Gambling-House Geese May Be Laying Fewer Golden Eggs to Fill State Coffers
JUST three weeks after New Orleans signaled a green light to build the world's largest casino, those who study the gaming industry indicated that revenues from gambling may be nothing more than fool's gold.
``States and cities hoping to reap riches from gambling could be in for some unpleasant surprises,'' said Robert Goodman, a professor of regional planning at the University of Massachusetts who studies the effects of gaming as a government revenue source.
``Governments don't tend to evaluate the costs of gambling to a community in any serious way; they only think of the money they're going to make. And that's a flawed approach.''
Janice Mueller, legislative auditor in Wisconsin, where both dog-track betting and Indian reservation casinos are legal, agreed: ``Gambling should be treated with great caution,'' she said.
``It is not a reliable source of revenue, nor is it a consistent one.''
Mr. Goodman and Ms. Mueller participated in a session of the National Conference of State Legislatures, which concluded here last month. Conversation at the session frequently turned to gambling - specifically to the increasing number of states looking to it as a way out of their economic blues.
``Gambling is becoming more popular because it brings money into places where there was hardly any before,'' said Bob Dowd, the director of public relations for Harrah's New Orleans, which will operate the casino scheduled to open here in 1995. ``I can't think of any places that are in worse shape today than they were before gambling got going, and a lot of them are doing much better.''
Michael Rose, chairman of the Memphis-based Promus Companies, which also has an interest in the New Orleans casino, was equally upbeat, pointing to the presence of riverboat gambling in the small town of Tunica, Miss. ``In the last two years, 13,000 new jobs have been created there, and $1 billion in new investment: new hotels, expansion of old ones, new restaurants, auto dealerships expanded.'' He added that Tunica's unemployment rate has dropped to 4 percent this summer from a devastating 27 percent in 1992.
That gambling was on the minds of those attending the New Orleans conference could easily be explained by the apparent explosion of gaming popularity nationally. Not only have the country's casinos seen a jump in their earnings from $4.2 billion in 1982 to more than $10 billion in 1992, but in state after state there now exists a variety and wonder of gambling: river boat gaming in Illinois and Iowa; slot machines in Montana, Oregon, and South Dakota.
Floridians will go to the polls this fall to vote on overturning a state ban on casinos.
``There is obviously more gambling now in our country than existed before,'' said Goodman. ``But what may not be equally obvious is that the leading promoters of gambling are governments. They are less regulator of gambling today than they are its chief promoters.''
The problem with that, according to critics of gambling, is that state and local governments tend to overlook gaming's liabilities. Goodman said that, oftentimes, gambling attracts more local residents than tourists, resulting in a reduction of discretionary spending that might otherwise have been used to buy cars, major appliances, and clothing from community businesses.
The popularity of gambling in some locations has also shown evidence of decline: ``We have five dog tracks right now and only one of them is profitable,'' said Wisconsin's Mueller, who added that parimutual betting there slipped from $345 million in 1991 to about $251 million last year.
The potential for reaching a saturation point with gambling could also limit its revenue-raising potential.
``If you want to say that gambling is the perfect answer to all of your revenue needs, then you'd be making a mistake,'' said Dowd of Harrah's New Orleans, which agreed earlier this month to give the city $22 million to cover the costs of additional fire, police, and street services needed by the casino. ``But the way we look at it is it creates revenue and employment.'