Indiana: Race to the Bottom

State shouldn't depend on gambling
Lawmakers need to rein in their enthusiasm about this revenue source

A sharp falloff in Indiana gambling revenues certainly has much to do with the sagging economy and high gasoline prices, as the industry asserts. But it would be a mistake for state policymakers to wager that the losing streak is temporary and reversible.

True, working people have seen a reduction in the amount of money they have left over to plug into slot machines and slide across blackjack tables. But even if and when that changes, they'll be playing a market that appears to have hit its limit.

For lawmakers, this means tamping down their hopes that this alluring voluntary revenue source will produce ever-richer jackpots.

With admissions down 7 percent at the state's 11 casinos in the first half of 2011 compared to last year, total revenues from those venues and the two racetracks with slot machines fell to their lowest point in three years. Their $1.39 billion take was $22 million less than the first half of 2010.

Two straight yearly declines never have happened before, says the gambling newsletter publisher Ed Feigenbaum. And the years to come don't bode well.

The border states from which Indiana's casinos have drawn heavily are finally cashing in. A new casino is operating in Chicago, another is a month away from opening in Michigan, and more competitors are planned for those states and Ohio. If gambling in Indiana is already a "mature" enterprise, as some experts maintain, then old age should see a decline.

While many would applaud that decline on moral or social grounds, the reality is that the state would suffer acute withdrawal if the business deteriorated. Gambling tax revenues to the state exceeded $872 million in fiscal year 2010, down from nearly $876 million the previous year. Add in employment, local taxes and related economic development, and we are hooked.

At the same time, we shouldn't press our luck. Lobbyists who push casino expansion (while simultaneously asking for tax relief for flagging racinos) are asking lawmakers to ignore the odds.

The state needs growth industries. Gambling isn't one of them. It's not wise strategy to raise the ante.
-- The Indianapolis Star