A Dicey Proposal

Today, Ohio will consider whether to adopt an amendment to its constitution in order to legalize casino gambling in the state’s four largest cities. Most of the state’s politicians from both parties support the measure. Ohio and its cities are in bad fiscal straits, and the prospect of the tax revenue to be shared among them is alluring.

Moreover, it is painful for the budget-conscious public servant to contemplate how many Ohioans take day trips to gamble in the neighboring states of Pennsylvania, Indiana, and Michigan, which already permit casinos to operate. That the paychecks of Cincinnati are swallowed by Rising Sun, Indiana, and find their way ultimately to state coffers in Indianapolis, is justifiably enraging, and a desire to see Ohioans squander their money closer to home explains much of the amendment’s appeal. Regrettably, such local concerns play out on a national scale, leading to a kind of gaming arms race between the states.

Despite gambling’s broad, bipartisan support from Ohio’s political class, the issue does not poll well, and has a good chance of being voted down. While ordinary voters are not always right in rejecting the widely shared judgments of politicians and the professionally informed (the two largest newspapers in the state also endorsed the issue), in this case they should do so.

I will not address how policy-makers and voters ought to weigh considerations about the addictive qualities of gambling. This is an important question, but it has been taken up recently and convincingly elsewhere. The social scientific evidence about the effects of opening casinos on crime and local employment rates, while frustratingly relevant to any discussion about gambling, is decidedly mixed. Some studies report increases in crime, others decreases, and most show increases in both local employment rates and problem gambling. The evidence is clouded further by an examination of the funding sources for these studies, which usually turn out to include a national group representing the interests of the gambling industry (“the gaming industry,” to be perfectly polite).

There are of course reasons in principle to oppose gambling authorizations independent of those metrics. The demand for gambling, like that for most services, is not fixed and unalterable. It is true that some portion of Ohioans who would gamble at Ohio casinos would be those who previously had been crossing the border to do so. When one state legalizes gambling, its neighbors have a strong fiscal incentive to follow suit, lest it lose a competitive advantage.

But some portion of Ohioans will start going to casinos for the first time, just because they’re closer and more convenient. Marginal incentives really do matter, and making something cheaper by increasing its supply is a sure way of increasing the total amount of it in society. Politicians who support legalizing gambling should put aside their understandable complaints about competitive edge and ask whether they want to see more of their constituency spending more time at casinos. It’s possible that this additional time and money spent at casinos would have been spent watching television and buying potato chips, but it’s equally possible that it would have been spent starting small businesses or going to night school.

More fundamentally, however, the proponents of legalized casinos are simply mistaken about what makes for the long-term health of a city and a broader polity like a state. States need money to perform essential public services, without which they will fail in their duties towards their citizens. But the honest way to go about collecting it is through transparent taxes, not by skimming from the haul collected by private casino owners. While the revenues collected from taxes on casinos might help restore the state to fiscal equilibrium (though in Ohio’s case, as in many others, the deficit was so enlarged by the recent recession that the additional revenue will be far from enough), fiscal stability is only one of many qualities that make for a healthy polity in the long term. Equally important is the quality of education at all levels, investment in infrastructure, the character of neighborhoods, and the provision of public services. Without these, even a state running a budget surplus is not only doing a disservice to its citizens, it may find itself having lost its competitive edge among other states. (Examples spring readily to mind: Atlanta, long one of the fastest growing big cities in the United States, has in the last few years seen its commercial property investment rating dramatically downgraded by Moody’s due to its inability to manage demand for scarce water resources or provide adequate transportation infrastructure.)

Providing social services costs money, it is true, some of which could be provided by casino taxes, but in many cases casinos directly and negatively affect communities in ways that additional revenue cannot counteract. Particularly disastrous in the case of the Ohio ballot issue is the placement of the casinos in the hearts of the state’s four largest cities. Three of those cities, at least, have recently been showing signs that their long period of decline is over. Young professionals are moving back into the city in droves, and families are hesitantly beginning to follow. Inner cities have seen investments in historic preservation and new development. Casinos will militate against these trends. No doubt they will attract visitors from the suburbs and surrounding regions, but they will hammer home the idea, only just beginning to fade, that central cities are places you might commute to, or visit on a field trip, but never the kind of place you’d like to live and raise a family in.

The urbanist thinker and former mayor of Bogotá Enrique Peñalosa has said that children are a kind of indicator species for communities, just as certain vulnerable species can serve as indicators of an ecosystem’s health. If you can walk around a community and see children flourishing, your community is flourishing. It is not difficult to see why families with children might decide not to move downtown after all if they will be living a few blocks away from a casino, and that decision, made by a multitude of families, will rule out a future where American cities are once again safe, beautiful, and exciting.

Casinos and the associated tax revenue they bring in may look irresistible to politicians in an era when tax increases are politically unfeasible but Americans demand strong public services, but in the long term they are a bad investment. One-shot fiscal maneuvers rarely improve a state’s permanent health. What is needed instead is sustained attention to creating places, urban, suburban and rural, that will attract businesses and people. Casinos will certainly not do that.