States' Answer to a Weak Economy: Gambling

Saturday, 05 Nov 2011 11:50 AM

 

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NEW YORK - As the U.S. economy stubbornly resists stimulus efforts, New Jersey and Maine are among several states betting on a simpler way to fill their coffers: gambling.

Both northeastern states are holding Election Day referendums to increase the once-outlawed practice, following states such as Massachusetts and New Hampshire that have already embraced gaming to boost revenue and jobs in tough times.

Maine will gauge support for a new casino and slot machines at two race tracks, known as "racinos", while New Jersey is seeking to overturn a federal law prohibiting sports betting.

"When states experience economic hardship, they turn to gaming," said Cory Morowitz, chairman of Morowitz Gaming Advisors. "Post-2008, almost all gaming increases are related to the economic downturn."

A recent push to build casinos and increase slot parlors at race courses, particularly in the Northeast, echoes similar moves elsewhere in the early 1990s when economic recession hit.

States whose residents pop over the border to spend -- and generally lose -- their hard-earned gambling cash, are looking to increase betting opportunities in their own backyard to keep the money in state.

This fall, the Massachusetts legislature approved three casinos and one slots parlor in a bill under which 25 percent of casino revenues and about 50 percent of slots revenue would return to the state. In New Hampshire, a House legislative panel last week voted to permit two casinos. The proposal still faces several legislative hurdles.

Outside the Northeast, Minnesota lawmakers struggling to find a way to provide public funding for two-thirds of a proposed $1.1 billion Minnesota Vikings football stadium have floated several options to expand gambling in the state.

They include permitting slot machines at horse racing tracks, allowing electronic pull-tabs at bars and restaurants and a private casino in downtown Minneapolis.

Illinois, which is among the most financially strapped states, in May voted to authorize new casinos that could generate up to $1 billion a year, including one in Chicago. Governor Pat Quinn, worried about the state's reputation for corruption, has threatened to veto the plan unless it is slimmed down and includes more oversight.

If the referendum passes in New Jersey as expected, it is just a first step on the long road to making it legal to gamble on professional, college or amateur sporting events by placing bets at casinos and racetracks in the Garden State.

That kind of betting is outlawed by federal law except in Nevada and Delaware. Passing the referendum would set the stage for New Jersey to file a lawsuit to overturn the federal ban within its borders too.

© 2014 Thomson/Reuters. All rights reserved.

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