Casino Watch Focus has reported on the rush of sports betting that has been legalized over the past few years, and a lot of jurisdictions have authorized such gambling during the middle of the Covid-19 global pandemic. With many people at home and online gambling becoming more and more popular, one has to wonder how that has impacted the economy, especially after economic stimulus checks were being handed out. Today’s guest author, John Kindt, University of Illinois professor emeritus, who has testified before Congress and legislatures on business and legal policy issues, particularly in the area of gambling, examined such a question and explains how bans on sports gambling could impact the economy in the University of Illinois Law Review:
A strong economy is essential for U.S. national security. The economic downturn caused by the 2020 COVID-19 pandemic has again highlighted this basic economic principle.
In the context of legalized gambling, Nobel-Prize Laureate Paul Samuelson emphasized that gambling creates “no new money or goods”1 and “subtracts from the national income.”2 The economic multiplier effect of “consumer dollars” is negated or otherwise substantially diminished when consumer dollars are diverted into gambling dollars.3
Therefore, the $2.2 trillion economic stimulus of the 2020 Coronavirus Aid, Relief, and Economic Stimulus Act (CARES Act)4 wasted billions of dollars of the $260 billion allocated for unemployment benefits and the $300 billion allocated in payments to U.S. citizens.5 Intended to put food and other necessities of life in consumer pantries, billions of CARES Act dollars were instead misdirected into lotteries—creating record lottery sales, for example, in Georgia and Texas during the first 30 days of the CARES Act.6
While shutting down productive consumer businesses, governors declared lotteries to be “essential”7—although historically states were receiving only 27 cents per gambled dollar.8 More importantly, U.S. lotteries take $85 billion out of the U.S. consumer economy each year (with only $23 billion going to state budgets).9
Accordingly, the cheapest and most effective way to pump-prime the consumer economy would be to shut down the lotteries. This $85 billion would thereby morph into a consumer economic multiplier resulting in approximately $255 billion in new economic spending on consumer goods (or over $1 trillion in 4 years).10
In his 1999 Martin Luther King Day speech in Chicago, Jesse Jackson emphasized that “[t]he new chains of slavery happen to be . . . lottery tickets.”11 Later in 1999, the state lotteries were savaged by the congressional U.S. National Gambling Impact Study Commission, in its Final Report (“NGISC Final Report”).12Academically, it is well-established that lotteries make “poor people poorer”13 and target-market to minorities14 contributing to gambling addiction rates of: African Americans (2–4%); Native Americans (2–6%), Hispanics (2–3%), and Caucasians (1.2–2%).15
As reported in the Wall Street Journal, these social and economic concerns prompted Mr. Les Bernal, the national director of the charity Stop Predatory Gambling (“SPG”), to write to all U.S. governors and state attorneys general detailing the need to close the state lotteries.16
The 2020 movie Money Machine,17 however, documented the power of the gambling lobby in suppressing adverse facts. While Columbine and Sandy Hook remain in the psyche of the U.S. public, Money Machine details how the October 1, 2017 Las Vegas killings have been sanitized18 via “a web of corruption and cover-ups that make the Vegas of yesteryear, when it was still run by the mob, seem positively quaint.”19 The biggest mass murderer in U.S. history, Stephen Paddock, killed 59 people including himself and injured 413 by gunfire.20 It would be difficult to argue that Paddock did not satisfy the American Psychiatric Association’s criteria for being an addicted or problem gambler.21
All of these facts and trends are well-known to the gambling industry, whose business model has morphed toward abandoning brick and mortar gambling facilities in favor of widespread internet gambling—utilizing sports gambling to build pressure on government decision-makers. Gambling lobbyists are looking to leverage the COVID pandemic and the public’s natural affinity for sports into real-time 24/7 gambling on cell phones and throughout video games.22 In the age of COVID, bans on sports gambling and lotteries would inexpensively and effectively pump-prime the U.S. economic system with billions of dollars in consumer dollars—without CARES-type loans being incurred by the U.S. Treasury.
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