The readers’ forum

Casinos won’t help Florida’s economy


In the mad scramble for more gambling dollars, Florida’s timing could not be worse. The state’s legislators are contemplating the addition of casinos as declining revenues in other states indicate the gambling boom is over.

States that come late to the party can still milk money from casinos. But the pickings are getting slim as more markets become saturated and the growth cycles get shorter.

Pennsylvania enjoyed steady growth in casino tax revenues for six years before the returns dropped last year. Increased competition from casinos opening in Maryland and Ohio were partly to blame.

In Detroit, casino revenues dropped 4.7 percent last year in part because of competition from Ohio. In Indiana, casino revenues plunged 15 percent over the past six months, hitting an eight-year low. In Wisconsin, the drop in casino revenue there prompted some to say there is a gambling glut.

Colorado, Missouri and New Jersey have all seen sharp declines in casino revenues. Louisiana’s casino revenues were down 4.4 percent in December, including a 16 percent drop in New Orleans. Mississippi’s revenues fell almost 5 percent last year and are down 27 percent since hitting a peak in 2007. Since then the casinos have slashed 8,500 jobs.

A study by the Rockefeller Institute found that casinos do not solve state budget woes, but instead provide unpredictable revenues. That can cause problems for states that become hooked on casinos as a revenue source.

Delaware is a harbinger for other states looking to cash in on casinos. The tiny state was early to the casino game, opening slots parlors at three racetracks starting in 1995. Initially, tax revenues soared and eventually casino gambling accounted for 8 percent of the state’s budget. But as soon as casinos began opening in Pennsylvania in 2006, Delaware’s gambling revenues began to drop. The recent addition of casinos in Maryland has further reduced Delaware’s casino revenue.

In response, Delaware tried to add more gambling options, including legalizing sports betting in 2010 and online gambling in 2012. That did not stop the losses. Last year, the casinos began threatening layoffs unless the state lowered its tax rate, which is 43.5 percent on gross slots revenue.

Rather than reduce taxes, Gov. Jack Markell gave the casinos an $8 million bailout. So the casino industry has gone from generating revenues for the state to receiving a taxpayer subsidy.

The News Journal, Delaware’s main newspaper, had the best solution: “Delaware should start getting out of the gambling business,” the newspaper wrote in an editorial last year. “It is too dependent on what was once the easy money of a state-controlled monopoly.”

Adding casinos in Florida has similar challenges. The state already has lots of gambling, including Indian casinos and Internet cafes, referred to as “convenience casinos.” Given the gambling expansion in other states, the opportunity for growth from out-of-state gamblers is limited.

Here’s the good news: Florida doesn’t have to go down the road of other states that bet on casinos and are now chasing their losses. Instead, the state would be wise to focus on businesses that grow the economic pie rather than fight for a shrinking piece of it.

Paul Davies and Barbara Whitehead, Institute for American Values, New York

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