State gambling, once again, with financial future
The resurrected attempt in the Pennsylvania Legislature to legalize video gaming terminals in taverns, bars, truck stops and off-track betting locations makes some sense from a revenue perspective for this state that’s dogged by an estimated $3 billion shortfall.
But whether it makes sense in the “bigger picture” must be the more dominating consideration.
Potential downsides are significant.
First, it’s important that state residents understand that this new push is the result of ineptness by Harrisburg lawmakers. They’ve failed to address the state’s fiscal dilemma.
Pennsylvania’s money shortfall has ballooned to $3 billion, from $2 billion a year ago.
The video-gaming-terminal proposal won’t be the needed godsend toward resolving the shortfall, and the money benefits garnered might amount to a pittance when stacked against the problems for which the initiative might eventually be responsible.
For example, the proposal calls for softening the potential adverse effects that the plan would have on the state’s casinos by reducing the tax that the casinos pay on slots revenue.
The question becomes how the Legislature expects to make progress on the financial front if the effect of new money coming in one “door” is being diminished by intentional loss of tax revenue coming through another “door.”
Meanwhile, the plan also calls for Pennsylvania’s 67 counties to share upwards of $50 million of the new VGT money, volunteer fire departments to share $2.5 million, and $2.5 million to be allocated to fund substance abuse programs and to fight the state’s opioid crisis.
While those three money uses are attractive, they’ll keep badly needed deficit-reduction money from helping attack a deficit that has caused credit-rating agencies to impose five credit downgrades on this state.
The downgrades make borrowing money by the state more expensive; state taxpayers ultimately are responsible for paying the higher borrowing costs.
Legal gaming terminals will help bars and taverns that have been challenged by the casinos’ presence; that’s indisputable. However, the new VGT proposal could mean fewer players thus less revenue for casinos, meaning less taxes that they would be obligated to pay to the state, beyond the overall tax cut that’s being proposed for them.
Then there are the possible negative impacts to families, and other negative social impacts, associated with expanded gambling.
The state police estimate that there are more than 40,000 illegal VGTs currently operating in Pennsylvania. The availability of those illegal devices is testimony to lax enforcement, not evidence of why they should be made legal — and others added.
Backers of the proposed measure say it would imitate Illinois’ expanded gaming approach. But like expanded gambling would have its downsides for Pennsylvania and not be the ultimate money solution that the state needs, gambling expansion hasn’t resolved Illinois’ financial mess.
A budget stalemate there is in its 22nd month.
Finally, for Pennsylvania, there’s the unknown of how the estimated, proposed 25,000 to 35,000 legal VGTs — five allowed in bars and taverns and 10 at truck stops and off-track betting locations — would impact the Pennsylvania Lottery, which funds senior citizen programs.
It’s true that, if enacted, the proposed VGT plan would bring extra dollars into the state’s coffers. However, delight from that could be much less than the plan’s proponents currently anticipate.
This proposal necessitates serious caution.