A new institution in American life is contributing to the growing gap between the haves and have-nots. That institution is the regional casino.
Until about 1990, casinos were legal only in Nevada and Atlantic City. But then casinos began popping up across the country, with the support and sponsorship of the very state governments -— now 23 and counting — that previously had outlawed them. In November, New York voters will decide whether to change our constitution to allow casinos here.
How do the new casinos contribute to inequality? While casinos do not create wealth, they redistribute it, overwhelmingly from the have-nots to the haves. Gov. Andrew Cuomo and other casino advocates often use terms such as "destination gaming resorts" to describe them, but the label is highly misleading. Anyone who has actually visited America's regional casinos knows that they are quite different from Vegas-style resort casinos.
A resort casino is a place you might visit once a year, but a regional casino is a place you can conveniently visit several times in a month or a week. Whereas Vegas-style resort casinos historically have catered mainly to high rollers partial to table games, the new regional casinos cater overwhelmingly to middle rollers and low rollers who play slot machines. In short, the business model of the new regional casino depends on attracting gamblers of modest means who live near the casino.
These new casinos both prey upon vulnerable people and increase their number. Women, low-wage workers, and retirees account for a large and disproportionate share of casino revenue. In addition, studies show that living near a casino increases the chances of becoming a problem gambler.
And while most people who visit casinos are not problem gamblers, a significant body of scholarly research suggests that from 35 to 50 percent of today's casino gambling revenue comes from problem and pathological gamblers.
Isn't it the role of government to protect people from being exploited? Think again.
For starters, regional casinos are largely the creations of state governments, intended first and foremost to raise revenue for the state. This dynamic creates a fundamental conflict of interest.
In their capacity as regulators, state governments are charged with protecting the public from the very business practices that generate revenue for the state and which the state is actively co-sponsoring.
This conflict of interest affects nearly every aspect of states' sponsorship of casinos, including the number and location of casinos, the design and payout of the slot machines, and the many and constantly evolving casino strategies aimed at encouraging heavy gamblers to, as casino insiders put it, "play to extinction."
Many forces currently contributing to the rise of inequality, such as globalization and technological change, cannot be directly controlled by public policy.
But the new casinos are a public policy — they exist only because policymakers want them to exist.
Do we want them in New York? To us, the answer is no. We need policies that create wealth rather redistribute it in the wrong direction. We need policies that are progressive rather than regressive.
We need policies that strengthen our families rather than weaken them, encourage the work ethic instead of the luck ethic, and build up our communities rather than drain wealth from them.
Most of all, we need policies that bring us together into one New York family rather than policies that divide us into the people doing the fleecing and the people being fleeced.
