Codependent Addicts: States and Casinos

Loath to tax the citizenry based on income, many states have increasingly turned to cigarette smokers and gamblers for revenues. Gamblers are often smokers, and both groups tend to be of modest or low income.

So after taxing the daylights out of the working class's cigarettes, states can go for a second helping from the quarters the little people dump into the slot machines. This raises revenues that, in the old days, their better-heeled residents might have had to pay. And the fleeced masses don't know to complain. Bingo, as they say.

And when states ban smoking in all entertainment venues but the casino, they end up securing an especially dependable revenue stream. As public policy goes, this means of taxation is highly unattractive. After all, they are funneling their smoker population into another highly taxed and unhealthy activity. As an added anti-social bonus, they discriminate against other businesses in search of the same entertainment dollar.

But the casino industry knows that its profits have become oh-so-important to the gambling-addicted states and localities. We're partners now.

That mentality explains how Donald Trump could stand up a few days ago and with a straight face call on 11 casinos to unite in a lawsuit against Atlantic City. The intrepid City Council had passed a new smoking ban that would cover the casinos -- and after threats that its move would cost the city 20 percent of its revenues and up to 3,400 jobs.

Trump insisted that denying their customers the right to smoke would put Atlantic City casinos at a competitive disadvantage over competitors in slot parlors where gamblers may puff and play -- in Philadelphia, for instance. One hesitates to accuse Trump of inconsistency, but he clearly hasn't lost sleep over the idea that Atlantic City's old restaurants are now at a competitive disadvantage because smoking is prohibited on their premises but not the gaming palaces on the boardwalk.

A similar conversation is going on in Connecticut. Since 2003, Connecticut has banned smoking at restaurants and bars but not at its two humongous Indian casinos. State officials are trying to extend the smoking prohibition to Foxwoods and Mohegan Sun.

The casino interests have responded with numbers purporting to show that Connecticut could forego $76 million a year in its expected take from their slot machines if smoking were disallowed. And to underscore the dangers, the chairman of Mohegan Sun said he might have to lay off up to 1,200 workers as a result of the lost business.

Perhaps someone would like to tote up how many jobs would be created -- at the pubs, fish restaurants and pool halls in New London and elsewhere in the region -- if the smokers who had left them for the casinos suddenly started returning. Or a general accounting of how many jobs elsewhere in the economy have vanished because of casino competition.

The Indian casinos further argue that tribal sovereignty exempts them from state-enacted bans on smoking. Connecticut's attorney general begs to differ. The debate continues.

It's so silly that it's almost funny, but many states discriminate among gambling ventures in deciding where people may smoke. They allow smoking at the big casinos while prohibiting it at what's called "little gaming" places that offer bingo (for example, churches or American Legion posts), video lottery terminals, keno or pari-mutuel gambling. Charities that depend on money from bingo nights complain that these smoking bans have sent their customers to the big casinos.

Which sounds right if, as the casino industry says, 70 percent of gamblers also smoke. Hand them a drink (big taxes on alcohol, too), and what do you have? Your tax base.

COPYRIGHT 2008 THE PROVIDENCE JOURNAL CO.

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Views expressed in this column are those of the author, not those of Rasmussen Reports.

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