States Seek Gambling Fix

By: - November 22, 2002 12:00 am

Ohio Sen. Doug White, a Republican, is no fan of gambling.

“I do not like gaming, I do not participate in gaming, and I do not encourage anyone else to participate in gaming, because it’s a losers game. A whole lot of people have to lose if a few people are going to win,” said the Ohio Senate’s president elect.

Yet, oddly enough, White is pushing a bill in the Ohio Senate that would allow the state’s horse tracks to install slot machines, a practice currently banned under state law.

When asked how he can justify his pro-gambling policy stance given his anti-gambling personal leanings, White pointed to the fiscal, economic and geographic realities forcing his hand.

Many slot-playing Ohioans, especially senior citizens, now head to Indiana or West Virginia, neighboring states where slots are allowed, or other, more distant states like Nevada, in order to play their favorite game of chance, White said.

But if slots were allowed at Ohio horse tracks, he added, more gamblers would stay instate to place their bets, bringing hundreds of millions of dollars to Ohio’s coffers and strengthening the state’s struggling horse racing industry.

White’s personal and policy dilemma may be unique, but his state’s economic and fiscal situation is not.

Deep budget deficits, and the need for significant program cuts or tax increases to balance them, are leading many state lawmakers to consider an alternative revenue source expanded legalized gambling as a way to raise money without raising taxes.

The stakes for states and the gambling industry are huge: In 1998, Americans lost $50 billion on legal wagering, according to the National Gambling Impact Study Commission, and generated billions of dollars in tax revenue for states and localities.

In Pennsylvania, Gov.-elect Ed Rendell (D) has said he would support slot machines at the state’s four horse tracks Philadelphia Park Racetrack, The Meadows, Penn National Race Course and The Downs at Pocono. Rendell is unlikely to address specific slot proposals until after he is sworn in, but pro-slot forces are hoping for concrete action early next year.

The issue has been pushed for years by representatives of Pennsylvania’s horse tracks, who fear their business is slowly slipping away to tracks in Delaware and West Virginia, where money from slot machines is folded into the winnings for horses, which raises the racing stakes thereby attracting better horses.

“The fact of the matter is in order for our industry to survive the playing field is going to have to be leveled to allow slot machines at the race tracks,” said Tom Kauffman, executive director of the Pennsylvania Horse Racing Association.

But more than just aiding struggling horse tracks, slots would bring home tax revenue that now goes into Delaware’s and West Virginia’s coffers, said Kauffman. And that’s an attractive benefit for state lawmakers trying to balance the budget.

“The primary driving factor [among lawmakers] is the growing budget deficit; the fact the state needs new sources of revenue,” said Kauffman. “But I think it’s also a recognition of all that slots could bring, of all that’s being lost across the state line, the struggle of our industry, the fact that we’ve got tens of thousands of jobs at risk.”

Similar arguments are driving the debate in neighboring Maryland, where Gov.-elect Bob Ehrlich (R) favors introducing slot machines at the state’s horse tracks.

In Florida, Gov. Jeb Bush (R), an adamant opponent any expansion of gambling during his first term, said the state may have to consider expanded gaming to pay for a voter-approved policy to reduce class sizes, which could cost more than $20 billion over the next eight years.

“I don’t think it’s wrong or inappropriate to have a discussion about these things,” Bush told the Orlando Sentinel .

Expanded gambling in Florida could include introducing slot machines and video poker at racetracks and jai-alai arenas.

In Massachusetts, departing governor Jane Swift has appointed a commission to study all forms of gambling expansion, including casinos, gaming on Native American lands and slot machines at racetracks.

Medford Mayor Michael McGlynn (D), a gambling commission member and president of the Massachusetts Municipal Association, said the gaming expansion question goes back to the late 1970’s in Massachusetts, but that the current fiscal crisis is forcing lawmakers to answer that question definitively.

“The governor elect is against any new taxes. The rainy day fund is down to $300 million. This year we’re looking at a potential deficit of $1.5 billion. Twenty-five percent of the budget is local aid. It’s a tough question to answer,” he said.

As mayor of a small city, McGlynn’s concern is the possibility that expanded gaming could negatively affect the state lottery, which provides hundreds of millions of dollars a year in direct support for cities and towns.

Massachusetts Gov.-elect Mitt Romney has said he would consider casino-style gaming if it would bring significant revenues to the state.

All this momentum in favor of expanded gaming has left some opponents, such as Ohio Sen. Jim Jordan (R), critical of his fellow politicians’ newfound support for the issue.

“Politicians want to do the easy thing, which is to stick it to families, particularly poor families, with gambling,” he said. “They don’t want to have to think about cutting spending and/or raising taxes.”

But Jordan admits his criticism faces stiff competition in the form of harsh fiscal realities, and even, lobbyists from the well-heeled gambling industry.

“The gaming interests have a lot of money,” he said. “When they come into town they don’t just pick Joe-bag-of-donuts lobbyist, they go get the good ones.”

Two decades ago, two states had legal gambling and 48 states outlawed it. Today, 48 states have some form of legal gambling this includes lotteries, casinos, riverboat casinos, Indian casinos, video lottery machines and betting on horse racing, dog racing and jai-alai. Only Hawaii and Utah do not.

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