Weighing The Odds

Revenue vs. addiction: A longtime debate renews as Maryland's political season revs up.

April 28, 2002|By Michael Hill | Michael Hill,SUN STAFF

Revenue, addiction at center of debate Children at play throw dice and spin wheels to find out who wins and loses. The reward might be a moment's happiness, the loss a sense of disappointment, that's all. But the games adults play for money will be an issue this election year in Maryland.

For some, gambling is a sure route to easy riches - not for the gamblers but for the state, as its taxes would fill public coffers. For others, gambling is pure evil - if not immoral, then certainly a stupid bet for any economy, sapping money from productive activities and bringing a raft of expensive social problems in its wake.

The truth certainly lies somewhere in between. But exactly where is hard to determine. After three years of study, the National Gambling Impact Study Commission concluded in 1999 that more research is necessary.

In Maryland - already deep in the gambling business with horse racing and lotteries - slot machines are seen as a way to save the horse racing industry and a casino at the Inner Harbor as a boon to Baltimore's tourist industry and tax rolls.

And why not?

"My view is the reason to legalize gambling is because people want to gamble," says Douglas Walker, an economist at the Georgia College & State University. "It's a consumer issue. It increases the alternatives for entertainment."

But William Thompson, a public affairs professor at the University of Nevada Las Vegas, disagrees. "It's a bad way for the state to be raising money," he says, arguing that, unlike those found in Las Vegas and Atlantic City, casinos in most places take their winnings from local residents, money that otherwise could be spent in local businesses.

Gambling has been around for all of history. In this country, lotteries financed many early government projects, including the Revolutionary army and the Washington Monument in Baltimore.

"The main thing about the early periods of gambling in the United States - and it has something in common with the current times - it was driven by fiscal demand," says Raymond Sauer, an economics professor at Clemson University in South Carolina.

Sauer says that in the early years of the United States, with no well-developed capital or credit markets, lotteries were used for everything from selling houses to raising money for churches and schools - including Harvard University. "If you look at the early 19th century, a sizable number of financial institutions operated as lottery houses and banks at the same time. It was as the 1820s and '30s approached that political agitation to stop getting revenues from this sinful activity gained sway at the same time financial markets were developing more efficiency."

Sauer says there has always been tension in the United States between morality-based opposition to gambling and gambling's ability to raise revenues.

"When the availability of alternatives to raise revenue is really limited, constituents who want to ban gambling have a lot of trouble," he says, pointing to the re-emergence of lotteries in the South during Reconstruction and the expansion of pari-mutuel betting during the Depression.

"The interesting thing about the current period is there is a perceived limitation on government's ability to raise money at the same time that demands on government to do things don't cease," Sauer says. "We want the government to do a lot but certainly don't want them to get the money out of our pockets, so lotteries are resorted to fill the gap."

Maryland has had a lottery since 1974 and expanded it over the years to include a wide variety of games. Gov. Parris Glendening blocked further expansion to slots and casinos, but his departure at the end of this year reopens the issue. "The two sides are engaged in a struggle that is centuries old," Sauer says of such political fights. "Every now and then, something tilts the equation in favor of one group or another."

What could tilt the equation in Maryland is the struggling horse racing industry's seeking slots at tracks.

Lt. Gov. Kathleen Kennedy Townsend, favorite for the Democratic gubernatorial nomination, opposes slots at the tracks while Republican favorite Rep. Robert L. Ehrlich backs the slots proposal.

Neither favors casino gambling, even though a 1997 study by the Greater Baltimore Committee estimated that it could bring $67 million in tax revenue to the city and $368 million to the state. But meanwhile, the Piscataway-Conoy Indians of Southern Maryland are seeking state recognition as a tribe, a move that could be a major step toward a Native American-run casino in the state.

Many experts are dubious about the marriage of slot machines and horse racing. Some claim that the prime focus of such hybrid "racinos" would become the slots, not the horses, since so much more money is made from the machines, though the deal that brought slots to Delaware commits a small percentage of slot profits to track purses, helping to bring in better horses.

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