The squeeze is on. Demand for government to decrease it’s reliance on sales, property, and income taxes as sources of revenue is continuing to rise, leaving policy makers scrambling for new, less painful sources of revenue. Also going up are the costs of providing public services, entitlement programs, and conducting the other various functions of government. This upward spiral requires that they simultaneously look for better, cheaper, and more effective spending strategies.
It is no wonder that policy makers are starting to feel the pinch. To make things all the more uncertain, we are facing a federal debt that seems to swell exponentially on a daily basis and a national economy with the moodiness and sensitivity of a manic-depressive. All in all, it is a situation that demands a whole new degree of creativity from all levels of government. This cathartic hour in the fiscal evolution of our nation has pressured out a myriad of new and unorthodox strategies for spending cuts and new sources of revenue.
One group of these new strategies, termed “sin taxes”, (so called because they are directly associated with what is traditionally considered the seedier side of American life), are gaining widespread popular support and are being considered a silver lining without the dark clouds by some in the federal government and by many financially strapped state legislatures. Sin taxes are really two different types of revenue strategies with two different outlooks, combined under one name. The first of the two categories is government sponsored lotteries and legalized gambling. The second category is excise taxes.
The two differ in that legalized gambling tends to be an encouraged vice, an attitude fostered by the states’ hope of improving revenues. On the other side, excise taxes are often levied on products considered socially unvirtuous, products like alcohol and tobacco. In these cases they are used as a deterrent in order to discourage the use of the products they are applied to. Lotteries and Gambling Lotteries and gambling are not really new concepts in the search for sources of revenue. The first Continental Congress made the use of lotteries to help finance the Revolutionary War.
You could say that, in more than one way, we all owe our freedom to man’s willingness to take a gamble. Benjamin Franklin, George Washington, and Thomas Jefferson all ran their own private lotteries. There was a time, however, not too long ago, when gambling was held in notorious regard by the general public. In fact, gambling houses were considered only slightly above opium dens in their insidiousness. Gambling was made out to be a hideous social monster that stole bread from the mouths of children, made families destitute, and put people out of their homes.
At various times in our history gambling has created, in the minds of “decent” citizens at least, visions of the illicit. Images of slick, smooth talking professional cheats beguiling the public. “In 1955,baseball commissioner Ford Frick considered wagering so corrupt he prohibited major leaguers from overnighting in Los Vegas. ” In the last decade or so, however, viewpoints have changed dramatically. Public perspective on gambling has turned almost one hundred and eighty degrees. A recent survey conducted by Harrah’s, a casino company, found that “fifty-one percent of American adults believe ‘casino entertainment’ is ‘acceptable for anyone.
Another thirty-five percent say it’s ‘acceptable for others, but not for me. ‘” This drastic change of attitude may seem surprising at first but that surprise quickly fades once you realize what American societies moral indignation has been up against. An increasingly bleak outlook in finding and maintaining employment and a growing uncertainty in maintaining financial security teamed with an aggressive marketing and public opinion campaign launched by casino interests, state governments, and Indian reservations has almost certainly had a hand in eroding anti-gambling zeal.
State and city governments further untarnished gambling’s image by imprinting the funds they created for special programs like education and senior’s funds to make it more agreeable to constituents. Other things, such as the many churches that use bingo as a way to raise funds, have contributed as well. The change of casinos from ‘family’ run businesses to the tidy glow of corporate ownership has rinsed away the stain of the illicit and moved gambling into the mainstream. One only has to go to what was once known as “Sin City” to see this new nonchalant attitude.
The trashy, flashy, leisure suit-esque of Los Vegas casinos has been replaced by “themed entertainment with it’s pirates, wizards, and glass pyramids. Vegas Casinos have traded in their call girls for day care centers their flashy hot spots for “family” entertainment. Gambling, has become one of the most popular forms of entertainment in America. In 1993, more people went to casinos than to major league ballparks, ninety-two million visits. Legal gambling revenues reached $30 billion, which is more than the combined take for movies, books, recorded music, and park and arcade attractions.
Gambling can be divided up into two main categories. The first, lotteries and state sponsored gaming, and the second private legalized gambling. Lotteries were common in the United State until a little over a hundred years ago when Congress outlawed all state lotteries in response to the uproar over a Louisiana corruption scandal. In the last ten years however they have made a energetic comeback. States in desperate need of cash have propelled lotteries into service with expectations of phenomenal increases of revenue. Initially they were not disappointed.
According to Pat Riley of the Idaho State Lottery Commission, the Idaho lottery alone has contributed ninety-five million dollars to Idaho education since it’s formation. It is estimated that the take on lotteries in the United States is twenty-five billion dollars a year, all of it collected on a voluntary basis. Unfortunately, all this free money has a dark side. Avoiding the obvious ethical dilemma of government working as a bookie, lotteries, according to the article ‘Lotteries and Sin Taxes: Painless Revenue or Painful Mirage?
Are subject to the product-life-cycle phenomenon,” which means that they experience impressive growth in the beginning but as time moves on so does the demand. Proof of this decline lies in the track record of the Idaho Lottery. In 1990, lottery revenue accounted for 4. 2 percent of the total state revenue set aside for education. By 1993, that number had dropped to 2. 5 percent, and even though in 1994 the actual dollar amount of lottery revenue increased 4. 0 percent from the figure in 1990, the population of Idaho rose 10. ercent in the same time frame. (Figures provided by Pat Riley of I. L. C. and Statistical Abstract of U. S. 1991, 1992, 1993, and 1994) As the interests in the lottery wanes and after once getting such a potent initial kick, some states suffer withdrawal as the funds begin to decline. It is then that the temptation to legalize other forms of gambling in the hopes of retrieving that revenue ‘high’ is the strongest. However decreases in tax revenues are not the only reason that private sector gambling is on the rise.
For the many areas in the United States that are experiencing extremely poor economic conditions, legalized gambling is very attractive. The incredible destitution of Indian reservations has prompted many to push measures through that would allow them to build bingo halls and casinos on reservation properties to create jobs. (Indian Gaming, incidentally, took in approximately 15. 2 billion in 1992. ) The article ‘Mixed Blessing For America’s Ethiopia’ describes the experiences of Tunica County Mississippi with legalized gambling.
Census takers in 1980 found that Jesse Jackson’s label “America’s Ethiopia was very accurate. “It was the poorest county in America with 53 percent of all residents living below the poverty line, median family income at a paltry $7,685 a year and 15 percent unemployment. ” With the advent of “six block-long ‘riverboat’ casinos-without engines or wheelhouses” floating on flooded cotton fields, the median income tripled and employment rose to 95 percent of all adults. Gambling’s influence has transformed many regions from economic wastelands to vitalized economies, but this doesn’t come without a price tag.
Gaming industries don’t create wealth; they stir up existing resources and redistribute them. They also draw money away from existing businesses. “In Atlantic City for example, about 100 of 250 local restaurants have closed since casinos debuted in 1978,” States are often forced to legalize some form of gambling to slow the flow of dollars to out of state gambling ventures. This means that states that experience high initial profits often suffer when the competition moves in next door.
An example of this is in Biloxi, Mississippi “… ot revenues topped at $207 per machine per day. A year later when competitors moved in, however, the daily win-per-machine figure dipped to $109. ” On top of all this some economists feel that we are spinning the wheels of chance on borrowed time. “Legalized gambling in America has been running on a seventy year boom and bust cycle since the colonists started the first lotteries. ” Nelson Rose an instructor at Whittier Law School in Los Angeles, feels that the next bust is about thirty-five years ahead, and that it will most likely be triggered by a scandal.
While most casino officials think this is ridiculous, there are already signs of corruption. In Louisiana, there are rumors of a bad smell emanating from the governors mansion. According to the article ‘The Big Sleazy, Governor Edwins has been connected with a number of ethical breaches relating to that particular state’s legalized gambling. Perhaps it is only coincidence that Louisiana is the state whose scandal triggered the events that led to that first federal ban on lotteries a hundred years ago.