A row of gambling machines at Maryland Live Casino, which celebrates… (Karl Merton Ferron, Baltimore…)
Last week in Maryland the opening of a new casino, Maryland Live at Arundel Mills Mall, raised anew the ongoing discussion about the value of legalized gambling in the state.
The favorable arguments are easy to articulate. Casino companies and the constellation of associated, non-gambling businesses they attract — construction, food-and-beverage, entertainment — profit from the economic activity and generate jobs in or near the casinos. The revenue-starved state government delights in precious tax receipts gained without having to raise marginal income rates or impose unpopular new fees.
Meanwhile, Marylanders who like to gamble have the opportunity to do so at a location much closer to home than a long drive to Atlantic City or an even longer flight to Las Vegas, while those who do not are happy to benefit from having others pad the state treasury. And gamblers and non-gamblers alike benefit when tourists visiting from other states bring their dollars here.
All in all, a win-win situation for everyone concerned — right? Sort of.
As I wrote in an op-ed for the Sun back in 2002, three years before I became a regular columnist, there are patterns of economic stratification within the gambling community.
Citing information provided by a public relations executive from a nationally-known casino, I noted that people with lower incomes tend to spend money on scratch-off tickets, lotteries and Keno (all of which have long been legal in Maryland) while higher-income individuals are disproportionately drawn to higher-stakes table games like blackjack and craps. (Sports book gamblers, slots players and poker fans fall somewhere in between.)
Given this stratification, Maryland has steadily been working up from the bottom. In fact, now that Maryland Live Casino offers computerized versions of table games, only live-dealer table gaming — which really draws the most affluent gamblers — remains illegal in the state. At this point, the state may as well go all-in, so to speak, and legalize that too. Without them, it's unclear whether Maryland's casinos can become major tourism and entertainment destinations that attract big-dollar gamblers.
But no matter how successful it is, the new casino will do little to alleviate state budget problems.
According to a report published last year by Lucy Dadayan and Robert Ward of the Nelson A. Rockefeller Institute for Government, all but two states have some form of legalized gambling — the most common form, of course, being state lotteries. They also report that, aside from a recession-addled 2009, state revenues from gaming increased in every year from 1998 to 2010, with average annual revenue growth of 4 percent across the 13-year period. You can see the allure to state budgeters.
But the Dadayan/Ward report further clarifies that casino-derived revenues contribute little to state coffers. Despite nearly doubling since 1998 from $2.4 billion to $4.5 billion, casino-derived state revenues in 2010 constituted less than a fifth of the $24 billion that states raised overall from gaming. Lottery receipts provide most of those revenues.
Moreover, with the exception of a handful of the 48 states that allow some form of legalized gambling — Nevada, obviously, plus New Jersey, Connecticut, and West Virginia (which has a Hollywood Casino at the Charles Town racetrack featuring live-dealer table games) — gambling receipts tend to hover around 2 percent of statewide revenues.
That said, casino receipts are not unlike income tax increases on the top 1 percent: Alone they cannot solve the government's revenue problems, but they do make a difference at the margins — which is why most taxpayers are keen on both.
Thomas F. Schaller teaches political science at UMBC. His column appears every other Wednesday. His email is email@example.com. Twitter: @schaller67.