Gov. Martin O'Malley's special session on casino gambling should have been called a rubberstamp session. Because there really was no legislative session, let alone public debate or analysis regarding the negative economic and social impact that will come from more gambling. Instead, lawmakers basically rammed through a pre-packaged measure that will enable casinos to strip more wealth from Maryland residents.
For a governor who once described slot machines as a "morally bankrupt" way to fund education, Mr. O'Malley's transformation to casino supporter is especially troubling.
If approved by voters in November, Mr. O'Malley's plan — ironed out mainly behind closed doors before the special session began — will add a sixth casino in Prince George's County and allow table games, round the clock operation, and lower taxes for the existing casinos in Maryland.
Never mind the state wants to alter the rules when only three of the five casinos are even opened. Or that the sixth casino could be operated by MGM Resorts, a company that was essentially run out of New Jersey because of its ties to a casino in China run by a family that has been linked to organized crime. Or that Mr. O'Malley burned up a lot of political capital on an issue that at best will contribute $200 million a year — or a little more than 1 percent — to Maryland's general fund.
The main problem is that gambling is an insidious and unsustainable way to fund government operations. That's because casinos are nothing more than a regressive tax that creates more problem gamblers.
A study last year by the University of Maryland, Baltimore County found that one in every 30 state residents already had a gambling problem. Those most at risk for developing gambling addictions are single men between the ages of 18 and 29, either African-American or Latino, with less education and income than the overall population.
Adding even more gambling will lead to increased social costs — including crime, bankruptcy, divorce and suicide — that will be paid for by taxpayers whether they gamble or not. Those costs are never factored into the revenue projections states tout. States also fail to consider that casinos don't generate much new spending but merely divert money from other area businesses, such as restaurants, movies and other entertainment.
The argument that a casino in a suburban mall — like the one at Arundel Mills — can be a destination resort is pure folly. No families travel to such outposts. These are basically convenience casinos that thrive from repeat local business. During a gambling conference in Philadelphia last year, the general manager of the Harrah's casino in Chester, Pa., said customers visited an average of 4.5 times a week — or more than 200 times a year.
Traffic patterns like that make it hard to argue casinos are mainly about an occasional fun night on the town. In reality, the casinos don't have a successful business model without repeat and problem gamblers. Yes, the casinos in Maryland may keep residents from gambling in other states, but they will also cause residents to gamble more often. Lawmakers are sworn to protect residents, not find ways to make them poorer.
More broadly, it is irresponsible for Maryland lawmakers to add more gambling without seeing how the existing casinos impact the state. Indeed, there are signs Maryland may not be able to support more gambling. The manager of the Hollywood Casino in Perryville asked the state to eliminate up to 500 video lottery terminals because it has lost a third of its business since the casino in Arundel Mills opened in June.
For a peek into the gambling future, Maryland should look to its neighbors in Delaware. The First State jumped in early on slots and now generates more than 7 percent of its budget from gambling revenue. But as competition has heated up from Pennsylvania and other states, including Maryland, Delaware is scrambling to add more gambling just to maintain existing revenue.
First the state legalized sports betting. Then it added table games at the casinos. In June, the state passed a law to allow online gambling, which essentially will enable residents to gamble from their home or mobile phone. Delaware is also looking to add keno machines in restaurants.
At the same time, the state is giving casinos a giant tax cut, supposedly so they can better compete. In a sense, Delaware lawmakers are just like addicted gamblers who chase their losses.
Now, Maryland is poised to make the same bad bet.
Paul Davies is a fellow at the New York-based Institute for American Values, where he edits the blog getgovernmentoutofgambling.org. His email is email@example.com.