Follow the money

After the passage of Obamacare, the debate on whether to allow video gaming machines to be installed at Canterbury Park and Running Aces may seem like just so much bread and circuses. Yet I spent some time recently researching this topic and exchanging some e-mails with the executive director of Racino Now. I learned a lot about Minnesota's conflicted attitudes toward gambling, but the legislative debate all really boils down to money.

On the one hand, we have the "trouble in River City" crowd which opposes installing video gaming machines, ostensibly on moral and legal grounds, at two Twin Cities locations: the aforementioned racetracks where gambling is in progress as we speak. Yet these good folks are strangely silent on repealing the Minnesota State Lottery, or shutting down the Indian casinos or the racetracks, or office football and basketball pools. If gambling was such trouble (with a capital "T"), why not shut it all down?

The answer: money. Who has the most to gain from a prohibition on the expansion of video gaming in particular? Why, the people who currently have a monopoly on it, of course. As Christopher Johnson, executive director for Racino Now, told me in an e-mail:

There are 18 casinos which receive hundreds of millions of dollars each year in net profits and do not pay any corporate taxes, property taxes or taxes on their gaming profits. Further, these entities charge their customers lodging taxes, tobacco taxes, alcohol taxes, sales taxes and gasoline taxes and the state turns around and gives the money back to the tribes. In 2008, the tribes collected $19.5 million in such taxes and the state refunded $17.25 million of the money back to the tribes.

On a recent At Issue segment on KSTP-5 Eyewitness News, conservative commentator David Strom and a spokesman for the Service Employees International Union, otherwise at odds, stood united against the bill. Host Tom Hauser shrugged off the results of a poll conducted by his own television station that found a bipartisan 80% of Minnesotans favor the racino bill.

In 2004, former speaker of the Minnesota House of Representatives Steve Sviggum called the Indian casinos' influence in state politics "deep and insidious." Do I begrudge the tribal casinos their gambling compacts with the state? No, but while opponents of the racino legislation are declaring the debate over, critical thinkers should follow the money.

Other conservatives have questioned the wisdom of giving government yet another revenue source, even one that is "dedicated" to certain purposes. As P. J. O'Rourke said, "Giving money and power to government is like giving whiskey and car keys to teenage boys."

In her recent e-mail to constituents, Rep. Sarah Anderson reported how Minnesota State Lottery proceeds may not always be going where you think they're going:

...While we all want to protect our natural resources, I am concerned that the House bill does not spend these dedicated funds in the way Minnesota residents expect them to be used. I question whether projects like digital photography classes and online field trips fit the mission of the Fund or the intent of the people of Minnesota.

During debate on this bill, I offered an amendment removing a provision that spent Environmental Trust Fund dollars to install new windows and doors for the director's residence at a learning center in Lanesboro. When a Minnesota citizen buys a lottery ticket or makes a donation on their tax form to benefit the environment, I doubt they are envisioning computer screens, camera lenses, or doors and windows for someone's home.

According to Racino Now spokesman Dick Day in an e-mail sent yesterday, "our racino bill was passed as an amendment to a bill in the Agriculture, Rural Economies and Veterans Affairs Finance Division Committee. The Committee, chaired by our author Rep. Al Juhnke (DFL-Wilmar), passed the amendment through committee on a voice vote with no audible opposition. This is wonderful news and reestablishes the positive momentum that the racino bill has generated this legislative session."

If I could be Dick Day for a day

Recently, you may have seen or heard former state senator Dick Day working as a lobbyist for "the racino," that is, legislation (SF2950) to permit the same video gaming machines that are already running legally at eighteen casinos around Minnesota to be installed at the Canterbury Park and Running Aces racetracks. The morning line has placed long odds on this old nag, which has repeatedly failed to reach the winners circle since 1997, the year then-Senator Day's racino bill first left the starting gate.

Unfortunately, this year as in 1997 and subsequent years, the racino is being sold on its revenue potential for the state of Minnesota's general fund. This is the wrong approach. A majority of Minnesotans have repeatedly said that video gaming revenue is the wrong way to finance state spending. Besides that, as a former Republican Senator, Dick Day knows that Minnesota does not have a revenue problem, it has a spending problem.

In horse racing, when your horse is not winning, you change something: adjust the horse's medication, add blinders, change the leg wraps, adjust the length or intensity of morning workouts or warmup routine, something.

I think that racino supporters should take a different route, one that appeals to the libertarian and fairness aspects of the measure. If I was Dick Day for a day, I would blow away most of the current communications strategy and sell the racino as a liberterian jobs and economic growth bill:

• The racinos would create thousands of jobs and boost the local private economies near each location. Purse supplements from video gaming would enable true investments with true returns (not permanent taxpayer liabilities that are sold as "investments") in Minnesota's private racing, horse breeding, and agricultural industries. In a 2004 University of Minnesota study, the horse industry in Minnesota had an economic impact of $1 billion.
  
  
• Legalizing video gaming machines at the Canterbury Park and Running Aces horse tracks would not represent an expansion of gambling. There is already plenty of gambling going on at these facilities.
  
  
• Video gaming is already conducted at Minnesota's eighteen casinos. Why not allow it at Minnesota's two horse racing tracks?
  
  
• Unlike professional and college sports stadiums, building two racinos will be 100% privately financed, requiring no investment or perpetual subsidy from the state.
  
  

In the current economic climate, the racino bill would give a needed kick to Minnesota's private economy, and provide an additional entertainment option for residents and tourists. From my perspective, the revenue potential is beside the point.

UPDATE: As one of our commenters pointed out, a poll conducted on March 3, 2010 by SurveyUSA found that 80% of Minnesotans favor a racino. So if we had initiative and referendum in Minnesota, we would have video gaming in exactly two additional venues that already conduct gambling.