Pennsylvania is never going to attract enough gamblers to deal its way out of a $3 billion deficit.
The state Senate got the dice rolling in May by voting to legalize and tax fantasy sports and online gambling (including instant Pennsylvania Lottery games) and to allow tablet games at airports. Then, early this month, the House voted to authorize 40,000 video gaming terminals at bars and truck stops.
The bill isn’t entirely bad or unnecessary. The Legislature had to change the local-share tax on casinos that had been struck down by Pennsylvania courts. And, as distasteful as it is, the part of the bill legalizing video gaming terminals caps them at the number estimated to being operated illegally across the state already.
The expansion of gambling online and at airports, however, is bad policy. In a 2016 report, the Rutherford Institute concluded that gambling revenue delivers a short-term boost to state revenues as games are added but later stagnates or even declines. The Rutherford findings suggest that one state’s gambling-revenue growth eats into neighboring states’ collections. There appears to be a cap on consumers’ demand for gambling, meaning that adding more games will lead to a cannibalization of gambling revenue.
The Rutherford report also noted the social costs of the vice that drives gambling revenues, including “problem or pathological gambling, bankruptcy, crime, mental illness, suicide, regulatory costs, family costs, arrests, job loss, divorce, poor health, etc.”
The craziest part of the bill now in play might be that the original measure was meant to do no more than update Pennsylvania’s problem-gambling programs. It sought to set up a single toll-free number for people to call to find out about treatment services. That remains in the bill and is to be funded by gambling establishments.
There is no funding in the bill, however, for neighborhoods that might be blighted by casinos, for police departments responding to crimes driven by gambling or for areas where it has caused unemployment rates or bankruptcies to rise. As they did in betting on the stock market to cover the pension increase of 2001, Pennsylvania lawmakers are putting taxpayers’ chips on the upside of expanded gambling and leaving its costs for later.
Why not get a handle on state spending? Just for starters, Pennsylvania has a 2,358-person permanent legislative staff – the second-largest in the nation in 2015, according to the National Conference of State Legislatures, behind only New York’s 2,776. And as of this year according to the NCSL, our lawmakers are the second-highest-paid in the nation, at a base rate of $86,478 per year, behind only California. And California has a total of 120 members in its two legislative chambers to pay a $104,118 per year base rate, compared with Pennsylvania’s 253 lawmakers in Harrisburg.
Given the high price of Pennsylvania government, taxpayers deserve better than our Legislature’s slot-machine focus. It’s coming up lemons, after all, given that the state treasurer and auditor general’s warning early this month: State government’s deficit is growing so fast that the treasury soon might have to borrow from an outside lender to keep routine operations running.
It’s time for Harrisburg to put a chip or two down on responsible government.
