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States going all in to expand gambling

Rely on revenue to limit tax hikes, deep budget cuts

By Michael J. Crumb
Associated Press / March 16, 2010

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DES MOINES — Faced with a drop in gambling revenue, states are adding games, considering new casinos, and increasing lottery options — anything to keep their cut of the profits rolling in.

States are adamant that they do not want to take advantage of anyone, but with budgets in free fall and tax increases a losing hand politically, lawmakers acknowledge they are dependent on gambling dollars.

At least 18 states this year are looking to expand games of chance because of a drop of 5 to 14 percent in the money they collect from casinos, horse racing, lotteries, or other gambling.

“Absolutely, we’re addicted to gambling dollars,’’ said Iowa state Representative Kraig Paulsen, the House Republican leader and an opponent of plans to expand gambling in Iowa, which already receives about $300 million a year from the industry. “The current budget couldn’t be close to being balanced without that money,’’ he said.

The idea of luring people to gambling tables when they are being battered by the recession is an awkward one for state governments — a point raised by people who deal with the collateral damage from gambling.

The new blitz “makes gambling more enticing, makes people more curious,’’ said Doug Billingsley, whose treatment center provides counseling for problem gamblers in Iowa.

Some gamblers say they do not know how they can afford to wager more when they are earning less.

“People don’t have as much to spend,’’ said Freda Lofthus, 71, as she was playing slot machines at Prairie Meadows Racetrack and Casino near Des Moines. “I spend about half of what I used to.’’

But in state capitols, the urgent budget problems trump other concerns.

Pennsylvania, where recently legalized casinos have installed 25,000 slot machines over the past few years, is among states now allowing table games, such as poker, blackjack, roulette, and craps. New York is putting 4,500 video lottery terminals at the Aqueduct Racetrack in Queens. Governor M. Jodi Rell of Connecticut wants to offer keno in restaurants so that people can gamble while they eat.

Socially conservative states are no less ambitious. Lottery ticket machines have been installed in grocery stores in Florida, which also joined Powerball last year and is considering a second multistate game.

Kansas is promoting the outlaw ambience of Dodge City, which now lures gamblers with 600 slot machines and a full spread of gaming tables. Missouri casinos have upgraded their slots with dazzling 3-D graphics.

“As the recession became deeper, that expected revenue became more important,’’ said Shaun Adamec, a spokesman for Governor Martin O’Malley of Maryland, where at least 10,000 slot machines are being installed in five locations.

The only alternative in Maryland and elsewhere would be raising taxes. “There’s no appetite in the Legislature for an even modest tax increase,’’ said Gary Tuma, a spokesman for Governor Ed Rendell of Pennsylvania, which hopes for an additional $140 million in the 2010-11 fiscal year from expanded gambling.

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Clyde Barrow, a gambling researcher at the University of Massachusetts Dartmouth, said states rationalize gambling “as a voluntary tax because nobody has to gamble.’’ But he said studies show that many respond to the temptation.

“We do know the closer you put casinos to people, the greater propensity to gamble,’’ Barrow said.