Betting the Future

March 29, 2012 By

Like many other governments on the perpetual hunt for new revenue, the Markell Administration is once again looking to gamblers to help feed a hungry and growing state budget.

The News Journal reports that a plan unveiled this week would, according to Finance Secretary Tom Cook, bring in more than $3 million a year in additional revenues for the state.  The centerpiece of the plan is the introduction of state-sponsored on-line gambling.  According to the News Journal:

The administration also wants to begin selling lottery tickets and offering casino games like slots, blackjack, poker and roulette online, as well as on mobile phones.

The plan would also expand the amount of sites across the state offering Keno instant lottery by 100 and it calls for an increase of twenty new venues for pro football parlay games.   The News Journal again:

Currently, Keno and sports betting are available only at the three casinos.  This provision would allow businesses like bars and restaurants, as well as clubs like the VFW or volunteer fire companies, to offer the games…

Curiously, the administration is further proposing to reduce the annual licensing fees on Delaware’s three casinos by nearly $8 million a year.   This windfall for the casinos, however, would be restricted by the state to activities that would bring more cash-toting customers through their doors and to enhance the capacity of the casinos to keep them pumping the slots.

I checked the state website for a press release but found no additional details.  The Governor’s spokesperson has said a complete legislative proposal is on its way to Leg Hall next week.

Given the limited information, it is hard to make too many informed judgments about the wisdom of these proposals.  However, based on what we have to work with, I do have a few questions/observations/concerns.

First and most obvious (even to a history major like me), is the fact that the numbers don’t add up.  If the introduction of internet gaming is supposed to generate a fresh three plus million-a-year, but the breaks that we are cutting the casinos amount to nearly eight million, then that’s one serious delta the state is banking on making up.  And we’re left for now to conclude it will happen thanks to the 120 new Keno and pro football parlay sites, plus the fresh funds that would presumably come through the casinos ability to invest their newfound cash into schemes that would significantly expand the ranks of current gamblers pumping the slots at Harrington, Dover Downs and Delaware Park.

That’s a big bet, particularly when gambling revenues haven’t historically panned out the way politicians have promised, and Secretary Cook is publicly acknowledging the industry in Delaware is “stagnant.”

Which leads to the second and related issue of the proposal apparently requiring the casinos to use the money for “marketing” among other growth-supporting strategies for their businesses. Is this a right and critical thing for our government to be doing?

I asked this same question in a piece I wrote nearly three years ago when the state was tangled in a national legal fight over the expansion of sports gambling:

With an implicit financial stake in getting more people to gamble, the state will be compelled to promote itself as a gambling mecca – in other words, growing the market and encouraging more people to do something that many experts feel is ultimately unhealthy.  Is this really a proper role for our government?  The state taxes smoking and drinking but it certainly doesn’t promote them.

…the question we should be asking is if an expansion of state-sanctioned gambling – and in this case, a deepening, vested financial interest for Delaware – is actually good public policy.  Will, on balance, more gambling be a long term plus for the state?

With this major financial incentive, the state is not only going to be actively promoting its own expanding array of gambling offerings (Mobile phones?! Really? Will there be a special waiver for gambling and driving?), but it will also be directly encouraging the casinos to creatively do the same.  What’s more, the state will be encouraging every local VFW and volunteer fire hall to get into the gambling business.

As I wrote in 2009:

Most people don’t want a casino in their backyard anymore than they want a saloon.  Why?  Because gin joints and gambling parlors don’t evoke the most family-friendly environs nor are they typically seen as hothouses for personal growth and intellectual development.

extensive research concludes that gambling is a net financial negative for local communities and municipalities.

Another consideration is the historic connection between state-sanctioned gambling and government corruption.

Delaware native and UD grad Paul Davies, a former senior editor and reporter with the Wall Street Journal and Philadelphia Inquirer ( interviewed in these pages last November), has extensively investigated the failed promises of state-sponsored gambling and established a website, www.getgovernmentoutofgambling.org to catalogue the negative effects of state-supported gambling on communities, government and the overall public good.

In the face of all this evidence, then, the administration’s proposal is confounding, counterproductive and strikingly unimaginative.

As I concluded before:

I’ve got no particular moral or ethical truck with gambling.  Many things that aren’t necessarily good for us are still legal …  With obvious exceptions, people should be free to spend their money as they see fit.  I certainly don’t aspire for my children to become regulars at the blackjack table but it’s a free country, and if my neighbor chooses to pump the slots, then so be it…

But just because something may be good for the state budget, that doesn’t mean it is good for the state.

Secretary Cook insists these changes are needed to keep the state “competitive.”  Who wants to be competitive in a race to the bottom?

 

photo: sophistechate, via twitter

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    Wilmington resident Michael Fleming is a marketing and communications executive.

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