Self-devouring slots

November 02, 2008|By DAN RODRICKS | DAN RODRICKS,

It looks as though Marylanders are ready for slots. Sick of the debate, or concerned that state budget woes will mean higher taxes or reductions in everything from school teachers to 911 operators, we're headed out on Tuesday to amend the state Constitution. According to the most recent polls, a majority of us are willing to authorize the installation of 15,000 slot machines - and, given current economic conditions, it makes sense: Good idea and right on time.

But a couple of cautions need mention on this Sunday before Election Day. If you've already made up your mind to support slots, you can move on to another story or the supermarket coupons.

But if you're like me and haven't quite decided how to vote on Question 2, read on. I think you should keep a few things in mind, starting with this: It looks like we're going to be eating our own.

Maryland is going to have to count on Marylanders to play the slots in order for this experiment in revenue creation to be successful.

I didn't realize it before I checked, but a majority of states already have slot machines. "There are 37 states that have some form of legalized electronic gaming device - including traditional slot machines, video poker and bingo - at Indian casinos, commercial casinos, racetrack casinos, and/or bars, restaurants or other licensed establishments," says an organization that won't be satisfied until slots stand in a long line from sea to shining sea. That's the American Gaming Association, the lobby for the casino industry in Washington.

Maryland has the issue on the ballot Tuesday while Ohio voters, who rejected 31,500 slots at racetracks in 2006, are being asked to approve a privately owned casino in the southwestern part of the state.

But, even without Maryland and Ohio getting into the act, there are a lot more slot machines than there used to be, a lot of places for people to "entertain" themselves by blowing their money - and without packing the carry-on bag.

Long gone are the days when, if you wanted to play the slots, you had to travel to Las Vegas or Atlantic City. Because there are so many slot machines in the United States - including in Pennsylvania, Delaware and West Virginia - they can no longer be viewed as a way for Maryland to score revenue from the pocketbooks and wallets of "tourist" or "destination" gamblers.

We need our own to play - and our own are going to be low-, middle- and fixed-income citizens. We dance around the moral hazard of so much legalized gambling, but it constitutes a de facto tax on the poor. And, in this case, not the poor from elsewhere, but our own.

A study by the Maryland Institute for Policy Analysis and Research at the University of Maryland, Baltimore County says that, in order to reach the revenue levels the O'Malley administration hopes for, we will need every Marylander now traveling for slots to stay close to home.

"To collect gross revenues at the high end of the estimates," the study found, "Maryland would need to capture all revenues currently spent by Marylanders at [slots] sites outside the state, as well as generate dollars from new gambling (current players spending more and new players) at a rate nearly 150 percent above current levels."

The study also sees slot machine gambling hurting other revenue sources for the state.

"These impacts include declines in lottery sales and a reduction in sales taxes," the report says. "These transferred revenues are not likely to be offset by increases in the sales tax on new sales of food and drink from establishments near [slots] sites. There could also be significant social costs, particularly from increased costs of addiction treatment and increases in debt."

Things are swell in Pennsylvania, where the first slots went into operation two years ago this month. But an analysis of the numbers and interviews with players by the Philadelphia Inquirer showed that benefits to Pennsylvanians through their property taxes have been offset by financial and personal losses. The $1.8 billion that the state raked in is an impressive sum, but it came from gamblers who lost more than $2.4 billion playing the machines. "That's an average loss of $249 for every adult in Pennsylvania," the Inquirer said, pointing out that average property tax rebates to homeowners were only $190.

So, yes, slots create revenues. But we eat our own in the process.

It's particularly distressing to see the prospect of a casino in Baltimore, the city with the highest concentration of poverty in the state. People who've been limited to playing the various lottery games at the corner grocery will now be able to throw their money into video slots. With the state needing to squeeze every last dollar out of its citizens, I figure we'll see expanded MTA service to get city residents to the slots 24-7.

You'd like to think Mayor Dixon or her predecessor, Martin O'Malley, would feel some shame about pushing slots in the city, where so many of the state's low-income families reside. But instead they're among those driving the bus.

Like a lot of people, I've grown sick of the whole slots question. But being sick of something is not a basis for a vote either way. You've got to think. You've got to consider the consequences - good versus harm, and whether we're making Maryland a better place or just eating our own.

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