Category Archives: Gambling

How Illinois Bet on Video Gambling and Lost

Source: Jason Grotto and Sandhya Kambhampati, ProPublica Illinois, and Dan Mihalopoulos, WBEZ January 16, 2019

This story is the first in an ongoing series, “The Bad Bet: How Illinois Bet on Video Gambling and Lost,” that investigates video gambling in Illinois.

Legalizing video poker and slots was supposed to generate billions of dollars for the state. A decade later, that hasn’t happened. Now, legislators want to double down on gambling.

Keeping State Lottery Revenue Alive

Source: Olivia Berlin and Jackson Brainerd, LegisBrief, Vol. 25, No. 35, September 2017
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Did you know?
– Education receives the majority of dedicated state lottery revenues.
– Lotteries were illegal in every state in the country until 1964.
– Instant scratch ticket games are generally state lotteries’ most popular product.

For the 44 states that have them, state lotteries represent a small but valuable source of revenue. On average, about 1 percent of state revenue comes from lotteries. Sometimes that money goes into the general budget, but most legislatures use it to fund certain projects, like schools, senior services or environmental protection. In crafting the current state budget, West Virginia lawmakers used some lottery money to fund Medicaid, rather than raise other taxes to cover that cost. …

State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment
Source: Lucy Dadayan, Rockefeller Institute of Government, Blinken Report, April 2016

Annual Report Required by Act 2013-90: The Impact of Tavern Gaming on the Pennsylvania State Lottery

Source: Philip Durgin – Executive Director, Legislative Budget and Finance Committee, May 2017

Act 2013-90, an amendment to the Local Option Small Games of Chance Act, requires the Legislative Budget and Finance Committee to conduct an annual study of the impact of tavern gaming on the State Lottery. Under the act, the Governor may request the General Assembly to transfer money from the General Fund to the State Lottery Fund up to the amount identified in the study. This is the second report under this mandate. ….

When Act 90 was being debated, the Governor’s Office of the Budget estimated that 2,000 establishments would be licensed under the act, generating an average weekly payout of $10,000 per license. Using this assumption, the legislation was estimated to generate total annual net revenue of $156 million, which in turn would generate (at a 60 percent tax rate) $93.6 million in additional revenues for the General Fund annually. Actual state revenues, however, have been far lower. In CY 2014, tavern games generated approximately $153,000 in state tax revenue, increasing to $1.42 million in 2015 and $1.48 million in 2016. ….

Gaming fatigue? Pennsylvania tavern games fizzle
Source: Barrett and Greene (B&G) blog, June 5, 2017

One of the trickiest tasks in government is estimating the impact of new legislation…..

The Responsiveness of Casino Revenue to the Casino Tax Rate

Source: Kathryn L. Combs, Jaebeom Kim, Jim Landers, John A. Spry, Public Budgeting & Finance, Vol. 36, Issue 3, Fall 2016
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From the abstract:
This paper examines the tax base elasticity of the regulated casino industry in Illinois to help estimate state‐level revenue impacts of casino tax rate changes. Illinois’ shift to a graduated rate schedule increased the highest marginal tax rate on casino adjusted gross receipts (AGR) from 20 percent to 70 percent before reverting to a 50 percent rate. We construct a state‐level casino tax rate variable, which is a statewide average for each month of the marginal casino tax rate facing each casino. We find that a 1 percent increase in this state‐level casino tax rate decreases overall Illinois casino AGR by around 1.1 percent.

State Revenues From Gambling: Short-Term Relief, Long-Term Disappointment

Source: Lucy Dadayan, Nelson A. Rockefeller Institute of Government, Blinken Report, April 2016

States turning to gambling as a quick fix for revenue woes have been disappointed with the results, according to a new study from the Rockefeller Institute. The study warns that “State officials considering expansion of existing gambling activities or legalization of new activities should weigh the pros and cons carefully.”
Press Release

State Revenues from Gambling
Source: Lucy Dadayan, Nelson A. Rockefeller Institute of Government, presentation at the CSG/ERC 56th Annual Meeting & Regional Policy Forum Quebec City, QC, August 9, 2016

Planning for a Payout: Effectiveness of Special Purpose Entities as State Lottery Administrations

Source: Daniel L. Fay, American Review of Public Administration, Vol. 46 no. 5, September 2016
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From the abstract:
Public management literature has previously examined privatization in which government contracts with private firms or other organizations to provide goods or services to the public. However, privatization of organizational structure through the creation of special purpose organizations remains relatively underexplored. This study examines the policy consequences of privatizing state lottery organizations by comparing the revenue returned to state governments from lotteries managed by independent state agencies to lotteries managed by privatized special purpose organizations. Using data on the organizational structure and revenue returns of the state lottery administrations in the United States from 1985-2008, fixed effects analyses demonstrate that independent state lottery agencies are more effective than privatized special purpose administrations. The revenue costs of lottery administrative privatization are robust to multiple measurements and specifications, and suggest that choosing a privatized organizational structure can cost states tens of millions of dollars in lost lottery revenue annually. Special purpose lottery administrations maximize returns to state governments in average-sized states with low African American populations. State-agency lottery administrations maximize returns to state governments in small- or large-sized states with high per capita income and high population density. Implications of state special purpose administrations and future research opportunities are discussed.

A Region Left Behind: Lost Opportunity In The Deep South

Source: Chico Harlan, Washington Post, 2015

….It is a downbeat reality for a region that for much of the second half of the 20th century was actually closing its gap with the rest of the country, helped by the federal war on poverty and the end of legalized segregation. But during the past 15 years — and particularly since the Great Recession — the catch-up has stalled. By some measures, it has reversed. Somebody born today in Mississippi, Alabama, Louisiana, Georgia or South Carolina is far more likely than someone born elsewhere in the United States to attend a poorer school, drop out before high school, work a low-paying job, struggle with debt, go to prison and die young, according to national health, labor and education statistics. …. But the troubles in the Deep South go well beyond race to include frayed state finances, which have eroded the safety net for the poor, as well as public school underfunding, which leaves those who can afford it scrambling to private schools. And it extends to a growing technological divide that has left significant rural areas without access to the digital world; a rise in single-parenthood, which is a major indicator for generation-to-generation poverty; and the decline of rural job opportunities in states that have long relied on agriculture rather than on urban hubs….

Articles include:
An opportunity gamed away
Source: Chico Harlan, Washington Post, July 11, 2015
For a county in the Deep South that reaped millions from casino business, poverty is still its spin of the wheel. …. What went wrong in Tunica is a matter of perspective. For many African Americans — and the county’s current officials — it was a story of a largely white political leadership that did not grasp the depths of poverty facing many black residents and did not choose to use the casino revenues that flowed into the county in an equitable way. So instead of funding skills training and providing programs for the vulnerable, they poured money into a riverfront wedding hall, an Olympic-size indoor swimming pool and a golf course designed by a former PGA Tour pro — all while implementing a massive tax cut that primarily benefited the wealthy. …..

Graduating, but to what?
Source: Chico Harlan, Washington Post, October 17, 2015
Poor students in the Deep South who successfully navigate traumas at home and dysfunction at school find few opportunities afterward. ….The Deep South’s paralyzing intergenerational poverty is the devastating sum of problems both historical and emergent — ones that, in the life of a young man, can build in childhood and then erupt in early adulthood. Students such as Davis deal with traumas at home and dysfunction at school — only to find themselves, as graduates, searching for low-paying jobs in states that have been reluctant to fund programs that help the poor. That cycle carries implications not only for the current generation, but also for the ones to come, and holds back a region that has fallen further behind the rest of the nation….. In recent years, shriveling job prospects for the high-school-educated and scant state support for the poor have combined with the Deep South’s more timeworn problems — single-parenthood and under-education — to diminish the chances of a middle-class life for somebody born into poverty….

A grim bargain
Source: Chico Harlan, Washington Post, December 2, 2015
Once a weakness, low-skilled workers who get paid little have become the Deep South’s strength. ….In wide swaths of the Deep South, public schools struggle, turning out workers who lack basic skills. Agricultural work has long faded, while job opportunities in once-prosperous industries such as textiles and timber have been lost to cheaper options in Latin America or automation at home. Politicians say they must give freebies to lure companies here, or offer nothing at all and watch the region — which already lags behind the rest of the country on most measures of well-being — fall even further behind. But in some cases, when opportunity arrives, it highlights a grim bargain: Jobs come at great cost but offer only a slightly better version of a hard life. The region’s weaknesses — a low-skill workforce that doesn’t expect particularly high wages — become its competitive strengths. And suddenly, the only opportunity for somebody such as Deshler becomes a Chinese company looking for a place from which to do more business in the United States….

The Fiscal Impact of Legalized Casino Gambling

Source: Mark W. Nichols, Mehmet Serkan Tosun, Jingjing Yang, Public Finance Review, Published online before print March 17, 2015
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From the abstract:
We examine the fiscal impact of legalized casino gambling, including Indian casinos. Our study examines the impact this legalization had on counties where casinos were located. Using county-level data between 1987 and 2007 and difference-in-differences estimation, we examine the impact of casino openings on county area government revenues, expenditures, sales tax revenues, and education expenditures. Our results indicate that casinos did not have a statistically significant impact on per capita government expenditures and revenues. However, this was due to differential impacts between commercial and Indian casinos and revenue-sharing legislation between states and counties. There is minimal evidence of a net impact on sales tax revenues in the counties where new casinos opened and some evidence, albeit weak, that Indian casinos are associated with lower county education expenditures. The results are robust when using propensity score matching results accounting for the endogeneity of casino location and spatial lag and error regressions.