Various alternatives have been proposed which seek to provide much-needed restructuring of the Texas tax system and otherwise provide additional funds for education and other budgetary priorities. I have extensively analyzed a wide variety of key proposals with regard to their equity, efficiency, and growth potential. One set of proposals, expanding the legal gaming options available in the state, represents an alternative that both stimulates business activity and provides substantial revenue. The hearing process on these measures has begun, but they face a difficult and uphill battle to get the two-thirds votes needed to end up on the November ballot. In my opinion, based on years of studying the issue around the country, we should get the chance to decide.
Casinos and related activity could be expected to bring billions into state coffers. Even if Texas is only half as successful as relatively comparable states with casinos (adjusted for demographics) in attracting spending from persons from other locales, the economic stimulus is huge (almost 187,000 new jobs plus billions in business activity during the construction phase). In all probability, the true impact would be substantially higher.
Another proposed enhancement of gaming options is to allow video lottery terminals, an extension of the existing Texas Lottery, to operate at the licensed racing locations within the state. Adding VLTs at racetracks would also lead to significant economic stimulus. Once fully operational (around mid-2006), this expanded amusement offering would generate net contributions of some 26,073 jobs.
The chief arguments against implementing gaming deal with the costs to society of problem gambling, increased crime, and related drawbacks. While the issue of the social costs associated with gaming is certainly legitimate and worthy of full and serious discussion, it should be properly focused. The evidence I’ve seen suggests that the incidence of problem gaming and adverse social consequences are not materially or systematically different in states that permit casino gambling from those that do not. Texans, for example, presently have opportunities in the form of the lottery, eight liners, racing, Internet gaming, and casinos in nearby states (to name only the most obvious categories). Citizens of the Lone Star State spend billions of dollars each year in these types of activities, much of it in Louisiana, Oklahoma, New Mexico, and other states. Moreover, the profiles of those who participate in casino gaming indicate they tend to exhibit educational and income levels above national averages. Thus, this type of activity is not regressive in its incidence like many alternative forms of gaming and other elements of the Texas revenue structure.
Similarly, crime rates in areas with casinos do not rise any more than tends to be the case with any form of increased tourism, and regulatory oversight can eliminate any other concerns. Simply stated, there is evidence that Texas is already bearing the social costs associated with gaming while not enjoying the far more significant positive stimulus. In fact, Texans are paying hundreds of millions in taxes to other states and supporting thousands of jobs elsewhere.
From the standpoint of consumer welfare, casino gaming is clearly warranted. National surveys overwhelmingly indicate that casino gaming is desired by a substantial majority of the population. Moreover, a local option process of the type proposed allows voters to make the ultimate decision and, thus, permits interested parties on all sides to have a full and fair hearing and specific community concerns to be adequately addressed at the area level. I have been involved in numerous projects in which voters have been allowed to decide about the location of sports and entertainment venues. Some of these initiatives have passed, others have not. Without exception, however, there has been vigorous debate on community priorities.
Virtually all options available to significantly raise fiscal revenues for public education, property tax relief, or other worthy public purposes implicitly involve a net extraction from the private sector. Every major current or potential revenue base—be it property, sales, income, payrolls, business activity, or gross receipts—removes funds from consumers or businesses in order to provide for public needs. Gaming is unique in that it permits “voluntary” payments by those who desire to purchase a particular form of recreation. It actually stimulates private-sector spending and, by decreasing the percentage of public revenues that must be extracted through involuntary taxes, enhances the business climate and competitiveness of the state. Additionally, as an ongoing source of State revenues, gaming offers excellent stability and growth properties. As an example, during the recent downturn when the state and local tax bases in Texas suffered substantial contraction, casino gaming in the US, and the tax revenues derived there from, demonstrated consistent growth.
Responsible gaming clearly merits careful consideration in the ongoing efforts to promote statewide economic development, job creation, greater prosperity, new governmental revenues, and more competitive tourism in Texas.