Hawaii League of Women Voters says legalized gambling is still the wrong bet

Beth-Ann Kozlovich

with Beth-Ann Kozlovich

HONOLULU—It’s a fairly common phrase: “Hawaii is a special place.” When it comes to gaming, that’s certainly so—only Hawaii and Utah bar gambling.

But in this legislative session, that may change. A record number of gambling bills, 16, have been introduced. Only two of them amend the definition of gambling to clarify that ad tab machines are a form of gambling. The rest range from proposals to have a stand-alone casino in Waikiki, shipboard gaming in Hawaii waters, a non-binding referendum on the ballot of the 2012 general election to permit gambling in the State, another referendum for a State lottery, an amendment to the State Constitution to legalize slot machines and video poker machines and to allow gaming on Hawaiian Home Lands.

About that last one: The Hawaiian Affairs Committee has already voted 9-1 to advance a bill allowing bingo on Hawaiian Home Lands on at least one site. That location would be designated by the Hawaiian Homes Commission. If passed as written, 80 percent of general excise taxes on gross bingo receipts would be deposited into a Hawaiian Home Lands trust fund. The rest of the money would go toward the State general fund, administrative expenses, and compulsive gambling programs.

To see House Bill 1225, relating to Bingo, click here

Last Friday, the measure moved on to the Judiciary Committee. Meanwhile on the previous day, the Senate Committee on Tourism also considered a gaming bill. Senate Bill 602 proposes an amendment to the State Constitution to legalize slot and video poker machines. The committee will take up the measure again this Tuesday, February 15.

To see Senate Bill 602, relating to slots and video poker, click here

The phenomena of having so many gambling bills pepper the Legislature this session was to be expected says Baylor University Distinguished Professor of Economics Earl Grinols.

“There is a cycle that the country is going through and it has been on the cycle for about the past 20 years,” Grinols says. “Every time there is downturn in the economy or some recession or budgetary problems in the states, the gambling industry picks a state, targets an area they want to expand into, and moves there telling the local population and Legislature ‘we can provide money, we can fund education, we can give you jobs’ and the experience here is a reflection of that.”

Grinols spent a whirlwind trip last week talking to lawmakers and making public presentations at the behest of the non-partisan organization, The League of Women Voters (LWV). In 1994, Grinols was one of the first academicians to testify before Congress and recommend that it establish a national commission to study the impact of casino gambling. Two years later, the National Gambling Impact Study Commission was formed, and, in 1999, it released its recommendation calling for a moratorium on gambling expansion.

Dr. Grinols’s book, Gambling in America: Costs and Benefits (Cambridge University Press, 2004) details his research and is in part the reason why the LWV brought him to Hawaii.

Of the current arguments that gambling will keep revenue and gamblers in Hawaii, Grinols is categorical: The numbers don’t work.

“The way the issue is being discussed in terms of bringing money to Hawaii is the reverse of what it would it would do,” Grinol says. “Gambling will lose money for the existing economic base in Hawaii on top of bringing social costs. At whatever level gambling begins in Hawaii that will not be its final resting place.”

To illustrate, Grinols uses an analogy of a bathtub filled with water to represent Hawaii’s economic base including resident and visitor populations—and he says from an economic perspective both must be used.

“What the gambling industry has proposed in their study of the year 2000, and this has been recited this time around, is that their casinos and operations would draw from new visitors to Hawaii, about 10 percent,” Grinols explains. “So imagine putting in an additional gallon of water into the tub. But they’re going to be taking out of the bathtub 10 gallons of water so most of their clients will be coming from Hawaii’s existing base and they will be diminishing the local economy because they will be diverting revenues that will go into their own coffers.”

Even if the interests are locally owned, Grinols says that based on past research of other states, “mainland” gambling interests will scoop up local gambling businesses and the money will flow out of the State as will Hawaii gaming population.

“Our perceptions are the opposite of what’s happening,” Grinols says. “In Las Vegas in the 1990s, the gambling industry opposed an expansion of gambling in other areas. But that led to a boom in Las Vegas.”

As counter intuitive as that may seem, Grinols says there is a logic behind it. People get tired of their local gambling establishments and want to go off to the big time gambling experience of Las Vegas. Add on the layer of Las Vegas interests owning external gambling establishments and the money funnels right back to Las Vegas.

There is no such thing as a little bit of gambling.

Moreover, Grinols says the gambling lobbyists will infiltrate the Legislature and take whatever toehold it may have gained through a bill limiting gambling “just to” this or that. It will continue to work at gambling expansion until it becomes major moneymaker—for them. There is no such thing as a little bit of gambling, he says and to believe that somehow Hawaii will escape the fate of the other 48 states is to be especially naive.

The LWV has grappled with the Hawaii gambling question for over a decade, according to Susan Dursin, the Hawaii County League of Women Voters co-president and chair of a study committee that considered legalized gambling. Despite having their information in the public sphere for 10 years, she says many people are still looking at the issue in a vacuum.

“There are a number of people who simply don’t understand the research that has come out or the economic impacts and they really need to be educated,” Dursin says. “They are looking one specific, contained answer to the problem and there is the slippery slope. It’s like being half pregnant.”

Dursin says the LWV reviewed a great deal of literature in late 1990s and were open-minded about what gambling could bring to Hawaii. She says “the League way” is to present pros and cons, but that even after the process finished, members still had more questions about the effects of gambling on Hawaii than had been answered.

“In the end, we saw that the benefits were more than offset by the costs to us, both measureable in dollars and those unquantifiable,” Dursin says. “So we came out in opposition to any form of legalized gambling. We have not seen evidence in the time since that study was done to change our mind. In fact, evidence that is coming out from people like Dr. Grinols shows us that was the right decision.”

Grinols points to two types of impact studies used to assess the total impact of gambling on a community. There is crossover information used to create the economic assessment of a new industry and the sociological impact on wellbeing in the cost-benefit studies. Both sides of the coin amount to the same thing: Even when big money is generated, the seeming upside of gambling is far outweighed by the problems and the even bigger hard costs to treat those problems.

“The costs are three times the benefits when properly calculated,“ says Grinols. “I’m saying hold the line. To abandon that now is to adopt a permanent situation for a short term problem.”

The entire interview with Dr. Earl Grinols and Susan Dursin plus the opinions of callers is on the Town Square archive at www.hawaiipublicradio.org. Reach Beth-Ann Kozlovich at [email protected]. Town Square airs live every Thursday evening at 5 on KIPO 89.3 and your calls are welcome.