States seek to expand casinos, other gaming

Aug 11, 2009 5:09 PM
by GT Staff |

Despite a downturn that has impacted gaming revenues in a majority of the states that now allow casino gaming, more states are expanding gambling to shore up budget shortfalls.

Gambling is expected to expand in about a dozen states this year, with a resulting increase in $2 billion of gambling taxes, according to a USA Today report.

"Politicians are pushed toward gambling when times get tough," said William Thompson, a public administration professor at UNLV. "If it’s gambling or a tax increase, the political choice is clear, and the public acquiesces."

Thompson adds that, while gambling has grown steadily for the past two decades, the largest increases occur during economic downturns. Here are this year’s biggest expected expansions:

• Ohio: The most populated state without casino gambling will put 17,500 slot machines into seven race tracks.

• Pennsylvania: The legislature and governor are working on legalizing video poker for bars and taverns.

• Illinois: The state has already approved adding video poker in bars.

Commercial casinos are now legal in 12 states, with 28 other states home to tribal casinos. In addition to adding slot machines, some states are considering other measures, such as relaxing regulations on hours and types of games.

In Colorado, for instance, casinos can now stay open for 24 hours a day, they’ve raised betting limits from $5 to $100 and have added craps and roulette to the casino mix.

In Pennsylvania, where gambling-tax revenue has risen as the state added slot machines over the past year, state officials recently introduced a proposal to add table games such as blackjack and craps to the state’s slots-only locations.

Lawmakers in at least 14 other states have considered expanding gambling as an alternative to raising property or income taxes, according to the National Conference of State Legislatures.

One growth area has been in "racinos," or slot machines and other games that are installed at race tracks. Five of a sample of nine states with racinos saw revenue increase in the fiscal year ended June, according to the Wall Street Journal.

Despite the rush to get on the gambling bandwagon – or perhaps because of it – the states’ revenue from casinos and other forms of gambling is on the decline.

Revenue contributed by commercial casinos to state and local governments was down 2.2% in 2008, to $5.7 billion, according to a report in the Wall Street Journal.

Eight of the 12 states that allow commercial casinos saw their take of gambling revenue fall in the fiscal year ended June of this year, compared with the same period a year ago, according to data from states and the Nelson A. Rockefeller Institute of Government at the State University of New York.

In five of those states, including Nevada, gambling income fell by a greater percentage than the state’s overall revenue did. Nevada’s gambling-tax revenue fell an estimated 15% in the fiscal year ended June 30, compared with the same period a year earlier.

Many lotteries also are hurting. In a sampling of 20 state lotteries, including California and Illinois, 14 had year-over-year drops in revenue for the fiscal year ended in June, according to the Wall Street Journal.

"Gambling revenues are declining across the board, and states can no longer count on gambling when it comes to closing budget gaps," Lucy Dadayan, a senior policy analyst at the Rockefeller institute, told the Wall Street Journal.

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