Letter to the Editor: Video Gambling Machines are the New “Crack Cocaine”
The U.S. National Gambling Impact Study Commission highlighted in its Final Report that electronic gambling machines (EGMs) constituted the new “crack cocaine” for addicting gamblers. The U.S. Congressional Commission concluded that any states with EGMs convenient to the public needed to re-criminalize those machines.
Modern casino gambling revenues come 90% from the video gambling on EGMs—formerly called slot machines The definitive academic study published by Harvard and MIT indicates that near these EGMs/gambling facilities, crime increases approximately 10% every year—as people lose their resources. Similarly, bankruptcies increase 18% to 42% as former consumer spending is lost into the gambling machines.
Gambling’s lobbyists allege new tax revenues, but academic studies indicate that the costs of the gambling-caused crime, bankruptcies, and other new social costs to the taxpayers are at least $3 for every $1 in new tax revenue. In most states the tax revenues are slowly siphoned away from education and teachers and back to gambling’s insiders—such as the recent N.Y. Lottery scandal where $1.7 billion was allegedly misdirected.
Congressional testimony in 2015 noted: “[o]ne of the first states to embrace the lottery, riverboat casinos, and neighborhood electronic gambling, Illinois has given away at least $35-$100 billion to gambling’s insiders since 1990”—enough money to remedy most of the state’s budget problems, including the state’s $115 billion debt for unfunded liabilities.
In Illinois, the taxes on video gambling are openly ridiculed, since revenues go 70% to the owners/operators, only 25% to the state treasury, and only 5% to the local government. Other states have higher tax percentages as they try to emulate Canada, where virtually all of the revenues go to the Canadian government (minus reasonable management fees to the gambling operators).
There are few genuine controls on video gambling. For example, in Illinois the 2009 Illinois Video Gambling Act technically allows Illinois to have more EGMs than exist in Nevada. Beginning EGM installations in 2012, Illinois has quickly expanded to over 21,509 EGMs in convenience locations, including a scuba shop and a flower shop. By comparison, Illinois’ ten casinos have 11,046 EGMs (and only 274 table games)—with 11,623 seriously addicted gamblers on the self-exclusion list for casinos.
Regulation of video gambling on convenience EGMs is problematic, as exemplified by Judge Aaron Jaffe’s shouting match with Illinois state legislators promoting EGMs and his headline in the Illinois Daily Herald: “State Video Gambling Chief Says ‘Almost Impossible’ To Keep Mob Out.” Judge Jaffe’s sentiments were echoed in the Chicago Tribune, the Chicago Sun-Times, and most Illinois news media—which called for the repeal of the Illinois law authorizing video gambling.
Studies confirm that student populations are particularly vulnerable to EGM gambling addiction and will get hooked at double the adult addiction rates—creating a larger, expensive, new generation of gambling addicts. Knowledgably, the college town of Carbondale was one of the first Illinois communities voting in 2009 to ban the EGMs—however, dictating to local government, gambling lobbyists subsequently overturned this ban.
EGMs shrink the consumer economy, denigrate quality of life, increase taxes, and stigmatize governments. Governments must change their image, re-criminalize EGMs, and “grow the economy” to attract new consumer businesses. Otherwise, EGMs and associated gambling proponents will continue to deteriorate local and state economies.
*Professor John Kindt is a Senior Editor of the multi-volume 2009-2014 United States International Gambling® Report.