Congress should resurrect the nationwide gambling ban that existed through most of the 20th century to help soothe a fragile U.S. economy shaken by the worst credit and financial crisis in decades, a University of Illinois professor and national gambling critic says.
John W. Kindt argues that gambling is a multi-billion dollar drag on the economy, not the moneymaking boost touted by supporters. Cash merely changes hands from bettors to casino owners, he says, creating no products or anything else of value.
If the estimated $100 billion now spent annually on gambling – mostly slot machines – went into consumer spending instead, economic models show it would generate more than $300 billion for the nation’s slumping economy and create jobs and services, said Kindt, a professor of business and legal policy. He says Congress should also repeal more than $40 billion in tax write-offs for slot machine owners.
A ban also would save hundreds of billions in costs to society stemming from gambling addictions, bankruptcies and crime that studies show increases when casinos open, he said.
“No. 1, a ban would pump prime the economy,” Kindt said. “No. 2, it would lower pressure on taxes because you wouldn’t have as many new addicted gamblers, bankruptcies and crime. So you’re eliminating substantial social costs, you’re improving quality of life overall and as John F. Kennedy said, ‘a rising tide lifts all boats.’ ”
A ban would not solve the lingering economic turmoil that has left the nation teetering on the brink of recession, said Kindt, who has studied gambling since Illinois first allowed riverboat casinos nearly two decades ago.
“But it’s a step in the right direction and would halt the spread of gambling that is destabilizing world economies and financial markets,” he said.
“It also would send good economic signals to less stable countries that they can’t gamble their way to prosperity.”
Kindt said Russia re-criminalized 2,230 casinos and slot machine facilities in 2007.
“What do the Russians know that the U.S. hasn’t figured out?” he said.
Kindt says gambling has spawned a potentially dangerous speculative bubble in international financial markets as decades of industry growth have created exaggerated expectations that far outstrip real value. If the bubble bursts, he says, the ripple effect on the U.S. economy could rival the subprime mortgage crisis that sparked the nation’s latest economic woes.
“In the subprime crisis, at least you had some real estate in assets,” Kindt said. “What assets do you have with gambling? Slot machines? Gambling is built on sand. There’s nothing there. It isn’t built on rock.”
Markets outside the U.S. have already seen the potential consequences, he said. A Gibraltar-based gaming company saw its London Stock Exchange value plunge from $10 billion to $2.4 billion in one day after the U.S. voted to increase sanctions on Internet gambling in 2006.
“It’s fun and games,” Kindt said of the gambling industry. “The question is do you want fun and games, addicted gamblers, bankruptcy and crime or do you want economic development and international financial stability?”
While states routinely turn to gambling as a quick, short-term fix for revenue shortfalls, Kindt says history shows betting isn’t the answer. He said President Franklin D. Roosevelt used jobs programs and other initiatives – not gambling – to pull the nation out of the deepest depression in modern times.
“The point is you didn’t see FDR and you won’t see the federal government saying that gambling will save us,” Kindt said. “It’s just the opposite.”
He says the 1999 U.S. National Gambling Impact Study Commission called for a moratorium on the expansion of any type of gambling anywhere, but the move failed in the face of opposition by the gambling industry’s powerful lobby.
But he says gambling critics hope their odds improve based on talk during this year’s presidential campaign to limit the influence of special interests in Washington.
“If people really want to take risks, they should take educated risks as entrepreneurs or with the stock market,” Kindt said. “They also should ask if slot machines are ‘fair.’ ”