Casinos are not the Answer to a Recession

As states all across the nation struggle with budget shortfalls, one solution keeps popping back into focus: legalizing casino gambling. Formerly puritan New England is not immune to the siren call of neon- Massachusetts Governor Deval Patrick has repeatedly tried to move forward with plans for two resort style casinos in the Bay State. Now some Democratic state senators are picking up the issue as well. While on first blush casinos may seem like a ready-made answer to budget woes, upon closer inspection institutionalized gambling will hurt, not help the economy.

There are two significant costs that are associated with large-scale casino gambling; one is a humanitarian cost, the other purely economic. Both are consequential deterrents and yet both seem to be little understood by the voting public. Gambling addiction is not a myth, and in fact it is a very serious problem wherever casinos have opened. Governor Patrick’s casino plan plainly admits that 1 out of every 20 people (5%) would become a problem gambler as a result of his initiative. That’s 250,000 people, not including the family members of these addicts who will also suffer. Unfortunately, while problem gamblers make a lot of money for the gambling industry, their addiction leads to child neglect, crime, distressed families and bankruptcy.

In humanitarian terms casinos lead to a very real drop in the quality of life for effected citizens. Gambling invariably brings with it a number of less attractive activities such as petty crime, theft, alcoholism, poverty and prostitution among them. What does it say when the national leader of the casino industry lobby, Frank Fahrenkopf, said he’d oppose a casino where he lived? If he doesn’t want one in his home town why should anyone else. These are large-scale public nuisances that create far more problems than any purported benefits they could bring to state coffers. In fact, the monetary benefits of casinos are also seriously suspect.

First and foremost, the evidence does not show that gambling solves any fiscal problems. To the contrary not one state in the country has ever solved its budget problems through the growth of casino gambling. Even New Jersey, with its 11 casinos, had to shut down its state government in 2006 due to a budget crisis, and this was well before the current recession. The Boston Business Journal– one of the states most pro-business publications- has repeated warned against the negative economic impact of resort casinos in New England. Mainly because casinos lower a region’s standard of living by attracting lots of low wage jobs. Additionally, the Patrick plan’s proposed numbers simply do not make sense. The revenue estimates do not account for the fact that New Hampshire would put two casinos right on the state border and Rhode Island would also expand its slot machine locations into full scale casinos in response to new large scale facilities in Massachusetts. One can almost envision an arms race for dollars going on. And while normally competition is good for business, in this case it would only escalate all the associated negatives.

However, it gets worse. Not only do casinos not bring in the promised funds to allow states to provide necessary services to citizens, they also act as a de facto tax on the lowest wage earners. Research has shown that the poorest households spent 11 percent of their income on gambling, compared with the highest earners who spent less than 1 percent. In Minnesota 52 percent of people who filed for bankruptcy mentioned gambling as a major reason to file. Does it make any sense to raise taxes on the most vulnerable in society? Even if the humanitarian costs doesn’t bother you, the economic one should. When the poorest among us fall, it is the rest of the tax paying public who must act as the security net. Casinos cost everyone more of their hard earned money.

Rather than states looking for new streams of revenue to make up for budget shortfalls perhaps they could take a page from the common American household and simply tighten their collective belts. In Massachusetts’ case, over $12 billion in waste was reported on as recently as last year. Clearly there are more humanitarian and more economically sound ways of going about dealing with the effects of this recession on states’ budgets. Let’s hope saner minds prevail when it comes to casinos.

For more center-right news & views see The Rockefeller Republican.

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