Gambling Is Not a Budget Solution

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Created on Friday, 24 June 2011 20:11

We are now in the final days before a potential state government shutdown, and since the end of the legislative session, there has been little to no progress towards resolving the budget impasse at the Capitol. Gov. Dayton is unwilling to sign the Republican-led legislature’s cuts-only budget, and Republican legislators in turn refuse to consider Gov. Dayton’s proposed tax increases on the wealthiest Minnesotans. In the midst of this deadlock, there have been oblique references to expanding gambling as an alternative way to raise revenue. Whether this comes onto the table in the budget negotiations or not, it is a good time to remind ourselves why JRLC opposes the expansion of gambling in Minnesota and any increase in the state’s reliance on gambling revenue.     

Gambling is damaging to the community as a whole. It can encourage people to engage in risky behavior while acting on baser desires for money. Casinos rely heavily on compulsive gamblers for their revenue, which gives them no incentive to stop enticing patrons by promoting unrealistic expectations about winning. Expanding gambling in Minnesota would likely increase the number of compulsive gamblers in our communities. The industry also has a disproportionate impact on low-income people.      

If these reasons are not compelling enough for our leaders, here is another: research has shown the social costs of gambling outweigh the benefits. Prof. Earl L. Grinols, an economist who has studied gambling extensively, has carried out a cost-benefit analysis of casino gambling. He quantifies casinos’ benefits and costs to the economy per adult. The chart below summarizes the analysis and shows that the costs of casino gambling far outweigh the benefits.   

According to Grinols’ cost-benefit analysis, the costs of casino gambling outweigh the benefits by a ratio of 4.7 to 1. We should not attempt to balance the budget by expanding gambling in Minnesota. It would be harmful to our state to resort to gambling to get around the present impasse over raising revenue.  

Table Source: Calculated from data in E. L. Grinols. Gambling in America: Costs and Benefits. Cambridge University Press, 2004.        

*According to Grinols, no studies have tried to isolate and quantify the costs of gambling-caused suicides, and it is difficult to envision assigning a dollar value to a life lost.

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Eleanor Glewwe

Summer Intern