More hard-pressed states take a chance on gambling

Slots, casinos gain support of legislators

ATLANTA - In a sign that America's chips are down, states are increasingly turning to gambling to plug budget holes.

Plans to allow or expand slots or casinos are percolating in at least 14 states, tempting legislators and governors at a time when many must decide between cutting services and raising taxes.

Gambling has hard-core detractors in every state, but when the budget-balancing alternatives lawmakers must consider include reducing education funding or lifting sales taxes, resistance is easier to overcome, political analysts said.

While gambling has not been immune from the recession, it has held up relatively well compared with states' other revenue sources, such as income and sales taxes. This helps explain why past expansions of the gambling industry have been preceded by economic downturns, analysts said.

For example, Rhode Island opened the country's first racetrack casino in 1992, and four states soon followed. More recently, states faced with sagging revenues during the 2001 recession joined multistate lotteries such as Powerball and gave more leeway to Native American tribes seeking to expand their casinos.

Analysts say the latest round of gambling initiatives are large and ambitious, a sign that the industry aims to capitalize on states' economic turmoil. "From the gambling industry's point of view, this is their big chance," said Earl Grinols, an economics professor at Baylor University who specializes in gambling.

Ohio's casino advocates, including lobbyists working for Penn National Gambling Inc., are pushing a variety of large-scale development projects. In Georgia, a developer working with Dover Downs Inc., wants to transform a blighted section of downtown Atlanta with a 29-story hotel that would attract tourists with more than 5,500 video lottery terminals.

The developer pitching the $450 million Atlanta project, Dan O'Leary, estimates $300 million a year in revenues would be funneled to the state.

Many of the gambling proposals seek to expand footholds in states that already allow limited gambling. Kentucky's House speaker had proposed allowing video gambling terminals at the state's racetracks, and legislators in New Hampshire, New York, and Texas are seeing proposals this year to allow similar gambling terminals at their tracks.

Lawmakers in other states are talking about reversing hard-fought crusades to tighten restrictions on gambling. Nine years after South Carolina lawmakers outlawed video poker, state Senator Robert Ford is fighting to make it legal again.

Ohio voters repeatedly have rejected ballot proposals to expand gambling, but Governor Ted Strickland said he is willing to listen to proposals to help close a $7 billion shortfall in the next two-year budget.

In Massachusetts, proposals to allow casinos and racetrack slot machines have been resubmitted to the Legislature after being rejected last year. A tribal casino proposed for Middleborough would be exempt from state and local regulation under a plan under review by the US Interior Department.

Even Hawaii, which along with Utah is one of two states without a lottery or other form of legalized gambling, may consider a change. Aides to Governor Linda Lingle, long an opponent of gambling, say she is open to discussing it as a way to close the state's growing budget gap.

Nationwide, gambling is a $54 billion annual industry that employs more than 350,000 people. Most state gambling revenues come from lotteries, racetracks, and betting devices such as slot and poker machines.

Twelve states reap tax money from full-fledged casinos, and 23 others have casinos on tribal reservations, which generally do not pay taxes to states.

While advocates say casinos help attract jobs and revitalize downtrodden areas, opponents say they attract crime, foster gambling addictions, and have a disproportionately negative effect on lower-income people.