The RPs Debate Gambling: Ron Grainieri Rebuts

As the proud product of parochial schools whose existence depended upon Bingo, I am well beyond worrying about the moral implications of using proceeds from vice to pursue virtuous ends. Considering how governments at various levels already derive revenue from other vices, such as tobacco and alcohol, as well as already existing lotteries, I view the moral debate on legalized and regulated gambling as forced and ultimately irrelevant. It is far too late for the brothel denizen known as the treasury to wish to regain its virginity.

I will say that I do not like the fact that the gambling industry has succeeded in re-christening (re-luciferizing?) itself as the “gaming” industry, which I consider a classic example of transparent mendacious marketing. It is supposed to make the activity appear somehow wholesome and entertaining, and to encourage us to avoid thinking about the whole, “most of the people who play lose their money” angle. Spare me. People play games like Missile Command (the greatest video game in the history of entertainment) for the fun of the game, and are happy to know that every quarter so spent is lost forever. Slot machines only exist because people are gambling on the hope of winning more money. To pretend otherwise is an insult to the intelligence of anything with a pulse.

But I digress.

The point I want to make is that I agree that money for the state from gambling is no less legitimate than money from other sources. Precisely because I reject the idea of gambling proceeds as supernaturally tainted, however, I also reject the idea that gambling proceeds have some magical power to solve fiscal problems. It is certainly true that legalized gambling has made fortunes for the managers and developers of gambling institutions. Whether such proceeds actually have positive spillover effects is another question entirely. Las Vegas has done well in large part because of its status as the first such mecca. Since then we can trace diminishing returns. Ask the people of Atlantic City whether gambling has solved local (let along state-wide) fiscal problems. As more an more localities establish casinos and slot parlors to keep their gamblers local, the returns are going to diminish further.

Combining that reality with Artur’s admonitions about the likelihood of mismanagement of funds, I am unaware of any recently started gambling operations that have actually solved local funding problems. Sure, money is generated, but the basic issues of sensible administration, bureaucratic turf wars, and the rush to cut other taxes in turn always manages to blunt the advantages.

This is more than an abstract question for me. My home town, Niagara Falls, NY, has been kicking around the idea of legalized gambling for almost my entire life. As heavy industry departed in the 1970s, many hoped that casinos would rekindle the tourism industry. As New York dithered, Niagara Falls Ontario across the border acted, and has established several profitable casinos. Finally, New York and the Seneca Nation established a casino on expanded tribal land downtown. Instead of revitalizing the city, however, the casino has taken a blighted area and turned it into a blighted area with a profitable casino in its midst, with modest to negligible economic spillovers for hotels and restaurants outside the casino. Nor is this surprising—casinos, after all, are built on the idea of keeping people from ever seeing the sun or the time, let alone leaving the premises. Some jobs have been created, which is good, though the number is limited. Most of the players are from the local area, which means there is limited new income being generated. People are merely spending cash at the casino that they will not be able to spend at restaurants, theaters, and grocery stores elsewhere in town. Meanwhile, gambling proceeds have been diluted among different governmental agencies, and the promised bonanza remains somewhere down the road.

Now, one could argue that this is all because an Indian Casino, with its special tax privileges, is disconnected from the local economy. If casino gambling were  legalized generally, advocates say, there would be many more sites, more movement throughout the city, more prosperity. Maybe. Though I can only point to Atlantic City, and the law of diminishing returns, to suggest that even then the returns are likely to be modest at best.

My bottom line: sure, states and localities should be free to gamble on gambling. But they should not expect to win. Only the house wins, every time.