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Triple Lutz Report--Casinos Don't Increase Wealth
www.KerryLutz.com ^ | 01/14/2012 | Kerry Lutz

Posted on 01/14/2012 11:41:18 AM PST by appeal2

Many States are scrambling to build new casinos. They mistakenly believe that this is a surefire prescription for more tax revenue and jobs. They’ve bought into the false Las Vegas Myth–that if you build it and it has a blackjack table, a roulette wheel and a craps table–they will come. However, Vegas is looking more and more like Detroit, yet another failed US city. Do politicians believe that encouraging and subsidizing these parasitic industries is going to build wealth? As libertarians we are not against citizens starting and running gambling enterprises. They’ve been doing it since the before the Babylonians and they’re going to be doing long after we’re gone.

What we object to is the unholy alliance of government and big gambling. It is corrupt and it does not serve the public. Selling mega-casinos as a panacea for economic growth is completely fraudulent. The overall wealth of a society that engages in governmental sponsored gambling enterprises actually goes down. While there is an increase in taxe revenues, there’s also a resulting decrease in consumer spending and an increase in social costs, which are never factored into the rigged gambling equation.

While on occasion we have unsuccessfully tested our luck at the tables, we all know that gambling is a vice that can destroy families, increase crime and harm society. Therefore, the government should stay out of it, whether it’s running lotteries, booking sports/horse bets or embracing casinos as a fiscal cure all.

Listen to the Report Now


TOPICS: Business/Economy; Government
KEYWORDS: casinos; gambling; newyork
Think New York can get rich off of casinos. Think again. Just another governmental scam that will hasten its ultimate decline and collapse.
1 posted on 01/14/2012 11:41:24 AM PST by appeal2
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To: appeal2
There are also a number of tribal Casinos that are in default on their bond payments.

Gambling is a regressive tax and impacts those who are most at risk. For a government to target such people for revenue increases is corrupt.

It is time to think of the government as the new Mafia, running numbers (excuse me Lotto & Powerball), allowing gambling if it gets its take (casinos), and now some state's are looking into taxing and regulating drugs (medical marijuana laws, decriminalization, etc.).

Yes government has much in common with organized crime.

2 posted on 01/14/2012 11:48:03 AM PST by Robert357 (D.Rather "Hoist with his own petard!" www.freerepublic.com/focus/f-news/1223916/posts)
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To: appeal2

There is so much more than revenues to the state. It is the price that those who become addicted to gambling pay.
Many lives have been ruined because the greed of the state overlooks the many who can’t stay away from the casino. An example, a man whom I knew personally, is the case of a Coast Guard officer who embezzled $1.4 million from USCG Academy funds between 2004 and 2009. His problem was gambling and his proximity to the casinos just north of New London, CT caused his demise. He committed suicide, on the Academy grounds after being confronted by authorities.

Yes, there are millions who do not become addicted but there are many thousands who ruin their lives.


3 posted on 01/14/2012 11:58:01 AM PST by BatGuano (You don't think I'd go into combat with loose change in my pocket, do ya?)
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To: appeal2

All gambling does is redistribute money, it produces nothing. The only way it can generate money is to bring in money from outside the local economy. Las Vegas could bring money in , because people from all over the world would go there. But now other countries, like China, are building their own Las Vegas attractions. The other casinos in the U.S. are trying to bring in money to their city that would otherwise be spent in Las Vegas.


4 posted on 01/14/2012 11:59:19 AM PST by Vince Ferrer
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To: Vince Ferrer

Gambling = A Tax on stupidity.


5 posted on 01/14/2012 12:02:16 PM PST by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: appeal2

In practice, casinos may be good, bad or indifferent, much like anything else. Arizona is a good example.

There are many tribes in Arizona, and a lot of them are both dirt poor, and *cannot* develop economically because of a vacuum of federal business law. That is, many companies could help them, but can’t, even though the tribes want their help, because the potential liabilities are too great.

When casinos were legalized, those tribes near metro areas suddenly prospered, while the more rural tribes went bust with their casinos, for purely location reasons. So with impressive wisdom and charity, and backed by a state referendum, the newly wealthy tribes pooled their wealth for profit sharing with the poorer tribes.

But then it was like an idealized lesson in an economics textbook. Some tribes used their money poorly, some wisely, and some extraordinarily wisely.

Two wise examples were first one tribe, genetically afflicted with morbid obesity and diabetes, which bought themselves a world class diabetes clinic, that would have been impossible to afford otherwise.

Another tribe, a small tribe, made a dramatic cultural change. They decreed that their tribe now had a purpose, and all tribal members were obliged to be part of it, that all children would have as much education as they could achieve, with everyone in the tribe actively supporting them, for free. A total dedication to intellectualism and academic achievement.

How extraordinary. And all paid for with their share of casino money.

Yet compare this with the casinos not on Indian reservations, and you can see the differences. They are just corporations providing high margin, empty entertainment. A way for “rubes with too much loot” to get brain stimulation by losing their money.

And I mean that particularly, because it has been shown that gamblers get more stimulation in their brains from losing than winning.


6 posted on 01/14/2012 12:18:03 PM PST by yefragetuwrabrumuy
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To: Vince Ferrer

Exactly right. Most gambling proponents argue that in a free society, people should have the opportunity to lose their money any way they wish, and government simply takes a cut in the same way they take a cut of various other enterprises through taxes and fees. But there is no new wealth creation, merely discretionary income being redistributed. Of course the problem comes when people are too stupid or addicted to realize they shoudln’t be gambling with money that is needed for other things, like feeding their kids.

Government should not be in the business of running gambling operations, it should all be done by private businesses that then pay taxes.

Anyone with a basic understanding of probability theory will find another way to dispose of their excess cash.


7 posted on 01/14/2012 12:19:44 PM PST by bigbob
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To: Vince Ferrer

All gambling does is redistribute money, it produces nothing.”

And liberals are incapable of understanding capital and wealth; they only “understand” stimulus and distribution.


8 posted on 01/14/2012 12:32:39 PM PST by ConservativeDude
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To: Vince Ferrer; ConservativeDude
All gambling does is redistribute money, it produces nothing.

Much like the "Service Economy" that was palmed off on the public as to supplement to the offshoring of factories.

9 posted on 01/14/2012 12:52:06 PM PST by Oatka (This is America. Assimilate or evaporate.)
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To: Vince Ferrer
All gambling does is redistribute money, it produces nothing.

I suppose that is so, if you consider entertainment and fun nothing. But by your standard. Sports are nothing. Movies are nothing. Theater is nothing. Television is nothing. And on and on...

Millions of responsible people part with an amount of money they can easily afford while having a great time gambling (not me, I find it boring and/or too nerve wracking). That is something.

The horse is out of the barn on legalized casino gambling. The revenues can go to state and local government, or it can go to Indian tribes. That's the only decision to be made at this point.

10 posted on 01/14/2012 12:58:48 PM PST by Minn (Here is a realistic picture of the prophet: ----> ([: {()
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11 posted on 01/14/2012 1:03:27 PM PST by DJ MacWoW (America! The wolves are here! What will you do?)
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To: bigbob
But there is no new wealth creation, merely discretionary income being redistributed

Yes, there is. Entertainment is part of what constitutes wealth. People's lives are immeasurably richer, due to the entrainment options a prosperous society makes available to them. Gambling is one of those entertainment options. Millions of people have priceless memories of great times had in Vegas hotels and casinos. That's wealth by any standard, whether you approve or not. Why is that so hard to understand?

12 posted on 01/14/2012 1:05:23 PM PST by Minn (Here is a realistic picture of the prophet: ----> ([: {()
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To: bigbob
Anyone with a basic understanding of probability theory will find another way to dispose of their excess cash.

Maybe that's true, if they derive no entertainment value from gambling. If, however, the value of the entertainment derived, exceeds the house edge on the amount they plan to risk, people with an advanced understanding of probability and statistics can and do gamble, and maximize their wealth and happiness in doing so.

13 posted on 01/14/2012 1:11:01 PM PST by Minn (Here is a realistic picture of the prophet: ----> ([: {()
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To: appeal2

They CAN get rich if they use gambling to bring in more tourists...But that requires them to be the only state nearby with gambling.


14 posted on 01/14/2012 1:13:34 PM PST by mamelukesabre
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To: Minn

Entertainment is not wealth. You must have wealth BEFORE you have entertainment, otherwise you will never have a market for entertainment.

Example: you can’t sell cadillacs and caviar to starving ethiopian refugees...and you can’t sell them trips to vegas either.


15 posted on 01/14/2012 1:16:44 PM PST by mamelukesabre
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To: Minn
I agree that it is a form of entertainment. However, I can't think of any other form of typical entertainment that doesn't have a statistically significant addiction level for mature adults (assuming that ingesting something isn't part of the entertainment!) that can lead to some serious consequences. Can anyone think of any other type of entertainment with serious addiction consequences? And sex addiction doesn't count.
16 posted on 01/14/2012 1:18:59 PM PST by Controlling Legal Authority
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To: appeal2

A casino is just like a government. Whatever they pay out to anyone they first must take from someone else. But, it also keeps the lion’s share of what it takes in for itself.


17 posted on 01/14/2012 1:21:23 PM PST by N. Theknow (Kennedys=Can't drive, can't ski, can't fly, can't skipper a boat, but they know what's best for you.)
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To: mamelukesabre
Entertainment is not wealth.

Then neither is a Cadillac. And neither is a bushel of soy beans. Let's say they are all goods; goods that require capital and labor to produce. They are products that may or may not exceed the value of the inputs that went into creating them. And when they do exceed the value of the inputs, that is the creation of wealth. It's silly to say that the gambling industry produces nothing. If they produce nothing, then GM produces nothing as well, because poor Ethiopians have little to trade in return for the wealth their efforts generate.

18 posted on 01/14/2012 1:53:29 PM PST by Minn (Here is a realistic picture of the prophet: ----> ([: {()
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To: appeal2

Government gambling is a tax on every industry that survives by attracting disposable income by supplying amusements; Ski hills, bars, movie theaters, legitimate theaters, pro sports, etc. etc. etc.


19 posted on 01/14/2012 1:54:00 PM PST by DManA
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To: appeal2

Just the ruling class giving its citizens another tool to remain poor and dependent.


20 posted on 01/14/2012 1:54:24 PM PST by CSM (Keeper of the "Dave Ramsey Fan" ping list. FReepmail me if you want your beeber stuned.)
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To: Minn

Most Americans have no moral objection to gambling. The only question left is why in most states ownership of the industry is by law restricted to certain ethnic groups and crony government scams.

I refuse to patronize an industry that I am forbidden from owning equity in.

Time to deregulate the gambling industry.


21 posted on 01/14/2012 2:01:22 PM PST by DManA
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To: Minn

Then neither is a Cadillac.
~~~~~~~~~~~~~~

Well, you’re starting to get it. Lets try this again.

You can’t sell a cadillac to a starving ethiopian refugee because_____?

You can’t sell a vegas trip to a starving ethiopian refugee because_____?

You fill in the blanks.

Here’s a hint for ya. Money is not wealth either. Money in the savings account is a TALLY of surplus. Surplus is production minus consumption.

When a person chooses to waste a portion of their surplus on entertainment, they are not producing wealth. Remember the phrase “bread and circus” from the days of ancient rome?

I think I’ve given you plenty of hints now.


22 posted on 01/14/2012 2:08:33 PM PST by mamelukesabre
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To: Robert357

“It is time to think of the government as the new Mafia, running numbers (excuse me Lotto & Powerball)...”

The big problem with government is that its payout is worse than the mob’s. The Mafia used to pay out 85% of gross revenues to winners; the state lotteries average less than 60%. Winners of big lotto jackpots then get the privilege of paying income taxes on their winnings, which bring the payout down to something like 40%. Oh, and the state lottos are even more fraudulent about their numbers games than the mob was. E.g., when the mob promised a payout of, say, $10000, the winner got $10000, not the discounted present value of $500/year paid out over 20 years.


23 posted on 01/14/2012 2:10:17 PM PST by Skepolitic
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To: Controlling Legal Authority

Well, if you suffer from di-somey X syndrome, then “shopping” might qualify.


24 posted on 01/14/2012 2:10:56 PM PST by mamelukesabre
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To: appeal2
Do politicians believe that encouraging and subsidizing these parasitic industries is going to build wealth?

Nah. They just want make it easier for people to gamble in their own jurisdictions so they can siphon off a chunk of the take. It really is a sign of how low we've let our country sink.

25 posted on 01/14/2012 2:38:09 PM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: appeal2
I was a trustee at an Eagles Lodge for several years. Membership and revenue were slipping and we were going down until we got some gambling income going. It was only a temporary reprieve though. It may have prevented us from having to face reality and make some tough decisions in the long run.

We got just a few of those video slot machines. That kind of gambling is illegal in our state but everyone gets around it. Bars have those machines marked “amusement only” and they pay off under the table. The way it works is that only regular customers, or members in the case of a private club, can play for real. If you run a bunch of credits up, you signal the bartender and they write down what you had and clear the machine. You come in the next day and pick up your winnings.

We always had several guys bitching that if the state would just make gambling legal, we'd have it made. It was so unfair that the tribe could have our local casino, but we couldn't have legal gambling at The Lodge. I never argued with them much about that, but suggested The Eagles statewide try and lobby for an exemption from the gambling laws for fraternal organizations like ourselves.

I realized that if every bar in town had legal gambling, none of us would gain anything. That's the way it works nationally. Once it's everywhere, it's just a drain on the economy. It seems unfair to just have gambling in a few areas, and see those cities or states kick ass, but at least someone comes out ahead on it that way.

I was all for the tribal gaming and state lottery when those came up for vote. I'd probably vote against them if I had it to do over.

26 posted on 01/14/2012 2:44:52 PM PST by brewguru
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To: mamelukesabre

Excellent point. When people didn’t have disposable income and they were less mobile, they found other ways to entertain themselves.


27 posted on 01/14/2012 4:06:11 PM PST by appeal2 (Don't steal, the government hates competition.)
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To: mamelukesabre

Excellent point. When people didn’t have disposable income and they were less mobile, they found other ways to entertain themselves.


28 posted on 01/14/2012 4:06:11 PM PST by appeal2 (Don't steal, the government hates competition.)
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To: mamelukesabre

Excellent point. When people didn’t have disposable income and they were less mobile, they found other ways to entertain themselves.


29 posted on 01/14/2012 4:06:11 PM PST by appeal2 (Don't steal, the government hates competition.)
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To: mamelukesabre

Excellent point. When people didn’t have disposable income and they were less mobile, they found other ways to entertain themselves.


30 posted on 01/14/2012 4:06:12 PM PST by appeal2 (Don't steal, the government hates competition.)
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To: appeal2

Only 2 ways to create wealth. Manufacture a product or extract something from nature.


31 posted on 01/14/2012 4:32:05 PM PST by wordsofearnest (Proper aim of giving is to put the recipient in a state where he no longer needs it. C.S. Lewis)
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To: appeal2

Only 2 ways to create wealth. Manufacture a product or extract something from nature.


32 posted on 01/14/2012 4:32:16 PM PST by wordsofearnest (Proper aim of giving is to put the recipient in a state where he no longer needs it. C.S. Lewis)
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To: appeal2

Only 2 ways to create wealth. Manufacture a product or extract something from nature.


33 posted on 01/14/2012 4:32:16 PM PST by wordsofearnest (Proper aim of giving is to put the recipient in a state where he no longer needs it. C.S. Lewis)
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To: wordsofearnest

If you want to boil it down to the most basics...

Wealth is plentiful food, clothing, shelter...and methods to acquire them for minimal exertion. Everything else is just means to this end. Energy is just a means to obtain the 3 basics with as little exertion as possible. Transportation is just means to these ends as well. So is technology and manufacturing. An economy is just a mechanism by which people specialize in various tasks that are necessary to create the 3 basics. Those who contribute more, get more. In theory.


34 posted on 01/14/2012 4:54:01 PM PST by mamelukesabre
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To: mamelukesabre
Well, you’re starting to get it.

Gee, thanks, Professor.

You can’t sell a cadillac to a starving ethiopian refugee because_____?

Because he is not a participant in the wealth creating market. Apart from distance, he is forced to participate in a commodity based, low margin economy, hobbled by despotism. His economy lacks the resources and know-how to manufacture advanced automobiles, or much else of high value. The poor Etheopian guy just isn’t a participant because he has nothing to trade. The fact that he can’t buy a car has nothing to do with whether or not the production and consumption of automobiles is a wealth producing activity, and whether a new Cadillac is wealth. Sadly, that car won't stay shiny forever. As it’s used, the wealth in the car is depleted until, someday, it meets the crusher. That doesn't mean producing and consuming that car wasn't an exercise in creating and productively utilizing wealth in a fashion that beat all other alternatives for those involved.

You can’t sell a vegas trip to a starving ethiopian refugee because_____?

Because he is not a participant in the wealth creating market. Apart from distance, he is forced to participate in a commodity based, low margin economy, hobbled by despotism. His economy lacks the resources and know-how to build and staff gleaming casinos, or much else of high value. The poor Etheopian guy just isn’t a participant because he has nothing to trade. The fact that he can’t gamble has nothing to do with whether or not the production and consumption of casino floors is a wealth producing activity, and whether a blackjack table, staffed with a dealer, is wealth. Sadly, the joy of the casino experience won’t last forever. The two things necessary to enjoy it, time and money, pass. Eventually it is time to go home. That doesn't mean building and staffing the casino wasn't an exercise in creating and productively utilizing wealth in a fashion that beat all other alternatives for those involved.

And a paradoxical thing about entertainment as a wealth producer verses things, is that entertainment, and the memories it produces, tends to bring lasting happiness more than things. People carry priceless memories of trips they took and shows they see that enrich their lives up to the moment of death. I would never trade the memories from my travels for the money I spent to take the trips, and neither would you. I wasn’t wasting anything by entertaining myself; I was building the kind of wealth that matters. The airlines, hotels, restaurants, and entertainment venues along the way contributed to my wealth and their own wealth at the same time. It is not a zero sum game, as anybody with the most rudimentary understanding of economics understands. There has to be balance, of course. Overspending on the here and now can cause serious problems. But it is the guy that stashes away every penny, while carping about how those enjoying their lives are “wasting” that is truly squandering his most important asset: time.

You fill in the blanks.

The blanks you wish filled in shows you’ve fallen for a Keynesian trope. The idea that wealth creation is driven by consumer’s wherewithal to buy things is backwards. Wealth is created by production, not demand. Demand is always unlimited. It can only be satisfied by production. Bringing demand in line with supply is the job of producers, not consumers. Collectively, all production is what brings wealth and brings consumers needs and desires in line with the possibility of acquisition and consumption. This is the primary reason that Keynesian pump priming is nonsense. Handing people money to spend, that has been taken from others, creates no wealth. Building and staffing a casino that people desire to gamble in does produce wealth, for the producer and the consumer.

Here’s a hint for ya. Money is not wealth either. Money in the savings account is a TALLY of surplus. Surplus is production minus consumption.

So by that reasoning, a guy with millions of dollars in the bank is not wealthy. He just has more credits than debits. That’s really deep, man. What would I do without our hints?

When a person chooses to waste a portion of their surplus on entertainment, they are not producing wealth.

Waste? Seriously? All money spent on entertainments is wasted? Why, because it could have gone to the grave with the person instead? I think maybe I need to be in a different class.

Where in the world did you ever get the silly notion that the production of entertainment is not the production of wealth? Are all the movie theaters in the country, all the television networks and stations, all the roller rinks, all the ski resorts, not wealth? Are we not collectively richer for the behavior that results in their production and utilization? Wouldn’t life suck on a massive scale, and hardly be worth living, without all of that “wasting” behavior? Wouldn’t we all be poorer?

One of the greatest and most prolific producers of wealth in this country is a little entertainment firm called the NFL. Have you noticed the enormous pleasure and joy (wealth) they are able to create simply by having men run around on a field and hit each other once a week in the autumn? They create so much wealth that a national holiday has been spawned where vast swaths of people gather to consume it. If you tell me that isn’t wealth production, but just people squandering wealth on a silly game, I will have to conclude that you are hopelessly obtuse and really don’t understand the topic.

Remember the phrase “bread and circus” from the days of ancient rome?

Yes, it’s been used around here ad nauseum (over 4000 times believe it or not), usually by people attempting to appear learned and erudite, while informing us that some fun activity or another is beneath them and portends the end of Western Civilization. It is rather tiresome.

I think I’ve given you plenty of hints now. ‬

How kind of you.

35 posted on 01/15/2012 9:48:00 AM PST by Minn (Here is a realistic picture of the prophet: ----> ([: {()
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