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Gambling Issue a Target of Disinformation in Texas

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It is dismaying that on certain issues Empower Texans, which used to be a leading force in the fight for individual liberty and fiscal responsibility in Texas, has begun to take positions which seem more characteristic of a anti-liberty socially conservative agenda. One recent example of this is their position on the issue of legalized gambling in Texas expressed in two recent articles, one by Empower Texans founder Michael Quinn Sullivan and one by Austin-area blogger Michele Samuelson. These articles are timed to lay the groundwork for an argument against legalized gambling as we go into a legislative session where the issue is sure to come up.

It is disturbing to see a previously trusted advocacy group like Empower Texans and two activists who I have personal respect for resort to arguments on this issue which are both contrary to a basic belief in individual choice and personal liberty and based on gross factual inaccuracies which seems to come straight out of the press releases of anti-gambling groups underwritten by gambling interests from other states.

As a matter of principle, if you believe that people should have the right to determine what they do with their own money then you ought to support their right to decide to spend that money on any form of entertainment, including gambling. On a more pragmatic level, if every state neighboring Texas has legal gambling and millions of Texans and their money travel to these states to gamble, and those states are clearly not questioning the economic benefits of gambling, why should the government of Texas deny those same benefits to our citizens and businesses?

But let’s look at some of the specific misinformation being promoted by these articles at Empower Texans. Both articles repeat some of the same false claims and misinformation.

One of these is that gambling advocates promote gambling primarily on the basis of enhanced tax revenues from taxing gambling. This is an easy argument to dispute so it’s always the one which gambling opponents focus on, but it is not really a significant part of the arsenal of arguments in favor of legalized gambling. Of course, anyone who has studied the industry realizes that whatever tax benefits come from taxing gambling are offset by the cost of government regulation of gambling, and the more the state regulates the less chance there is of profit and tax revenue. As shown by the Texas Lottery, once the state actually runs gambling the profits go to fund endless bureaucracy and to pay contractors like GTECH which gets the lion’s share of the lottery revenues.

However, the real economic benefits of gambling come from its secondary effects. Despite the claims of opponents repeated in this articles, Gambling creates jobs and the more intensive and highly developed the gambling environment the more jobs it generates. A study from the Federal Reserve in St. Louis shows that resort casinos are particularly effective in generating new employment and revenue for local communities. Casinos employ a lot of people, they build hotels which employ even more, and the gamblers they attract spend money on transportation and in other local businesses, plus the casino employees need housing, food and other services. All of these workers pay taxes and all of these businesses pay taxes, including taxes at an inflated rate from the hotels. This revenue mostly does not go to the state, but it does go into the local tax base and has an enormous impact. It’s enough to take a depressed area like Gulfport Mississippi (Federal Reserve report on economic growth in Gulfport-Biloxi) and turn it into a boomtown overnight. Galveston is another Gulfport waiting to happen.

Another flawed argument raised in the Samuelson article is that “it’s been proven that gambling expansion contributes to higher crime rates.” This is an old claim from gambling opponents based on the general assumption that sin begets more sin, which seems convincing to many people predisposed to believe it, but is not supported by facts. For example, the impact of two resort casinos near Norwich Connecticut has been studied for 20 years and the results were that local communities either matched or exceeded the nationwide trend of declining crime rates over that period, in some cases dramatically. While crime decreased by 19% nationwide the community of Preston saw a 33% decline in crime and North Stonington crime went down by 24%. Some studies have shows increases in the crime rate in some areas where gambling was introduced, but when the population of those areas was adjusted for the influx of tourists and gamblers those results proved to be false,. Contrary to popular assumption the primary force driving crime is not the “moral environment” but rather economic conditions. As shown by a study in Georgia, unemployment is a much larger factor in creating crime and legal gambling related jobs give those willing to work an alternative to crime and reduce crime rates.

One of the things which many of the independent studies on gambling seem to agree on is that the more privatized gambling is and the larger scale and less regulated it is, the more it benefits local and state economies. Very limited gambling initiatives like just allowing parimutuel wagering at racetracks or just allowing slot machines at limited locations are much less likely to be economically successful and more likely to be crushed by regulation and expensive overhead. The lesson from these studies seems to be that if you want gambling to succeed and produce real benefits you need to go into it in a very big way. It needs to become a self-sustaining industry with real potential to attract an influx of tourists on a large scale.

Ultimately, whether you believe the emotional arguments of opponents, or the propaganda of out of state gambling interests, or the data of the competing studies, or the stories of successes from other states, one fact remains very clear. With so many different opinions and so many conflicting interests, the rational response is to let the people of Texas decide. They are the ones who go to neighboring states to gamble now. They are the ones who will pay the costs and reap the benefits of legalized gambling if it comes to our state. They deserve a chance to vote on the issue and advocates on both sides deserve a chance to educate them and win their support. Obstructionist legislators bought off by special interests should step aside and let the issue be put on the ballot.

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