The desire to gamble is as old as man, you may say. Even the Pandavas and Kauravas, hobnobbing as they were with the Gods, could not resist the temptation and paid a hefty price for their indulgence.

Activities like drinking, prostitution and gambling have always been tricky issues for public policy. Should the State take the responsibility of determining a place in society for these activities or should it be left to the individual? The debate between the economics and morality is a continuing one.

Massachusetts is now well on its way to be the newest state in the US to allow casinos within its borders. The lower house has approved it with the votes in favour almost four times those against. The upper house will also do so soon, and then four gambling facilities (three casinos and one slot parlour) will be licensed.

With a national unemployment rate stuck at about 9 per cent and states having to cut back on their social programmes due to budget constraints, the focus is on jobs and revenues. And the justification for casinos has mostly been centred on those two themes.

Three issues

Three critical issues are intertwined in determining the potential for success of the venture. All three will influence bids for the licences. The first is the number of licences. The State picked on four that would be distributed geographically around the state, and also reserved one of the casinos conditionally for the native American tribe of Mashpee Wampanoag. If they cannot find the land and satisfy the conditions, it would revert to open bidding.

US federal laws give preferences to native American tribes to operate casinos on their lands, putting them outside the pale of state jurisdiction. The Wampanoags who do not have a reservation in the state would likely face court challenges on this preference.

A second potential troublesome area is the cost of the licence. The state has set a minimum price for the licences that would be auctioned, which is perhaps the only sensible way to deal with a commodity whose asset value is difficult to estimate, like spectrum licences. The onus is on the bidder to judge the value and thereby the potential return.

A third problem is the tax rate. This has been fixed at 25 per cent of the revenues of casinos and 40 per cent of the revenues of the slot machine parlour. This puts the Massachusetts rates in about the middle of the range in the nation that has taxes between about 7 per cent (in Nevada, with its popular destination of Las Vegas) and 57 per cent (in Pennsylvania). It has been irksome to the politicians of Massachusetts that casinos in the neighbouring state of Connecticut draw the people of the former. And Connecticut's 25 per cent rate provides a benchmark from which it is difficult to wander afar.

Before chickens hatch

It is in the interest of the state not to kill the goose that lays the golden egg, so tax rates and regulations would have to be carefully designed to keep casinos operating successfully, since the state is justifying the legalisation as a means for jobs and revenues and, to quote the Governor, to “spur other economic growth in the state”.And so staying with the fowl metaphor, we find the politicians indulging in the time-worn principle of counting chickens before they are hatched. The state has revealed how the revenues are to be spent.

Included in the list of earmarks are schools who will receive 14 per cent; 25 per cent will go to cities and towns to ‘help preserve jobs and services', 5 per cent to combat compulsive gambling, and so on. The state argues that 7,000 direct jobs and 3,000 indirectly would be created.

Age of lesser morals?

It must be okay for the state to go ahead with allowing gambling when it is meant for ‘good' causes, right? Which brings us to the moral objections, the missing voice in the debate. It has taken many years of discussion and failed legislation before coming to this stage where casinos will become a reality. After all, Massachusetts was founded as a colony by Puritans, so legalising gambling was not going to be easy. But the opposition of previous years has been muted this time around, perhaps due to sheer fatigue.

The Catholic Church, a vigorous objector in the past, is itself weakened from the allegations and settlements on child abuse. Or perhaps it is a sign of the times.

Those opposed to the march towards gambling have been arguing that the costs will outweigh the benefits. That it, is a tax on the poor who are tempted to, but can ill-afford, the indulgence, and that it will lead to crime and addiction problems. So the best of intentions to protect the public are included in several amendments to the bill.

And as you get ready to go to the casinos, keep in mind how the state strives to protect you: ATMs in the casinos cannot dispense more than $100 (about Rs 5,000) a day to help you limit your spending; there will be clocks on the walls to help you keep track of time spent; casinos would be prohibited from releasing pheromones into the air (reportedly an industry practice to make people gamble aggressively); and workers would check the cars for children abandoned, while their parents are inside contributing to the revenues of the state and helping jobs growth.

(The author is professor of International Business and Strategic Management at Suffolk University, Boston, US. blfeedback@thehindu.co.in )

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