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States with slots hurtin'

Governor Martin O'Malley and the pro-slot forces in Maryland make it seem like voter approval of slots will spare the pain of state budget cuts or new taxes. A sucker would almost start to believe that 15,000 slots form a panacea, a way of making Maryland recession-proof. The pro-slots crusaders may not make such a claim specifically, but that's the gist of the ads and signs we're seeing now. I fully expect to see a choir of fourth-graders singing the praises of slot-machine gambling in the next TV spot.

But look around -- at least four other states with lots and lots of slots -- Nevada, New Jersey, Pennsylvania and Connecticut -- are having big budget headaches, too.

Nevada -- that's the state with Las Vegas, and Las Vegas has lots and lots of slots -- one for every eight residents, in fact. And yet Nevada is among the many states facing huge budget shortfalls, something like $898 million, according to the Center on Budget and Policy Priorities. . . .  Nevada has a declining economy. In fact, the Rockefeller Institute of Government reported recently that no state economy has been worse since January 2007. The measurement is based on tax revenue, the unemployment rate -- now at a 23-year high of 7.1 percent and expected to hit to 7.6 percent in January -- real wages, average weekly hours worked, the labor market and payroll data. The Nevada governor, Jim Gibbons, and the state legislature have cut state spending by $1.2 billion, and Gibbons warned that another 14 percent cut could be coming in winter, according to the Las Vegas Review-Journal. Things are so bad that the state plans to close the rural East Ely Railroad Depot Museum, a historic link in the state's copper mining history, to save a few bucks. (Why don't they just stick a few slot machines and a black jack table in the place?) 

Sounds like Nevada, with its huge gambling industry, just doesn't have a good deal with the casino operators -- or that maybe gambling revenue isn't the ever-flowing revenue stream the "gaming industry" claims it is.

Closer to Maryland, the Commonwealth of Pennsylvania, also blessed with lots and lots of slots, is facing a budget shortfall of about a billion bucks. Since the new fiscal year began, the Keystone State has seen its biggest first-quarter revenue drop in 20 years. At the current rate at which revenues are plunging, the budget shortfall by next summer could be about $1.3 billion, according to published reports. Pennsylvania's unemployment rate was 5.8 percent in August, the highest in  five years.

In Connecticut, revenues from gambling don't seem to be able to fill the gap -- at least not at the current collection rates. Estimates on the budget shortfall there range from $300 million to $800 million.

New Jersey has lots of slots -- in Atlantic City. This state is staring at $1.7 billion budget shortfall.

Any way you look at this -- with slots or without slots -- states are facing recession, revenue shortfalls and cuts in services and programs. So, with slots or without slots, what's the diff if the "gaming industry" is keeping so much of the profit? I remain opposed to Maryland's slots referendum on account of the fact that no one listened to me. There should have been a state gambling commission established to oversee the Lottery and all forms of legal gambling. State-sanctioned gambling ought to be state-operated gambling, with no greedy fat cats in the middle -- or it shouldn't be at all.

 

 

 

Posted by Dan Rodricks at 7:00 AM | | Comments (12)
        

Comments

Your reasoning here is a bit flawed. I agree that slots won't save people from making spending cuts, but the rest of your piece poorly supports your points. You list a bunch of state and their budget woes in what seems to be a poor attempt to correlate slots and having budget woes. Your reasoning is that even with slots these states are having budget troubles, but couldn't someone just as easily say that the money from slots is keeping them from having even worse problems. On your last point, I agree wholeheartedly. If we're going to be ripping off the citizens, we might as well do it directly.

DR: One assumes -- particularly because of the way the Maryland referendum is being touted -- that states with more legalized gambling (casino and/or slots) than the rest would not be among the 29 states reporting budget shortfalls in the billions. One would think -- particularly because of the way the Maryland referendum is being touted -- that they would be among the blessed 21 who have not overextended themselves in recent years while flush with revenue. But, given the political nature of all this, you see in at least four cases where having slots made no difference, which means the states' take in these places was not as big as it should have been to begin with, or that gambling revenues have only made budgets bigger, leaving these states as vulnerable as the rest in a downturn.

Dan, you are so right. Unfortunately, many Americans really do believe that there's such a thing as a free lunch. They claim to value certain things (education, public services), yet don't want to pay for them. Alas, even though she's now presented in the form of the almighty slot machine, the Fairy Godmother still doesn't exist.

Dan,

One explanation for the data that you provided is that over the long run, slots provide very little fiscal benefits given that legalizing them will cost the government in administration and oversight fees, lost productivity, increased fees for additional social services for gambling addictions, family disruptions, drug addictions, etc etc. This argument that slots will provide money for education and lower taxes is totally bogus. Dont let the 3.7 million dollar misleading ads fool you.

"State-sanctioned gambling ought to be state-operated gambling, with no greedy fat cats in the middle"

State-operated gaming would put a massive bureaucracy full of highly paid state employees in the middle. I don't think there would be much difference to the bottom line.

I have no moral objection to gaming, but I'm voting no on this referendum because of the convoluted nightmare that the General Assembly made out of this issue. My constitutional amendment would read like this:

"All forms of gambling are legal in Maryland. The state will collect sales tax on the proceeds."

How hard is that?

Facts are facts. Maryland has an enormous budget deficit that needs to be solved so that we may continue to educate our children and support vital state programs going forward. Your theoretical argument as to whether states that allow gaming are relatively better or worse off at the moment reminds me of the story about the doctor who stands over his patient who has just suffered a heart attack and debates the relative merits of whether his approach may or may not meet with success while the patient lies dying on the operating table. Let's just cure the patient instead of quibbling over theoretical pretexts. If you have a better idea than slots for plugging the deficit, I'd certainly be interested to hear it. If not, then let's just be adults for once and approve slots so that we may capture the Maryland revenue that is currently spilling over our borders, helping to educate kids in Pennsylvania and West Virginia.

I teach in Baltimore public schools, and I see up close how important school funding is. While I would love to see increased education budgets, slots are a scam.

We've allowed the gambling industry to convince us schools will benefit from slots, and thus to frame the issue as supporting or opposing school funding. The truth is that the share of profits going to schools will be minimal.

Florida asked its residents to support state gambling, and promised this in return: if you qualify for a state school and can't afford it, gambling revenues will pay your tuition. That's a real benefit that adds real value to society. This is a paltry, first-round offer. We need to reject it.

If you're curious how much vague gaming offers like this actually help an education system, take a look at Louisiana and Alabama. Both went in for promises like this one.

When the people of Maryland are offered a real share of gaming profits, I'll be the first in line to vote for it. Until then, I call on parents and teachers across the state to tell the gaming industry our kids deserve better.

It is reassuring to read a teacher speaking up. There are many perversions of sanity resulting from this potential imposition of a gambling culture in Maryland, but one of the worst ones was the vote of the teacher's union board members for slots. At best, one could say that Senator-for-Life Miller threatened them with a loss of their pensions. At worst, they simply sold out the rank and file. Just an insult to good teachers as the pro-slots people repeat to everyone that Maryland teachers support slots.

A second and equally appalling action was the Maryland Board of Regents coming out in favor of slots. Again, an extraordinary insult to the Maryland academic community and alumni. How can Maryland pretend to be one of the great universities in this country when its ruling board has nothing better to do than wallow in political mud? I'm sure that UVa, Penn, and Harvard are humbled by this stunning contribution to academic excellence through gaming.

Finally, the writer above who parrots the Miller argument about money "spilling over our borders" has been duped like so many in Maryland. The official target for slots revenues is $1.36 billion per year in 2013. The highest gambling industry sponsored estimate of money leaving the state is $400 million. The more than $900 million difference is why the gambling industry and politicians are lusting for slots. This referendum is not about recapturing money leaving the state. It is all about turning Maryland into a full-fledged gambling economy. We start competing with Mississippi instead of Virginia. People have a choice, but the politicians who brought you slots have not highlighted the simple facts for voters. I wonder why?

"Full fledged gambling economy, gambling culture", please check your hyberbole at the door when you pen such nonsense. You invoke these gross generalizations as though there would be a slot machine on every corner. We are talking about five locations, some of which already allow other forms of gambling on the premises. Doug, you are the one doing the parroting here, parroting the Franchot for governor campaign. How would you propose we raise the funds to educate our children and fund vital state programs in the absence of slots revenue. You are enthusiastic at casting aspersions at slots as a revenue source. What do you propose then in its stead? Hollow moral arguments? Last I checked it takes real solutions to plug budget deficits, not theoretical treatises.

Martin, After paying the social costs and regional impacts of gambling, there will be little or no money left for schools. All you will have is the lower standard of living caused by a huge business that creates nothing, and sucks money OUT of the local economy

That is patently untrue, Scott. Please check your facts. You may believe that this might be true in theory, however every single independent study that has been undertaken shows unequivically that the advent of slots brought zero increase in crime etc...when they were introduced in surrounding states. In fact, the areas near the slots facilities have actually thrived economically - the polar opposite of the simply false scenario the anti slots groups would have people believe. But they have not appeared to let the facts get in the way of a good argument, thus far, that's for sure.

THE TRACKS NEED MONEY. WITHOUT SLOTS THEY MAY HAVE TO CLOSE. FIRST THING THEY MIGHT SEND THE PREAKNESS TO DELAWARE OR WEST VIRGINIA.

The Hypocrisy has no bounds....

30 plus years of benefiting from one of the nations largest lotteries.. Billions an Billions of Volunteer Revenue Generation..

The anti slot zealots are opposing 15,000 slots in 5 location.. and have, through various means, denied MD for the past 6 years, similar Revenue Generation..

even a modest 200 million a year equates to a Billion dollars lost..

not enough to cure the massive shortfalls to be sure.. but then again.. Lost Revenue is Lost Revenue...

ITS A CHOICE...

Play
Don't Play..

But know this... if this referendum fails... EVERYONE WILL FEEL THE PAIN OF HIGHER TAXES..

Higher than otherwise would be needed if the Volunteers step up and play....

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About Dan Rodricks
Jan. 8, 2009, marked 30 years for Dan Rodricks' column in The Baltimore Sun. Over three decades, Dan has won numerous regional and several national awards for his reporting and commentary -- in print and on the air. "I've had opportunity to write a column and work in both radio and television, never having to leave my adopted hometown of Baltimore to have those experiences," he says. "I consider myself very fortunate." In addition to writing a twice-weekly column for The Baltimore Sun and his Random Rodricks blog, Dan is currently the host of Midday, on WYPR-FM, National Public Radio in Baltimore. An artful story-teller and social critic, he has observed local, state and national political and cultural trends for three decades, and has a lot to say about almost everything.
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