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Wednesday, August 28, 2013

CT’s gambling problem




Editorial from the Hartford Business Journal:

"Relying on gaming revenue is bad fiscal policy for a myriad of reasons. First, it continues to feed lawmaker's insatiable appetites for spending. Instead of making tough cuts to live within the state's means, lawmakers go to any lengths to raise revenue, even if it means expanding gambling activities in restaurants, places where children and families go to dine and spend time together.

Additionally, gaming revenue is typically not a safe bet. When the economy goes south, people spend less on lottery tickets and slot machines, leaving the state budget vulnerable to deficits....


We've seen that story play out a great deal since 2008. Just check the diminishing slot machine returns at Foxwoods and Mohegan Sun.

One of the big reasons Connecticut's budget has continued to face red ink is because its key revenue streams — income and sales taxes — take significant hits during recessionary periods. That forced Gov. Dannel P. Malloy to implement in 2011 the largest tax increase in state history."

CT’s gambling problem


State lawmakers have a gambling problem.

The Hartford Business Journal recently reported that Connecticut plans to have 1,000 Keno vendors starting Jan. 1 in bars, restaurants, and convenience stores across the state.

The bingo-like game is being administered by the Connecticut Lottery Corp. and was sanctioned by lawmakers as part of a shady, 11th hour budget deal last legislative session.

Keno was adopted to help sure up Connecticut's projected budget deficit; the game is expected to add $27 million in annual revenue by fiscal 2015.

Relying on gaming revenue is bad fiscal policy for a myriad of reasons. First, it continues to feed lawmaker's insatiable appetites for spending. Instead of making tough cuts to live within the state's means, lawmakers go to any lengths to raise revenue, even if it means expanding gambling activities in restaurants, places where children and families go to dine and spend time together.

Additionally, gaming revenue is typically not a safe bet. When the economy goes south, people spend less on lottery tickets and slot machines, leaving the state budget vulnerable to deficits.

We've seen that story play out a great deal since 2008. Just check the diminishing slot machine returns at Foxwoods and Mohegan Sun.

One of the big reasons Connecticut's budget has continued to face red ink is because its key revenue streams — income and sales taxes — take significant hits during recessionary periods. That forced Gov. Dannel P. Malloy to implement in 2011 the largest tax increase in state history.

Gaming revenues, which includes money from the lottery, casinos, off-track betting and charitable games, now make up a significant portion of Connecticut's $20 billion budget.

The Connecticut Lottery Corp., for example, contributed $312.1 million to the state's coffers in fiscal 2013, while Foxwoods and Mohegan Sun collectively kicked in $296.4 million.

There's also a moral issue at stake. Many studies have shown that gaming activities, like the lottery, turn out to be regressive taxes because lower income groups spend a higher percentage of their income on such activities.

Meanwhile, Mary Drexler, executive director of the Connecticut Council on Problem Gambling, recently told Hartford Business Journal that Keno and slot machines are the two most addictive games for developing a problem. Additionally, Keno largely will be played in restaurants and bars where children under 18 can sit, even though they can't play directly.

“This brings a game closer to youth and younger adults,” Drexler recently told HBJ.

The irony is lawmakers are supporting a potentially addictive game to raise revenue for programs that aim to help the state's most vulnerable residents; the same residents who are most likely to spend a larger portion of their income playing Keno.

This is self-defeating policy, and most likely a reason why lawmakers adopted Keno as part of a backroom budget deal without holding a public hearing.

To be fair, the gaming industry isn't the bad guy here. Foxwoods and Mohegan Sun have been good corporate citizens, creating thousands of jobs in Connecticut over the years. The Connecticut Lottery Corp. too has contributed to the state economy. And playing casino games, or the lottery, in moderation can be enjoyable entertainment for some people.

But expanding gaming simply to raise more tax revenue doesn't seem like sound fiscal policy. It's just a bad bet.

http://www.hartfordbusiness.com/article/20130826/PRINTEDITION/308229924/ct#8217s-gambling-problem


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