Government Revenue from Gambling Declines

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by Paul Post, Thoroughbred Times

State and local government revenues from authorized gambling operations fell 2.8% in fiscal year 2009 compared with last year, the largest decline in 30 years, according to a new study on wagering.

Data is contained in the report, "For the First Time, a Smaller Jackpot: Trends in State Revenues From Gambling," by the Nelson A. Rockefeller Institute of Government based in Albany, New York. The institute is the public policy research arm of the State University of New York and conducts fiscal and programmatic research on state and local governments.

The report, released Monday, comes as states continue to examine casinos, video lottery terminals, and other gambling operations as potential sources of new revenue-with more than 25 states considering such proposals in the past year. Authors of the study said new gambling activities often provide a quick boost to state revenues, but generally do not keep pace with traditional tax revenues and government expenditures over time.

"The historical tendency for revenues from existing gambling operations to grow at a significantly slower pace than other state revenues may hold important lessons for states as policymakers consider further expansion of casinos, racinos, and other gambling activities," Institute Deputy Director Robert B. Ward and Institute Senior Policy Analyst Lucy Dadayan wrote in the report.

Most states reported declines in gambling revenues over the last two years. States that reported increases, including Pennsylvania and North Carolina, have recently authorized the opening of new gambling operations.

Racino revenues are up in New York, where seven of the eight racetrack casinos reported increases in the latest fiscal year. Statewide, patrons bet $12-billion at racinos and lawmakers are poised to name an operator for Aqueduct's proposed racino, too, adding another 4,500 video gaming machines to the mix.

States generate revenues from four major types of gambling operations-state lotteries, casinos, racinos, and pari-mutuel betting. The largest source, lottery income, fell 2.6% nationwide from fiscal year 2008 to 2009. Casino revenues declined 8.5% while racinos increased 6.7%, largely because of new racinos opening in Indiana and Pennsylvania, the report said.

Preliminary figures contained in the new report indicate pari-mutuel wagering revenues declined by 14.8% from July-March 2008 to July-March in 2009.

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