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States betting on gambling money

By Kay Bell · Bankrate.com
Tuesday, April 3, 2012
Posted: 2 pm ET

In the span of four days, we witnessed what was arguably the largest spate of gambling in U.S. history.

By the time the Mega Millions lottery numbers were drawn on Friday, March 30, folks hoping for immediate wealth had bought more that 625 million tickets. Three days later when NCAA March Madness wound down with the men's college basketball championship game, this year's tournament outpaced the Super Bowl as the bettors' favorite in Las Vegas.

So it's no surprise that states are more than ever considering gambling as the answer to their fiscal prayers.

Gambling in some form already is allowed in almost every state in the nation. And as state governments struggle to recover from the recession, more politicians in both parties are starting to embrace the practice.

Aside from the obvious money it could bring in, it's a way to get cash without doing the unthinkable: raising taxes, especially in an election year.

Reuters reports that the Democratic governors of New York and Kentucky want more casinos in their states. Kansas' Republican governor wants more gambling money to pay down that state's debts. And in Minnesota, state officials think that more gambling is the way to help finance a new stadium for the privately-owned NFL Vikings.

Here in my home state of Texas, we have lots of lottery options, including the Mega Millions game. And yes, I bought a ticket. If I'd won, you wouldn't be reading this because I'd be on my yacht in the Mediterranean.

But Lone Star State lawmakers still are resistant to expanding gambling opportunities, although betting advocates point to the tens of thousands of Texans who regularly take their money to casinos in neighboring New Mexico, Oklahoma and Louisiana.

Even Grover Norquist, the man famous or infamous depending on your tax and political point of view for his no-tax pledge, has encouraged the Texas legislature to reconsider.

In a letter to Texas House members in January, Norquist pointed to a study by The Brattle Group that showed that for every $1 in gaming revenue, the commercial casino industry creates $1.5 in additional economic activity. His writing is below.

Unlike the failed policies that have come out of Washington, D.C. in recent years, permission of gaming involves no government handouts and has proven to provide a real economic multiplier. In fact, the industry has had a more significant economic impact than many other sectors of the economy, with gaming generating 450,000 jobs nationwide in 2010. The benefits of incorporating the gaming industry into the Texas economic portfolio are too significant to ignore. Not only would it be preferable to job-killing tax increases, it would actually lead to job creation.

Of course, there also are lots of arguments against state-sanctioned gambling. In addition to objections on religious and moral grounds, antigambling advocates say the revenue from gambling is poor public policy.

Gambling revenue typically is described as akin to the excise taxes that states collect on cigarettes and alcohol, other products that have detrimental effects on users. But when it comes to betting, say antigambling opponents, the fiscal losses incurred by participants are much more immediate and often more dramatic. Even the biggest nicotine freak doesn't raid Junior's college fund to buy cigarettes, but that has happened when someone is convinced he or she can strike it rich by playing just one more game of blackjack.

And all excise taxes are regressive, costing the poorest the most, as well as being not transparent to taxpayers, thereby distorting economic behavior.

Texas has fared better than many states during this latest economic downturn, so there's no urgency here to open casinos. But if I were a betting person -- wait, I am! -- I'd wager that despite arguments against gambling, I'll soon encounter some one-armed bandits within Texas' borders.

Does your state have casinos and other betting parlors? Do you think states should expand gambling options instead of cutting spending or raising taxes?

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