The Great Temptation of Slots

The yowls that went up from the land at Governor O'Malley's relatively minor cuts of $213 million will make slots all the more appealing when the Governor and the General Assembly finally hit the coal face of trying to eliminate the remaining deficit of approximately $1.3 billion. Slots is probably the only one of the many options for raising revenue (outlined in a previous post: Let's Get Fiscal) where people will volunteer to give away their money.

While slots are quite unpopular here in Montgomery, they are clearly a tempting option for the State, so let's take a look at the pluses and minuses of slots:

On the Plus Side of Pulling the Lever (or Pressing the Button):
1. Slots Will Bring in Lots of Moolah
If we go in big for slots (15,500 machines in 7 locations), it will close most of the budget deficit by bringing in $16.5 million in FY 2009, $412.6 million in FY 2010, and $807.4 million in FY 2011. The bang will be less big if the State is less cautious and goes with a mere 9,500 machines in four locations: $1.1 million in FY2009, $109.7 million in FY 2010, and $337.3 million in FY 2011.

2. Slots Reduces the Need to Raise Taxes
It doesn't take an accountant to figure out that money from slots reduces the pressure on the Guv and the Leg to raise taxes. They will likely be relieved because Ehrlich already raised many "fees" as they were called by Republicans back in the day (read: before he lost the election).

3. Less Fiscal Pressure on Montgomery
Many of the most-discussed tax choices will fall heavily on MoCo. Remember that soaking the rich in Maryland means soaking us in Montgomery even if a dollar goes a lot less further here than in much of the rest of the State. It also makes it easier for County Executive Ike Leggett to raise revenue locally which will stay here to address many local problems.

4. Largess from the State
The State may even have the funds to spend on interests near and dear to our wallets, like making sure that teacher retirement (a very big-ticket item) stays fully funded and perhaps the GCEI (Geographic Cost of education Index). If Gov. O'Malley is smart, he'll link any slots plan directly to a new major spending proposal with broad popularity, such as a Maryland equivalent to the Hope Scholarship program in Georgia.

5. Everyone Else is Doing It
Maryland is an oddly-shaped state (geographically challenged?) with many neighbors who already have slots. West Virginia has slots and the track--I can still hum the Charles Town Races and Slots jingle from having heard it so many times--and our western neighbor appears ready to make the jump into casino table games. Many Marylanders ride the bus to play slots or bet on the horses in Delaware. Pennsylvania opened its first slots parlor last year; it already had horse racing. Slots proponents argue that we ought to keep the money that Marylanders spend gambling there here at home.

On the Minus Side of Pulling the Lever (or "Just Say No" as Nancy said):
1. Maryland's History of Corruption
Our younger readers may be surprised to learn that Maryland was once Louisiana on the Potomac--only without the fine Cajun cuisine or French-speaking politicians. It is still in living memory that Maryland's entire political class was arrested for corruption starting with Vice President Spiro Agnew and continuing on through Democratic Gov. Marvin Mandel and far, far down the political food chain. Alcoholics on the wagon should be commended for fighting the good fight and a tough struggle every single day--but they also shouldn't open bars.

2. The Power of Gambling Interests
Even if Tony Soprano doesn't personally drive down the Garden State to start handing out checks in Annapolis, legal gambling syndicates will have so much money to throw around that their influence on our state's politics will be profound. A license to run slot machines is license to print money, so don't be fooled into thinking that they won't have lots of it.

And a little money goes a long way in most state capitals. As one Arizonan said after much of his state legislature was arrested in a major corruption scandal: "I knew they could be bought but had no idea how cheaply." Buying Congress is expensive because of federal campaign laws and the expense of congressional campaigns makes it prohibitive. Not so at the state level.

There is a potential solution around this problem, though it will require saying no to the interests who have spent much money promoting slots in the state: the government should run the machines. I cannot fathom why Maryland should essentially enrich a narrow class of oligarchs by handing over lucrative licenses. Let's do it ourselves and keep all the money if we are going to do it. Don't worry; they'll still be plenty of corruption to resist in all of the state contracts to build, run, and maintain the new acres of machines.

3. It's Regressive
For some reason, gambling is yet another of the many activities with huge class connotations. People lower on the financial food chain who gamble play slots while the affluent favor table games and James Bond plays baccarat (no, not the crystal). As Tom Schaller has argued (I can't seem to find the link), if we're going to have gambling, we might as well go the whole hog and gig everyone.

4. It's Addictive and Causes Social Problems
Gambling is an addiction that has ruined many people. Like alcohol, it doesn't snare most people but it hits some people very hard. And it is a temptation that is easier to resist if it isn't just next door. Proponents say that people who like slots can already play in neighboring states but it is a lot more tempting when it is nearby. I recall an interesting story in the paper about how a mayor who brought gambling to her town then had to watch her sister gamble away her house and fall into ruin. Unsurprisingly, like many addictions which require regular infusions of large sums of cash, it is associated with a rise in crime.

4. It's a Lot Less Profitable Than You Think
Lots of reasons for this one. First, the social problems mentioned above cost money. People who lose their shirts and jobs to gambling addiction don't pay taxes. Instead, the State ends up having to pay to fight rising crime and other associated social ills. Second, much of the money goes out of state. We don't make slot machines in Maryland. All of the money for slots infrastructure will benefit Nevada, not Maryland. Many owners may take and invest their profits elsewhere as well.

5. Saving Horse Racing
Maybe I just didn't grow up with the fresh smell of horse dung but this has to be the least appealing reason for bringing slots to the State. It's not politically correct to say in Maryland, especially around Baltimore, but the horse racing industry does not strike me as an especially valiant goal worthy of taxpayer subsidy. It is bizarre enough that the federal government pays corporations large sums of money to grow food in the breadbasket of the world. Must we extend bad policy into lunacy?

And the Delaware experience shows that slots, not the horses, is the total focus of any slots and racing parlor. Racing may "survive" but only because it permits people to operate slot machines. Oh, and needless to say, this is a complete dog of a political excuse for voting for slots in Montgomery. Though I imagine my reader(s) in Laurel may disagree, Pimlico should avoid a shotgun marriage with slots.

6. The Wrong Lesson
I hesitated to put this one down because I don't demand that the State be in the morality business. Indeed, I prefer it stay out of it. Even if the State already runs the lottery and, here in Montgomery, peddles alcohol (albeit with the supposed goal of curtailing the negative effects of its use), do we really want to encourage the belief that one can get something for nothing? That the good life doesn't take hard work but a lucky spin of the wheel?

So are you ready to pull the lever?