Rather than imposing new taxes, though, a number of states are turning to gambling to raise money to pay the bill for necessary government services. Lotteries, casinos and slot machines are becoming the revenue sources of choice. But reliance on the various types of gambling is the worst way to raise money to pay for schools, public safety, transportation and other public services.
Don't get me wrong. I like to gamble. I understand the adrenaline rush that comes from putting your money on the line and savoring the possibility of making a killing.
But gambling is a poor choice for raising public revenue. First, it's regressive--probably the most regressive form of revenue-raising currently available to the states. Anecdotes are legion of poor folks lining up at the 7-Eleven to spend a good portion of their meager paychecks on lottery tickets. Beyond that, there is ample research to support the claim that state-sponsored or -sanctioned gambling is regressive. I talked to a noted scholar recently who said that her research found that single mothers on welfare spend 16 times more on the lottery than working women do. If regressive taxes are bad in general, their gambling iteration is the worst.
Second, gambling is addictive. For some, the habit can be as hard to kick as smoking or cocaine. The riverboat casinos, Indian reservation gaming joints, racetracks with slots, and lottery ticket-peddling convenience stores are lined with addicts. To be sure, not everyone who gambles is hooked. But gambling has been proven time and time again to play to the most compulsive personalities in society. Today, an estimated 5.5 million people are problem gamblers and another 15 million are on the road to forming a bad habit.
Third, and admittedly more problematic, gambling is of questionable morality. I do not generally judge revenue systems on moral grounds. But gambling offends many people for just that reason. Indeed, the opposition to gambling in many states has come from religious groups. These groups have been mostly conservative, but liberal religious organizations are increasingly joining the opposition as well. Most public finance experts do not let issues of morality cloud their thinking. There are plenty of other areas of public policy--death penalty, prayer in school, abortion--in which morality and religion play a pivotal role. But people in a large portion of the country find gambling offensive on moral grounds. And that alone should give public officials pause.
Finally, there's something unseemly about a government's fiscal reliance on gambling revenue and the need to keep that cash flowing into coffers. To do so, the state has to promote gambling. In states already reliant on gambling, you can hardly escape the pressure. Television, radio and newspapers are inundated with gambling ads. Billboards summon the gambler to casinos on riverboats and Indian reservations. The worst, in my opinion, are the states that belong to the multi-state lotteries--Powerball, the Big Game, etc. The state entices its people to buy a chance at winning hundreds of millions of dollars. But their citizens have a better chance of being hit by lightning six times than winning the jackpot.
It used to be that people defended state-run lotteries as a means of getting organized crime out of the gambling business. But at least in those bad old days, people had to find a bookie to feed their habit. There was some work involved. Today, the state brings the vice right to your door.
Why, then, are state political leaders so enamored with the thought of gambling as a revenue source? That's easy. It's less politically risky than imposing new or higher taxes. The politics of anti-taxation have so poisoned our collective thinking that many legislators and governors view taxes as an unholy last resort. They are bolstered by public opinion polls, which show that taxpayers would rather not have an increase in their tax burdens. In Pennsylvania, pro-gambling politicians were emboldened by a survey showing that 80 percent of state residents would rather expand gambling than raise any taxes, other than on cigarettes.
We criticize some states for levying the sales tax on food. We say it's unfair because poor people have to pay a few extra cents on a loaf of bread. But at least they get the bread.
