"Today's Debate" article on balancing budgets with gambling

Our view on balancing budgets: States bet on a bad hand
Expanding legalized gambling doesn’t guarantee easy money.
As state governments struggle to cope with the worst recession in decades, the peddlers of something-for-nothing politics are touting a familiar magic potion to resolve financial woes: more legalized gambling.
From Hawaii to Maine, state capitals are awash in proposals for new lotteries, slot-machine parlors, video gambling and full-fledged casinos — all in pursuit of mega-million-dollar jackpots that would help states balance their budgets without belt-tightening or tax hikes.
According to recent surveys, serious proposals to seek revenue from new or expanded gambling operations are percolating this winter in at least a third of the states.
There's just one problem: The most recent evidence says the promised riches won't materialize. A few examples:
• Kansas authorized state casinos in 2007 on the notion that $200 million could be raised each year for debt reduction, capital improvements and property tax relief. Nearly two years later, private casino developers have pulled out of three of the four proposed casino sites, fearing that there's little money to be made in today's down economy.
• Illinois had planned on netting $575 million from the sale of a long-dormant casino license but had to settle for a bid barely one-fifth that size — $125 million — plus a promise of further payments over the next 30 years, but no money in time to help the state's current budget crisis. Meanwhile, tax revenue from existing casinos was off 32% in December compared with the previous year.
• Ohio, which was looking for $292 million in sales for the first year of a new Keno game, has grossed only $46 million.
• Maryland's hopes for $660 million in revenue from new slot machines took a heavy hit last week when only one of six proposed sites for the new gambling centers drew bids. The state Senate president said the bidding process is in "disarray."
• California, which was looking to a boom in tribal casinos as an important source of new revenue, is finding casinos are in trouble, abandoning expansion plans and warning of a serious drop in business.
• In Rhode Island, a glitzy slots palace that the state was counting on for $250 million a year is coming up way short, defaulting on its loans and threatened with bankruptcy. Desperate state politicians are talking of buying out the private owners to keep the shaky facility running.
Gambling, obviously, is not immune to the economic recession, as some in this industry have long claimed. While lottery sales are holding up, casino revenue nationwide appear to be declining.
So like the gamblers who are staying home, state legislators would be wise to defer their dreams of a sudden, life-altering payoff. Even with the federal stimulus bill about to rain down money from Washington, balancing state budgets will require tough choices between raising taxes and cutting services. The record shows that counting on gambling revenue is anything but a sure bet.

Opposing view: States deserve a cut
By Greg Stumbo
On the first Saturday of each May, all eyes turn to the Kentucky Derby to watch what has rightfully been called "The Most Exciting Two Minutes in Sports."
It's always a proud moment for Kentucky and its unparalleled horse industry, no matter who wins.
But in recent years, that industry — and the $4 billion economic impact it has on our economy — has suffered because other states have found they can lure it away with larger purses at the tracks and bigger tax incentives on the farm, all funded by expanded gaming revenue.
If Kentucky wants to keep its competitive edge, I believe it has no choice but to level the playing field by joining them. Other states might have different reasons for considering this option, but the bottom line is protecting our bottom line.
Clearly, Americans like their games of chance. They spend tens of billions of dollars each year in cities like Las Vegas and on everything from the lottery and bingo to March Madness office pools. Gaming easily dwarfs all other forms of entertainment.
Over the past 45 years, ever since New Hampshire established the nation's first modern lottery, states have found that their citizens want these types of games. All but two, Utah and Hawaii, now offer at least one legal form of wagering. We can long argue whether this is a positive trend, but voters have shown no inclination to reverse it.
It might indeed be unwise to rely on gaming revenue for critical state services, but that does not mean we should leave all the money on the table.
If a state's citizens are going to play, and they are, then the home state should benefit, not those that surround it.
State Rep. Greg Stumbo, a Democrat from Prestonsburg, is speaker of the Kentucky House of Representatives.