THE GAMBLING COMMISSION, ESTABLISHED IN 1970 TO STUDY GAMBLING LAWS AND PRACTICES IN THE UNITED STATES, CONDUCTS THIS HEARING TO EXAMINE ILLEGAL AND LEGAL GAMBLING ACTIVITIES IN PENNSYLVANIA. TWO FORMS OF LEGAL GAMBLING EXIST IN THE STATE: THE LOTTERY AND PARIMUTUAL HORSERACING. THESE TWO ACTIVITIES COLLECT A SUBSTANTIAL AMOUNT OF STATE REVENUES. THE ADVANTAGES AND DISADVANTAGES OF FURTHER LEGALIZING GAMBLING ACTIVITIES ARE DISCUSSED. EIGHT WITNESSES ARE CALLED TO TESTIFY ON FORMS OF LEGAL AND ILLEGAL GAMBLING FLOURISHING IN PENNSYLVANIA, POLICE CORRUPTION IN TOLERATING GAMBLING, THE EFFECTIVENESS OF EXISTING LEGISLATION ON GAMBLING, ORGANIZED CRIME IN CONNECTION WITH GAMBLING IN PENNSYLVANIA, AND SPECIFIC FORMS OF GAMBLINGS IN OPERATION IN THE STATE. THE ARREST AND PROSECUTION OF ILLEGAL GAMBLING OPERATORS IS DISCUSSED IN CONJUNCTION WITH THE PROBLEM OF OVERCROWDED COURTS IN THE STATE. OFFICIAL POLICIES AND STATEMENTS OF THE CITY OF PHILADELPHIA'S POLICE COMMUNITY, THE FEDERAL BUREAU OF INVESTIGATION UNIT IN PENNSYLVANIA, THE PHILADELPHIA STRIKE FORCE, AND THE PENNSYLVANIA DISTRICT ATTORNEY'S ASSOCIATION CONCERNING GAMBLING AND ORGANIZED CRIME ARE DISCUSSED BY OFFICIAL REPRESENTATIVES OF THESE ORGANIZATIONS. THE HEARING WAS THE SECOND IN A SERIES OF REGIONAL PUBLIC HEARINGS BEING CONDUCTED BY THE GAMBLING COMMISSION. (DAG)