More insightful journalism from USA Today, but this time I actually mean it. Dennis Cauchon has a pithy survey of the recent slot expansion:
Slots increasingly are a rite of passage for state governments in search of a lucrative new source of tax revenue. State and local governments raised about $6 billion from taxing casino gambling in 2003. Slot machines provided more than two-thirds of that revenue. That’s double the amount of revenue that gambling provided five years earlier. As a result, more states are legalizing slots or considering it:
ï¿½ This month, Pennsylvania approved installing as many as 61,000 slot machines over the next few years, more than any state other than Nevada. That will make Pennsylvania the 36th state to have casino gambling, either on Indian reservations, at racetracks or in stand-alone casinos. Maine also has authorized slots but doesn’t have any in operation yet.
ï¿½ Voters in California, Florida, Nebraska and the District of Columbia may consider ballot measures this year to legalize slot machines or expand them.
ï¿½ Even states that rejected slot machines may not be able to resist the lure of easy money. Although Texas, Maryland and Ohio turned them down this year, slots probably will return as a potential source of revenue because the governors or lawmakers in many of those states don’t want unpopular sales, income or property taxes raised instead. And they don’t want to see their residents cross the border to play the slots and provide taxes to neighboring states.
“Slots were the only plausible vehicle for property tax relief, which our state desperately needs,” says Pennsylvania Gov. Edward Rendell, who led the fight for slot machines in his state. “The Legislature is averse to raising taxes for anything, even if it means lowering another one.”
And with casinos at its eastern and western borders, Pennsylvania feared prohibiting casino gambling was a fool’s game. “It’s not like we’re bringing a new vice to Pennsylvania,” Rendell says. “The question was whether we wanted to keep some gaming revenue here or to send it to Atlantic City and West Virginia.”
Cauchon also gives West Virginia’s Mountaineer Park as a case study:
The Mountaineer casino, with 3,200 slots, is a classic example of why states find it hard to say no to slot machines.
Located on an economically depressed sliver of West Virginia that pokes between Ohio and Pennsylvania, the Mountaineer Race Track was on the verge of bankruptcy when slots were approved in 1994.
“The horses were one step above the glue factory,” says Tamara Pettit, the state legislator who helped win approval for slot machines and who now handles public relations for the track and casino.
Weirton Steel, the area’s dominant employer, had started shrinking from 14,000 employees to its current 1,900.
Seventy percent of local voters approved slots.
Today, the track and casino employs 1,740, up from 340 in 1994. In addition, the number of jockeys, trainers and other horse people working at the track has tripled to 3,600.
Mountaineer and two other horse track and casinos brought in $271 million to the state last year, about 8% of total tax revenue. Out-of-staters paid that bill. Fifty-seven percent of gamblers at Mountaineer are from Ohio; 35% are from Pennsylvania; 2% are from West Virginia.
This is a great capsule summary of the state of slots in the summer of 2004, and an excellent read. Since slot expansion seems to be the wave of the future, even if you don’t live in states with slots, or slots impending, I would definitely suggest that you take a mintue to educate yourself by reading this article.