observed coming in from the Parkway, continued on
down the hill, past Central City and into Black Hawk, and there were not nearly as
many people in Central City. Due to the actions of Black Hawk and their less stringent
planning policy, Central City may now have to comply and try to draw gamblers away
from Black Hawk in order to continue to survive, and the only way to achieve this will
be by giving in to the growth machine elite and building it bigger and flashier;
creatively destroying the community they consider home. "The road was good at
getting people to go through Central, said Ryan Worst, a gaming analyst with Brean
Murray, Carret & Co. "Additional capital will help get those people who go through to
stay instead of going through to Black Hawk" (Daily-Reporter- Herald, 9/11/06).
Already, there have been actions taken by the Central City local government in
order to try to increase the number of visitors to its gambling venues. The best
example of this type of activity occurred within Central City. It has been well
documented that when Central City put a moratorium on construction within their city,
investors turned to Black Hawk and began tunneling money towards it, and
consequently Black Hawk now leads the three towns in terms of revenues generated

by gaming within the state. Recently, Central City has been looking for a way to bring
back some of that revenue that they lost out on to Black Hawk. From the beginning
Central City has had to deal with the fact that commuters from Denver, the main
population center, have to drive through Black Hawk in order to reach Central City.
Once the tide of investment began to shift and Black Hawk began to have the larger
casinos, there was little reason for people to continue up the canyon to Central City.
In order to combat this fact and give people an option, Central City decided to finance
a road built off of Interstate 70, the main East-West interstate through Colorado. This
would allow potential gamblers access directly off the interstate so they would no
longer had to negotiate US 6 and Colorado 119 up Clear Creek Canyon, which is a
curvy 2 lane highway and which has seen more than its share of accidents. This road
would also allow visitors to start in Central City, and then have to choose whether or
not to continue on to Black Hawk. The Central City Parkway as it is named is at the
Hidden Valley exit for 1-70 and is 8 miles in length. The road has been in the works
since the 1990s, and the concept finally was realized when it opened to automobile
traffic in November of 2004 (Vuong, Andy, 9/7 & 9/10/06). The Central City business
improvement district issued $45.2 million in bonds to finance the road and to cover the
initial bond payment and other costs (Vuong, 9/7/06, p. 1-2). The 20 year bonds are
to be paid off with property taxes.
The issue currently is that the road has apparently made it easier for people going
to Black Hawk and the road has not brought in the amount of development needed to
make the payment on the bonds. Joe Behm, president of the business improvement

district said that, "...the way the district projections were set-up, we needed 2 or 3
additional brick and mortar projects within the city to cover the debt service on the
bonds. We got one of them with Century; the piece that's missing is the two other
ones" (Vuong, 9/10/06, p. 1). The one development referenced above is the $50
million Century Hotel & Casino which opened in July of 2006. The casino is owned by
Colorado Springs based Century Casinos and the development includes a much
anticipated 488 car parking garage, however the city has agreed to pay 60 percent of
the cost of constructing the garage (Vuong, 9/10/06, p. 2). In addition to the Century
casino, two casinos shut their doors within Central City, the Teller House which closed
in July 05, and Scarlet's which just closed in September of 2006. Both were owned by
a Swiss based firm named 3C Gaming, and said that the revenue projections were
never met and so they had to close their doors. However, a parcel of land was sold to
Las Vegas based Pinnacle Entertainment which operates casinos in Nevada Louisiana,
Indiana, Argentina, and the Bahamas (Vuong, 9/10/06, p.3).
While the jury is still out as to whether or not the road was a good investment for
Central City and whether it will allow Central City to steal some of the investment
money and visitors from Black Hawk, it is certainly evidence that the government of
Central City is not a passive player in the industry, they are active in making sure that
gaming grows and that it brings in the appropriate amount of revenue. Not to be
outdone, there are plans in the works to improve the drive to Black Hawk; first the
Colorado Department of Transportation is attempting to improve the current drive by
widening the 2 lane highway, US 6 and Colorado 119, and trying to straighten out

some of the curves, as well as their continuing efforts to maintain safe passage
through the canyons by preventing rock slides and falling rocks. There are purposed
plans to add an exit off Interstate 70 along with a new tunnel to connect commuters
from the interstate to Black Hawk. The estimated cost of the tunnel would be $200
million; however there are purportedly $150 million available from private casino
interests (Flynn, 11/29/06, p.l).
Another instance that demonstrates the partnership between the local politicians
and the industry elite when it comes to both growing and protecting their revenue
stream from a development occurred last summer in Colorado. In July 2006 Colorado
enacted a ban on smoking in public areas. This legislation effected all restaurants and
bars within the state, and had many proprietors crying foul; they claimed that the
forced ban on smoking within their establishments would hurt their business and
potentially put them out of business. Interestingly enough, the floors of casinos were
one of the only exceptions built into that legislation. Casino owners and managers do
not have to try to figure out how accommodate patrons that smoke but can no longer
smoke within the building. They currently don't have to deal with patrons like Helen
Mitchell who was staying in Black Hawk when interviewed, and whose attitude is that
if she can not smoke there, she won't go there (Kelley, 7/19/06, p. 1-2). This situation
might all change in February of 2007, the Colorado State Legislature is re-visiting the
smoking ban legislation, and more than one party has noticed that the casinos
received an exemption so that it does not hurt their business while everyone else was
forced to struggle.

The results of the data that I gathered showed us some interesting trends; not all
of them were foreseen, but I think in the end the results do demonstrate that the
growth machine is still present in all of these towns. All three of these towns had
increased growth of the gaming industry during this period. In all three measures:
AGP, the number of casinos and devices, as well as the assessed value of property, all
three towns continued to see increases over this time period. The initial proposal to
legalize small stakes gaming in these towns, led to a gaming industry which included
casinos within these towns, and we have continued to witness it grow over the years,
even though it was larger than the citizens wanted when it was initially implemented.
As we look over the duration of the last ten years we see exactly what Stokowski
saw initially, and exactly what people witness when it comes to these tourism
economic developments. In terms of economics, these developments do tend to
generate a great deal revenue in these areas. However, these financial gains seems
to be focused on gaming revenues for the industry, and tax revenues for the
governments, whether or not the citizens of these towns actually derive a benefit from
these increased revenues has been an on-going source of debate. As Stokowski
described it, the community revitalization portion of the economic development seems
to be lagging behind the industry development. In addition, according to Kindt and
others these types of developments are not necessarily even helping financially to
boost the local economy other than employment opportunities and gaming taxes,

because they tend to cannibalize other businesses, and it depends on whether or not
the money spent in the casinos was just drawing that money away from another local
location within the state, and therefore substituting versus drawing new spending into
the area and activating the multiplier effect (Kindt, John, Winter 1995-96).
My data and observations did show, as opposed to the theories on capitalism by
Schumpeter and Marx, that there are a lot of local variables that are involved that
shape the relative power of these local growth coalitions. Capital has not yet fully
"melted into air", and there is still the reality that local politics and local realities shape
the nature of capital investment within their communities even if it is in a limited
fashion. The three towns, Central City, Deadwood, and Black Hawk while all pursuing
growth during the period of time studied certainly ended up looking very different from
one another, despite the fact that all three started with the same goal in mind. In
Deadwood they chose to stay stricter in terms of the limitations that they wanted
placed on the development, although they had areas where there was some give, and
they eventually upped the bet limit, but the town has been able to retain its historic
character, and has not witnessed the rampant growth like other venues. South Dakota
shows that you can have gaming and still have a sense of community as well. There
was little evidence of creative destruction within the town. While Deadwood lost most
of its services, and underwent a good share of construction, there was not mass razing
of buildings, and the main street resembles itself before gaming was approved. The
casinos have remained relatively small, and while retail services have been lost, the
overall sense from Deadwood is positive regarding the economic development.

Granted Deadwood is much further away from a major population center, and so it is
much less of an attractive investment, but it does seem that gaming has added to the
already existing tourist business they possessed.
On the opposite side of the spectrum is Black Hawk, which exemplifies the growth
machine having total control. The casinos in Black Hawk are so much bigger than
what they previously possessed, as well as bigger than those in Central City and
Deadwood. They are nice casinos and if you were not a resident of the town, and
purely there to gamble you can certainly appreciate them, but as far as being created
to help boost the local economy of the community, this is certainly not the case. They
are far too expansive, and certainly can not be what the residents or former residents
of the town were anticipating. Black Hawk wins the prize for financial gains, the
casinos within Black Hawk bring in far more money than any of the others, but I think
it comes in last place in terms of saving the community. Black Hawk showed little
restraint in its planning, and its requirements for preservation, being a historic
landmark. There are many visible signs that the natural surroundings were given little
regard, as portions of mountains were removed for casino parking lots, and additional
room for hotels to be built. It is interesting to note, however, that while the gaming
industry in Black Hawk far outpaced the other towns, there was not a corresponding
advantage in community development and other services within Black Hawk despite all
of the money flowing through the town, in fact Black Hawk had the fewest number of
services available to its residents, you could count the number of non-casino
businesses on one hand.

The third town, Central City, I think helps illustrate both the influence of the
growth machine, and capitalism's drive for revenue, as well as the need for some type
of comprehensive plan for these types of developments even more than Black Hawk.
Central City started out receiving the bulk of the capital investment, but when it tried
to slow things up, when they tried to go against the growth machine, the investment
money flowed to neighboring Black Hawk. Black Hawk, by opening their arms to the
investment and then allowing the casinos to develop as they saw fit, will therefore
dictate the future of Central City. It will really be difficult for Central City to compete
with the casinos that are currently in Black Hawk. The Central City Parkway which
came with a large price tag in the end has just allowed people easier access the
casinos down the hill in Black Hawk. Central City will not be able to compete and draw
tourists to their town without going down the same path and building bigger more
Vegas like casinos.
As far as ramifications for other types of developments that take place in the
future, I think that this examination was very important. With its varying outcomes, it
shows that planning with resident and local control can be the deciding factors as to
the amount of influence the growth machine has on a community. These outcomes
also coincide with the other experiences with gaming on Native American reservations,
as well as Riverboat developments. They all seem to come back to the manner in
which they were implemented, and the steps taken to control the impact of the
developments. In terms of gaming establishments on Native American reservations
there have been a number of instances where the development as been a success

both economically for the tribe, but also in terms of tribe's culture, and its
preservation. The Foxwoods casino run by the Mashantucket Pequots are a prime
example. While the casino itself is brining in unprecedented revenues for the tribe,
they are able to use that money in a way that helps preserve their history and improve
the quality of life for their members. The tribe has built a museum that details their
culture and their history, and with the revenues they are able to buy back some of
their previous land (Inside Out Documentaries, 2003). Another positive example is the
Mississippi Band of the Choctaw Indians. Two generations ago they were the poorest
tribe, in the poorest state in the nation. On the reservation at that time, only 7
percent of the tribe had a high school diploma, and 86 percent of the population
earned less than $2,000 a year. With the onset of gaming, the 9,000 members of the
Choctaw clear $100 million a year. The Choctaw have been able to utilize the gaming
revenues to further diversify their local economy, and have plants where they
assemble components for GM automobiles, as manufacturing plastic utensils for
McDonalds. In terms of their cultural preservation, the Choctaw have developed a CD-
rom that helps the youth of their tribe learn their language, and will assist in
preserving it for generations to come (Inside Out Documentaries, 2003). Within the
cases of Native American gaming there have also been the negative aspects of the
industry and the drive for revenues. Many tribes have had a great deal of infighting
regarding the subject. Some of the worst battles have been within tribes that decided
to pay dividends to all the tribe members. This many times entails checking blood
lines, and length of residence on the reservation, and many times resulted in tribes

removing people off their members scrolls (Gonzales, 2003). Another aspect of the
gaming on the reservation is the fact that they would have to rely on non native
companies for the construction, and the start up capital, and there are a number of
tribes that were taken advantage of by these companies (Hsu, 1999).
Communities when they implement a development strategy must anticipate the
boom in real estate and take preventative measures such as zoning restrictions, or
caps on assessed value to prevent the development from taking over the town. They
must anticipate the large influx of capital and be prepared to fight off investors, and
make them wait before breaking ground. Also, there needs to be some sort of
comprehensive way of dealing with these developments so investors can not play one
area versus another in order to receive what they want. This might lead to regional
planning for developments in order to avoid the competition between areas, as well as
circumvent the fact that local governments are equally vested in the outcome. This is
not specific to gaming either; it can be applied to any of the economic development
strategies mentioned, mall developments, amusement parks, retails areas, ski resorts;
they all possess the growth machine risk. Within our capitalist economy investment
capital is always going to constantly pursue more profits, at any cost, unless we take
control over the process.

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