Gambling has been a political “hot potato” in Minnesota. What’s the right path forward?

Should gambling be legal, given the costs it incurs?

Humans have gambled for thousands of years, so it’s in our social if not actual DNA. Like many activities, gambling can be an enjoyable diversion. Go to the casino with a limit that’s reasonable for your financial situation and stick with it. Gamble until your money runs out, and then stop. Why is that worse than spending your money on eating out or going to a movie theater or concert? People voluntarily spending money without directly harming anyone else. How can a fan of the free market complain?

Admittedly, gambling is different. Go to a concert, and you expect to come home culturally or emotionally enriched, but financially worse off. Go to a casino, and the roulette wheel, slot machine, or blackjack table offers the prospect, however dim, that you’ll leave with more money than you had when you came in. “Just one more spin!”

And so people can and do get into trouble, financially and otherwise, with gambling. But is that a reason for government to prohibit it? (Reminder: A ban won’t prohibit gambling entirely; it will send some of it underground.) People can and do get into trouble with  alcohol, and we’ve (wisely) decided that the trouble it brings isn’t reason enough to ban it. Meanwhile, people can and do ruin their finances in many ways–binge shopping, investment decisions driven more by hope than calculation, etc.–that are unwise. But you can’t cure stupid, and you probably shouldn’t try to outlaw it, either.

Should gambling be banned or severely restricted on the grounds that gambling-induced problems create demands on the public budget? (If so, why do we have a state lottery?) I haven’t looked at the economic literature on gambling lately. But remember this: People can put demands on the public budget for all sorts of reasons: don’t exercise and then eat too much (see: diabetes, heart disease, and public health programs). Be a lousy parent who doesn’t give a rip about whether your kid succeeds in school (see: dropouts, unemployment, and crime), and … and … and … you name it.

Whenever we have an expansive government, we’re going to expose the citizenry at large to the financial obligations of poor personal decisions. This expansive government, in turn, has restricted the freedoms of individuals. Take tobacco and public health programs, for example. First came the nagging (warning labels). Then came taxes to recoup the medical expenses paid by Medicaid. After that came smoking bans, which trample on property rights. A similar pattern is now being played out with food, with governments hectoring us on our bad eating habits, browbeating restaurants into changing their menus and even outlawing certain ingredients.

We could attempt to “balance” the freedom of people to occasionally (or frequently) make bad choices with the financial interest of keeping governments intact. That’s the dominant choice. Or we could choose to scale back on the scope of government, call on private associations to address the fallout of bad decisions, and let the chips fall where they may. For a variety of reasons, I prefer the second path, though I doubt it’s going to get much headway soon.

Should we expand gambling to address state budgetary problems?

In short, I’m sympathetic to the idea of expanding legal gambling, but two features of the current discussion on the subject make me pause. The first is the debate over whether it should be casino-based or limited to race tracks, an idea dubbed “racino.” It’s hard for me to see any principles at work favoring one or the other. Should business owner A or business owner B get a favor from state government? That’s not a question that has a clearly superior answer, on principle. Instead, the answer will come from the power politics of team red versus team blue, who controls what office of government, fissures within ideological camps, and so forth. No surprise there.

The most significant problem I see with expanded gambling is that is an enabler that will do nothing to promote the long-term fiscal health of Minnesota. Since tax revenue from expanded gambling will be “new” money from a “voluntary tax,” expanding gambling will be politically palatable than raising the sales tax, raising the income tax, or cutting government spending as a means of addressing the fiscal challenges of the years to come.

There’s one problem with relying on gambling for financial salvation, however: It won’t work. The new money could, in the abstract, be used for any number of activities. Some of them will have very little to do with the central purposes of government. And if I had to pick between whether the new money would be used for a core function of government or one far from vital, well, I’d bet (ahem) on the latter.

Build a new playplace for the wealthiest sports league on the planet? Yeah. That’s why we need to expand the legal scope of gambling.

I’ve long believed that taxpayer funding for professional sports stadiums is foolish. Foolishness and democracy can and often do go hand-in-hand, however. So it appears that gambling in Minnesota will be expanded one way or the other. Unfortunately, it won’t be for the right reason, which is that adults should be free to make decisions about their own lives, including their amusements. By incurring more social costs of gambling, and directing the new revenue to a sports stadium, the governor and legislature will ensure that all will pay for the amusements of some.