Riverboat gambling, competition and taxes

When Adam, then 10 years old, and I traveled to Rising Sun, Ind., in May 2010 to attend the christening of the AEP towboat Hoosier State, about the only thing we knew of the town was that it was on a two-lane road along the river west of Cincinnati. In other words, it would not be an easy place to get to. On the road along the river, we and other cars were delayed a bit by a tractor pulling a piece of farm machinery.

When we arrived at Rising Sun, we found the riverboat casino before we found the park where the christening would be held. After the ceremony, as we were about to leave, we were invited to go along on the VIP ride on the boat. As we left the park, we got a good view of the floating casino.

One thing I learned in my first incarnation as a newspaper reporter was that gambling is an arms race. If one state starts a lottery or allows slot machines at racetracks or floating casinos or casinos on land, it brings in tax revenue as people from out of state come in to play. As other states notice that, they, too, must add gambling. That puts a hurt on the first states to adopt gambling. That is what happened here in West Virginia, which was the first among its neighbors to get into the gambling business other than a state-run lottery. Now its neighbors are stepping in, and competition hurts.

I got to thinking about that as I read this article on The Atlantic's website about how casinos do not really help a local economy, at least in the long run. Then I found this article that talks about how Indiana's casinos, including the one at Rising Sun, are hurting after Ohio allowed casinos within its borders.

Sunday morning I checked information from the West Virginia Lottery on its table games tax revenue. Table games are those such as blackjack and poker that combine skill with chance. There are a number of such games allowed in West Virginia -- 25 as of the end of July. In the 2013-14 fiscal year, which ended June 30, the state collected about $50.64 million in taxes from table games. The year before, it collected $78.12 million. The year before that, $68.15 million.

 In the first four weeks of this fiscal year, West Virginia collected $3,623,243.89 in taxes from table games. That was down from $4,252,716.13 last year and $5,999,239.11 in fiscal 2013, which really was in July 2012.

I've heard the state lottery described as being a voluntary tax. Some people call it a tax on stupidity. Perhaps it's also a desperation tax or a boredom tax. Most of the people I have seen buying lottery tickets here in the Huntington WV area are older, except when an online jackpot such as Powerball or Mega Millions goes above $300 million. The Atlantic article says casinos rely on older and problem gamblers to stay in business.

In my first and only incarnation as a newspaper opinion writer, I asked how far West Virginia would go in the gambling arms race and how far it could afford to go. There is a possibility one of the two houses in the Legislature could flip to the Republican side after this year's election for the first time since the Great Depression. I don't know if that would affect how lawmakers support the state's gambling interests, but it would be interesting to find out.

Meanwhile, the people of Rising Sun and other Ohio River cities that are home to floating or land-based casinos are probably wondering how much longer the downturn in gambling revenues will last, and how they will prepare if it becomes a permanent fact of life.