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The Honolulu Advertiser
Posted on: Sunday, February 14, 2010

So, you want to bet?

By Jack Hoag

Hawaii news photo - The Honolulu Advertiser

Hawai‘i residents shoot craps at the California Hotel in downtown Las Vegas.

Advertiser library photo

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The economic arguments against the introduction of legalized gambling into the state are overwhelming. Yet the Mainland proponents who come to our shores each year attempt to sell their product by providing half the story, omitting the many quantifiable costs to the community.

Their case is tantamount to a business owner asking a bank for a loan and providing the estimated gross revenues, but conveniently ignoring the costs of doing business.

According to economists who have made objective studies of gambling's introduction to a community, the negative return ranges from 3:1 to 6:1 when all cost factors are considered, such as the developer's take, the cost of government oversight, additional police, cannibalization of existing retail operations and the very high social welfare costs.

Consequently, leading business organizations — the Chamber of Commerce of Hawai'i, the Hawai'i Business Roundtable, Small Business Hawai'i and the Hawai'i Bankers Association — have consistently opposed gambling. It is clear the business sector has studied the issue and concluded that gambling would be a bad bet.

Of course, many of Hawai'i's citizens enjoy the fun and fellowship of Las Vegas excursions and go there for a variety of reasons. What is not obvious to the casual visitor is the fact that Nevada leads the nation in bankruptcies, divorce rates and crime.

The American Bankruptcy Institute reported in August 2009 that "Nevada was the state with the highest per capita filing rate in the country with 9.33 residents per thousand filing in all chapters." CQ Press' Crime State Rankings 2009 listed Nevada at the top of its rankings for states with high rates of crime. The state is also a leader in suicide and unemployment rates. These are hardly the kind of statistics that speaks to uplifting and enriching our state.

Hawai'i is known throughout the world for its unique culture, ambience and image.

It is highly unlikely that potential visitors would decide to visit Hawai'i to gamble, when gambling is readily available elsewhere. There is a greater risk that tourists will turn off to Hawai'i if we succumb to denigrating our state as has been witnessed in places like Atlantic City, a once-inviting community that has taken on the characteristics of a slum.

The avowed reason given by some legislators to study the "option" of gambling is that it would enrich our tax coffers. The evidence and expert opinion say otherwise. A study in the Review of Economics and Statistics, by Earl Grinols and David Mustard, found that crime caused by gambling increased 8 percent to 10 percent after a gambling facility opened and continually increased thereafter.

In the Michigan State Law Review, Dr. John W. Kindt of the University of Illinois said that "states which have little or no gambling have better economies and tax revenues than states with multiple gambling mechanisms."

And during last year's legislative session, then-Honolulu Police Department captain (and now chief) Louis Kealoha testified against the legalization of gambling: "Because of the lure of easy money and big paydays, it will attract organized crime and encourage public corruption," he said. "Our first mission is public safety and protecting the community. We cannot support something that would strengthen the criminal element in our city."

Public corruption related to gambling has taken place time and time again. The late Chris Hemmeter, the former Hawai'i hotel developer, made a brief attempt to develop a casino in New Orleans in 1992. Before that debacle ended the governor of Louisiana, Edwin Edwards, was sentenced to federal prison and three other elected officials were incarcerated. The tendency for elected officials to cross the line in their associations with gambling interests can be just too tempting.

The proponents of legalized gambling can outspend citizens' groups in promoting their product. For that reason alone, any referendum on the issue would be a "David and Goliath" battle.

And isn't it clever how their public relations people have even persuaded legislators to use the term "gaming" instead of what it is — gambling. Doesn't gaming sound like innocuous fun?

Let's not be fooled. Hawai'i's state motto is "The life of the land is perpetuated in righteousness." There is great wisdom in those words. Let us preserve our land from this insidious threat.