Fairfax on Gambling

Lisa Fairfax at the Conglomerate has a thoughtful post on state ballot initiatives to legalize gambling. She writes:

“[T]his election day, voters in several states will be considering ballot initiatives involving gambling or lotteries. Indeed, my own state of Maryland has proposed such an initiative, which would add a new constitutional amendment approving up to 15,000 “video lottery terminals” in five locations throughout the state. Like other states, Maryland’s initiative aims to raise money to cover its significant budget shortfall—a shortfall of about $430 million. As one can imagine, these initiatives have sparked considerable debate, and that debate seems to be heightened when viewed in the context of the current financial and economic crisis.

Proponents of the Maryland measure contend that the initiative could potentially raise $600 million, a significant portion of which would go to fund public education. From this perspective, in a time when states are strapped for cash and thus not only have had to increase taxes, but also have had to take measures such as slashing budgets and instituting hiring freezes and/or mandatory furloughs, it is hard to argue with a proposal designed to inject $600 million into the state’s coffers. As the Baltimore Sun noted in its recent endorsement of the measure, while raising revenue from gambling is not ideal, it may be better than the alternative choices of higher taxes or allowing public education and health care to suffer if budget cuts continue unabated. Proponents also point out that many Marylanders travel out of state to nearby states like Delaware or West Virginia where gambling is allowed, and hence we might as well enable these Marylanders to spend those funds in their own state.

Opponents first question whether gambling initiatives can be counted on to raise significant revenue. Given recent reports indicating that revenue has fallen sharply in many casinos, this is not an idle question. These reports reflect the reality that people no longer have discretionary funds to spend on activities like gambling. Then too, opponents insist that gambling has costly secondary effects because, as studies suggest, it is addictive, leads to increased alcoholism and otherwise negatively impacts other businesses and the surrounding community. Moreover, opponents express concern that gambling measures will prove especially harmful to lower class communities, imposing what some describe as a regressive tax on those communities. Again, such an argument has particular salience in these economic times. Indeed, if more people are living paycheck to paycheck, can or should we pin even part of our economic recovery on the hope that they will use part of their paychecks to gamble?

In the end, much like recovery/bailout measures at the federal level, these gambling initiatives sorely test our ability to find solutions that do not exacerbate our problems or otherwise offer short-term fixes that undermine our long-term ability for economic growth and financial health. In its opposition to the initiative, the Washington Post insisted that the gambling measure will not promote healthy economic growth and hence voters should resist the “false promise of pain-free revenue” that the gambling measure represents. The Baltimore Sun also recognizes the problems associated with relying on gambling revenue to finance government, but nevertheless suggest that while relying on such revenue represents a painful choice for voters, these extraordinary times require us to make painful choices.”

You may also like...