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The Honolulu Advertiser
Posted on: Wednesday, November 25, 2009

Can gambling save us? Don't bet on it


By David Shapiro

Opponents of legalized gambling are bracing for another battle in the Hawai'i Legislature as state tax revenues continue to fall short.

Gambling supporters such as Senate Ways and Means Chairwoman Donna Mercado Kim, who last session proposed allowing slot machines in Waikk, are expected to renew their argument that gambling is preferable to big tax increases as a new source of revenue.

Kim's proposal and other gambling initiatives died this year after Gov. Linda Lingle at first agreed with lawmakers that all options should be on the table, but then clarified her position and said she wouldn't support gambling.

Since then, however, state tax collections continue to decline by double digits every month and the budget deficit is expected to exceed $1 billion by the time the Legislature convenes in January despite pay cuts negotiated with state workers and a round of layoffs.

Like many people in Hawai'i, I vacation in Las Vegas and it would be hypocritical to offer moralistic arguments against gambling, but I've never been a fan of legalized gambling as a solution to a dead economy.

For one thing, it would take several years to devise a plan, license gambling enterprises and get them producing jobs and tax revenue. This would have zero impact in addressing the current state budget deficit.

Secondly, gambling states are hurting as much as we are in this economy, raising questions about how much legalized gambling could really help pull us out of a recession.

If gambling was such a panacea, Nevada wouldn't be one of the few states doing even worse than Hawai'i in the recession; a recent study by the Pew Center on States cited Nevada's heavy bet on gambling as the source of its problems.

Even when the gambling economy improves, Nevada does gambling very big and very well, and we couldn't compete credibly with them any more than they could compete with us on snorkeling and hula shows.

Visitors come here to spend the day on the beach, drink mai tais under the stars and enjoy our culture and natural beauty not to spend long hours in dark casinos working the slot machines.

And people go to Las Vegas for more than just gambling with its lavish resorts, world-class entertainment, expansive dining options and naughty distractions we can't match.

Locals wouldn't stay home instead of going to Vegas if we had slots, serious West Coast gamblers wouldn't give us a look and Asian tourists whose primary interest is gambling would continue flying right over us and heading for Nevada.

Which raises the question of whether the minimal economic benefits Hawai'i would gain from legalized gambling would be worth the undeniable social costs of giving up our status as one of only two states along with Utah that allow no legal gambling.

Hawai'i isn't the only state that has flirted with gambling in the economic tailspin; 25 states have considered new or expanded gambling activities in the past year, according to the Rockefeller Institute.

But the institute urged caution, noting that gambling revenues dropped 2.8 percent in fiscal 2009 and dependence on gambling revenue tends to increase rather than ease long-term budget imbalances.

Studies are persuasive that gambling doesn't bring new money into the economy, but soaks up money already in the economy that would be spent on other goods and services.

I received an e-mail from a fellow who offered a half-facetious suggestion that the best way for Hawai'i to cash in on gambling would be for the state to take advantage of depressed Nevada real estate prices by buying a casino in Las Vegas that caters to Hawai'i visitors and watching the bucks roll in when the economy improves.