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Tuesday, Sep 23, 2014
Commentary

The dangerous allure of one-armed bandits


Published:

Thomas Paine, arguing for American freedom in his 1776 edition of “Common Sense,” said that “a long habit of not thinking a thing wrong, gives it the superficial appearance of being right.” He added: “Time makes more converts than reason.”

Paine might as well have been describing Tallahassee legislators. Without reason, and against reason, in yet another comprehensive gambling bill, these guardians of the public good seem ready to tumble to the view that slot machines have suddenly become right for Florida.

Gambling proposals describe themselves in promises of economic benefits, entertainment, painless money and development, but what we are really talking about is slot machines. Casinos house slot machines, and the large majority of casino revenue comes from slot machines. Mississippi reports 85 percent and Iowa nearly 90 percent.

So what do we know about slot machine gambling? The Diagnostic and Statistical Manual of Mental Disorders of the American Psychiatric Society describes a gambling impulse control disorder whose symptoms include repeated unsuccessful efforts to control, cut back, or stop gambling.

Other symptoms of gamblers who suffer from this mental disorder include chasing their losses and relying on others for money “to relieve a desperate financial situation caused by gambling.” Many pathological gamblers resort to embezzlement and crime. Some ruin their family finances and commit suicide.

Research has found and confirmed in later studies that gambling devices such as video slot machines are associated with significantly faster onset of pathological gambling in men and women. Slot machines have been called the “crack cocaine” of gambling.

Fiorello LaGuardia, the New York mayor who took sledge hammers to gambling machines in the 1930s to keep them out of New York, called slot machines “mechanical pickpockets.” He referred to those who ran them as tinhorns and chiselers. “Don’t give a tinhorn a break,” LaGuardia said. To his police he instructed, “When you see one, grab him by the back of the neck and bring him in. They break up homes and bring only misery.”

Australia’s Productivity Commission reports that 42.3 percent of gambling machine revenue is from problem gamblers. A very careful Canadian study using gambling diaries to improve on the need to rely on gambler memory found nearly 60 percent.

These are disturbing figures. Gambling’s superficial appearance is one thing, but the numbers are inescapable: Slot revenues — which account for the overwhelming majority of money casinos take in — are one-third to one-half funded by individuals with gambling disorders.

There are other reasons to question the idea of proliferating casinos and slot machines in Florida. My own research using 20 years of data from every county in the United States finds that counties that introduced casinos experienced higher crime rates by about 8 percent after the passage of sufficient time for the effects to be felt, generally four to five years.

In addition to increases in crime and suicide, the investigation of the costs and benefits of gambling expansion has identified eight other costs, including bankruptcy, employment and business costs, social service costs, and direct regulatory costs. Overall, if one compares the benefits and costs of casino introduction to a previously gambling-free economy, the costs outweigh benefits by a factor of three to one.

The evidence accumulated since the mid-1990s has never been withdrawn. Yet the passage of time seems to give casinos the superficial appearance of cost-free economic development and painless tax revenue. Common sense says that we look at facts. Citizens, if not the Legislature, should be “under no sort of influence public or private, but the influence of reason and principle.”

Earl L. Grinols is Distinguished Professor of Economics at Baylor University, former Senior Economist for the President’s Council of Economic Advisors, and author of “Gambling In America: Costs and Benefits.” He can be reached at Earl_Grinols@baylor.edu.

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