Expanding gambling in Ohio is not the solution to budget woes

Press Statement
For Immediate Release
July 13, 2009

David Miller, Vice President for Public Policy
Citizens for Community Values
Contact:  (513) 733-5775

Expanding gambling in Ohio is not the solution to budget woes
Governor and Legislature should pursue fiscal restraint and compassion for victims of addiction

Columbus, Ohio – My name is David Miller and I am Vice President for Public Policy at Citizens for Community Values in Cincinnati. I stand today with my colleagues in opposing Governor Strickland’s and the General Assembly’s plans to expand gambling in Ohio in an effort to balance our state’s budget.

We would all do well to remember President Ronald Reagan’s assessment of a similar problem he faced:  “In this present crisis, government is not the solution to our problem; government is the problem.”

It is disappointing and discouraging to see many of our intelligent and thoughtful leaders refuse to consider meaningful alternatives to these problems. Currently there are four separate bills that would shrink the size of a bloated bureaucratic state government and make it more efficient. Ohio could reduce government waste by over $3 billion with these measures alone.

Instead, we have a reckless pursuit of bad public policy that is wishful at best on its revenue projections, and short-sighted and counter-productive at its worst.

The Cincinnati Enquirer reported last week that gambling revenues at the casinos in Southeast Indiana plunged 13.5% in the first half of 2009. Keep in mind that these are the casinos we should emulate since they are some of the biggest thieves of Ohio’s gambling dollars.

If the General Assembly and Governor Strickland are relying on their revenue statistics to come up with projections for Ohio, I suspect we’ll end up in the same place we did when the Governor released his own budget proposal with red ink running in the streets.

When I say it’s short-sighted and counter-productive to attempt to use gambling revenues to balance our budget – any budget for that matter – it’s a gross understatement.

University of Illinois Business and Public Policy Professor John Kindt, who has been studying the effects of gambling for the past 20 years, recently released a massive compilation of his work in the United States and International Gambling Report. Ohio leaders should heed his warning when he says:

“It’s Economics 101 that you cannot gamble your way to prosperity. But you can gamble your way into more recessions and even depression.”

One of Professor Kindt’s more startling conclusions comes from a simple cost/benefit analysis. Reports which have been confirmed for many years, including sworn testimony before the U. S. Congress, concluded that the cost of legalizing gambling to the taxpayers is at least $3 for every $1 of theoretical benefits.

The saying always goes in gambling, “The house always wins.” In this case, the taxpayer always loses, and loses significantly. It’s outrageous for our government leaders to think they are going to solve our fiscal crisis with these kinds of odds.

Although the vast majority of gamblers can walk away from a casino, slot machine or lottery ticket with no lasting problems, a certain percentage cannot. In 2% – 5% of cases, the most serious problems in the wake of a gambler’s addiction cost the state far more than is brought into the tax coffers.

The costs of bankruptcy, crime, destruction of families, domestic violence, and suicide, just to name a few, are not only costly to the state, they are costly to those who suffer from this vice and our government should care more about the suffering they are going to cause if they move forward with the expansion of gambling in Ohio. Not only is it cruel, it is irresponsible and negligent.

Economics Professor Earl Grinols illustrates it this way. Imagine that there is a newly developed drug to solve certain medical problems. Other drugs exist for the same problem and the new drug’s use is successful for most people. It seems to serve the purpose well, but as time passes, experience reveals that, for one or two percent of the users, the drug has devastatingly harmful consequences. For another two or three percent of users, it has harmful consequences. The company wants continued licensing and the state is considering complying if the promoter will share the profits. [Anything sound familiar here?]

Recent experience in the case of Vioxx was that less than 3/1000ths of 1% of the users were found to suffer harmful cardiac events as a result of the use of Vioxx. That is fewer than 5,600 individuals per year. Yet, Merck voluntarily removed the drug from the market last September 30, 2004.

The reality is that we have far more people harmed from legalized gambling than 3/1000ths of 1% of its users. With a product liability in the range of 5%, we instead have state leaders rushing to get casinos and slot machines up and running as fast as possible so they can get a cut of the losses.

On top of the product liability issues with this industry, these leaders should be called on by the voters to answer for their own hand in the scheme and for negligence in the enactment of economically and socially dangerous legislation. With a July 3 poll identifying some 84% of voters wanting the say in the expansion of gambling in Ohio, I dare say these leaders will have their chance. I suggest they start preparing their answer now.

For the record – a recorded one at that – Citizens for Community Values suggests that the General Assembly’s first answer to the Governor’s proposal be a NO vote!

I’ll close with another quote that has been attributed to President Ronald Reagan when he was the Governor of California and at a similar crossroads. It goes something like this:  “The state should get its wealth from the strengths of its citizens, not their weaknesses.” Ohio’s state leaders should subscribe to this philosophy today. Gambling is not the answer.