Washington initiative promises painless tax cuts; critics dubious

Rebecca Cook

Wednesday, Oct. 13, 2004 | 8:54 a.m.

SEATTLE -- The sponsors of Initiative 892 have a surefire bet for voters this fall -- cut property taxes without cutting the state budget.

There's just one catch. The initiative would allow up to 18,000 electronic slot machines in restaurants, bars, bowling alleys, non-tribal casinos and card rooms. A 35 percent tax on the machines would pay for the property tax cuts.

Initiative supporters say it's a no-pain, all-gain way to cut taxes.

"It costs you nothing if you're not a player," said Jerry Allen, vice president of operations at Hawk's Prairie Casino in Lacey, Wash.

But academic and government studies over the years show that expanded gambling does cost society.

People who live within 50 miles of a casino are twice as likely to become problem gamblers than those who live further from gambling opportunities, according to a national survey of 2,400 adults for the 1999 National Gambling Impact Study Commission. And the roughly 5 million problem gamblers in the United States cost about $5 billion a year in social services, reduced work productivity and creditor losses.

Another study found that personal bankruptcy growth rates in counties with casino gambling was more than double the rate in counties without casinos. The study's authors, two professors at Creighton University in Omaha, Neb., analyzed records from all 250 counties that had casino gambling in the 1990s and matched them against non-casino counties with similar demographic and economic profiles.

"Just common sense tells you that the more available and accessible you make something, the more people do it," said Tom Grey, executive director of the National Coalition Against Legalized Gambling. "If you have drug or alcohol addiction, everyone assumes there's a cost to that. Gambling has been sold only as a benefit. You can't gamble yourself rich as a state any more than you can as an individual."

Right now in Washington, only tribal casinos can offer slot machines.

Initiative sponsor Tim Eyman, the man behind a string of popular tax-cutting initiatives, insists that I-892 won't increase the number of gamblers in Washington state, only the number of choices for people who already gamble.

"People who like playing these machines have a choice now -- they can fly to Reno, fly to Vegas, or go to a tribal casino," Eyman said. "This will just give the fixed number of people who play these games a different place to go."

Eyman is the public face of I-892, but the money behind the campaign comes from non-tribal casinos, card rooms, bowling alleys and other businesses that hope to benefit from electronic slot machines. They spent $821,800 paying for signature-gatherers to put the measure on the ballot, and now the campaign was in debt according to campaign disclosure statements filed last month. More recent contribution reports indicate more money is coming in.

Likewise, the "No on I-892" group is a broad coalition of civic and religious leaders. But the money for the campaign comes from tribes with casinos that want to protect their business. The tribes have donated more than $5 million to defeat the measure.

"The fight is really between those that already have it and those who want to cut into their pie," said Las Vegas political consultant Nancy Todd Tyner, who has worked on gambling issues across the country.

Tyner said gambling initiatives succeed most often when the money is earmarked for a specific purpose that voters understand and like. Advantage Eyman -- everyone likes property tax reduction. But, she said, it's hard to pass a gambling initiative if the pro-gambling forces are split like they are in Washington.

Tyner supports regulated, taxed gambling, though she said she prefers casinos to the stand-alone slot machines, which are more addictive and don't create as many jobs.

The same studies that describe gambling's cost also show some positive effects. Counties with casinos have lower growth in business bankruptcies than counties without gambling. And unemployment rates and welfare costs decrease by about one-seventh in communities with a new casino, according to the National Gambling Impact Study Commission.

While the rosy picture painted by initiative supporters isn't entirely accurate, neither are the dark predictions of some initiative opponents. At the kickoff of the No On I-892 campaign, some community leaders raised fears that electronic slot machines would be in every corner convenience store. Gov. Gary Locke cautioned against allowing wide-open, Las Vegas style gambling.

However, the initiative is more limited than that. I-892 would only allow the games in over-21 places that already are licensed for some sort of gambling. Electronic slots wouldn't be in 7-11s or grocery stores.

One remaining question about I-892 is how much relief taxpayers would actually get. Eyman says the revenue on the games will be $400 million, "the largest property tax cut in state history." But state officials predict the tax relief would actually be only $252 million, or $32 on a $100,000 home.