COOK ON CONCORD: Pressure to approve gambling grows along with budget deficit

No matter who is elected governor in November (and by the time you read this the final candidates will have been selected in the state’s September primary), there is going to be a big budget gap to fill in the next biennium. Some estimates are that it will approach $300 million. Therefore, the push for additional revenue will be severe, as there are precious few places to cut expenditures.

Assuming the ultimate winner is someone pledged to veto a broad-based tax, sales and income taxes will not be available for solving the budget deficit, regardless of their merit. Therefore, such things as tobacco taxes, one-time revenue sources yet to be determined, increased taxes from increased economic activity, if any, and other “creative” solutions will have to be found.

Expanded legalized gambling in New Hampshire — called “gaming” by its proponents — has received a lot of attention in recent years. The pressure to include it in the mix of solutions for the budget shortfall in the next two years will be intense, and those who favor it will seize the opportunity to promote it as a “quick fix” for the state’s budgetary problems, paid by out-of-staters to a large degree — a favored revenue formula in the Granite State.

The Business and Industry Association of New Hampshire’s Economic Development and Fiscal Committee recently heard from proponents and opponents of expanded legalized gambling. What they heard made obvious why the pressures for gambling will mount in next session.

First, proponents are organized and well funded. They represent established New Hampshire-based businesses at the four racetracks in Hinsdale, Belmont, Seabrook and Salem, which already allow betting on sporting events that take place in other locations and provide a lot of funding for lobbyists to add to their bottom lines by allowing them new sources of revenue.

Proponents noted that New Hampshire tracks are New Hampshire businesses, need to meet competition from out of state, demonstrated the locations and facilities and means of gambling available in New York and the rest of New England, and pointed out the amount of revenue that could be generated for the state if expanded gambling were allowed.

Estimates of between $175 million and $250 million in revenue will be very attractive to legislators having to fill the budget shortfall.

Proponents also state that New Hampshire has had gambling of one sort or another ever since a lottery was used by Samuel Blodgett to build the Amoskeag Canal in Manchester.

Gambling, both historic and contemporary, is cited in supporting the legalization of “video lottery” machines. Proponents admit that these are video slot machines and point out that they exist at many competing locations, so we should enable our local tracks to be competitive.

Video slot machines are not the only gambling proposal that could emerge. Among them are casinos and machines at the “grand hotels” in the North Country or placement of state-owned machines at various locations.

Proponents of video slots at the tracks point out that they could be added quickly, the tracks are located where the population is and maximum revenue could be produced quickly.

Their arguments are superficially attractive and the need for a “quick fix” will be tremendous.

Refuting these arguments, the Granite State Coalition against Expanded Gambling, a coalition of organizations, religious groups, law enforcement groups and individuals was represented by a former state senator, Jim Rubens, its executive director, and Professor Earl Grinols of Baylor University, an expert on the subject.

Grinols presented data on the individual and societal cost of gambling and the special cost when video poker machines are allowed. The speed with which people can spend money on these machines makes losses that can be incurred huge compared with any gambling mechanisms already allowed in New Hampshire.

He recounted individual stories of bankruptcies, horrible losses, suicides, criminal activity visible and invisible and stated that between 30 percent and 50 percent of casino revenue comes from problem gamblers, 7 percent of revenue comes from stolen money, and the places with the greatest amount of gambling in the United States have the highest rate of many of these problems.

Rubens cited the societal cost, psychological effects and other evils of gambling and pointed out that every former state attorney general opposes expanded gambling, as does the present, the Chiefs of Police Association is opposed to it, the tourism association opposes it, and that money spent on gambling is not spent on meals, hotel rooms or other activities, thus hurting existing businesses.

Arguments for adoption did not seem persuasive, but the question which will remain in the next legislative session is whether the need for revenue will be sufficient and the amount of the estimated revenue from expanded gambling too attractive for legislators to avoid. nhbr

Brad Cook is a partner in the Manchester law firm of Sheehan Phinney Bass + Green and heads its government relations and estate planning groups.