Don’t Bet Budget On Gambling

Enticing whispers are floating through Capitol halls that Texas can have it all: more revenues, lower taxes and balanced budgets. All that – and more! – would come simply by expanding legalized gambling in Texas. Such promises might look good under flashing neon at night, but simply don’t hold up under sober inspection in budgetary daylight.
 
When Gov. Ann Richards sold Texas on the lottery back in the early ‘90s, we were told it would help fund public education. The Austin American Statesman reported in 2010 that lottery proceeds “barely cover three days” of school operations. On a number of occasions, ticket sales haven’t even covered the winning jackpot.
 
Taxpayers are right to treat suspiciously new claims that expanded gambling will provide Texas with sudden financial freedom.
 
Indeed, expanding gambling can only really be counted on to exacerbate spending problems in the future. Baylor economist Earl Grinols has found that for every dollar a state receives in gaming revenues, it pays out $3 in government expenses. That’s a way to bust the bank, not shore up the budget.
 
In this legislative session, with budget-writers allegedly trying to make ends meet, some pro-gaming lawmakers (including those with personal or family financial ties to the gaming industry) are expected to sell gambling as a way to lower school property taxes.
 
Yes, these are the same legislators who voted to create a burdensome business tax back in 2006, saying it would cut property taxes. We all know how that has failed to perform. Counting on new revenues to cover-up bad spending decisions is a perennially losing-hand.
 
Lawmakers must fix the spending, not hide behind the illusion of new revenue sources.
 
The lottery is state-owned, state-operated, with no competition or even pesky private operators from whom to collect taxes and fees, yet it hasn’t delivered as promised. Of course, as economist Milton Friedman put it, with the “government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”
 
Government doesn’t run any business very well. Or, for that matter, even regulate them appropriately. The same lottery commission isn’t doing a very good job monitoring the other gaming enterprise under its charge: privately-owned charitable bingo parlors.
 
A recent expose by the Austin American Statesman revealed the cash-intensive parlors were both keeping cash on hand when they shouldn’t, while also not able to account for missing funds. Charitable bingo brings in $700 million each year for the industry, but the Statesman says about $35 million annually is used “for charitable purposes.”
 
Given the state’s pitiful performance in managing its current gaming footprint, how can an expansion of gambling even be in the cards?
 
The same Statesman expose found that, with charitably raised dollars, bingo operators formed the “Coalition for the Survival of Charitable Bingo.” That entity, the paper reports, “has spent between $250,000 and $550,000 to convince lawmakers that gambling expansion in Texas should include bingo halls, among other issues.”
 
They aren’t the only ones. Apparently the ponies haven’t been performing well lately, so the horse-racing lobby now says the only way to save their collapsing industry is… slot machines at the tracks.
 
Whatever fiscal ill you can imagine, the gaming industry and their friends in legislative office claim you can count on more gambling to make it better.
 
That’s not just a bad bet, it’s fiscally reckless in the face of real-world experience. New Jersey, Illinois and Louisiana – and all other states with bigger gambling footprints – are in demonstrably worse economic shape than Texas. They have higher taxes, bigger government… and still big budget problems.
 
Nevada –gambling’s Mecca – faces a worse budget situation than Texas this year; they have the worst shortfall percentage in the nation, according to the Center for Budget and Policy Priorities. Likewise, Nevada has a 14.5% unemployment rate, compared with Texas’ 8.3%.
 
Could it be Lady Luck just doesn’t shine on gaming-friendly states?
 
Or maybe it’s the systemic problem of politicians seeking new revenues rather than imposing restraint on government spending? Curiously absent from gaming’s sales pitch are references to the expanded costs associated with their plan, in terms of regulatory oversight, law enforcement, and even social services. Instead, lawmakers are regaled with meaningless tales of how many Texans fly to Nevada and Louisiana every year to gamble – money that might allegedly be gambled closer to home. So they say.
 
In making state policy, gambling must be viewed for what it is: entertainment. It is not, nor should it be accepted as, a solution to budget woes or tax concerns. Only cutting spending and restraining government growth can truly accomplish that.
 
Betting on the ponies or trying one’s hand at high-stakes poker can make for an entertaining diversion over a long weekend, but everyone agrees that’s an irresponsible way to plan on paying the bills. Same holds for the state budget, only more so. And Texans certainly shouldn’t bet on property tax relief coming from such a predictably unstable revenue source.
 
Texas cannot afford the reckless budgeting that results from listening to the siren song of easy money. It’s never that easy, especially when government is in the game.
 

Take Action

JoinGive
Michael Quinn Sullivan

Michael is the CEO of Empower Texans. A graduate of Texas A&M, former newspaper reporter, one-time Capitol Hill staffer, think tank vice president, and an Eagle Scout, Sullivan is married with three children. He divides his time between the Metroplex, the rest of Texas, and Austin.

Read All Posts