In order to get a valid, reliable comprehensive cost-benefit analysis of casino tax revenue, the Governor should commission a reputable scholar outside Kentucky, independent of gambling opponents and supporters. Such an investigation would fundamentally differ from economic impact analyses the gambling industry prefers. These types of studies offer statistics on jobs creation, construction and development activity, and tax revenue generated, but omit any description whatsoever of the costs of the projected impact.
Two existing cost-benefit analyses of gambling in America describe what these costs would likely include. The June 1999 National Gambling Impact Study Commission Final Report, issued by a national commission appointed by President Clinton, recommended a moratorium on gambling expansion until the costs and benefits could be investigated further. Their two-year study identified such costs as increases in gambling addictions among adults and youth, financial and credit problems among gamblers, reduced worker productivity, employee theft, other crimes, suicide, divorce, homelessness, and abuse and neglect of children. More than half of these costs end up being paid by taxpayers through government programs.
The most comprehensive cost-benefit analysis is offered in Dr. Earl Grinols's 2004 book Gambling in America: Costs and Benefits. A Baylor University economist, Mr. Grinols served as Senior Economist on President Reagan's Council of Economic Advisors, has published more than 80 books and articles, and has studied gambling for more than 15 years without support from the gambling industry or its opponents. He documents the cost of gambling-derived tax revenue as among the most expensive methods of funding government, concluding the costs outweigh the benefits by more than a 3:1 ratio.
The Clinton Commission report includes some relevant personal anecdotes. One Mississippi couple began gambling excessively at a Biloxi casino, losing more than $70,000. When their credit card company demanded payment of $10,000, they ran to the casino for one last big win. Instead, they lost $2,000 more and filed bankruptcy. Sound familiar? Some in state government have similar plans, even after the lottery has failed to solve our financial woes.
Governor Beshear tells us state government is in a hole because it's spending more than it makes. He also tells us that we can gamble our way out of this hole by going to the slot parlors. He tells us we can win big, more than $500 million every year, a fantasy figure for which he has provided no valid evidence.
Whether the Governor's fantasy is true or not, he owes it to the people of our Commonwealth to uncover what it's going to cost us. A comprehensive, reliable and valid cost-benefit analysis would provide for more informed decision-making than what has happened thus far. Don't insult us with promises of free money. Inform us of the real costs of the fantasy.
John-Mark Hack is chairman of Say No To Casinos, a 501c (3) educational campaign based in Lexington with volunteers throughout the state.