Gambling is a Poor Way to Raise Revenue

First, a disclosure. Writers at The Yellow Line have been known to spend time in casinos. We see nothing morally wrong with the occasional vacation to gamble in Vegas or Atlantic City. What we do think is wrong is the explosion of casinos and slot machine parlors all over the country.

Today’s New York Times reports:

Gambling revenues, once a mere trickle, have become a critical stream of income in a number of states, in some cases surpassing traditional sources like the corporate income tax and helping states lower personal income or property taxes.

This is all well and good as long as a state is getting the vast majority of its gambling revenue from visitors, instead of taking it straight out of the pockets of their own residents. But what happens if those visitors are given gambling options in their own state?

Some 70 percent of gambling losses in Delaware's three "racinos," racetracks with video slot machines, come from visitors from Pennsylvania and Maryland. But Pennsylvania legalized slot machines last year and the Maryland Legislature is debating a bill to legalize gambling there.

What benefit is it to Delaware if most people losing money in their racinos are from Delaware? Suddenly this great source of out-of-state income is now just a different form of taxation. All the state is doing is taking money out of the pockets of its own citizens while exposing them to all the negative social consequence of legalized gambling, as covered in detail by The National Council Against Legalized Gambling. These include higher crime, divorce, bankruptcy, even suicide.

Legalized gambling is by far the most exploitative way for a state to raise revenue. And as more and more states legalize casinos and/or slots, the social costs will certainly outweigh the revenue generated. States should break their addiction to legalized gambling and find better ways to raise revenue.