Saturday’s Washington Post ran an interesting article on its front page, above the fold left, called “Virginia stays out of gaming as stakes rise.” As the author, with the very improbable name of J. Freedom du Lac, explains, Virginia is one of only ten states (plus the District of Columbia) to have successfully resisted the lure of legalized casino gambling and its legions of high-paid lobbyists—so far. Most of the essay is about Virginia, but it contains some important data about the gambling phenomenon on a national scale (unfortunately, it lacks completely any international angle). This is stuff everyone in this country should know about.For example, did you know that 25 years ago the only two states with legal “casino” gambling were Nevada and New Jersey, and now there are, as I say, 40?Of course, there were other states involved longer ago than that. I remember when slot machines were not only legal but prolific in certain countries in Maryland, including along route 301 headed down Waldorf way. My parents used to drag me, as a young child, to a place called the Wigwam, which was built in the shape of a gigantic teepee. It was noisy, with all those one-armed bandits being cranked over and over again, so back in 1959 I sat by the jukebox listening to Connie Frances sing “Lipstick on Your Collar” over and over and over again, at a nickel a pop. All the adults were feeding coins into a machine, so hey, why not me? The slots bred sleaze and corruption, as they always do. You could ask the former Governor of Maryland, Spiro Agnew, about it; he was up to his eyeballs in it despite having deflected a just-too-obvious $200,000 bribe while he was running for the job.But that was nothing compared to what goes on today. Then we were talking small-time stuff. Now we’re talking very big bucks, national and international corporations and lobbyists galore. There are more than 500 commercial casinos and 425 tribal casinos across the country, and last year they raked in more than $65 billion in gross revenues. That’s more than mere grocery money, folks. What changed?What changed was the 1988 Indian Gaming Regulatory Act, which allowed more casinos on tribal lands and then on Mississippi River gaming boats—Yancy Derringer redux. But the real tipping point came when a certain state legalized racetrack slots in 1994, and that state—this will come as no surprise at all to those who follow such matters—was Delaware.Delaware has no state sales tax and very low income and property tax rates. The state instead acquires its money in three basic ways First is by robbing travelers on route 95 for exorbitant tolls. Second is by hosting dummy and shell corporations from all over the world, collecting registration fees but not requiring true beneficial owners to identify themselves. Other states do this too to some degree, but Delaware is by far the largest abuser, allowing criminals and even terrorists to launder money on U.S. soil, and making it much harder for Treasury and Justice Department officials, as well as city and state tax officials, to effectively pursue U.S. tax evaders who park their money in the Caymans and elsewhere. And third is gambling revenues. (If you’re wondering whether the Vice-President knows about all this, then maybe you really were born yesterday…)After Delaware the avalanche began in earnest, more or less in parallel with the deterioration of state finances, especially acute after 2008. New York is the latest state to legalize casino gambling. Maryland greatly expanded gambling after a ballot measure passed in November 2012 (I wrote about that here at the time). New Hampshire will probably be next. In a few years only Utah and maybe Virginia will be the last holdouts.Why tell you all this? What difference does it make? Well, two reasons, one petty, one substantive.. . .First, in the soon-to-be-released January-February 2014 issue of The American Interest you will please take note of an essay by David Blankenhorn called “Wanna Bet?” It’s a good essay, mainly about how the casino moguls and their lobbyists—and compliant, no doubt often corrupt state politicians—have distorted the language with which we talk about this issue. So there is no such thing as gambling, only “gaming.” Casinos are for “entertainment”, and do not differ in essence from any other kind of entertainment. Blankenhorn also points out that most of the increase in commercial big-box gambling in recent years is nearly all in the new computerized slot machines. He also quotes experts on the addictive nature of gambling for many people, and he comments in passing on the regressive nature of states’ raising money this way, since gambling is overwhelmingly an activity that seems to appeal most to those who can least afford to lose their money.Unfortunately, when I tried as editor to get Mr. Blankenhorn to widen the scope of his essay, and also to expand his moral indictment of the whole sordid mess, he refused to do so. So the essay, while fine for what it is, is less than what I had hoped for. In that light, let me do the expanding here he should have done there.So second, as to substance, Blankenhorn’s main point, and his best sentence, I think, is this: “Here is the rule of thumb: If a thing is basically dishonest, its advocates will speak of it dishonestly.” He’s absolutely and even brilliantly right, and of course as a maxim it applies to a much wider spectrum of behaviors than gambling.But so what? Hucksterism is as least as American as apple pie, and as the hard apple cider with which much of the country was awash before the 20th century. Americans have always gambled; poker is in a sense our national game (not that whist and dominos were far behind in yesteryear); Indians, too, gambled before Europeans ever set foot in North America; so why would states not tax that activity since they tax just about every other thing they possibly can tax? Besides, no one makes any American feed money into a slot machine, anymore than anyone forces anyone to eat the semi-toxic “fast food” that causes so many of our nation’s health problems. If people want to do stupid things, that’s their right. If, as P.T. Barnum supposedly said, “There’s a sucker born every minute”, why should governments try to change that, or protect suckers from themselves? Isn’t that a temperance-like vestige of Protestant asceticism, a puritanical atavism that, as we learned from Prohibition, invariably does more harm than good?I’m sympathetic to all that, to a point. I like to play poker. I consider it entertainment, even when I don’t win. Certainly, government has no business whatsoever telling citizens that they can’t pay poker in private, or bingo, or roulette, as a form of entertainment and socializing. Respectable arguments can be made, too, that government—American government, at any rate—should not prohibit corporate business activity that in no way coerces anyone into doing something they would not otherwise do.Similarly respectable arguments can be made, however, that government should aggressively tax behaviors that create broader social externalities, both to disincentivize them and to help pay to remediate the externalities they cause. We do that regularly with “sin taxes” on alcohol and tobacco. But we don’t do that with casino gambling; indeed, a lot of states vie to give casinos tax breaks in order to lure them onto their turf. This is despite the fact that studies consistently show that 35-55 percent of all casino gambling revenue derives from those with clinical addictions to gambling, addictions that cause serious problems for themselves and their family and friends. Big box casinos decisively depend for their revenue base on such vulnerable individuals, which is worse than “taking candy from a baby”; it’s robbing the livelihood upon which entire families depend.Why is this so? Because the overwhelming majority of this revenue comes from slot machines, and slot machines of the new, computerized kind, cannot be beaten over time. Unlike the old one-armed bandits, and unlike other parlour games, there is no genuine randomizer in these machines, and there is no skill one can bring to “playing” them that can make any difference in the outcome. They pay out as bait, and they very, very rarely pay out big jackpots just so the casinos can pretend in their propaganda that the machines are genuine and fair mechanisms of chance. They are not; they are programmed to cause regular players to lose. They are, in short, “fixed” in ways that even the old one-armed bandit machines could not be. They are literally dishonest; in the vernacular, a swindle. One cannot gamble with them really; one can only be conned by them.Since that is unarguably the case, there is, in my view, an acute political-moral problem with government not only allowing them to function, but actually encouraging them to function in order to suck off their tax revenue teets. In my view—and I expect many readers will not agree—it’s obscene for American government at any level to encourage slot-machine “gambling.” And I will go further in an effort to make myself unpopular: Not only have states increasingly legalized and allowed for the expansion of slot-machine stuffed casinos, but states themselves have instituted lotteries that function not only as regressive forms of taxation, but that abet the moral norming of gambling in our society as a whole.The class discriminatory impact of all such policies is undeniable: The “dirty little secret” of state-sanctioned gambling today, as Blankenhorn rightly but only passingly notes, and the main reason for its bipartisan popularity, is that it offers cowardly legislators a way to pay for state government without raising property taxes on the affluent–that or being brave enough to slash wasteful or unsupportable patronage spending. State leaders who support casinos and state lotteries are complicit in taking money from the vulnerable and unwary and delivering a large portion of it to large and predatory “gaming” corporations and, through the taxes they pay, to the state.Indeed, a kind of positional race-to-the-bottom has arisen among some states to get their hands on that revenue. Thus, when Marylanders had to decide a ballot question about whether to expand casino gambling in November 2012, most of the “vote no” campaign ads appeared courtesy of self-interested gaming interests in West Virginia. If Virginia eventually gives in, one the arguments will be that, after all, why should Maryland and West Virginia get the money that Virginians are spending there if they’re going to gamble anyway? This is a scoundrel’s argument if there ever was one, akin to the “argument” that goes: “Well, why shouldn’t I steal from the restaurant or the store cash register since just about every other low-level employee is doing it?”That governments are now eagerly doing what any respectable parent tells a teenager is just wrong represents yet another form of democratic institutional decay in our society. More than that (as I have also written about before), by no possible premise of democratic theory should those out of state be able to project such outsized influence into another state’s electoral process, as West Virginia gambling lobbyists projected into Maryland in November 2012. But there is no outrage over this. There is barely a whisper. This sort of political filth has become normalized, just as banks that have become extractive industries rather than partners in building wealth have become normalized.State politicians who do the bidding of big-box gambling corporations should be ashamed of themselves for debasing the core institutions of American democracy, for abetting the transformation of one state, county and city after another from Bedford Falls into Pottersville. You don’t have to be an anti-dancing, blood-on-the-saddle Baptist to take that view, either; I do, and I’m not.Some politicians at least act as though they’re ashamed, which is why we never see photos of them visiting casinos or “playing” slot machines, and why they reflexively mumble false formulas about how casinos provide jobs, grow the economy or expand “entertainment” options for the American public, whenever they are asked to justify what they are promoting. As Blankenhorn shows, their brains have been colonized by gamble-speak, which turns the most important words pertinent to the public policy debate into gibberish before any real conversation can even start, even as their campaign war-chests fill with cash from the “gaming industry.”Speaking of campaign finance shenanigans, I can’t prove it, but my intuition tells me that old-fashioned payola-style graft to our clutch of endlessly venal politicians explains a lot of what has been going on lately. It sort of looks, feels, smells and quacks just like Maryland’s slot machine sleaze did back in the late 1940s and 1950s. (For details, see Wayne Goldstein, “Maryland’s Sordid Slots History is About To Be Repeated”, Maryland Politics Watch, November 3, 2008.)You’re shocked, I know….. Actually, I wish you, and a lot more people, would actually be shocked. Our healthy sense of outrage ain’t what it uster be, and so it’s true: People in a democracy mostly get the quality of government they deserve. We no longer make an effort to clean up what stinks. Most of us don’t even hold our noses anymore. We’ve normed the stench, then? You betcha.
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Published on: December 1, 2013You Betcha