If you live in Maryland, you may have seen the signs around your neighborhood reading “Keep Taxes Low, Strengthen Our Schools,” and urging you to vote Yes on Question 2 this Election Day. Anytime someone makes you an offer like that, you ought to be skeptical. As always, it makes sense to follow the money.
In this case, it quickly becomes obvious who is pushing this constitutional amendment and how they stand to profit. The race tracks that will host and operate the 15,000 video lottery terminals will get rich, and the appropriators and bureaucrats get a new stream of cash without having to impose a tax increase. The lawmakers claim it’s for the schools, while the gambling industry funds the public relations campaign.
Some characterize this initiative as “legalizing video lotteries,” as if the government were proposing to simply lift its existing ban. But it is instead a big-government program. Video lotteries in Maryland won’t be private businesses that pay taxes—they will be effectively a government program administered in part by private companies.
The House Ways and Means committee in Annapolis explained the video lottery industry’s status in language that could have come out of the Soviet Union or Thomas Hobbes’ Leviathan: “If the State decides to legalize an activity currently prohibited, the revenues from this activity belong to the State. It is then the decision of the State as to how to appropriately allocate the revenues.”
The state’s strict control over the industry points to other potential unsavory business-government cooperation. The amendment would limit the number of terminals, meaning the current gaming giants would get their licenses and be confident that no competitors could cut into their racket. Nice work if you can get it.
Look back at the states’ 1999 deal with the tobacco companies to get a hint as to how this deal might play out. The tobacco settlement that year secured billions of dollars in payments from big tobacco companies to state coffers, thus giving lawmakers, governors, and bureaucrats more cash to dole out while not having to raise taxes.
But it also made state governments dependent on tobacco companies. As a result, when Philip Morris faced a crushing lawsuit in Illinois in 2003, 37 state attorneys general filed a brief asking the federal court to go easy on the tobacco giant—if Philip Morris went out of business, the state governments might go bankrupt, too.
If Question 2 passes, expect the same relationship between Annapolis and the gambling industry. What if something threatens the local gambling industry? Private poker games? Expect increased police crackdowns on those. Not-for-profit raffles? What good do they do for the state coffers? Maybe they should be more heavily regulated.
An antigambling crusade by a church group would, in effect, be an anti-state-revenue crusade—watch out church ladies; big brother will now have even more reason to come after you.
The state-gambling relationship is already cozy. The Laurel Racing Association spent $2 million through a gambling front group called “For Maryland For Our Future,” running ads and putting up those “strengthen our schools” signs. On top of that, the LRA has lined our leaders’ pockets.
Recipients of LRA money include the Anne Arundel Democratic Senatorial Committee Slate, Democratic House Speaker Mike Busch, the Democratic State Central Committee, Republican former Gov. Bob Ehrlich, and many other lawmakers.
So what’s the downside? First, there is a moral objection here. Many Marylanders believe gambling is immoral, and this sort of gambling—lacking the entertainment value of horse racing or craps—is exploitative and addictive. That’s not a convincing argument to outlaw video lottery machines, but it is a good reason not to implicate all of Maryland’s citizens in running a gambling operation by having the state run it.
Clearly our leaders in Annapolis find something objectionable about gambling—why else would they outlaw almost all forms? There’s Maryland for you: if it’s not illegal, it’s probably mandatory.
And purported upsides of the scheme, “keep taxes low, strengthen our schools”? Does anyone really believe the spenders in Annapolis will ever be sated? That they’ll say, “okay, we’ve spent enough”? No. Deficits and the potential political costs of hiking taxes are the only factors that ever limit the growth of government. Opening a new channel of money won’t prevent tax increases—it will only increase government and prevent proper prioritization of funds.
And throwing more money at education is merely a distraction from the fact that our urban schools are broken and in need of substantive reform, not just more dollars (look at D.C. as an example).
So, before you place your chips on video gambling, realize the game is rigged.
Examiner columnist Timothy P. Carney is editor of the Evans-Novak Political Report. His Examiner column appears on Fridays.
