Casinos and slot machine gambling haven’t helped New Jersey avoid a $10.9 billion deficit or the loss of 121,000 private sector jobs (and they certainly [haven’t been kind to Atlantic City). www.realclearpolitics.com/articles/2010/05/26/the_reform_agenda_changing_course_in_new_jersey_105729.html]
Despite revenues from casinos and slot machine gambling, California (10.5%), Connecticut (11.1%), New Jersey (11.8%), Rhode Island (10.2%) and Pennsylvania (10.2%) all have higher tax burdens than Massachusetts (9.5%). p. 32 “State-Local Tax Burdens 2008”..
Not surprisingly industry proponents aren’t ready to let their poor track record get in the way of promises about prosperity. Unfortunately, leading legislative advocates seem to have forgotten the old adage about promises that are too good to be true.
I’ve already mentioned ( http://tiny.cc/BMG-Reason1) that projected gambling revenues are primarily redirected spending, rather than representing an infusion of new spending in Massachusetts — that casino and slot machine revenues would come at the expense of existing spending on the Lottery and on consumer and household goods, spending at bars and restaurants and on entertainment. And I’ve already noted that alluring revenue projections ignore the fact that market share will be quickly undercut by the development of competing gambling establishments by Indian tribes and neighboring states.
At the same time that industry proponents exaggerate the potential benefits, they dismiss or ignore the real and significant costs of legalizing Class 3 gambling. In California, the Attorney General said problem and pathological gamblers cost the state $1 billion per year. In Indiana, an exhaustive review showed the costs at $2,500 per problem gambler per year. In Massachusetts, assuming that 4% of the adult population has or develops gambling problems, that would mean well over $500 million in costs every year… just about the amount of tax revenue that proponents are hoping to generate.
There’s the cost of creating and sustaining a new regulatory infrastructure. The cost of increased crime and the associated increases in police, court, and prison costs. The cost of increased alcohol and drug addiction. The cost of increased rates of bankruptcy and default. The cost of increased rates of domestic violence. The cost of family turmoil as money set aside for rent or mortgage or car payments, for child care or higher education, for food or clothing or prescription drugs — for whatever else the household needs or wants — is spent instead by the addicted householder on “gaming.”
No other industry that we could bring to Massachusetts would engender all these additional costs or put such a hit on Lottery revenues.
(As previously noted, shifting spending from the Lottery to casinos/slots has a disproportionate impact on Local Aid, because the Lottery returns a much higher percentage of gross revenues to cities and towns than would a tax on casino/slot machine revenues. Mass. residents would have to lose a lot more money to casinos/slots to make up the lost Lottery revenues. )
Proponents argue that we’re already paying some of the social and economic costs, on behalf of the Mass. residents who do their compulsive gambling in out-of-State venues. As long as we’re paying the price, they argue, we might as well benefit from that gambling. By that unsavory logic, if New Hampshire or the Wampanoag Tribe started selling cigarettes or alcohol to 16-year-olds, Massachusetts would be justified in lowering the minimum age for purchasing tobacco and alcohol. After all, the argument might go, if State resources have to pay for the consequences of their smoking and drinking, we might as well capture their spending and tax dollars. Never mind the fact that loosening sales restrictions would make it easier for more 16-year-olds to start smoking and drinking.
As previously noted, studies conservatively estimate that 6% of gamblers are already addicted and another 12% are prone to addiction. Researchers have noted, however, that the incidence of pathological gambling is probably higher than any study based on self-reporting can measure, because denial of the problem is part of the disease. In a study of casino patrons cited by the 1999 National Gambling Impact Study (NGIS) Commission Report, 13% of subjects self-reported attitudes and behaviors evidencing “problem” or “pathological” gambling, and another 18% self-reported behaviors indicating that they were “at risk” of developing severe gambling problems.
What is clear, is that the more convenient the opportunity to gamble, the more likely that at-risk gamblers are to slide into addiction. The 1999 NGIS Commission estimated that prevalence rates of problem gambling double when access to gambling becomes more convenient. That people smoke or drink or engage in other addictive behaviors when it becomes more convenient should come as no surprise: it’s why communities limit the number of liquor licenses, restrict the placement of cigarette vending machines, etc. It’s why we hold bars and bartenders liable for serving alcohol to patrons who are already intoxicated.
Unfortunately, in the interest of maximizing “easy money”, the Legislature is on the verge of endorsing a business model that promotes addiction and that depends on addicted “players” for the majority of its revenues. The last thing gambling industry representatives — and their allies on Beacon Hill — want to see are well-intentioned legislative requirements to interrupt the play of gamblers while they are “in a zone”, to limit daily losses, to restrict the gambling of known addicts, to put limits on the serving of alcohol, or other provisions that might erode the success of slot machines in getting addicted patrons to “play to extinction” (i.e., exhaust their resources). And as we have seen in other states, even if the Legislature enacts a few protections at the outset, those protections get whittled away over time in response to the gambling industry’s cry for “relief” to keep their product more competitive with casinos in neighboring states.
As noted above, approx. 80% of casino revenues come from slot machines, and approx. 70-90% of slot machine revenue comes from 10% of the players. Despite all the opportunities to offer counter-arguments, industry advocates have never disputed the charge that slot machines are engineered for addiction and designed to keep customers gambling until their resources are depleted. As Dr. Natasha Dow Schull, MIT assistant professor and author of “Addiction by Design” has testified and written, today’s generation of slot machines maximize “time-on-device” and minimize the need for disruptions (e.g., by replacing the use of coins and pull levers with credit and push buttons), speed up play to allow in excess of 900 games per hour, combine mesmerizing displays and sound effects, and employ algorithms that sustain the illusion that “winning” is possible, all the while depleting the player’s resources. When gamblers are in their “zone”, the play becomes even more important than periodic small payouts (which disrupt the rhythm of the interaction). http://scripts.mit.edu/~schull…
The last thing on an addicted gambler’s mind is whether they can afford to lose any more money.
Perhaps because the consequences of excessive drinking are more immediately visible and more demonstrably dangerous, public pressure has forced elected officials to make bars
and bartenders accountable for serving patrons who are already past their limits. There are no such norms in the world of gambling; and as long as the personal and economic consequences of self-destructive gambling are treated as externalities that taxpayers must shoulder, the gambling industry will have no reason to change its business model, which depends upon increasingly sophisticated technologies to addict and exploit their customer base.
In his 2005 book Gambling in America: Costs and Benefits, Baylor Professor of Economics Earl Grinols (a senior economist in the Reagan Administration, and no “flaming liberal”) estimated that taxpayers spend $3 on associated costs for every $1 in revenues from casino gambling. The aforementioned1999 National Gambling Impact Study estimated that the 7.5 million problem gamblers cost society approximately $5 billion per year and an additional $40 billion in lifetime costs for productivity reductions, social services, and creditor losses. Add ten years of inflation and we’re talking about $6.5 billion per year plus an additional $53 billion in lifetime costs. Double or triple that to factor in the costs generated by the up to 15 million other gamblers predisposed to addiction, but not quite there yet (a prime target of the gambling industry and its predatory slot machines). Add to those calculations the cost of creating an infrastructure to regulate and monitor the gambling industry, the cost of investigating, prosecuting, adjudicating, and incarcerating the perpetrators of gambling-related crimes (which typically include passing bad checks, credit card fraud, extortion, robbery, and worse.)
Massachusetts has been able to duck some of these national costs by prohibiting Class 3 gambling here. In a 2006 letter opposing licensing slot machines, the Mass. Public Health Association argued for a continued ban on predatory slot machines, citing “increased costs for taxpayers, insurers, health providers, and the Commonwealth due to acute medical care, mental health services, substance abuse services, unemployment insurance, child protective services, domestic abuse services, public safety, and correctional system costs” that are associated with compulsive gambling.
Massachusetts spends millions of dollars to discourage smoking and substance abuse. Despite the potential for higher tax revenues and more jobs, no legislator would agree to put cigarette vending machines in our schools or to dramatically expand the number of liquor licenses … because we know the individual and societal costs of those addictions.
Without the supporting evidence of a comprehensive analysis of the short- and long-term benefits and costs of legalizing Class 3 gambling — statewide and in the regions where venues are sited — the proposed legislation represents an irresponsible crap shoot with Massachusetts’ future, posing predictable risks and hardships to thousands of residents and their families, to hundreds of impacted businesses and their thousands of employees, and to the cities and towns that must cope with those impacts.
And unlike defective cars which can be recalled for repair, once we unleash the gambling industry and legalize predatory slot machines, there is no turning back.
Like a virus or invasive species, once the gambling industry gains a foothold in new territory, once its lobbyists and corporate contributions become marbled in the culture of the State House, we can’t wipe the slate clean and start afresh.
Let’s not go down that path.