Gambling (on) Losses

First published Friday, Feb. 6, 2009 in The Daily Sentinel


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The economy continues to make headlines. Unemployment in Ohio is over 7.5%, and many experts predict that will quickly climb to 10%. State and local governments are wrestling with how to balance budgets when revenues (taxes) are down while service demands (expenses) are up. The optimists are looking at that proverbial glass and asking, “Where did it all go?” while the pessimists are saying, “See, I told you so.” Who is going to rescue us from this mess?

Penn National Corporation rides to the rescue! In case you don’t know who that is, Penn National owns Argosy Casino in Indiana – just outside Cincinnati – and it spent $36 million to kill the proposed single casino constitutional amendment on last November’s ballot because it didn’t have had any ownership in the new casino and it didn’t want the competition. Ohio voters defeated that proposal, along with the last four attempts to expand gambling in Ohio (including two proposals made by Penn).

The people seem to have clearly spoken: we don’t want casino gambling in Ohio. However, now that our economy is in the tank, Penn National and other casino groups think Ohioans are willing to compromise. The Cincinnati Inquirer recently reported: “To boost state revenues, some state legislators propose expanded gambling. In spite of his longtime opposition to casino gambling, [Governor] Strickland said it would be foolish for him to ignore gambling ideas that might ease budget woes.”

“The state has been in bad financial condition for the last eight years,” said Senator Bill Seitz (R-Cincinnati) to the Toledo Blade. “I foresaw this eight years ago. You either raise taxes, cut spending, or expand gambling in Ohio. For me, it's an easy choice.” Seitz is one of the gambling industry’s biggest supporters in the State House. He thinks gambling is the easy choice. That must be music to Penn National’s ears.

Ohio government officials are not alone in considering gambling. The Associated Press recently reported that proposals to allow or expand slots or casinos are percolating in at least 14 states. “Analysts say the latest round of gambling initiatives are noteworthy in volume and ambition – a sign that the industry aims to capitalize on states’ badly bruised economies. ‘From the gambling industry’s point of view, this is their big chance,’ said Earl Grinols, an economics professor at Baylor University who specializes in gambling.”

This is their “big chance,” huh? Sounds like the gambling industry is gambling with our economic troubles to line their own pockets even further. In exchange, they promise economic miracles: thousands of new jobs, increased tax revenues, support for our schools, hospitals, and emergency response teams. Almost sounds too good to be true!

Maybe it is too good to be true. What’s the economy look like where gambling is most famous – Las Vegas? Foreclosure rates highest in the nation. Housing values declining by 50%. Unemployment up significantly as casinos lay off wait staff, dealers, valets, hotel clerks, cleaning crews, etc., after their profits fell by two-thirds in 2008. Seven gaming companies defaulted on $13 billion in loans last year. That’s a lot of bad news from “Sin City.”

Tom Gray, a field director for StopPredatoryGambling.org: “We’ve got gambling in 48 states, and you’d think if it worked, you wouldn’t have budget problems or education problems.”

Here in Ohio, Governor Strickland allowed the expansion of Keno gambling through the Ohio Lottery. Expected to generate $73 million in state revenue in its first year, Keno is currently projected to make only $25 million.

And where does the $25 million come from? Mostly the poor, marginally employed folks who often see all forms of gambling as a ticket to escape poverty. The truth of the matter is that gambling tends to mostly affect those who can least afford it. Rev. John Edgar, head of the United Methodist Church of Ohio’s anti-gambling task force summarized this well: “It is illogical to say that you're not going to increase taxes but are going to increase gambling revenue. Fundamentally, gambling – when it's state-authorized and taxed – functions like a regressive tax on the poor.”

As a former United Methodist minister, Governor Strickland knows all of this. He has long been an opponent of gambling. So I hope that he will not lay his principles on the altar of economic pragmatism. Gambling with Ohio’s future should not be on the table – no matter how bad the economy seems to be.