Tracking the Recession: Gambling Revisited

By: - January 17, 2009 12:00 am

The recession is so dire that elected officials in some states are dropping their long-standing opposition to gambling and considering ways to expand gaming or allow it for the first time.

In the past week, the governors of Hawaii and Ohio said they would consider changing their minds to permit certain types of gambling in their states. Wyoming ‘s governor said he would support the state’s first lottery. Two Nebraska lawmakers proposed allowing up to 3,500 slot machines at racetracks. Maine ‘s gaming board is reviewing a plan to allow Sunday morning hours at the state’s only gaming facility.

In every instance, officials cited their quest to find money to offset multi-million- dollar revenue losses by their states.

Hawaii is the biggest surprise. The Aloha State and Utah are the only two states without any form of gambling and have resisted it for years. But Hawaii Gov. Linda Lingle, a Republican opposed to gambling, told reporters Jan. 12 that she had instructed her budget staff to be open to every revenue-raising option, even gambling. The state has a .8 billion revenue gap this year and next.

“There is a possibility (that) each of us – the Legislature, myself, the community – may have to agree to changes that we didn’t expect we ever would because the circumstances have changed so drastically,” she said, according to an Associated Press account.

Gambling is enticing to state officials, especially during economic downturns, because it brings in new money without raising taxes. The more dollars state leaders can generate from gambling, the less they have to trim from other programs and services. Last year at least a dozen states expanded existing games or added new ones, according to the National Conference of State Legislatures (NCSL).

Ohio Gov. Ted Strickland (D) also is reconsidering his opposition to casino gambling. Industry officials have pitched competing casino proposals to legislative leaders and the governor, whose state faces a billion budget gap. Strickland, like Lingle, said he wants to keep revenue options alive but hopes casino gambling would be a last resort.

“My position has been described as softening or changing or whatever,” he told reporters Jan. 15, according to the Youngstown Vindicator. “What I’m just trying to do is tell you what I’m thinking. And that is, in my judgment, if we can proceed into the future without expanded gambling being a part of that economic picture that is Ohio , that would certainly be my preference.

“I do not believe that we, at this point, have a full understanding of what is likely to happen with this economy,” Strickland continued. “And so, consequently, I am unwilling to take a position that would indicate a refusal or a failure to listen to ideas that may be brought to me, and gambling will be brought to me, I feel fairly certain, as one piece of a possible solution to Ohio ‘s economic difficulties.”

Wyoming Gov. Dave Freudenthal (D) has not dropped his resistance to allowing casinos or slot machines, but told lawmakers in his annual State of the State address : “If I get a nice, regular PowerBall (lottery) bill, I’ve said I will support that.” Wyoming officials on Jan. 9 slashed their revenue estimate for the coming two-year budget cycle by more than million, though the state has a surplus.

In Nebraska , where voters rejected expanded gambling in 2006, state lawmakers revived the idea in the first week of this year’s legislative session, citing the recession. Gov. Dave Heineman (R) proposed a balanced budget Jan. 15, but with only a proposed 1.8 percent increase in spending, many agencies and schools would have to make cuts.

Two state senators introduced legislation asking voters to amend the Nebraska Constitution to allow up to 3,500 slot machines at thoroughbred racetracks. State Sen. Deb Fischer, one of the co-sponsors, said the estimated million a year in state revenue generated from the slots would be divided between roads and the horse-racing industry.

Maine ‘s Gambling Control Board is set to vote Feb. 11 on a request from a Pennsylvania company to allow gamblers to play slot machines starting at 8 a.m. Sundays instead of at noon at a slots hotel and raceway in Bangor. The company, Penn National Gaming Inc., contends that longer hours could bring in as much as million extra for the state, which has a million hole in its two-year budget.

Kentucky and Pennsylvania officials also are weighing various gambling expansions this year. Some states, such as Indiana , are discussing privatizing their lottery. The winning bidder would pay the state, bringing in “a chunk of revenue real quick,” said Ian Pulsipher of NCSL. However, an opinion issued in October by the U.S. Department of Justice raises a new doubt about whether privatizing lotteries is a legal option for states.

Gambling opponents say they are not surprised that the recession is triggering gambling fever. Lawmakers “see it as a voluntary tax because not everyone chooses to do it,” said Keith Whyte, executive director of the National Council of Problem Gambling in Washington , D.C. “But it’s also a tax on people with gambling problems. For short- term revenue gain, states are placing a number of their citizens at risk.”

The Rev. Jerry Mick, pastor of Bangor Baptist Church and a leading anti-gambling critic in Maine , said the proposal to expand Sunday hours at the slots hotel in Bangor would conflict with what he called sacred time when many people are attending church. “Sundays should be set aside for families and church,” he said in an interview.

See Related Stories:

House stimulus plan wins state praise (1/16/2009)

Stimulus could hurt transportation bill (1/14/2009)

States swamped by spike in jobless rates (1/9/2009)

Governors to pare back agendas (1/7/2009)

Budget gap could widen to billion (12/15/2008)

Slumping economy hits prosperous states (12/11/2008)

State budget gaps balloon to billion (12/5/2008)

Shifting economy keeps states guessing (12/4/2008)

Governors hopeful after Obama meeting (12/3/2008)

Sanford fights bailout for states (12/1/2008)

States ask feds for health care help (11/26/2008)

States eye their share of federal bailout (11/25/2008)

Tough economy hammers schools, colleges (11/17/2008)

States craft plans to stimulate economy (11/14/2008)

Depressed economy wallops states (10/24/2008)

State jobless funds are running dry (10/3/2008)

State workers face bleak budget picture (10/3/2008)

States act to cushion Wall Street meltdown (9/30/2008)

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.