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Legalized Gambling: The Prostituting of America?

copyright 1997

by Kathleen Purcell


Gambling and prostitution are among the oldest of human activities. Though they are both considered "victimless" crimes, most communities in the United States have long resisted legalizing either. But that attitude is softening.

While prostitution remains illegal in every state but Nevada, legal gambling is on the rise. Increasingly, state and local governments are turning to legalized gaming as an alternative source for revenue. Sandwiched between rising expenses and entrenched voter-resistance to tax increases, local elected officials are sponsoring games of chance, hoping to generate tax dollars.

To gain voter approval, gambling supporters make promises that appeal to a broad base of constituents. In Pennsylvania, lottery revenues support programs for senior citizens. In Missouri, a portion of the revenue is funneled into the state educational fund. In Minnesota, gaming activity supports the environmental trust fund. In every instance, gambling interests trade the promise of tax revenue and employment opportunities for the right to locate their establishments at the commercial heart of the community.

Despite growing acceptance, legalized betting remains controversial. At issue is whether the government, charged with guarding the welfare of all its citizens, should support an activity that harms a percentage of the population.

Depending on who you talk to, gambling is either harmless entertainment, an immoral vice, just another business, a parasitic leech on society, the best hope for financially struggling communities, or fiscally irresponsible public policy. The only thing that can be said for certain is that games of chance are not going away. Communities considering them as a way to increase revenues need to understand what gambling can and cannot do for them.

Initially, a lucrative gaming center can pump up the coffers of host municipalities. This burst of profitable activity often engenders voter goodwill while financing a potpourri of public programs and easing the tax burden on residents. But wherever legalized betting is established, the organizations that provide police and social services report a spike in suicides, divorce, child abuse, larceny, fraud, forgery, burglary and theft.

Supporters of gambling counter that an increase in crime is to be expected from any attraction that draws thousands of visitors everyday. They point to Bloomington, Minnesota, where the neighborhood surrounding the Mall of America reported an increase in petty crime shortly after the mall opened.

It's not the same, say law enforcement officials in Minnesota, where casinos have been legalized for years. The crime that accompanies wagering differs from that associated with private developments. Gambling consistently brings a sharp rise in serious economic and property crimes, felonies like fraud, theft and counterfeiting. And unlike other businesses, casinos often are exempt from paying taxes and so don't have to cover the costs of increased policing.

It's precisely these costs that communities need to understand when they debate the pros and cons of legalized gambling. In his book _The Luck Business_, Robert Goodman, a professor at Hampshire College in Massachusetts, estimates the annual cost of gambling at a conservative $13,200 per gambler. More aggressive studies put the cost as high as $52,000 per gambler.

Statistically, less than 10 percent of the population will develop a gambling problem, but that small percentage can have a disproportionate effect on their communities. Dr. John Warren Kindt, author of _The Economic Impacts of Legalized Gambling Activities_, has estimated that: "To maintain the same 'quality of life' after the legalization of gambling occurs, social welfare budgets would have to increase by 100 to 550 percent."

Few municipal governments plan for ways to meet this demand before allowing the gaming interests to settle in their towns. As the social costs grow, governments must choose between raising taxes to fund the social support system, or redoubling their promotion of gambling to increase revenues from that source. It's this cycle of increasing dependence and insufficient revenues that gambling opponents say traps the state into pimping for gambling interests.

The increase in the reported number of criminal cases coincident with the arrival of legalized gaming is a hotly disputed issue. Many of the problems often attributed to gambling can be written off as pre-existing social ills.

To further complicate the picture, not all forms of wagering are equally destructive. Bingo, pull-tabs, state-sponsored lotteries and other forms of "soft" gambling do not attract compulsive gamblers to the same degree as do harder forms of betting. Although the agencies that work with problem gamblers claim softer forms of wagering lead to harder, more thrilling forms, not all frequent gamblers make the progression, just as not all marijuana smokers end up strung out on crack or heroin.

Opponents are quick to point out the parallel. Despite pressure from medical professionals and special interests, terminally ill patients who want to smoke marijuana to relieve their suffering do so illegally.Gambling, they insist, is a crime against society that is as destructive as drugs.

Moral issues aside, the question is: can the gaming industry deliver on its economic promise? Probably not, say economists who have studied the effects of gaming on society.

According to a report by economist Dr. Earl L. Grinols, the problem is that gambling differs from other forms of entertainment in two respects: it reduces national income, and it creates social costs that must be paid for by taxing those who do not gamble.

"There would be little concern over how much gambling there is," Dr. Grinols says, "if it were not for the social problems and costs that gambling creates."

In regions where gaming is widely established, competition for the consumer's dollar is intense. And it's not just the entertainment dollar that is at stake. Predictably, 10 percent of problem gamblers will draw on their savings accounts after running through their discretionary funds. In this way, gambling organizations drain the community of money meant to pay for tangible services or buy hard goods.

By diverting funds from taxable activities such as retail and sales of homes and automobiles, gambling reduces the net taxes collected from these sources. Ironically, when local governments begin to feel the pinch from traditional sources, often their first impulse is to intensify support for gambling, thus feeding the cycle.

Traditional businesses have been slow to recognize how legalized gambling organizations attract dollars from across the spectrum of consumer markets. Once they catch on, it's often too late to reverse the trend. Businesses either fail, or relocate to friendlier economies. In Central City and Black Hawk, Colorado, the economic environment became so dominated by casino gambling that in 1992, residents had to drive 40 miles to buy a quart of milk.

If there's a lesson to be learned from the history of wagering, it's this:gambling is not just another form of entertainment like theaters or restaurants. It's a complex industry that can backfire on its host community in unexpected ways. At its worst, it can disrupt the economy, burden public social programs, drive up the crime rate and force out traditional businesses. Economists warn cities that rush to embrace gambling without sufficient preparation may find that what they thought would be the solution to their budgetary woes has become, instead, the source of their decline.

Opponents to gaming, especially those from states which have had large-scale casino gambling for many years, are even more adamant. Gambling, they say -- like prostitution and other "victimless" crimes -- inevitably preys upon the people who serve it, reducing supporters to pimps and prostituting their good intentions.

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