Archive for the ‘gambling’ Tag

Why I’m voting NO on Maryland’s slots referendum

Maryland's flag is one of the best in the Union

Maryland's flag is one of the best in the Union

With Maryland certain to cast its 10 electoral votes for Barack Obama in tomorrow’s presidential election, the most controversial state-wide ballot question is the Constitutional amendment that would legalize slot machines at five locations in the state.  The purpose of the measure is to raise tax revenue for education, but, after a lot of thought, I am going to vote no on the amendment and urge my fellow Marylanders to do likewise.

The problems with gambling are well known: gambling addiction, increased alcoholism and bankruptcy, and the potential for increased crime and family problems.  Treatment and response to these issues could cost $228 million to $628 million annually, absorbing some of the revenue the state would gain through legalizing slots.  Liberals and those interested in social issues should note that these challenges all fall most heavily on the poor, both because they can least afford to gamble and because these taxes are very regressive, they take a much larger percentage of a poor gambler’s income than of a rich one’s—and this is after the General Assembly just increased the regressive sales tax by 20%.  There are good reasons why our state Comptroller, Peter Franchot, opposes the measure.

These are bad for Maryland

Don't believe the hype; these are bad for Maryland

Just as importantly, the many promises of the pro-slots side are unlikely to be fulfilled.  The revenue estimates were made before the current economic downturn and are therefore too high.  Additionally, some of those estimates assume that 100% of the money that Marylanders currently spend on slots in neighboring states will be spent in-state if the measure passes, clearly an unreasonable assumption.  The money won’t be staying here in the Seventh State; the biggest beneficiaries of slots will be wealthy, out of state license holders and horse breeders, not our school children and local business owners.  Many stores and restaurants near the gambling locations will suffer, as just about every dollar stuck in a slot machine is a dollar that would have been spent elsewhere.  And the five locations that slots would be limited to under the current measure are not particularly good spots for such devices; it’s quite possible that this amendment is only allowing slots their foot in the door before a future measure will be needed to fix this one and make slots even more profitable.

Fiscal conservatives may want to note that this measure doesn’t just raise an existing tax, or create a new tax; it creates an entirely new industry—that brings with it all sorts of economic and social problems—just so the state can tax it.  And, since money is the most fungible of all resources, in the future this will probably result in a net increase in state spending, since general revenue dollars that otherwise would have been needed for schools will then be free to be spent elsewhere.  Conservatives like me should also be concerned about subsidizing the horse racing industry.  If I were going to give welfare to an industry, it certainly wouldn’t be one that is non-vital and essentially a form of entertainment.

The Washington Post joins me in urging Marylanders to oppose slots.  You can read their editorial here, and they provide additional information about the issue here. See also what the non-aligned Ballotpedia has to report about the measure.

The revenue raised will likely be much lower than advertised, and less than half the profits would go to education in any event.  Besides, it’s immoral to balance the state budget on the backs of the poor with a regressive tax like this.  The biggest gainers if we amend our Constitution for this will be already rich out of state casino owners who won’t have to worry about the problems we’re creating for ourselves here.  Maryland did well to get rid of slots in 1968; let’s not bring them back in 2008. Vote NO on Question 2.

Intrade markets predict Obama victory

Following last night’s first presidential debate, speculators playing the Intrade prediction markets still anticipate an Obama victory on November 4th.  Intrade is a gambling site where you can bet real money that a certain event will or won’t happen, and the presidential election is just one such event; you buy shares that will pay a fixed amount, I believe $10, if the event happens and nothing if it doesn’t; the value of the shares varies as people buy and sell them as their perception of the likelihood of the event occurring rises and falls.

At this moment, shares that will pay $10 if Obama wins (and nothing if he doesn’t) are trading at $5.60 and shares that will pay $10 if McCain wins (and nothing if he doesn’t) are trading at $4.36.  This means that gamblers—or investors, if you prefer—think there is about a 56% chance Obama will win and about a 43.6% chance that McCain will win; this is a slight move in Obama’s favor since last night’s debate.  They also sell shares for the contests in each of the 50 states plus the district of Columbia.  Currently, speculators think that Obama will win 311 electoral votes and McCain will gain 227, this is with the Democrat winning Nevada, Colorado, Virginia, and, by the thinnest margins, Ohio.

These predictions markets are somewhat like polls in how they attempt to gauge support and predict the ultimate outcome.  However, unlike polls, they anticipate future moves: investors knew that Obama’s poll numbers would rise during the Democratic convention and McCain’s during the Republican convention and share prices took this into account and didn’t move when the expected bumps came.

People interested in the outcome of the election, which is hopefully everyone, may find it interesting to watch the political futures markets.  By putting real money at stake, they attempt to harness the wisdom of crowds, which is often better at predicting the future than even what experts say.

I recently saw the wisdom of crowds at work, though in a considerably different context.  One gentleman, a fireman, had shared an anecdote about the aluminum siding on a house melting in the course of one conflagration he witnessed.  This got me to asking what the melting point of Aluminum is; I didn’t know, and neither did anyone else.  Eventually, I took guesses from everyone to see who could come the closest, promising a prize to the winner.  There were ten guesses, ranging from 162.5° F all the way up to 3200° F.  The actual melting point of Aluminum is 1220.6° F; the two closes guesses were 550° and 1800°.  However, if we’d taken the average of all the guesses (omitting the guess of 8° by the two year old son of one attendee) we’d have 1031.95°—which would have been, by far, the most accurate and would have won the prize: a nickel.

In any event, if you find poll numbers interesting, check out the Intrade prediction market, it just may prove more accurate than Gallup.