Changing Goals on Gambling

John J. Walters Oct 16, 2012

When did the goal for legalized gambling in Maryland switch from raising money for education to keeping up with the Joneses? Before 2008, it seemed like Maryland was united in the belief that gambling was a social ill and should be illegal. Then we decided that it was worth allowing some slot machines in a few select locations so we could fully fund Thornton legislation (which mandates spending increases on education every year). And here we are, four years later, ready to expand gambling already.

What’s the real motivation for adding a sixth casino and legalizing table games? Are we doing it because we think that we will raise more money for education? Or are we instead just hoping to beat our neighbors at their own game? Pennsylvania, Delaware, and West Virginia all have casinos close to Maryland borders that have been luring our residents (and potential tax revenue) away for years.

Could it be that a desire to compete with them is actually what’s driving our push for expanded gambling? It certainly seems like a strong possibility. How else do we explain the fact that Maryland called a second Special Legislative Session this year just to pass expanded gambling legislation? If we were really concerned with simply increasing revenues, it would have been more prudent to wait for the economic studies to be completed.

On the other hand, if the goal is to expand gambling simply so that we have a vibrant and successful gaming economy, it’s probably best that our legislators didn’t wait. Take a look at our latest policy report, An Economic Analysis of the Proposed Expansion of Gaming in Maryland. In it, we find that the gaming expansion will be much more of a benefit to casino owners than to the state of Maryland.

To be fair, building a sixth casino and allowing table games will likely do both: help the gaming industry and generate a little more tax revenue for the state. But the ratio is completely uneven. The vast majority of the extra money will stay with casino owners – and local communities will be left to deal with the negative externalities of having Vegas-style casinos open 24 hours a day.

Gambling is the “hot” that state governments are experimenting with – I realize that. It’s not just us. It must seem like a great deal to legislators, who are used to fighting tooth and nail to pass every tiny, incremental tax increase. They can simply legalize an industry that has been shut out for years and tax all that new revenue (quite heavily).

But following a trend is sometimes dangerous. Will there be unanticipated costs that come with legalized gambling (either social or monetary)? There usually are. And we won’t know for some time.

Hopefully we won’t be looking back on this many years from now, feeling like it was only the casino owners who benefitted from legalized gaming. Or that we should have quit while we were ahead, instead of trying to compete with our neighbor states.