Opposition to Expanded Gaming Grows in Minnesota

Published June 1, 2005

Faced with a $466 million budget shortfall, the lure of “easy money” is leading many political leaders in Minnesota, including Republican Gov. Tim Pawlenty, to advocate the expansion of gambling to help fill the state’s coffers.

Pawlenty proposes to have the state enter into a partnership with Northern Minnesota Indian tribes to open a state-run casino in the Twin Cities. Pawlenty’s plan would require tribes to take on $575 million in debt to build the casino and to pay a one-time state licensing fee of $200 million.

The state and tribes would then share the profits. The governor would use the $200 million licensing fee to help plug a projected $466 million budget shortfall in the upcoming biennium.

Other Minnesota political leaders from both political parties also have offered legislation to expand gambling.

State Senate Minority Leader Dick Day (R-Owatonna) has proposed a “racino,” which would allow the Canterbury Park horse race track to add an area for video slot machines, provided the state receives a portion of the revenues. Democrat state Rep. Tom Rukavina (DFL-Virginia) is sponsoring legislation that would allow establishments that sell beer or liquor to have video slot machines to be played by persons 21 or older.

Attorney General Dissents

Minnesota Attorney General Mike Hatch (D) has issued a legal opinion stating Pawlenty’s proposal would violate the Minnesota State Constitution. The governor’s office disputes that opinion.

The attorney general ruled that the 1988 constitutional amendment allowing a state lottery does not permit state involvement in a casino. He said the issue would need to be brought before voters.

In addition, some organizations are urging the governor and other state leaders to consider the social and economic costs of gambling before pushing for its expansion.

“Minnesota political leaders can’t talk about expanding gambling and at the same time ignore the true costs associated with gambling,” said Annette Meeks, chief executive officer of Center of the American Experiment, a Minneapolis think tank. “Expanded gambling is not a harmless way for the state to collect more revenue.”

One legislator who is bucking the gambling expansion craze is state Sen. David Hann (R-Eden Prairie), who has introduced legislation to do away with the Minnesota State Lottery.

Critics Cite Gambling’s Costs

While Minnesota’s gambling expansion proponents have heralded it as a boon for the state, critics say they have done little to address the social costs of expanded gambling. To help bring that issue to the attention of state political leaders, Center of the American Experiment in April hosted a forum with nationally known gambling expert Earl Grinols, an economics professor at Baylor University who has extensively studied gambling.

Grinols told forum participants, including Pawlenty’s chief of staff, Dan McElroy, that gambling expansion in Minnesota is “coming from the wrong place, it’s coming from the wrong people, and it’s coming at the wrong price.”

Citing a study by the Ontario Problem Gambling Research Center, Grinols reported 48 percent of casino revenues typically come from problem and pathological gamblers.

Economic Costs Outlined

Nationwide, Grinols said, “the social costs of problem and pathological gambling are between $32.4 billion and $53.8 billion” annually.

One of the costs associated with gambling is increased crime. Based on raw data, Grinols said, 12.6 percent of the crime observed in casino counties would not be present if casinos were absent.

Grinols has urged lawmakers and Pawlenty to conduct comprehensive studies of the likely impact of gambling in Minnesota before proceeding with its expansion, and state Rep. Frank Hornstein (DFL-Minneapolis) has introduced legislation to require such a study. On April 2, the Minneapolis Star Tribune quoted Hornstein as saying, “when these gaming proposals are brought before the legislature, the potential for significant social and economic costs should be front and center in the debate.”

Critics Being Heard

Efforts to bring the social costs of gambling to the attention of Minnesota political leaders appear to be paying off. Shortly after Grinols’ presentation, a state Senate committee voted overwhelmingly against the creation of a state-run casino and a racino proposal. The state House of Representatives passed two separate budget bills–one that includes revenue from a state-run casino and one that does not– indicating lawmakers are giving serious consideration to going forward without gambling revenues.

Despite those setbacks for the governor’s plan, Pawlenty’s chief of staff has hinted expansion of gambling may be worked out in last-minute, closed-door budget negotiations later this spring.

Meeks said regardless of what happens to the proposals currently being debated before the legislature, gambling expansion will continue to be an issue facing Minnesota in the near future.

“Legislators and other state leaders have gotten it into their heads that expanded gambling is a panacea for the financial problems facing state government,” said Meeks. “As long as they continue to operate on that false assumption, Center of the American Experiment will continue to educate them about the fact that expanded gambling also comes with social costs that are just too high for the people of Minnesota to pay.”

Randy Wanke ([email protected]) is director of communications for Center of the American Experiment.

For more information …

Center of the American Experiment recently released a report on the social and economic costs of gambling. The Minnesota Policy Blueprint report on “Gambling in Minnesota” can be found on the group’s Web site at http://www.americanexperiment.org.