The Fort Wayne Journal Gazette has an article on the State’s reliance on gambling revenue to subsidize taxes. The editorial commends the state on funding a treatment program with some of the proceeds but notes that the necessity of such a program is caused or exacerbated by the State’s legalization of gambling.
For my part, I think if the State is in for a penny, it should go in for a pound. Why be content to merely take a rake off the casino profits — why not have the State run the casinos directly and take the whole pie, reducing taxes accordingly? Normally you don’t want state run businesses — you want the private sector to be as innovative and efficient as possible. But I don’t think those policy goals really apply to gambling. I don’t think, as a State, we ought to be particularly enthusiastic about a booming gambling business that draws in more and more customers and convinces them to spend more and more of their money. So, I don’t think the normal free-market concerns about state-run businessess apply to gambling even though I’ll concede that private businesses would almost certainly deliver a better product more efficiently.
As for the moral concern, I’m reminded of the joke that ends with the punchline, “We’ve established what you are, ma’am; now we’re just haggling over the price.” We’re not somehow morally superior because the State doesn’t run the casinos and other gambling concerns directly. We’re just suckers for letting private business keep the lion’s share of the profit on this particular enterprise.
I should note that this analysis assumes that gambling is morally tainted activity but that we’re willing to allow it because of its value in defraying our tax burden. If it’s morally equivalent to other services, then obviously the State has no business creating a monopoly for itself; but then, if that were true, the State would have no business taxing gambling concerns more heavily than other service providers.
State run casinos would just be a way to make some citizens happier to pay higher taxes. Give them some razzle dazzle and some minimal chance of making a profit and the citizens will gladly put a little extra money in the State’s coffers. Charge an extra $20 on their property taxes, and they’ll be reaching for the torches and pitchforks. It’s not, apparently, that these particular citizens mind being parted from their money; they just want a little entertainment for their dollar.
I am not sure how casino licenses are allocated in Indiana, but perhaps auctioning licenses among qualifying operators would be a better way of raising quick cash for the State rather than auctioning off the toll road. This would leave operation of the casino in presumbly more efficient private hands without having to guess how heavily we could tax the entities without driving them away.
One good reason not to have the state run casinos is to look at how they run lotteries.
When you go to the casino, the payback on every dollar played for slots, for instance, is about 95% in Vegas, 90% in Atlantic City, in the low 80s in the Native American casinos. It has everything to do with relative gambling competition.
When you play the Hoosier lottery, just like every other state lottery, the payback is in the 20-30% range.
Because the state is transparently only interested in the rake, it offers the players a real sucker bet- home run or nothing. Casinos can only keep people inside by allowing them to win a lot more- not so much that they outstrip the house, of course. It’s no fun to lose.
So, if the state fails to allow people a higher return than they are used to, they will see diminished revenues. I suspect that the state would do exactly that.
For what it’s worth, I have never played at any of the private Indiana casinos, or even at the Native American ones. Reason is the lousy payback, in the low 80% range. Sucker gambling. I only gamble in Vegas, where the numbers make it more tolerable.
Then again, a lot of suckers play Hoosier Lottery. Maybe I’m being too rational here.
Yeah, I’m banking on the irrationality of gambling in making this suggestion.
My premise, perhaps faulty, is that we don’t care how many people gamble or, particularly, how much they enjoy their experience. The goal wouldn’t be necessarily to have the State profit more than the casinos; only to have the State profit more than it does now while the citizens of Indiana spend less on gambling.
On a personal level, I’m with you. I’ve never played the Indiana lottery — unless you count having a ticket bought for me on one occasion; and I don’t really like the local casinos. I’ve had a great time in Vegas, however. My wife introduced me to craps — fun game with better odds than the slots I’d more or less stuck with before.