Morality, economics, and gambling expansion

I’ve got a new column in the LVBP, about the dubious morality (and even more dubious economics) of many states that legalize gambling:

There's a paradox here: Many states legalize gambling only to bring in revenue in lieu of raising taxes. When their citizens can't generate the kind of tax revenues state governments can't do without, gambling is the obvious fix. The only problem is, when people aren't spending on other things, they're not going to be gambling much, either.The whole model of legalizing for revenues and revenues alone is a classic case of putting the cart before the horse.

via Las Vegas Business Press :: David G. Schwartz : States that legalized gambling for revenue did so for the wrong reason.

Read the whole piece if you like. What I’m doing is carrying the typical argument that “this is a business like any other” to its logical conclusion. If it really is, then artificially limited the market does everyone except a select few a great disservice.

Of course, I’m not the first person to say this. Peter Collins said it with a great deal more wit in his Gambling and the Public Interest.

2 thoughts on “Morality, economics, and gambling expansion”

  1. I tried linking this 1950 newspaper article but it isn’t linking properly.

    So, I typed the relevant parts out. (At least now the words are digitized).

    It’s slightly interesting (if just to see the style of writing used back in 1950). Plus, it’s helpful to see some earlier words on the subject of gaming and taxation.

    ================================================================

    Tucson Daily Citizen Newspaper – October 16, 1950

    Reprinted by permission of The Women’s Home Companion
    (1950 Crowell-Collier Publishing Co.)
    ===============

    ” GAMBLING NOT SO ROSY; LAS VEGAS DISCOVERS

    Obviously, for all the town spends on the support of its three full shift police departments, it isn’t spending enough. Yet the money to pay for more policemen is nowhere in sight.

    Couldn’t the gamblers be taxed more heavily?

    At first glance it would certainly seem so. The gambling business is infinitely profitable.

    With nine lucrative active gambling houses in the downtown area and hundreds scattered all over town, it would certainly seem that license fees could be raised and raised again, without ruining the gambling business.

    RUN FROM TAXATION

    But gamblers, like nearly everybody also run away from high taxation. In Las Vegas they run out to the County Strip, the area on the Los Angeles highway just beyond the city limits.

    Their bars pay license fees only one-third as high as those within the city. Their slot-machine and crap-table licenses cost less. Instead of paying high city real estate taxes on expensive downtown land, they spread all over low-cost desert acres, where county taxes are only one-third as great.

    Thus the gambling interests, virtually the same people in town as out on the Strip have a tremendous lever to use whenever the city thinks about increasing gambling taxes. “Raise our taxes” they say in effect, “and we’ll all move out to the Strip”.

    Strapped between growing needs for civic improvements and the danger of driving gamblers out of town, [the city of] Las Vegas is chronically on the edge of bankruptcy.

    Advisers remind them that gambling can remain a legitimate and legal business only so long as the majority of Nevada’s citizens think of it as an industry that benefits the welfare of the state.

    TAXPAYERS UNRELIEVED

    Making gambling a major industry in Las Vegas has not releived either the taxppayers or the community as a whole of any real part of their social and civic burdens.

    HONEST MISCONCEPTION

    Most Nevadans, and certainly most Las Vegans, honestly believe that gambling has built up their state and city. Yet there is much evidence to indicate that the contrary is true. The large casinos do, of course, provide substantial employment and fairly high wages.

    But the really big money, the constant and growing profits of the big-time license holders, has a tendency to flow out of town at an ever increasing rate. For few of the big operators are really Las Vegans.

    So what do all these golden promises of legalized gambling amount to?

    RECORD SORRY CONTRAST

    The record of Las Vegas is a sorry contrast to the picture gamblers and their political lackeys paint when urging the legalization of gambling in your home town.

    Las Vegas has brought prosperity at the price of complete and growing dependence on a non-productive parasitic and corrupt trade.

    The professional gamblers and their political friends are busily trying to sell the proposition to hundred of other communities.

    But before you buy their slicked-up sales talk your own home town, learn to know it for what it is – a jackpot of golden promises that never emerge from the rigged machine. ”
    ============

  2. A good measure of the campaigns to legalize or increase gambling are simply measures to shift existing tax revenue across geographic borders. Florida politicians look at their citizens flying to other states to gamble and suddenly there are speeches being made about changing Florida laws. States increase a levy on cigarettes and then find their expenses for smuggling interdiction have risen and the revenue has not increased as much as was expected.

    Property does not exist solely to be taxed? Politicians think it does! And thats why businesses get tax breaks and single family homeowners get tax increases: businesses can move elsewhere! And many businesses that have discovered all they really need are a web presence and a FedEx account are fleeing the highly taxed real estate.

    Lottery revenue is a tax on the mathematically challenged and in poor economic times its often the mathematically challenged who lose their jobs. So revenue predictions that were already a bit too rosy tend to become even more overly optimistic.

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