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Expanding Gambling in Maryland – Why I am Voting NO On Question 7

 

FROM DELEGATE DAN MORHAIM, M.D.


SUMMARY

Many constituents have asked why I voted “NO” on the expansion of gambling during the August 2012 Special Session of the Maryland General Assembly. This issue will be on the ballot as Question 7 in November before the voters. Here are my reasons.

For those who want more detail, please read the Questions & Answers section that follows the Summary.

• Your taxes just went up. But under this law, casinos will get huge tax breaks, including ones never before offered to any business in Maryland. That’s not right or fair.

• It will not provide economic growth, only the illusion of it.

• This deal takes money out of our economy and transfers it to multi-billion dollar casino corporations.

• Casino corporations will spend millions to influence political campaigns and politicians as they are now on Question 7. This is just the beginning of their political clout. It will only grow over the years if Question 7 passes.

• No community near casinos has ever been helped. Just take a look a few blocks away from the Strip in Las Vegas or the Boardwalk in Atlantic City.

• Maryland’s 150,000 problem gamblers will not be helped. The legislation provides less than $9 per year per problem gambler. That won’t help these people or their families.

• What’s next? It is not hard to see the big picture. Gambling has already spread and if Question 7 passes, it will continue until there is gambling 24/7/365 in every nook and cranny of our lives, from grocery stores to smartphones. That’s the plan of the casino corporations, and they are well on the road to achieving it. Is this the direction we want for Maryland.

• But there is an alternative. Instead of all the time, money, and energy put into expanding gambling, we could be investing in education, science, arts, biotechnology, infrastructure, renewable energy, and other programs that will bring real long-term economic growth and social benefit to Maryland.

QUESTIONS & ANSWERS

Some Definitions

1) You’ll hear the term “casino owners.” Sounds almost friendly, but these are not “mom-and-pop” companies. They are instead international multi-billion-dollar casino corporations like MGM Mirage, Caesars/Harrahs, Penn National, Trump, and other entities that answer exclusively to their executives and shareholders, not to the citizens of Maryland.

2) “Gambling” and “Gaming” are actually statistically structured money transfers. In the final analysis, the house always wins, even if there are individuals who from time to time come out ahead. That’s how the odds and numbers are arranged. The casino corporations will inevitably profit, and they have sophisticated computer programs and customer targeting strategies to insure this.

3) All forms of gambling are illegal in Maryland except for those operated by casino corporations and the State Lottery Agency. That means poker games among friends and NCAA basketball bracket office pools are against the law. Ironically, these are true “gambling” games because outcomes are based on a combination of luck and skill where all players compete on an even footing.

4) There’s a saying in Annapolis: “When in doubt, read the bill.” I’ll refer to the actual legislation as much as possible and use authoritative and independent sources, such as the Department of Legislative Services (DLS). I did not enter this process with my mind made up. I studied the issues carefully before deciding that expanded gambling in this legislation was bad for Maryland.

(DLS is the non-partisan entity that analyzes legislation and its financial impact. All legislation and fiscal notes are available at http://mlis.state.md.us. See “Bill information and status” and then enter SB1. Scroll down to read the bill, fiscal note, and other information.)

My taxes just went up. Why will casino taxes go down?

There were two special sessions of the Maryland Legislature this summer. The first one raised taxes on individuals making $100,000/year and couples making $150,000/year, including a further increase for those with children. I voted against this. This second session lowers taxes on casino corporations (pages 3, 4, 10, 17, 18 of the fiscal note).

Further, casinos were made exempt from the state personal property tax, which is paid by every other business in Maryland {see Article-Tax-Property 7-244 (D)}.

From the The Baltimore Sun (9/6/12): “In reality, Question 7 is a massive giveaway to the casino owners at the public expense. It guarantees steep tax cuts for most of the state's casinos and allows the possibility for even greater reductions in the future. The Department of Legislative Services estimates that the casino owners stand to reap a $525 million windfall if Question 7 passes.”

Won’t this bring money into Maryland?

Though it is claimed that expanding casinos “will bring money into Maryland,” this is highly misleading. While it’s estimated that some $12 million - $160 million (Fiscal Note page 2 “Net effect”) will come into the state treasury over the next few years (only a miniscule percentage of the state’s $30 billion annual budget), casino expansion will be a net economic loser for Maryland. This is because casino corporations will funnel their profits out of the state to their shareholders, executives, and to fund their companies’ further expansions. The money Marylanders will spend at the casinos will mean fewer dollars for other things: food, entertainment, clothing, transportation, etc. Gambling expansion will create a net negative cash flow for our state.

What about campaign contributions by the casinos?

Casino corporations are now able to spend millions on promoting their point of view on the referendum and on political campaigns. We’ve already seen the flood of ads and robo calls. In the future, casinos will leverage their money to influence campaigns and elections on all levels: federal, state, local. What do you think the ultimate effect of that will be?

Here’s what the The Baltimore Sun wrote (8/19/12): “The legislature...left in place a sham restriction. It only bans contributions from those who own at least a 5 percent stake in a casino. That leaves out most of those involved in the group that's building the Baltimore casino, and it allows the possibility of contributions from key employees, subsidiaries and holding companies. That is to say, the vast majority of potential contributions from gambling interests would be unaffected...the people would have had a fighting chance of standing up to the relentless pressure from the gambling industry. Now, it's open season.”

But this will mean jobs, won’t it?

There will be construction jobs for a few years. But after that, the remaining jobs are relatively low paying. The fiscal note (page 21) points out that the majority of jobs will pay under $30,000 per year. According to the U.S. Department of Labor, the median wage for “gaming service workers” range from $5.76 to $9.03 per hour, and Forbes magazine listed gaming among the “25 Worst Paying Jobs in America.” Further, the casinos are under no obligation to provide meaningful health insurance for people earning these amounts, which would be consistent with the Affordable Care Act (ACA). That means that some of these workers (who will be working at all hours around-the- clock, as casinos would now be open 24/7/365) will apply for Medicaid, WIC, pharmacy assistance, and other taxpayer-supported welfare programs. To keep costs low and profits high, the casino corporations will shift their responsibility to provide employee health care to taxpayers.

There are other and better ways to provide meaningful jobs with fair benefit packages.

What’s the big picture? Where is this all going? How will our neighbor states react?

The big picture is clear. Fifty years ago, only Nevada (Las Vegas) had gambling. Then Atlantic City came on line. Then gambling expanded to Native American Reservations, riverboats, and to our neighbor states Delaware, West Virginia, and Pennsylvania. They started with slots, and then we added ours. They responded with table games and 24- hours casinos. Now, we’ll do the same. What’s next? It’s easy to see. Our neighbor states will add sports betting, then Internet gambling, and finally we’ll see slots and gambling machines everywhere, in gas stations and stores, just like in Nevada. The long-term plan of the casino corporations will be achieved: full blown gambling everywhere, all the time.

But there's more. New gambling formats, such as on smartphones, are being planned. From The Baltimore Sun (9/26/12): “The State Lottery Agency is contemplating plans that would instantly catapult Maryland to the cutting edge of this new frontier of gambling – all without the General Assembly ever taking a direct vote on the issue.” Consider the impact of even easier access to non-stop gambling.

This is just entertainment. Why would we limit someone’s good time?

I don’t have a problem with people choosing their own forms of entertainment. But gambling is different. Rarely do people spend their rent money or their kid’s lunch money to go to the movies, a museum, a sports event, or a concert. Further, very few people skip work to the point of losing their jobs to attend these forms of entertainment. But gambling is an addiction that has destroyed lives and families. That’s why it needs to be more carefully and closely regulated than this legislation calls for.

Isn’t there money to help problem gamblers?

Here are the numbers. The State-funded prevalence study (UMBC, May 2011, page 33) states, “...approximately 150,000 Maryland adults have experienced moderate to severe difficulties related to their gambling.”

Yet the legislation calls for only $1.3 million/year for the Problem Gambling Fund (page 20, fiscal note). That amounts to $8.67 per year for each problem gambler. Realistically, how much treatment will that buy?

Hasn’t gambling helped some communities?

No community has really ever been helped by gambling expansion. None of the sunny revenue projections have ever come close, in Maryland or elsewhere. Just take a look at Las Vegas a few blocks from the Strip. All you’ll see are empty buildings and panhandlers, and the most common businesses are pawnshops and check cashing stores.

Gambling was sold to the citizens of New Jersey as a way to help the struggling resort town of Atlantic City. Yet Atlantic City’s neighborhoods are in even worse shape now than when gambling was introduced. The only beneficiaries have been the casino corporations and the ancillary companies that depend on them.

From the National Gaming Impact Study Commission Report: “In Atlantic City and elsewhere, small business owners testified to the loss of their businesses when casinos came to town. As evidence of this impact, few businesses can be found more than a few blocks from the Atlantic City boardwalk. Many of the “local” businesses remaining are pawnshops, cash-for-gold stores and discount outlets. One witness noted that, “in 1978 [the year the first casino opened], there were 311 taverns and restaurants in Atlantic City. Nineteen years later, only 66 remained, despite the promise that gaming would be good for the city’s own.”

In Maryland none of the forecasts for income from the lottery or slots have been realized. Like a run-down gambler, we stagger from plan to plan, hoping that this one will be the winner. It won’t.

What else could we do?

For every action taken, there’s an opportunity cost: what could have been done but wasn’t. If Maryland is to have these special sessions, why not use them to promote manufacturing, education, science, medical research, biotechnology, infrastructure, roads, bridges, renewable energy, health care, arts and culture, and the environment? There are many good things to do. That’s where real progress is made, progress that would provide sustained jobs, economic growth, tax revenues, and it would happen by creating enterprises that actually help people and strengthen our communities.

Conclusion

This legislation creates a vast giveaway of taxpayer money, false hopes, and perhaps ultimately a corruption of Maryland politics. The last stand is in the hands of the voters. I voted “NO” in the legislature, and I will vote “NO” on Question 7 in November.

I urge you to review the legislation carefully, and please don’t be swayed by those with a financial stake in the outcome. Do your own homework; read the bill and the fiscal note; review the analysis from independent sources, and consider the issue carefully.

This vote will determine what kind of state Maryland will be in the decades to come. Will it be one based on “gambling” or one based on sound economic principles with social value? It’s up to us.