The Tea Party is Inviting Gaming in for a Cup

The gaming industry is being invited to have a cup of tea with its traditional opponents. Admittedly for most of its history, gaming has never had a great many political friends. In the past, the industry’s friends showed up only when they were looking for campaign contributions. That has been changing over the last 25 years; there have been politicians who have supported gaming in some manner or gaming could not have spread to as many states as it did. And this year appears to be one of those years that gaming is popular in statehouses around the country. Budgets need to be balanced and passed and gaming revenues can be appealing under those circumstances.

A surprising constituency has moved into the pro-gaming camp this year, the fiscally conservative and Tea Party republicans. They have joined, mainly because they are opposed to any increase in taxes. The no new tax position creates, in state legislatures, the same kind of legislative grid lock we see in Washington. The conservative political-economic theory, as I understand it, says all budget problems can be solved by reducing government and reducing expenses – well, some expenses. Defining which expenses are unnecessary and examples of government excesses and which are essential to the maintenance of national identity becomes very political. In Congress, cutting Social Security and Medicare is acceptable on one side of the aisle, but not the other, just as cutting military and defense spending is acceptable to some, but not to their opponents in the other camp.

The state legislatures don’t have the same issues, but they have the same political-economic positions. Each state has different sacred cows and different examples of excess. Governors in several states are threatening to shut down the government to get a budget approved. New Jersey actually did that in 2006; the governor and the legislature played Russian roulette and for nearly a week all government agencies, including gaming control, shut down.

New Jersey Gov. Jon S. Corzine closed the state government Saturday amid a bitter dispute with fellow Democrats in the Assembly over his plan to increase the sales tax, threatening to shutter beaches, parks and possibly casinos in the coming days. Sean Alfano, Associated Press, 7-1-06

This year, Illinois governor Bruce Rauner is playing the same game. He has withheld the payment of lottery prizes over $600 and the distribution of VLT funds to local governments. Without an approved budget the state is unable to make its payments to the state pension fund. A state museum has closed, police training stopped and even 911 services funding has been disrupted. Rauner hopes to force lawmakers to accept his budget, but thus far no one has blinked.

Illinois Lottery payments for any winnings over $600 are being delayed until the state budget stalemate is resolved.  Lottery Post, 10-17-15

The State of Illinois since July has held onto $148 million in tax revenues from gasoline sales, casino gambling and video gaming that normally go to local government. Bob Okon, Herald-News, 10-24-15

Gov. Bruce Rauner hasn’t talked about his the fact that his own proposed budget was balanced only after including $2.2 billion in savings from a pension reform plan that, realistically, had no hope of becoming law before 2017. Huffington Post, 10-13-15

Pennsylvania is in the midst of a comparable discussion. And like the governor in Illinois, Governor Tom Wolf is playing hard ball. As part of his tactics, Wolf has threatened to shut down the state’s horse racing.

The Wolf administration on threatened to shut down horse racing statewide…cited a decrease in wagering at the tracks and the ongoing budget stalemate. Angela Couloumbis/ Ben Finley, Philadelphia Inquirer, 10-22-15

However, there are people in Pennsylvania who think they have an answer to increasing revenue without raising taxes. They want to expand gaming and their ranks include fiscally-conservative republicans willing to expand gaming to avoid tax increases.

Republican state lawmakers who are resisting tax increases to balance a deep budget deficit are taking steps toward the state’s third expansion of gambling in six years as an alternative source of cash. Tom Wolf, Wilkes-Barre Times Leader, 10-12-15

State Lawmakers held a hearing at Harrisburg International Airport for a bill that would allow slot machines at airports.  Melissa Nardo, WPMT-TV, 10-27-15

The compromise is a moral and political stretch for some; traditionally the religiously and fiscally conservatives have acted as a block and opposed gaming. But the no-compromise fiscal stance is forcing a change in that position. Pennsylvania is not the only state where gaming is being considered to balance the budget. Georgia and Kentucky, two states that have been stalwart opponents of gaming in the past, appear to be getting very close to legalizing it.

Gov. Nathan Deal has upped the ante — literally — on the growing political and economic push for legal gambling in Georgia beyond the existing state lottery.  Columbus Ledger-Enquirer, 10-12-15

The man elected governor on Nov. 3 will be required to quickly propose a way to fund the need for huge additional appropriations for the state’s ailing public pension systems…Conway and Curtis support raising money through casino gambling. Tom Loftus, Louisville Courier-Journal, 10-12-15

The conflict between a religiously and fiscally conservative position is really that proverbial spot between a rock and a hard place. If they refuse to compromise on new taxes and gaming, no budget gets passed. If they compromise on gaming budgets, they move forward and the state government continues to function. There are no easy answers to funding a modern society. But in a political structure that has become polarized around fixed positions, it is even more difficult. For the states, there are very few new revenue sources, except gaming. In the past gaming would not have been an acceptable source of new revenue in either Georgia or Kentucky. Compromises under stress can create some strange bedfellows, so I suppose it is not terribly surprising to find that people who adamantly opposed gaming on moral grounds suddenly see it as an acceptable alternative to increasing taxes. Pour me another cup of tea, please.


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