Tuesday, March 20, 2012

“Casinos – Reflective of Our Society?”

Sydney M. Williams

Thought of the Day
“Casinos – Reflective of Our Society?”
March 20, 2012
For one hundred and forty-two years the United States functioned with no legal casinos. The instinct to gamble, of course, has been a characteristic of man since he evolved, but it was only in 1931 that governments decided to take advantage of the inability of people to control their worst impulses. That year the state of Nevada legalized casino gaming, providing them the ability to tax gambling revenues.

At the time, the country was in the midst of the Depression; though still far from the bottom. GDP, in 1931, was 25% below where it had been in 1929, yet 36% above where it would be in 1933. States, understandably, were starved for revenues. Permitting casinos seemed like a good idea. Gambling was seen as an easy and “taxless” means of generating revenues. Little attention was paid to the social consequences, or to the fact that gambling revenues are regressive, in that their promises of riches are largely illusionary and gambling tends to attract those least able to afford to lose.

In the subsequent decades things changed, especially in the last twenty years. Michael Sokolove, in a fascinating article on Foxwoods and the casino industry in last Sunday’s magazine of the New York Times, noted that 566 commercial casinos operate today in 22 states Those casinos provided 820,000 jobs and they generated $34.6 billion in nationwide gambling revenues in 2010, and accounted for $125 billion in overall spending, or almost one percent of U.S. GDP. Since Congress passed the Indian Gaming Regulatory Act of 1988, 450 casinos, ranging from trailers to the Foxwoods facilities in Connecticut with 6.7 million square feet, are now operating in 36 states on reservation land. The Foxwoods facility is the largest in the Western Hemisphere (bigger than the Pentagon!) with 6,300 slots and 10,000 employees…and a debt of $2.3 billion that has given rise to concerns of solvency.

The story of gambling in the U.S., as Mr. Sokolove writes, involves “the gradual relaxation of moral prohibitions against gambling, a desperate search for new revenues by state governments and the proliferation of new casinos across America.”

While gambling has become socially acceptable, with forty-eight states now having some form of legalized gambling – Hawaii and Utah being the only exceptions – addiction is a problem. The National Council on Problem Gambling estimates that 85% of adults have gambled at least once in their lifetime, with 60% gambling in any one year. Their data conclude that two to three percent are considered problem gamblers, with one percent deemed to be “pathological.” Those percentages translate into four to six million people with “just problems” and two million that are “pathological!”

Casinos, with neither clocks nor windows and with colors and sounds that are mesmerizing, are conducive to putting coins into slots, hour after hour. The machines are addictive; there are few sights sadder than watching an older person sitting before a slot machine, ridding him or herself of their money, a quarter at a time. If that’s entertainment, it is beyond my understanding.

Lotteries reach way back in the history of our country. In 1612, 29,000 British Pounds were raised in England for the Virginia Company, with Pocahontas as the chief draw. She had gone to England in 1611 with her new husband John Rolfe and unfortunately died before she could return to Virginia, an early victim of the travails of gaming! George Washington sponsored a lottery in 1768 to build a road across the Blue Ridge Mountains. It was unsuccessful. Thomas Jefferson obtained permission, in 1826, to conduct a private lottery to alleviate his personal debts. He died that year, on July 4th. The lottery was held by his heirs, and failed to satisfy his creditors.

A massive bribery scandal in Louisiana in the 1870s that resulted in the outlawing of the use of the U.S. Postal Service for purposes of betting put the kibosh on state lotteries for ninety years. New Hampshire became the first state to reintroduce the lottery in 1964. Today, forty-three states have lotteries. In 2006, state lotteries sold $53.7 billion worth of tickets, equal to about 3% of the $1.77 trillion in state revenues. With a 31% net margin, lottery ticket sales are the most profitable of all gaming products. (The other side of that equation is that buyers of lottery tickets are mostly losers.) Unfortunately, the biggest buyers, again, are the ones that can least afford to lose. Legislators like lotteries and casinos, because they look upon them as a way to “get tax money for free.” There is a wide use of euphemisms, like “painless” revenues and “niche” revenues, designed to obliterate the ugly facts that lotteries promote addictive behavior and are a regressive tax on lower-income groups.

While it’s understandable that the state should tap into revenue sources that come from people’s behavior, the contrary side is that gambling has no redeeming qualities. It provides entertainment, but performs no social good. Mr. Sokolove notes that the State of Connecticut has received $6 billion from its two Indian casinos over the past two decades, yet the state is in worst financial shape than it was twenty years ago. Would we have been better off without the revenues? I don’t know, but it is hard to believe the state would be in worst shape. What are the long term social costs resulting from the casinos? Again, nobody knows. Connecticut’s casinos, like casinos in every state, embody an inherent conflict between a desire to increase revenues (regardless of purpose) and the duty to protect the public welfare .

An increasingly paternalistic government carries with it growing dependence, and a concomitant loss of independence and personal responsibility. A proliferation of casinos appeals to the “hope” gene in each of us. It helps to erase the concept that hard work and thrift are qualities necessary for success. A few years ago I read of a man (surely apocryphal, but perhaps not) whose retirement plans included three parts: Social Security, trips to the casino and instigating a few lawsuits. Regardless as to whether the story is true or not, it reflects a growing attitude among too many of us that yearn for a world in which we receive something for nothing.

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