NCPA - National Center for Policy Analysis

Cash-Strapped States Bet On Gambling

December 26, 2011

Faced with mounting budget deficits, more states are expanding gambling options and loosening restrictions in a grab for revenue.  Critics warn that the winnings are not worth the potential social and financial ills.  Nevertheless, many states continue to enact legislation that will increase brick-and-mortar establishments within their borders.

  • While the federal government attempts to overcome its deficit woes, it bears mention that states face a combined $95 billion deficit for 2012.
  • In this context, it makes fiscal sense that state lawmakers advocate the expansion of gambling options, as casinos and lotteries make up at least 2 percent of revenue in states that have them.
  • Recognizing the impending budget shortfalls, in 2009 and 2010 alone, 37 states pushed for increased gambling outlets.

State lawmakers in Massachusetts, who recently approved the construction of three casinos after 20 years of the debate on the topic, could not help but emphasize the potential fiscal benefits.

  • Estimates suggest that the casinos will collect $1.5 billion to $2 billion a year.
  • That corporate income will translate into $300 to $400 million in tax revenue to chip away at the state's projected $1.8 billion 2012 deficit.

The fiscal benefits explain largely why so many states have made recent efforts to bring gambling options to their citizens.  Additionally, it cannot be ignored that if a state chooses not to allow gambling within its borders it will watch potential tax revenue leak into other states that do.

Source: Ron Dicker, "Cash-Strapped States Bet On Gambling," Huffington Post, December 14, 2011.

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