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Pluses and Mlnuses
Proponents of legalized gambling
paint a rosy picture of swollen state
revenues and revived economies.
They point to Nevada, which has a
booming economy, a low sales tax
(3 percent) and no state income tax,
because revenues from gambling
fund such a large part of the state
budget. They look at Atlantic City
which is undergoing an economic
reviva! thanks to casino gambling.
But opponents are quick to point
outmany thoms. Forone thing, legal–
ized gambling rarely pulls in as much
revenue as anticipated in projections
dangled in front ofvoters by promot–
ers to win approval. In no place out–
side Nevada has legalized gambling
contributed more than 4 percent of a
state's revenues. In most states, reve–
nues from lotteries, off-track betting,
and other forms ofgambling amount
to less than 2 percent. "Detroit talks
about raising $50 rnillion from one or
two casinos," says Nevada Attomey
General Robert List , "but Nevada
has sorne 200, many of them $100
million properties, and the state is
only netting about $70 million from
them."
Nor does the legalizing o
f.
gam–
bling put a damper on illegal gam–
bling. On the contrary, illegal
gambling in states that allow wager–
ing is actually
higher
than in those
that do not.
"Any inroads legalized gambling
has made into illegal gambling have
been negligible," says Kurt Muel–
lenberg, cbief of tbe U.S. Justice De–
partment's Organized Crime and
Racketeering Section. "Legal gam–
bling creates a whole new market."
Federal and state law enforce–
ment officers point out that legal–
ized gambling creates new bettors,
who eventually turn to illegal book–
makers because they offer better
odds than state-run operations, and
the winnings are tax-free.
An oft-cited case in point is legal–
ized off-track betting (OTB) in–
troduced in New York City to
provide a revenue windfall as well
as to compete with illegal book–
makers. OTB has fallen short on
botb accounts. In the fiscal years of
1975 and 1976 OTB eamed $65 mil–
lion for the city and $25 mi1lion for
28
the state-considerably less than had
been hoped for. And studies show
that there has been litt1e impact on
illegal bookmaking. lo fact, a Uni–
versity of Michigan survey indicates
that OTB created about 90,000 new
customers for illegal bookies!
The major reason cited for the
disappointing performance of the
city's OTB is that, unlike winnings
from illegal bookies, winnings from
the state-run operation are taxed,
giving illegal operations a com–
petitive edge. This is why the Na–
tional Gambling Commission, in its
controversia! 1976 report, recom–
mended that gambling winnings be
There is the moral
dilemma of a state
allowing, even
encouraging, people to
gamble so that it
may enrich its coffers
at their expense.
Gambling is, after all,
a losing proposition
for nearly everyone.
exempted from income taxes. The
report noted that taxes on gambling
winnings constitute the "greatest
single obstacle to effective com–
petition with illegal gambling op–
erations."
However, there is strong opposi–
tion to this proposal. One of the
opponents to sucb an idea, U.S.
Senator John
L.
McClellan of Ar–
kansas, argues tbat "traditiona1
work values in this country will not
tolerate elevating gambling to an
advantageous position over income
earned by honest endeavor."
Organlzed and Unorganlzed Crime
States which choose·to legalize gam–
bling must also contend with the
problem of organized crime infil–
trating privately run gambling op–
erations, such as casinos. lt is widely
acknowledged that organized crime
financed and operated many of the
hotel-casino complexes that sprang
up in Las Vegas in the 50s and 60s.
State officials claim that tight con–
trols have dramatically reduced the
inftuence of organized crime in Ne–
vada in recent years. But mob
money and inf}uence are still
present
in
the town, and Atlantic
City faces the same threat as its
gambling ventures go into opera–
tion. New Jersey has set up elabo–
rate procedures to ensure tbat no
Mafia infiltration does occur. But
sorne federal officials doubt that the
state's apparatus can effectively
screen out organized crime in–
tluence.
And then there is the problem of
unorganized crime. The crime rate
in Las Vegas is among tb.e top five
in the nation, as the city is a mecca
for con artists, thieves and prosti–
tutes looking for fast and easy
money. In 1976, more than 50,000
crimes occurred in Nevada, a state
with a population of 628,000. More
than 34,000 of those crimes occurred
in Las Vegas.
One of the most serious criticisms
of gambling as a form of raising
revenues is that it represents a re–
gressive form of taxation.
lt
hits
low-i ncome people harder than
those in the middle and upper
classes. In addition, there are in–
dications that gambling- legal and
illegal- swells welfare rolls and
places a greater strain on social ser–
vices. Msgr. Joseph
A.
Dunne, presi–
dent of the National Council on
Compulsive Gambling and chaplain
for the New York City Police De–
partment, estimates that 10 percent
of New York City's welfare burden
goes to gambling and family prob–
lems stemming from gambling. New
York social workers
in
volved in wel–
fare and health have estimated that
60 to 65 percent of the people
in
Harlem bet in a daily numbers
game.
Government-run gambling op–
erations also require constant and
expensive promotion to lure resi–
dents into gambling. And even with
The
PLAIN TRUTH September 1978