newjerseynewsroom.com

BY RICHARD C. LEONE

COMMENTARY

Recently the New York Times reported that several studies had concluded that there would be only modest returns to states that legalized online gambling. For Iowa, for example, the forecast was less than $13 million. Even California could count on no more than about $100 million. These sums are “chump change” compared to the $18 billion the states reap from lotteries. Nonetheless, the lure of more gambling may prove, once again, to be irresistible.

Where 30 years ago legal gambling was rare, largely limited to Nevada, today it is as American as apple pie. And as apple pie has given way to more exotic and prepared desserts, gambling has taken on increasingly varied games and venues to attract customers.

Encouraged by our state governments and enticing advertising, we have become a nation of gamblers. And our state governments are addicted to gambling revenues as a substitute for direct taxation. The lure of raising money through “gaming” has proved irresistible. In fact that there isn’t any debate about the bite the lottery takes out of low income families. We know that this basic form of state sponsored gambling is highly regressive in impact. Lottery revenues, in fact, are more regressive than just about any other “tax.” In general upper income people avoid the lottery, but the working poor are hooked.

And that process has been led by our state governments. Their attraction to and dependence on lotteries opened the door to all sorts of other gambling. Lotteries were seen as an easy alternative to raising taxes or as a way to meet promises to lower or freeze taxes by only, as the Godfather might put it, putting in place another “harmless vice.”

But, of course, gambling is no such thing. It creates great problems for those susceptible to problem and pathological gambling, and it compromises the state’s ability to govern and regulate gambling. In addition, in the nature of the case, it seems to generate some of the most important political players in a state, people who are willing to spend money on campaigns and lobbyists and in order to influence the public decisions that determine how much gambling there will be, where it can take place, who gets the advertising contracts, and for how many hours a day it can operate.

But in addition to offering a way to avoid taking the heat for taxes, the expansion of gambling is seen as a powerful economic development tool. That argument was front and center in the 1970s when New Jersey permitted gambling in Atlantic City. Legalized gambling also brought ancillary befits to its advocates in the political world. Today, gambling interests rank as one of largest sources of political fund raising in the United States. A $5 million check from a gambling mogul to the PAC backing Newt Gingrich’s campaign is a case in point.