NCPA - National Center for Policy Analysis


April 15, 2005

A new report by the Texas Public Policy Foundation (TPPF) examines the economic and policy arguments for and against legalizing electronic slot machines, commonly called video lottery terminals (VLTs). VLTs represent the fastest growing form of gambling, and now, the 79th Texas Legislature is considering the introduction of VLTs at racetracks and casinos in Texas.

According to the TPPF, the financial costs of gambling are evident:

  • Some 24 out of 57 counties in the United States with casinos experienced job losses.
  • Atlantic City went from 50th in the nation for per-capita crime to first and violent crimes rose by 78 percent, during the first three years of casino gambling.
  • Sales declined 10 to 20 percent in Natchez, Mississippi after gambling was legalized.
  • Counties with casinos have a bankruptcy filing rate that is 13.6 percent higher than in counties without casinos throughout the nation.
  • Delaware reports spending between $1 to $1.5 million annually on gambling-related costs and Wisconsin reports spending $63 million annually.

Earl L. Grinols, one of the nation?s leading researchers on the economic impacts of gambling, calculates Texans will shoulder an increased annual cost of at least $1.5 to $3 billion dollars if VLTs are legalized -- a cost that would be magnified by reductions in state revenue from the diversion of spending on goods and services to gambling (an amount that is difficult to predict).

The cost suggest that Texas policymakers should exercise extraordinary cautionabout legalizing of VLTs, says TPPF. The long and short term impact, direct and indirect impact, and, most importantly, the final net economic result should be determined. Before VLTs are legalized, the question that should be answered is this: Once the costs are subtracted from new state revenues, will the lives of Texans be enriched by VLTs?

Source: Chris Patterson, "VLTs - What Are the Odds of Texas Winning?" Texas Public Policy Foundation, March 2005.

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