Chapter 20: The State of Legalized Gambling

Opponents of gambling have good arguments against legalized gambling. Some people find betting addictive. A study by the National Opinion Research Center estimated that pathological gamblers account for 15% of gambling revenue and that each such person costs the rest of us $12,000 over his lifetime for social and police work. Gambling does ruin some lives, and it does indirectly harm others.

State-run lotteries involve governments in trying to persuade their citizens to gamble. In the early days of the New York lottery, we recall billboards that said, “Support education—play the lottery.’’ That didn’t work, and the ads quickly changed to “Get rich—play the lottery.’’ Lotteries typically pay out only about half the money bet, so they are a lousy way to get rich even when compared with the slots at the local casino. Professional gamblers and statisticians avoid them, not wanting to waste money on so bad a bargain. Poor people spend a larger proportion of their income on lotteries than do the rich and are the main players of daily numbers games. The lottery may be a voluntary tax, but it hits the poor hardest, and states spend hundreds of millions on advertising to persuade the poor to lose yet more money. Some modest suggestions from those who are concerned about state-run lotteries: states should cut out the advertising and pay out more of what is bet.

States license casinos because they pay taxes and attract tourists—and, of course, because many citizens want them. In fact, most casinos outside Las Vegas draw gamblers mainly from nearby areas. Crime is higher in counties with casinos—but lots of lurking variables may explain this association. Pathological gamblers do have high rates of arrest, but again the causal link is not clear.

The debate continues. Meanwhile, technology in the form of Internet gambling is bypassing governments and creating a new gambling economy that makes many of the old arguments outdated.