ROLLING THE DICE: Gambling's Hidden Cost
By Jeff Helms
With Alabama facing monumental budget shortfalls this year and even leaner times ahead, some lawmakers and candidates are betting they'll hit the jackpot by legalizing and taxing casino-style gambling. Those who've studied the costs of gambling, however, say a financial windfall for the state may not be in the cards.
At the center of the debate is a bill in the Alabama Legislature that would call for a statewide referendum on the legalization and taxation of electronic gaming machines.
The sponsor, Rep. Marcel Black, D-Tuscumbia, says the proposed constitutional amendment could generate up to $200 million in tax revenue. But opponents argue the expansion of gaming would actually cost the state money.
According to the Alabama Policy Institute (API), a non-partisan research and education organization, legalizing casino-style gaming in Alabama would create 15,606 additional pathological gamblers in the state. The American Psychiatric Association defines pathological gambling as an impulse control disorder that is a chronic and progressive mental illness.
"If the public and private costs of pathological gambling are summed, the average cost per gambling addict per year is approximately $13,080," the report states. "Multiplying this by the number of gambling addicts created by putting casinos in Alabama creates a total annual cost of about $204 million."
Supporters of the bill say it would only tax the type of electronic games already being played in Alabama. But the recent controversy about these so-called "bingo" machines indicates gambling interests would likely push any new definition of legalized gaming to the limit.
In fact, when the Alabama Supreme Court struck down an injunction in November that would have prevented Gov. Bob Riley from raiding a gaming center in Lowndes County, Justice Glenn Murdock wrote, "the machines operate almost exactly like slot machines."
Gambling interests certainly seem to be wagering on the legalization of casinos. According to news reports, organizers of Country Crossing in Houston County have already spent about $87 million and are expected to more than double that by the time construction is complete. Likewise, Alabama gambling magnate Milton McGregor has spent about $150 million on a new hotel and casino in Shorter.
Ironically, these high-stakes bets are being made based on laws that were originally written to allow churches and other charities to organize bingo games using paper cards.
Meanwhile, studies show the social costs of gambling continue to rise. Dr. Earl L. Grinols, a professor at Baylor University, has authored some of the most comprehensive and definitive analyses of gambling in the United States.
According to his work, casino gambling causes up to $289 in social costs for every $46 of economic benefit. Nationally, he says gambling costs the economy $54 billion annually, compared to $110 billion for drug abuse.
API compiled facts from Grinols and others in its report "Casinos in Alabama: Worth the Gamble?" Among the more startling revelations of the report are that pathological gamblers are four times more likely to have poor mental health and four times as likely to attempt suicide than non-gamblers.
In addition, about 33 percent of problem and pathological gamblers have been arrested, compared to 4.5 percent for non-gamblers. Between 21 and 36 percent of problem gamblers have reported losing a job because of gambling, and nearly 20 percent of pathological gamblers have filed for bankruptcy, compared to 4.2 percent for non-gamblers.
According to Dr. John Barron of Purdue University, if casino gambling was eliminated in the United States, personal bankruptcy rates would fall by 1.4 percent nationally and 8 percent in counties near casinos.
But when it comes to the public and private cost of gambling, higher crime is by far the greatest threat. A study by Grinols and his colleague, Dr. David Mustard of the University of Georgia, found that by the fifth year after the introduction of casinos robbery had increased 136 percent; aggravated assault was up 91 percent; and auto theft increased 78 percent.
The API report also shows higher rates for domestic violence among gamblers. In fact, for every problem gambler, eight people are negatively impacted, including family, friends and employers.
Unfortunately, gambling preys on those who can least afford it. Lower income families spend a greater proportion of their incomes on gambling than their more affluent neighbors, and the API report shows gambling among youth and the elderly growing at alarming rates.
The concern about the impacts of gambling, as well as the lure of potential tax dollars, are not lost on Alabama's gubernatorial candidates.
The taxation of gambling is a major plank in the campaign platform of Democratic hopeful Ron Sparks, while his primary opponent, Congressman Artur Davis, seeks to regulate gambling but says he will not "tie our economic future to the uncertain promises of the gambling industry and its low-wage, recession-prone job base."
In a series of candidate columns published by the Montgomery Advertiser, Davis noted that poverty still exists in the shadow of Mississippi's mult-million-dollar casinos.
"Our neighbor to the west is actually an object lesson on the inability of gambling revenues to make wholesale improvements in the state's well-being," Davis wrote.
Among Republican candidates, Robert Bentley and Bill Johnson both support allowing voters to decide on the legality of gambling. However, Bradley Byrne, Kay Ivey, Tim James and Roy Moore are unified in opposing it.
When asked to address gambling by the Advertiser, Ivey said using gambling to fund state government is "unpredictable at best and unreliable at worst."
"It is fool's gold, a lure of easy money that doesn't deliver, unless you are the owner of a casino or local 'bingo' joint," she wrote.
Even the casino owners are not doing as well as they once did, Ivey noted. According to her column, casino revenues in Las Vegas, Nev., were down in October for the 22nd straight month.
API President Gary Palmer documented similar declines in his Jan. 30 Viewpoints column.
"Atlantic City casinos have suffered two straight years of declining revenues resulting in the layoff of over 2,000 casino employees last year," he said. "In Mississippi, the Choctaw Indian tribe announced that they are laying off 570 non-tribal workers from their Philadelphia-based Pearl River Resort and drastically cutting operating hours at their Golden Moon Hotel and Casino."
Despite the uncertainty of tax revenues and the high costs associated with casino-style gaming, the debate over gambling in Alabama will not likely end soon. Regardless of what action the Legislature takes, it may be up to Alabama's Supreme Court to rule on the legality of electronic games.
Meanwhile, like mobster Bugsy Siegel, who had visions of profits rising from the desert, gambling interests are betting they can capitalize on Alabama's dried-up budgets by promising to quench state coffers with tax revenues. But just as the sands of Nevada remain arid and infertile, studies indicate legalizing gambling may only serve to drain more strength out of the state's economy.
Editor's Note: Alabama Farmers Federation opposes
legalizing gambling in any form.