The RPs Debate Gambling: Artur Davis Rebuts

Artur Davis: Rebuttal #1

[The RP’s Provocation]

I think Jonathan makes the progressive case for gambling probably as well as I’ve seen it made–its a substantial upgrade from the libertarian boilerplate that gambling is a vice no loftier, no more shameful, than say, cigarette smoking, and that it’s not government’s job to regulate simple vice; its better than the “low wage casino jobs beat no jobs” spiel that drives progressives to embrace gambling in high unemployment communities.  The fact is that government has been in the business of outlawing sin for a long time, particularly those of the addictive variety. Meanwhile, the jobs case for casinos falters on the ground that heavy gambling counties, especially in the Deep South, have unemployment rates equal to or worse than the gambling free zones next door to them; if anything, the casinos seem to chase a class of low end retail jobs from certain neighborhoods.

Jonathan relies, instead, on a hard-core fact of politics: if raising taxes is untenable in most state capitals, and if massive service cuts are too draconian, gaming revenue is often the last option standing. If it sounds defeatist, its still proved powerful, and explains why conservatives in the Alabamas and Mississippis are torn over gambling, and rarely support banning it altogether, and why progressives are relatively untroubled by its regressive tendencies and the case that gaming dollars are a kind of extra sales tax on the poor.

So, without being an absolutist on the subject, I have two lingering doubts. One is that the gaming industry is a grossly inefficient market that uses its political clout to remain that way. In Alabama, rather than gravitate toward tourist destinations like the Gulf Coast, or the populous cities that could supply a steady labor base, it has concentrated in low end communities off the beaten path that have a much weaker core of employable adults. Even some of the communities that desperately want casinos struggle to get them or keep them. Ordinary rules of supply and demand don’t exist, and that means, invariably, that influence is be exercised to block some operators and to protect others. Its a lucrative prescription for corruption, and not surprisingly, the industry’s major benefactors found their way into a major, bipartisan public corruption prosecution last year.

Along those same lines, gaming, at least in the South, rarely provides the cash cow that its supporters describe. Part of the reason is the industry’s capacity to secure major tax exemptions from compliant legislatures; Mississippi, a low tax state in every regard, is a virtual tax haven for its mega-rich gaming powers. The Alabama casino mavens get PR points for “offering” to accept tax liability in exchange for clear-cut permission to operate, but they lobby behind the scenes to keep the tax rates low.  The much touted “charitable giving” requirement for Alabama casinos generates fractional returns for the local counties who are supposed to receive the proceeds.

If you know the South, you appreciate its preference for low corporate taxes, near invisible personal income taxes, and high sales taxes. Its a popular tradeoff that is not going anywhere anytime soon. Expanded gaming reinforces those patterns; to make it work in the progressive way Jonathan imagines takes a lot of scrutiny and a lot of regulatory vigilance; a lot of legislative skepticism toward the fine print in the bills; and a real willingness to buck a powerful lobby. Doesn’t sound like the South I know.

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