States with racinos (8): NM; LA; IA; WV; RI; DE; NY; ME.1
Three states - FL, PA, OK - have legalized racinos, but they are not yet operational (in total, 11 states have legalized racinos).
Why are states considering racinos? Here are a few states, out of the many, have proposed to add slots, video lottery terminals (VLTs) and/or other electronic gambling devices to their racetracks in 2003-4, as they attempt to fix state deficits with easy money.2
- Colorado has a $900 million deficit (13.4% of state budget)
- Maine has a $425 million deficit (16.5% of state budget)
- Maryland has a $1.2 billion deficit (11% of state budget)
- Pennsylvania has about a $1 billion deficit (about 7% of state budget)
- Across the nation, a combined state deficit of over $80 billion exists for fiscal year 2003-20043
Have existing racinos "plugged" state budget gaps?
- Delaware has had racinos since 1995, but it still remains $300 million in debt (12.2% of the state's budget for 2003-4).
- West Virginia legalized racinos in 1990 and still has a state deficit of $250 million (about 9% of the state budget)
- Rhode Island has legalized racinos since 1992, with over 2,500 VLTs and gross revenues of nearly $230 million from Lincoln Park and Newport. Yet, Rhode Island is still $215 million in debt (nearly 8% of the state's budget).4
Can states become dependent on gambling revenues?
- Nevada relies on gambling and sales taxes for 73% of its state revenue,5 with gambling taxes providing between 40-50%of the state's general revenue.6
- Montana maintains a list of the "Montana's Top Ten [county] Governments Dependent On VGM [Video Gambling Machine] Taxes," from 1990 through 1997. Montana cities rely heavily on video gambling machine taxes for nearly 14% of their general revenue.7
- Five states that run video lotteries earn a profit just from video lottery terminals that is equivalent to a significant percentage of their state budget (SD = 13%, WV = 11.2%, DE = 9.4%, RI = 8.2%, OR = 7.5%).
For more state information see the Lottery Revenue % State Budget Chart.
"Video poker is the crack cocaine of gambling," said Lt. Gov. Steve Windom of Alabama. "Not only does gambling enslave the poor who cannot afford to gamble, but it also enslaves state governments when they become dependent on the tax revenues [that] gambling supplies."8
Dog and horse racing: A sport refusing to die?
- "Yes, slots bring out more people. But let's not kid ourselves about why they're there," states the Washington Post. "[V]isit any Delaware racino and you'll find big crowds at the one-armed bandits [slot machines] and hardly anybody at the track, which is virtually hidden behind the Vegas-style slots casino. There is no natural connection between horses and slots," they further comment on the futility of subsidizing racetracks with slots, as they are transformed into casinos. " As for horse racing, some good things in life just go away … That's life."9
- "Horse racing is done, let it go, let it die," Gov. Bob Ehrlich of Maryland said. "It's generational. If young people don't want to go to the track, let it go," commented Ehrlich,10 who just days earlier told the House Ways and Means Committee that installing 10,500 slot machines at four horse tracks was the best option for closing the budget gap.11
- Rep. Steve Cutler, Majority Leader of the South Dakota House of Representatives, said that he supported the video lottery when it was introduced a decade ago, but now opposes it because he has seen the devastation it produces. Cutler said the state government has become addicted to the tax revenues.12
- In 1999, Maryland provided $10 million in subsidies to keep the state's dying horseracing industry alive.13
- Michigan pari-mutuel state revenues have fallen nearly 50% over the past decade, racetrack operation profits dropped 55% from 1996-1998, and live wagering has declined by nearly $300 million. Michigan had to supplement live bets with interstate simulcast wagering, in 1995, to keep the their racing industry alive.14
Racinos: A dangerous combination?
- Those involved with horse and dog racing contend that the introduction of slots or electronic gaming devices transforms racetracks into mini-casinos.15
- The National Gambling Impact Study Commission recommends that states should refuse to allow the introduction of casino-style gambling into pari-mutuel facilities; specifically, if the intent is to save a pari-mutuel facility that the market has determined no longer serves the community or for the purpose of competing with other forms of gambling.16
- Bill Eadington, director of the Institute for the Study of Gambling & Commercial Gaming at the University of Nevada, Reno, commented that racing shouldn't bank on slots to subsidize the sport long-term. The reason: slot revenue is always vulnerable to being taken by state legislators looking to plug budget holes [seen often with educational funding promises]. Slots turn racetracks into casinos rather than nicer tracks, which is "fundamentally a truth-in-labeling issue," he said.17
Social Costs Verses Financial Benefits — Who loses?
- "There isn't much [money] left over for horse racing," said McGlynn, CEO of Delaware's Dover Downs racino. "If we can keep it at a break-even, we're happy. The gains have solely come from the casino operation. Horse racing does give us something else to promote, but our (customers) largely come here because of the casino, not horse racing."18 Dog and horse racing serves only as a doorway for new casinos — not preserving the sport.
- Research from an Australian gaming authority discovered that "Most subjects [problem gamblers] had gambled on horseracing and on EGMs [Electronic Gaming Machines]."19
- Las Vegas pulls over 70% of their casino profits from slot machines. Dr. Mark Griffiths, is one of the world's leading researchers on addiction to slots from the University of Nottingham, England, says that manufacturers design slot machines to be addictive. "Slot machines are the most addictive form of gambling," he said. "Event frequency is critical - how many times you can gamble in a given time period. The more often you can gamble in a given time, the more that activity could be problematic."20
- The most addictive form of gambling ever in history is video gambling.21 Video machines are often used in racinos. At a cost to society of $13,200 per pathological gambler per year, only a small percentage of the population needs to be addicted to VLTs (or other forms of video gambling) for social costs to outweigh the benefits of job creation or tax relief.22
Gambling is viewed as a source of easy money without tax hikes or cutbacks; unfortunately, the social costs of gambling expansion are often ignored. Many state officials will not take a stand against fiscal irresponsibility and make difficult cuts to remain within a budget. Gambling is an unstable source of revenue and the most regressive form of taxation.
