USA Today 

Our view on legalized gambling:  

Cash-strapped states bet on a bad hand

Plans to legalize sports wagers and add video poker carry social costs.Several states, facing budget shortfalls because of the recession, think they've found their ace in the hole: Expand gambling and pocket the tax revenue.

Ohio is adding 17,500 slot machines at race tracks. Illinois has sanctioned video pokers at bars, and Pennsylvania's legislature is considering doing the same.

More troubling, other states now want to introduce sports wagering - a new escalation in the nation's steady expansion of gambling. Delaware, one of four states grandfathered under a 1992 federal law that bans betting on sports (the others are Nevada, Montana and Oregon), has decided to allow it - and is being sued by an anxious NFL, the NCAA and other leagues. Neighboring New Jersey, meanwhile, understandably wants to protect its gaming industry and is suing for permission to offer sports wagering, too.

If you think states are looking for dough in all the wrong places to fill budget holes, you've hit the jackpot.

Proliferation of gambling, of course, is nothing new in the USA. A dozen states have commercial casinos, 29 have Indian casinos, 40 allow parimutuel wagering and 44 have state lotteries. But as the recession intensifies the scramble for gaming revenue, it's worth pausing to consider what's been learned so far. For the relatively modest amount of tax revenue that gambling produces in most places - last year's $6.8 billion was just 1% of state tax receipts nationwide it buys a disproportionate amount of problems:

Addiction. States looking at video poker for fiscal salvation should consult folks in South Carolina, where it was legal from 1986 to 2000. By 1999, about a fourth of the state's retail businesses - ranging from bowling alleys to convenience stores - included gambling opportunities for customers. Video poker became known as "the crack cocaine of gambling." In one tragic case that galvanized public opinion, a 28-year-old mother played video poker for seven hours while her forgotten 10-day-old baby suffocated to death in the hot car. When the video poker machines were banned, attendance at Gamblers Anonymous meetings plunged, as did calls to the state's most popular gamblers' hotline.

Scandal. Sure, sports betting is legal in Las Vegas, and there's plenty of illegal sports betting everywhere else. But making single-game betting more widespread and easily accessible, as Delaware and New Jersey want to do, crosses a new threshold. It is almost guaranteed to encourage point shaving, lead to fixed games and damage the integrity of sports.

NFL Commissioner Roger Goodell credibly argues that it would create intense suspicion about every dropped pass or blown call. NBA Commissioner David Stern warns that games would increasingly be viewed through a "prism of the impact on the betting line." If the courts reject the sports leagues' lawsuit, Congress may need to revisit the issue.

Aside from the long-term economic and social costs of gambling, recent news suggests that it's not even a reliable short-term solution to fiscal problems. Several states have seen promised windfalls fall short of projections. Last year, casino gambling tax proceeds fell 2.2%. And the more gambling spreads, the more it becomes a zero-sum game as states compete for the same pot.

Gambling is here to stay, but by seeking to expand it as a something-for-nothing solution to budget shortfalls, states are only ducking tough choices between raising taxes or cutting services. For states serious about building sound economic foundations, the notion that gaming is the answer is, like the big Vegas casino of the same name, a mirage.

Posted at 12:22 AM/ET, August 21, 2009 in USA TODAY editorial