States Can’t Gamble Their Way To Prosperity

In 1994, Florida voters rejected a ballot proposal legalizing casinos and accompanying slot machines. The Florida gambling proposal was largely modeled on the Illinois Legislature’s 1990 legalization of casinos.

One of the nation’s first casino jurisdictions, Illinois gambling was imposed top-down on the public despite polls reporting 67 percent of the public opposed to casinos/slots.

Today Florida has its budgetary challenges, but Illinois has the nation’s worst state budget and credit rating — due in large part to $35 billion-$56 billion given away to gambling owners. For two years Illinois did not even fund the pension systems for public employees and has over $105 billion in unfunded liabilities. Illinois also misreported bond offerings from 2005-2009, resulting in the state being cited with pension fraud in 2013 by the U.S. Securities and Exchange Commission.

While it took Illinois two decades to arrive at budgetary insolvency, other states that legalize casinos/slots will eventually emulate Illinois. Once states embrace casinos/slots, gambling owners’ agendas and legalized political contributions dominate statewide economic policies, resulting in continued gambling expansions.

In 1994 both Florida Gov. Lawton Chiles and future Gov. Jeb Bush opposed legalizing Florida casinos/slots. Virtually the entire law enforcement community also opposed casinos/slots, as exemplified by a Florida Department of Law Enforcement (FDLE) report that emphasized in italics that “it has been clearly demonstrated in other jurisdictions that a significant increase in crime and its consequences accompanies casino gambling.”

This FDLE report concluded in bold print: “FDLE joins a large number of other criminal justice entities in opposition to any form of legalized casino gambling.” In 2006, the substantial crime increases that accompany new gambling facilities was confirmed in a definitive, nationwide 10-year study published by Harvard and MIT.

Also in 1994, Florida Secretary of Commerce Charles Dusseau reported that the casinos/slots ballot proposal was “an attempt at a hostile takeover of Florida’s $32 billion tourism industry by outside gambling interests.” He emphasized that “a consistent result of the introduction of casino gambling has been the cannibalization of pre-existing tourism industry.”

After 1994, the Florida and Illinois congressional delegations were largely responsible for enacting the 1995-1999 U.S. National Gambling Impact Study Commission, which substantiated these concerns. Annually since 2008, the multivolume 2008-2013 United States International Gaming Report, produced in concert with academics nationwide, has confirmed that Florida’s 1994 leaders were correct to reject casinos/slots.

During this same 1990s timeframe, Warren Buffett coordinated an effort in Omaha, Neb., to defeat a proposed “salvation casino” designed to transform the failing Aksarben racetrack into a casino/slots facility — despite two casinos being located nearby in Council Bluffs, Iowa. Instead, Omaha business and government leaders bulldozed the racetrack and transformed the land into a high-tech office park and an extension of the University of Nebraska at Omaha (UNO). During the last 20 years this development has attracted $1 billion in stores, restaurants, townhouses and the new 2012 UNO College of Business — ironically, built on the old racetrack grounds.

As re-confirmed in the last few years by definitive academic publications, the socio-economic costs of gambling are well over $3 for every $1 in benefits. These costs were predicted in 1994 by Gov. Chiles’ team of economic experts, as well as in several 1994-1995 academic articles — including the University of Miami Business Law Journal.

To illustrate how gambling philosophies catalyzed the 2008 economic recession, the website for 60 Minutes has an investigative 12-minute report that can be viewed, titled Financial WMDs.

Floridians should revisit the crime statistics disseminated by Florida’s 1994 bipartisan leadership and then emulate South Carolina and other jurisdictions that have re-criminalized slot machines and/or other gambling facilities.

Governments cannot gamble their way to prosperity.

Illinois casinos/slots have resulted in $35 billion-$56 billion in “giveaways to gambling owners by takeaways from teachers’ pensions.” Florida and other states that embrace gambling owners will eventually gamble away not only their state budgets, but also the public’s health, safety, and welfare.

John Kindt is a University of Illinois professor emeritus. He has testified before Congress and legislatures on business and legal policy issues, particularly gambling.

Institute for American Values, 1841 Broadway, Suite 211, New York NY 10023 212.246.3942