As more and more states legalize casinos, the competition for gamblers is beginning to impact government coffers.
Indiana is projecting a 9 percent drop in tax revenue from casinos in the coming budget year. The decrease in revenue is attributed to new casinos opening in neighboring Ohio. Casino competition has cut into the tax revenue at other states, including Delaware, Michigan, New Jersey and Pennsylvania.
The drop in tax revenue shows that casino revenue is not a sustainable or reliable way to fund state budgets. Not to mention, the opening of local convenience casinos in state after state does not generate any new spending, a study by the Federal Reserve Bank in Boston found. “Casinos that cater to a local market generally do not bring outside money into the economy through the spending of its patrons,” the study said. ”Residents patronizing such casinos may simply substitute gambling for other goods and services.”
Of course, once hooked on casinos or lotteries, states face pressure to find new ways to get residents to gamble once the tax revenue falters. In Delaware, gambling accounts for more than 7 percent of state budget, making it the state’s fourth biggest revenue stream. So when new casinos in Maryland and Pennsylvania began to lure away gamblers, the state enacted new gambling measures.
First it legalized a form of sports betting. Then it allowed table games including blackjack, craps and roulette. But its gambling revenues have continued to fall. In June, Gov. Jack Markell signed a law that could make Delaware the first state to offer Internet gambling. The state also reduced the tax rate on its casinos, who complained that competition was cutting into their bottom lines. To offset the loss in tax revenue, the state legalized keno machines in other bars and restaurants.
With each step, Delaware lawmakers essentially continue to bet against their residents. Rather than building a sustainable economy, the state is making a bad bet on gambling. It is an unstatinable arms race to the bottom.
New Hampshire is one state that has not fallen for the casino gimmick. An anti-casino group there has done a good job of making the case as to why casinos are a bad bet.