Georgia’s big gamble isn’t about education

Casino floors, like this one at a recently opened Harrah's in Murphy, N.C., could pop up in Georgia if a constitutional amendment is approved. (AJC Photo / Melissa Ruggieri)

Casino floors, like this one at a recently opened Harrah’s in Murphy, N.C., could pop up in Georgia if a constitutional amendment is approved. (AJC Photo / Melissa Ruggieri)

SAVANNAH — If you didn’t already think lawmakers were studying the expansion of gambling more than the preservation of the HOPE scholarship, Monday’s hearing here should have convinced you.

The location gave it away. Legislators from north Georgia didn’t trek to Savannah because it has a particular interest in HOPE’s fate. They came to Savannah because it’s deemed the second-best site for a casino in Georgia, after Atlanta.

And while committee members heard testimony about HOPE and Georgia’s public colleges during a first round of hearings in September, they spent all six hours Monday hearing from horse-racing advocates, casino executives, gambling-industry analysts, gambling opponents, and a professor who specializes in gambling research (more on him in a moment).

There were no representatives from other industries. Just one person, an opponent, spoke about other ways to reverse the trend of HOPE’s expenses rising faster than its lottery revenues. Another, Rep. Rusty Kidd, I-Milledgeville, argued for legalizing casinos but spending the money on Medicaid.

So make no mistake, the issue at hand is whether to legalize gambling at casinos, and maybe horse tracks. The notion these businesses would produce money for HOPE is best seen as a secondary concern, designed to attract support from Georgians who otherwise might be skeptical of the idea.

Although separating the two issues would be more intellectually honest, there is some merit to considering casinos expressly as salvation for HOPE. That’s because the historical record suggests they won’t be.

John Kindt, a professor emeritus at the University of Illinois, warned lawmakers that in many states casinos have turned out to be financial drains rather than spigots. While Kindt and committee members quarreled about some of his terminology and phrasing, I think I can translate: Casino gambling isn’t a reliable way to pay for big public programs.

One reason is states with casinos tend to gamble with their finances. In 2012, the latest year for which I could find comparable data, some of the states with the biggest gambling industries also had the most red ink in their budgets: Nevada (No. 1 gambling industry, No. 2 shortfall as a percentage of its state budget); New Jersey (No. 3/No. 1); Louisiana (No. 5/No. 4); New York (No. 7/No. 10); and Illinois (No. 9/No. 9).

Of the 10 states with the biggest gambling industries, nine ran budget deficits that year. Eight of them were worse than Georgia’s, which, you may recall, was considered traumatic under the Gold Dome.

Based on what I’ve heard so far about the proposal for casinos in Georgia, I’d chalk that up in part to unhealthy, and unrealistic, expectations that gambling revenues will fill a hole that lawmakers don’t want to fill by raising other taxes or cutting spending. The lottery has already proved insufficient to fund HOPE in the long run. What makes anyone think casino revenues would be different?

As state finances go, it’s a get-rich-quick scheme that ranks down there with taking this month’s rent money to the blackjack table, and trying to win enough money to pay the light bill.

Reader Comments 0

48 comments
Kyle_Wingfield
Kyle_Wingfield moderator

@Finn-McCool Just be forewarned that there's some bleeped-out language, if that's the sort of thing that bothers you.

FIGMO2
FIGMO2

@Kyle_Wingfield @Finn-McCool

Funny and sad.

The government contributes to the despair and then profits from the despair.

In essence, they become the bag man.

Finn-McCool
Finn-McCool

Like the Comedian Anthony Jeselnik said, Why are people surprised when lottery winners go bankrupt? You already know they tend to gamble with their money.

LilBarryBailout
LilBarryBailout

In this blog format, hyperlinks appear (at least on my Chrome browser) as black text on dark red background.  Very difficult to read.

gapeach101
gapeach101

Interesting information about budgets and legalized gambling states.  I'm not sure 2012 should be considered typical.  Hopefully gambling is done with discretionary funds.  Lots of folks were still in recovery mode in 2012 and maybe not gambling as much as in 2007.  

Sort of like funding your state budget on sales tax.  When the economy tanks, so does your revenue.

FIGMO2
FIGMO2

Never thought I'd see the day when government was running the numbers. The Godfather would be proud.

schnirt 

straker
straker

I'm with the Bible belters on this issue.


We no NOT need any casinos in Georgia.


For every joy they bring, 10 hearthaches will result.

Hedley_Lammar
Hedley_Lammar

Gonna be awful lonely around here on the other side of the paywall Kyle


Good luck with the venture AJC


Enjoyed the back and forth guys and gals. Be safe and most of all be good to each other. That is still free

NorthAtlanta
NorthAtlanta

Probably not going to subscribe just to read these articles.  Sorry.  Tacky move by the AJC.

Kyle_Wingfield
Kyle_Wingfield moderator

@NorthAtlanta Forgive me for thinking that trying to make enough money to avoid layoffs on a fairly regular basis is something other than "tacky."

Pub Heaven
Pub Heaven

The marketplace should decide winners and losers...

M H Smith
M H Smith

I'm all for other forms of gaming in this state to help pay for a Medicaid expansion.

.

 

. National tax revenue from commercial casinos in the United States in 2013, by state (in million U.S. dollars)* 

This statistic shows the national tax revenue from commercial casinos in the United States in 2013, by state. 

Tax revenue of commercial casinos in the state of Nevada amounted to approximately 7.88 billion U.S. dollars in 2013. 

 http://www.statista.com/statistics/187869/tax-revenue-from-us-commercial-casinos-since-2009/

.

.

I'll gladly suffer a $7.88 billion or as much as a billion dollar revenue stream with a smile.



Classof98
Classof98

So Kyle, are you against casinos because they won't help the state economy, or are you also against them on mere principle?

This is where Conservatives and Libertarians diverge ideologically. While conservatives want to legislate (their) morality, libertarians believe this nation was founded on "life, liberty, and the pursuit of happiness."

Silly us.

Kyle_Wingfield
Kyle_Wingfield moderator

@Classof98 This piece is about how they aren't salvation for state budgets. I'll evaluate them on their own merits in a future piece (but don't expect the tune to change much).

LilBarryBailout
LilBarryBailout

@Classof98 As a libertarian, surely you would agree that any private group or individual who wants to run a casino should be able to, right?

lvg
lvg

Any different than paying an annual tax for tire reclamation with auto registration and money going to general fund? For Cons whatever keeps Grover and tea heads happy so State is not taxing folks on income so as to keep state going is okay. As long as  it creates revenue 

Kyle_Wingfield
Kyle_Wingfield moderator

@lvg I think you'll find this is not really popular among "Cons," but nice try to make this a partisan/ideological deal.

DawgDadII
DawgDadII

Follow the money. Huge cash flows in casinos and gambling creates huge opportunities for the politicians, cronies, and crooks to profit, directly and indirectly.

RafeHollister
RafeHollister

So, the states that "invest" in gambling wind up with bigger deficits? No surprise there.  I think that is a political mind set or ideology of always wanting more than you can legitimately afford.  So, instead of seeing that money is limited and using this found money as an opportunity to reduce debt or to help pay for already in place necessary programs, they see the "new money" as something they can use to grow government with new projects and programs. 


Some politicians just refuse to accept that there is only so much blood in the turnip, there are no magic turnips or golden geese,  and they can't just continue to buy votes with other peoples money.  The more money the government removes from the economy through hook or crook seems to be inversely proportional to the rate of growth in that economy.

LilBarryBailout
LilBarryBailout

@RafeHollister Exactly right.  The free market uses capital more efficiently than unaccountable government bureaucrats, resulting in more value created and more benefit to society.

JackClemens
JackClemens

So, I was out of town. Is it the case that columnists are available only on the paid site now? If so, I bid the same $5.99 per month I pay for CBS All Access, which still doesn't get me NFL games. Let me know if you accept my offer. ;)

JackClemens
JackClemens

On topic, I don't oppose legalized gambling, but I don't see it as any sort of big economic engine either. (Birmingham Turf Club anyone?)


Kyle_Wingfield
Kyle_Wingfield moderator

@JackClemens Yes, our blogs have moved to MyAJC as of this morning. The site is metered, meaning you get to read several articles a month before you're prompted to subscribe.

And it sounds to me like your money would be better-spent here than at CBS! 

DMayr
DMayr

Agreed and agreed. Of all the issues facing Georgia, this solves none of them. And what makes it worse: this would further enable more wasting of money from those who can afford it least.  Gotta save the morons from themselves whenever possible...

M H Smith
M H Smith

What happened with Nevada, Kyle?

I know, what happens in Los Vegas, stays in Los Vegas. Besides the Vegas examples didn't fit nicely into your argument not to mention gaming industry  like all others has up and down revenues.  



If the legislators want to used the proceeds to "help" fund health care I'm fine with it and open to having other forms of gaming. 

 But if you want a sure thing for funding health care which I know you don't, lets take the issue of a Internet access or data transfer fee up for debate? 

Why not be honest Kyle, no matter what you will never allow having health care that will cover every U.S. citizen? 


Kyle_Wingfield
Kyle_Wingfield moderator

@M H Smith I'm not convinced you actually read what I wrote, which was that *despite* its largest-in-the-nation gambling industry, Nevada also had the country's second-biggest budget shortfall. It isn't a good look for those who claim gambling will a) spur economic development and b) help shore up the state's finances.

Kyle_Wingfield
Kyle_Wingfield moderator

@M H Smith "Besides the Vegas examples didn't fit nicely into your argument"

What are you talking about?

M H Smith
M H Smith

@Kyle_Wingfield @M H Smith 

Duh? 

You picked cases to fit your cause. If gaming was as unprofitable as you make out why are so many in the gaming business and why has Los Vegas done so well? Nevada runs the just about the entire state off of gaming.


Nah on second thought just carry on with your propaganda, even where it fails to make the case. 

Kyle_Wingfield
Kyle_Wingfield moderator

@M H Smith I didn't say "gaming has caused" anything. I said gaming hasn't helped states avoid these problems. Probably because gambling revenue is seen as "easy" or "found" money, and thus is spent a little more easily than the money that would come from raising income or sales taxes.

M H Smith
M H Smith

@Kyle_Wingfield @M H Smith 

So are you saying "gaming has caused these deficits DESPITE these big revenue streams?  Regardless of fiscal irresponsibility?

And again since we are onto who does read what someone wrote aren't you against funding Medicaid or healthcare no matter how fiscally sound the revenue mechanism? :)  

ganymeade
ganymeade

I probably do not agree with you on much but you are correct on this.If we are going to have a first class education in this state we will have to pay for it. Either we do or do not there is no middle.

RafeHollister
RafeHollister

@ganymeade Well there are things you could do to help that don't cost money, like school choice and more charter schools.

LilBarryBailout
LilBarryBailout

Gambling provides multiple avenues and opportunities to grow government, and should be opposed on that basis alone.

M H Smith
M H Smith

@LilBarryBailout 

Oh, look it's a new day we have another avenue to grow da BIG GUB'MENT. 

With trillions in debt you think more ways for business to make money and a few incomes for others is taboo?

Sometimes you out do yourself even for a anarchist 



LilBarryBailout
LilBarryBailout

@M H Smith @LilBarryBailout Georgia doesn't have "trillions in debt".  As a state, it has to balance its budget every year.  If, as you imply, you're interested in business making money and workers having incomes, surely you would be OK with private interests building as many casinos as they'd like and paying the normal amount of income tax like any other business.  Right?

Kyle_Wingfield
Kyle_Wingfield moderator

@332-206 Neither the support nor the opposition to this proposal is partisan, but thanks for injecting that into it.

Pub Heaven
Pub Heaven

Every Democrat in the state could support this, and it would not happen. The only way to legalize gambling in Georgia this session is through the actions of God's Own Party.

Kyle_Wingfield
Kyle_Wingfield moderator

@332-206 Not every Democrat supports it. Not every Republican opposes it. It will not pass the legislature without a majority of each party in each chamber.

The question is whether there are enough Republicans with enough power who want it badly enough to do what it takes to get those Democratic votes. I don't think that's the case, but we'll see.