Politicians Bet the Farm

[Joanne98]

Faced with tough budget decisions, many states are turning to gambling as an answer to their economic woes. But most end up getting far more than they bargained for.

Barbara T. Dreyfuss | March 10, 2008



Last spring, Kansas politicians decided to take government promotion of gambling to a new level, voting to make the state the first to actually own Las Vegas-style casinos. Not content, as other states, to merely tax the revenues of commercial gambling establishments, Kansas will own the casinos' buildings and rake in much of their proceeds. But the corporate giants and investors who own casinos in other states won't be left out. Kansas will partner with them to run day-to-day operations. The state's Republican legislature and Democratic governor, Kathleen Sebelius, endorsed the law as an answer to demands from the state Supreme Court to come up with more money for education. Rather than impose higher taxes or cut budgets, they bet on an easier road to riches. Watching Kansans flock to casinos in nearby Missouri and Iowa, political leaders decided to try to keep that money at home.

Kansas isn't alone. Officials in other states (over a dozen in 2007) are also scrambling to expand gambling, eyeing negotiated fees from American Indian tribes and tax revenues from commercial casinos. And, no longer satisfied with restricting casinos to rural areas, politicians are fighting to build them right downtown in the largest U.S. cities. As discussion of taxes has become taboo, politicians of both parties have been promoting gambling as a way to make a quick buck. Afraid to tell voters they need more money for government programs like education and public services, officials surreptitiously collect it by taxing gambling revenues.

It's not just a question of hidden taxing. When gambling comes to a community, crime, bankruptcies, suicides, and mental illness increase. City and county governments have to bear added costs for these problems, and local businesses often fold, as money that would otherwise be spent in the region flows into a corporate headquarters elsewhere. Despite opposition from many local citizens and business leaders, politicians have decided gambling is politically the easiest answer when they need immediate funds. The Rev. Tom Grey, field coordinator for the National Coalition Against Legalized Gambling, says Republicans' anti-tax rhetoric has caused "progressives to lose faith that there's a common good and a willingness to pay for goods and services."

A BIG GAMBLE

Legalized gambling has spread rapidly throughout the United States. Two decades ago there was a social stigma attached to gambling, and only two states, Nevada and New Jersey, allowed commercial casinos. American Indian gaming barely existed. But gaming has come out of the back alleys and onto the main streets of small towns and struggling cities around the country. It is promoted as high-class entertainment, yet affordable to the masses. And business is booming, with more than 460 commercial casinos operating in 11 states. Casinos took $32.4 billion in gross gaming revenues in 2006, almost double the $17 billion of 10 years earlier. American Indian-run gaming has also taken off, following an official blessing by Congress in 1988. Currently, 423 facilities, run by 228 tribes, operate in 28 states, according to Alan Meister in the 2007-2008 Indian Gaming Industry Report. Tribes raked in $25.5 billion in 2006. On top of the casino money, Americans spent more than $56 billion on state-run lotteries.
http://www.prospect.org/cs/articles?article=politicians_bet_the_farm


Black Hawk's Gamble

A report from one played-out Colorado mining town that sought to recoup its fortunes by bringing in casinos.

Tara McKelvey | March 10, 2008

See related articles Politicians Bet the Farm and Problem Gamblers In Their Own Words

It has been less than a week since Fran Fry was in Black Hawk, Colorado, a town of more than 20 casinos and fewer than 200 residents, and she cannot stop thinking about the place. Still wearing a nametag ("25 years of service") from the furniture store where she works, Fry, 58, lights a cigarette and tries to quiet her yapping Maltese, Bentley. "All I want to do is gamble," she says in the living room of her Englewood, Colorado, condominium this December evening. Her gambling habit has cost her and her husband, Michael, 59, also a furniture salesperson, roughly $680,000; a tri-level, four-bedroom house; and, she says, "a lot of self-respect."

Like most gambling stories, Fry's begins with a win: $277 in quarters, collected from a slot machine in Black Hawk one evening in 1994. "I'd go week after week. It took hold of me so bad," she says. Fry thought she was on a roll. So did a lot of people in Colorado. In 1990 voters approved an amendment to the state constitution allowing limited-stakes gambling in Black Hawk, located about 30 miles west of Denver, as well as in two other former mining towns, Central City and Cripple Creek. Civic and business leaders promised big rewards, explaining that gambling would create jobs, raise property values, and provide money for roads and historic renovation. Besides, they said, casinos are part of the mystique of a frontier town, which is founded on dreams and jackpots. "This is a proposition where everyone can win," wrote a gambling supporter in a 1989 letter to a local newspaper. And in many ways, Black Hawk has hit the jackpot, with its casinos generating roughly 80 percent of the state's $69 million in adjusted gross proceeds from gambling in 2006.
http://www.prospect.org/cs/articles?article=black_hawks_gamble