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Budget gaps lead states to gambling

NASHVILLE, Tenn. (BP)–Several states are turning to gambling for potential income amid budget shortfalls, even as the American Gaming Association reported that revenue from casino gambling fell 5.5 percent overall last year.

“It is deeply disappointing that some of our states are turning to gambling to help them close their budget gaps,” said Barrett Duke, vice president for public policy and research at the Southern Baptist Ethics & Religious Liberty Commission.

“If gambling was unacceptable when the state economies were doing well, it should be even less acceptable when their economies slow down. Government programs aren’t the only thing hurting in these difficult times,” Duke told Baptist Press. “Families are hurting as well. These state governments should be cutting their own expenses rather than looking for easy fixes that prey on people, especially gambling addicts, to close their budget shortfalls.”

The Wall Street Journal, in a May 11 article with the headline “Strapped States Find New Virtues in ‘Vice,'” said nationwide the public-funding crisis has led state and local leaders to condone activities and businesses they’d be apt to restrict in better economic times.

California, for instance, is debating whether to allow and tax Internet poker, which is prohibited by federal law. A measure will be on the ballot in that state in November to decide whether to expand and tax marijuana sales, and at least half a dozen other states are considering the revenue potential marijuana might provide.

Some states have loosened decades-old restrictions on Sunday alcohol sales, the newspaper said. One commentator said “blue laws” are a common casualty of recessions. “Every time there’s an economic contraction, sure enough, you start seeing local repeal efforts,” the economics professor said.

A key focus of the Journal article was the state of Ohio, where Gov. Ted Strickland, a nonpracticing Methodist minister, once described gambling as a “regressive tax” that harms the poor. But after Strickland reduced state spending by $2 billion, cut more than 2,500 government jobs and slashed state agencies by 10 to 20 percent and the budget still wasn’t balanced, his opinion of gambling changed.

When presented with an option to cut back a Medicaid program that provides oxygen tanks for critically ill patients, Strickland said that was the last straw and submitted a budget plan that included installing video lottery machines in the state’s seven horse-racing tracks, The Journal said.

The lottery machines, the governor projects, should raise $851 million over two years. Once Strickland gave in to the lottery machines, Ohio voters last November approved a measure to build casinos in the state’s four largest cities. Voters in the state had rejected gambling repeatedly in the past, the newspaper said.

“Prior to the Great Depression, the U.S. had a near-total ban on gambling, and since 1920 barred alcohol sales,” The Journal said. “But the government legalized horse-race betting during the depression and in 1933 repealed Prohibition, partially due to the high cost of law enforcement and need for tax revenue.

“Atlantic City voted to allow gambling in 1976, when the city was economically depressed and nationwide economic growth was slowing. The early-1990s recession prompted states like Mississippi, Louisiana and Indiana to bank on new gambling facilities for revenue. And after the 2001 terrorist attacks, New York expanded video gambling in bars to help make up for projected losses from lower tourism.”

Duke warned against following the same pattern in the current economic slowdown.

“By turning to gambling to raise additional money, the states are sending the wrong message to their citizens,” he said. “Instead of modeling good financial discipline and reducing their spending, the state that turns to gambling to plug funding shortfalls is communicating to its citizens that it is preferable to prey on the weak than to live within one’s means.

“Furthermore, the states that turn to gambling to close their budget shortfalls are introducing a permanent burden on the citizens to fix a short-term problem,” Duke said. “These casinos are not going to close as soon as the state economies improve. They will become permanent fixtures, preying on people for decades and increasing the number of families that are dependent on the states.”

In May, the American Gaming Association said revenue from casino gambling fell by $1.8 billion in 2009 from the $32.5 billion of revenue in 2008, and revenue fell in eight of the 12 states that have casino gambling.

“People had less money to spend on our products,” Frank Fahrenkopf, the association’s CEO, said, according to USA Today. “Until people go back to work, businesses that depend on discretionary income are going to continue to struggle.”

Government leaders who say casinos would bring more jobs to their states also must face the fact that casinos in 13 states employed about 328,000 workers last year compared with about 357,000 in 2008. The AGA also reported that casinos contributed $5.6 billion in tax revenue to state and local governments last year, amounting to a 1.6 percent drop from 2008.

“States are increasingly tempted to rely on new gambling revenue, but over time the revenue gains do not keep pace with growth in spending,” Robert Ward, deputy director of the Nelson A. Rockefeller Institute of Government in New York, told USA Today. “So while gambling may help in the short run, it does not solve long-term budget gaps.”

Pennsylvania is one of the few states that saw a revenue increase last year, but observers indicate it’s because the industry is new there. In January, Gov. Ed Rendell expanded the state’s gambling venture by legalizing such games as blackjack, craps and poker to help balance this year’s budget, USA Today said.

“The government beast never gets enough money. It should be the first to go on reduced rations when the economy goes sour,” Duke said. “Government actually needs fewer employees and smaller spending programs when the economy is hurting so there is more money in the private sector to create jobs. We must not continue to feed the government beast at the expense of the people when resources are scarce. You cannot starve the goose and expect to continue to get gold eggs.”
Erin Roach is a staff writer for Baptist Press.

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