Tax the Poor

Living in Ohio gets annoying every year around this season. A casino issue seems to be on the ballot every year. The debate doesn't seem to be clear-cut along party lines. Both liberals and conservatives want it; and both liberals and conservatives don't.

(from flickr user LU5H.bunny)

One argument on the liberal side that I almost never hear, even though it's really one of the best arguments against a casino, is that it's a tax on the poor.

When people think of gambling, they think of Las Vegas, with the bright lights and the high rollers. They think of places like Bellagio and The Venetian and the Wynn - places that cater to whales. They forget about cities like Detroit, Michigan or Gary, Indiana or Shreveport, Louisiana - places where gambling is much less glamorous. Here is Mark Lange in the Christian Science Monitor with some numbers:
In 1999, the bipartisan National Gambling Impact Commission found that 80 percent of gambling revenue comes from households with incomes of less than $50,000 a year. More remarkably, players with annual incomes of less than $10,000 spent almost three times as much on gambling -- in aggregate, real dollars -- as those with incomes of more than $50,000. With the aggressive encouragement of state governments, US gamblers -- most of them scraping by on limited incomes -- had to lose $84 billion last year in casinos and lotteries for the states to raise $24 billion in new revenues.
There are two primary responses to this point. One is that gambling is inevitable because poor people will just play the lotto if they can't gamble in a casino. The second is that gambling is inevitable because millions (maybe billions?) of dollars are leaving the state and being given to casinos in other states without one in Ohio.

Both points are true to an extent. Yes, poor people play the lotto hoping to hit it big. But the lotto is different from casinos in the sense that it is much less exciting, less adrenaline-inducing, and generally just less fun. Give people a game that's both exciting and gives them an opportunity to hit it big, and you could easily entice people who would get bored with the lotto.

On the second point, it's true that some people leave one state to gamble in others. Who are these people? Are they retirees taking charter buses to other states to spend a lazy afternoon with friends playing penny slots? The truly poor are not spending much money in neighboring states because they cannot even afford to travel to those places. Put a casino in their backyard and yes, they will start going.

Lastly, because of the way casino corporations are structured, it really is taxing the poor to give to the rich, since only a proportion of gambling revenue will go back to the state, the rest will go to shareholders in the casino (all of whom will probably be rich).

I'd like to start hearing some advertisements with arguments along these lines, rather than nonsense about whether or not the casino will create the promised number of jobs. The opponents of casinos need to start giving people a reason to oppose the issue, not merely a reason not to support it. This is an issue that is important to the long-term vitality of cities, but we focus only on the immediate future. Regardless of my own opinions about gambling and whether or not I would ever visit one in Ohio if it were built, unless I buy a condo in Las Vegas, I'm not very interested in living in a city with casinos.


    On October 01, 2009 Anonymous said...

    I disagree that casinos are taxes on the poor. Instead casinos are taxes on those who feel that they can win or more simply those with a highier risk profile. True, these same people may often be the poor or old folks but those are the ones who have little opportunity to "gamble" in markets. Lets face it if a rich person wants to gamble they usually can call up their broker a pick a "flyer". I believe a person decides to "gamble" because that person feels they may have a competitive advantage or better information in one arena or another (casinos, lotto, fantasy football, race track, etc). Unfortunately, some of these arenas, lotto specifically, have minimal barriers to entry ($2 ticket)with minimal opportunity to be successful without some knowledge of the topic.