There is so much going on with individual states' gambling propositions it's almost impossible to keep up. Here's just some of the recent activity:

• California: A new massive casino to open outside of LA in 2005
  
• Massachusetts: Despite the governor's opposition, they may authorize slots
  
• Nebraska: A senator proposed going to war with Iowa over gambling revenue, but the bill to expand gambling there still failed
  
• New York: Downtown Buffalo is likely to get an Indian casino
  
• New York: An attempt to stop Pataki engaging in gambling compacts with tribes failed
  
• Rhode Island: The general assembly is going to go months longer than normal, in part due to casino proposals and a proposal for the state to take a larger chunk of revenue from slot machines
  
• Texas: may get Powerball (and $100m in increased tax revenue)
  

Even though more Americans are gambling or gambling-friendly than any time in our history, what's really driving these latest pushes are the absolutely staggering budget deficits faced by almost every state in the union. Here are some depressing figures from "State Budget Actions 2002", a publication by the National Conference of State Legislatures:

In April 2002, 43 states reported budget gaps--the total of lower than expected revenues plus spending overruns--with the aggregate amount reaching $27.3 billion. By June 30, the end of FY 2002 for 46 states, the gap had grown to $37.2 billion.

Thirteen states reported FY 2002 budget gaps in excess of 10 percent of their general fund budgets.

Aggregate state balances fell 52 percent from FY 2001 to FY 2002, declining from $38.9 billion to $18.5 billion.

Balances as a percent of spending dropped. The $18.5 billion figure represents 3.8 percent of FY 2002 general fund spending. It is 4.2 percentage points lower than the FY 2001 balance of 8 percent.

Forty-three states saw their balances decline from FY 2001 to FY 2002, with some declines significant. Only five states saw improvement.

The number of states with balances above 5 percent fell. Fifteen ended FY 2002 with a balance exceeding 5 percent, the level Wall Street analysts recommend. Of these, four ended with balances exceeding 10 percent. The comparable numbers at the end of FY 2001 were 41 and 14, respectively.

Two states--California and Connecticut--reported that they ended FY 2002 with a deficit (1.7 percent and 1.9 percent, respectively).

State rainy day fund balances have fallen as states have tapped these funds. The aggregate balance dropped from $20.3 billion at the end of FY 2001 to $10.5 billion at the end of FY 2002.

Link

Nearly every state is in dire straits with respect to budget deficits and spending. Casinos (and various non-player-friendly gambling measures such as expanded slots and lotteries) are being proposed to attempt to make up some of these huge shortfalls. It seems infeasible to me for states to be able to sustainably make up their budget deficits by sucking money out of their legislatures at ever-increasing rates. At some point, something's going to have to give.

State budgets are totally out of hand, having gone through massive increases during the boom times of the 90's. Of course, now that a lot of that money is no longer flowing, governments would rather tax the stupid members of their states through the terrible odds of lotteries and slots than accept that they're just too big and need to cut some of their fat.

Sorry for the out-of-place political rant, but I strongly urge you to read what's been going on with state budgets over the last decade and where they are now. It's scary stuff. I'm not economist but there are some seriously in-the-hole states out there. Gambling propositions are only one small part of the states' strategies to avoid cost-cutting.

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Posted by: Kevin Chapman on October 6, 2005 04:53 AM