Snake Eyes or a Seven?

William Bennett’s gambling habits and million-dollar losses initiated a short-lived national discussion of the morality of gambling and its addictive character. Gambling is a form of entertainment that involves some dangers, but most gamblers can enjoy the activity without developing an addiction. Ironically, the addiction to be feared most is that of state governments to gaming revenue. That government addiction is made worse by the political, economic and social framework that surrounds casino gambling.



Political Framework

As state budget deficits have grown larger and larger, casino gaming, which is seen as a painless revenue source, has become a perennial political issue. The main reason many state legislatures did not pass a casino gambling proposal earlier is that the competing interests (racetracks, cities, Native American tribes, private casino operators) that would like to “partake” in casino gaming have managed to cancel one another out. This conflict has luckily caused political gridlock. But as a state’s budget crisis grows larger and cities and towns find themselves in even more dire straits, pro-casino interests are forging compromises worthy of Henry Clay.

Massachusetts is currently confronting the casino gambling issue, and sadly Massachusetts is not atypical. The racetracks desperately want slot machines to transform themselves into “racinos.” The new majority leader of the state Senate has two racetracks in his district. These tracks will therefore be the first to receive the most valuable casino gambling game, slot machines. But once racetracks are permitted slot machines, Native American tribes will be in a position to demand that slot machines be included in their casino proposals. This is required by a federal law passed in 1988 that aimed to make Native Americans economically self-sufficient. Private casino operators would also like to receive casino licenses. They promise to construct casinos faster and on a grander scale than any Native American casino. They also promise the state more revenue from their casinos than the state would receive from a Native American gaming operation.

If these gambling interests get their way, the result would be at least three tracks with slot machines, one or more private casinos and one or more Native American casinos. There will be an explosion of casino gaming in Massachusetts in towns like New Bedford, Springfield and Lawrence, which were not part of the “Massachusetts miracle” of the 1990’s. Weston, Wellesley, Winchester and other wealthy suburbs of Boston will not be part of this boom, but they will want to receive from the state their share of revenue from this new source.

Economic Context

The opening of all these casinos would create jobs both in the casinos and in the industries that support them. There would also be a boom in construction jobs, building the casinos and infrastructure projects like widening roads and bridges. But this boom would most likely be short-term. In addition, jobs in casinos often go to people who move into the area after the casinos are built, and they live outside the cities where the casinos are located. In Atlantic City, for example, the vast majority of the employees live in Atlantic County but not in Atlantic City itself. That is one reason why Atlantic City has not been revitalized at all by the success of its casinos.

While none of these casinos will be a failure, neither will they make any long-term meaningful contribution to the economic development of these depressed areas. The casino gambling dollar will be split up in too many ways for any of these casinos to be able to deliver on their economic promises to the cities where they operate.

But this is not the only promise that will prove to be illusory. The revenue projected for the state will also never approach what casino advocates promise. First, these Massachusetts casinos will need to entice Massachusetts residents away from the Native American casinos that are already operating in Connecticut. This will not be easy. Foxwoods and Mohegan Sun have a first-mover advantage over any Massachusetts casino and will not easily surrender the consumers they have so carefully cultivated.

These proposed Massachusetts casinos are also planning on attracting residents from other nearby states. But many of these states, like New York, Rhode Island, Maine and New Hampshire, have themselves opened or are planning to open casinos. The competition between the states for this gambling revenue will be fierce. This in-state as well as interstate competition for the gambling dollar will no doubt greatly reduce any long-term economic benefits that casinos will be able to deliver to economically depressed areas.

Social Setting

Massachusetts casinos will be located in areas that will not attract customers from across the country. While residents of Weston, Wellesley, Winchester and the other wealthy suburbs of Boston will make a few visits to these “regional” casinos, wealthy residents of Massachusetts will continue to view Las Vegas as their gambling playground. Hence, the poor and low-wage earners of these poor cities will be the primary patrons of these casinos, hoping to hit the jackpot as their way out of poverty. While some of the profits from these casinos will go back to these poor cities, a good portion of the profits will be used to support projects that will primarily benefit the middle class. Thus these casinos will take money from the poor and split it between the poor and the rich. While the state does need revenue, it does not need to play Robin Hood in reverse.

But the cruelest hoax that this explosion of casino gambling will play on these poor towns will be their exclusion from any future state help with their economic development. The state legislature will argue that these towns were given the golden goose of casino gambling and they did not take advantage of it. What fueled the Massachusetts miracle of the 1990’s was its superior educational institutions, which could support software and biotechnology industries. If these economically depressed areas are to stop the endless cycle of poverty, educational opportunities in these areas need to be greatly improved. Hence, any casino revenue ought to be directed toward the long-term economic development of these depressed areas rather than be dumped into the general fund.

The rise of “casino gaming” has many implications for American societal values not only in Massachusetts but throughout the United States. Perhaps the greatest challenge the gambling industry poses can be put as a question: How does a society, especially a state government, steer a middle course between prohibition and a laissez-faire attitude toward a potentially addictive activity? Americans clearly need to restore a balance on both the types of games that they use to entertain themselves and the ethical systems they use to justify their moral decisions. But this balance needs to be established before any state ventures into the waters of casino gaming.

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