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Thursday, Jan. 6, 2011 04:03 pm

Illinois loses at the blackjack table

Hockey is a game. Chess is a game. Placing a $50 bet at the blackjack table is not a game. It is gambling, even though casinos insist that they’re part of a gaming industry. But mislabeling is not the industry’s only offense. In fact, it’s insignificant compared to the damage the industry inflicts on the communities it invades. The industry feeds on the vulnerable, not unlike the narcotic pusher at high school playgrounds. It promises nirvana but delivers despair. You’ve seen the industry’s commercials on television. There is no truth-in-packaging here.

The gambling industry has captured local and state governments by agreeing to share its gambling spoils. These governments close their collective eyes to the harm the industry commits and see only gambling-derived tax dollars flowing into their coffers. Some state and local governments even vie for the right to inflict on their constituents the psychological, social and economic pain generated by commercial gambling.

To be sure, a $50 blackjack bet may be no more than a plaything to a dentist on vacation who decides to spend an evening at the casino. After all, gambling is not an activity that defines his life or even his leisure hours. And it is certainly small potatoes compared to his $240,000 annual income.

The problem is not that once-in-a-while-at-the-tables dentist. It is instead the many more who are not dentists, who do not earn $240,000, and who are at the tables far more than once-in-a-while. They’re encouraged to live on false hope, bet after bet, loss after loss. If they make that $50 bet, say, once a week, for just 30 weeks a year, that adds up to a $1,500 annual loss. If their annual income is $25,000, that loss represents six percent of their annual income. Suppose the government collects 20 percent of that $1,500 loss. That’s equivalent to $300 of tax revenue. It’s a government windfall that masquerades as a tax on the casino. Of course it’s not. It’s a tax on the people.

But that $50 illustration understates what really goes on at the casino. What if the gambler bets and loses not $50 but $100 a week? That eats up 12 percent of the gambler’s $25,000 annual income. Gambling is a regressive tax. The poorer the gambler, the greater is the percent of income lost on any bet.

Governments try to camouflage its destructiveness on lower-income people by claiming to earmark gambling-derived revenues to spending on public education. But it’s illusory. What that earmark often does is free up revenue to bloat non-basic government spending. In fact, our mounting state debt is used as an excuse to invite in casino operators.

A decade ago, the U.S. National Gambling Impact Study Commission sponsored by U.S. Sen. Paul Simon found that 80 percent of gambling revenue was derived from households earning less than $50,000 annually. Gamblers with annual incomes below $10,000 spent almost three times as much on gambling – in dollar amounts – than did those with incomes exceeding $50,000. And what was the government take? These essentially low-income gamblers had to lose $84 billion to casinos and lotteries for the participating state governments to rake in $24 billion of new revenues. While it may not be criminal in a legal sense, it’s a national disgrace nonetheless.

Enormous pressure has been exerted by the gambling industry on a somewhat compliant Illinois legislature to vote in favor of gambling expansion. Whether they succeed depends on our reaction, our voices, our remembering who in our government voted which way. Amazingly, only a month after national, state, and municipal elections were held in which candidates were claiming to fight for the interests of their communities, re-elected members of the Illinois Senate voted for gambling expansion. Gov. Quinn has so far indicated that he opposes it. We must hold our representatives accountable.

Fred Gottheil is professor in the economics department at University of Illinois, Urbana. Contact him at 217-333-4591.
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