Gambling: The No-Brainer

We all appreciate the extraordinary difficulty of balancing our state budget. All along we've encouraged lawmakers to look at a balanced solution, including new revenues, raised fairly.

We are concerned that with only a few days left, legislators may be tempted to resort to gambling revenues and follow the lure made by gambling proponents that increasing gambling is a “painless no-brainer.”

May I respectfully suggest that we all use our brains. Non-partisan academic research concludes that the social cost of casino-type gambling exceeds the economic benefits. In short, gambling is a harmful means of public finance and we oppose this approach.

Standing out among the many studies on this topic, the econometric cost-benefit analysis by Dr. Earl L. Grinols (Baylor University) and Dr. David B. Mustard (Terry School of Business, University of Georgia) found that “the costs of a casino are at least 1.9 times greater than the benefits.” This means that $1.00 worth of casino profits and benefits are outweighed by at least $1.90 in cost-creating activities such as crime, suicide, bankruptcy, and other social problems produced by problem and pathological gamblers.

Interestingly, the study shows that social costs begin to show up in earnest about three years after casino operations begin.

Faith communities view gambling with at least deep suspicion and some faith groups urge prohibition. The consensus seems to be that gambling can be tolerated when it is done temporarily, for a good cause, and does not become a substitute for sustainable stewardship. State government using gambling revenues violates these principles.

It should be noted that the 2007 Legislature passed a law requiring our Department of Human Services to design a process and funding mechanism for a formal study on social and economic costs of gambling because of crime and other pathologies. The Legislature asked for a quantification of social costs and saw this research as a prerequisite to careful policymaking, but this further research hasn't happened for lack of funds.

In other words, the warning sirens from the academic research are going off but Minnesota can't afford to make a clear-eyed, local analysis.

These are uncertain times. Budget impasses sometimes breed irrational, sudden, and strange compromises. If gambling revenues emerge as a short-term budget-balancing fix it will be a no-brainer alright.

Brian Rusche
Executive Director