Gambling is about freedom, not government revenue

Published 11:22 pm Wednesday, November 11, 2015

The Alabama legislature considered a lottery and expansion of casino gambling this year to generate new revenues for the state. Freedom, not state government finances, is the reason we should expand gambling.
The legal status of gambling reflects the character of our society and government. Do we want to be a nation where people try to force their life choices on others, or one where we accept our differences and cooperate when possible?
Libertarian political theory applies the noninitiation of force principle to guide our actions toward others. We can use force to protect ourselves against others, but not initiate its use. The core function of government is to protect our rights against criminals or foreign invaders.
Gamblers do not use force against others when they buy lottery tickets or play blackjack, so I start with a strong presumption that gambling should be legal. Can a good argument other than protection against force be made to restrict a consensual activity like gambling?
Sadly many Americans with gambling problems have brought ruin upon themselves and their families. Societal self-constraint to reduce the harm caused by problem gambling represents the strongest argument for government restriction of gambling. Of course Alabama can’t prevent other states from having legal gambling. But if Alabamians must travel to Biloxi or Las Vegas to gamble or Florida or Georgia to buy lottery tickets, perhaps problem gamblers will not ruin themselves before they can get help.
We do not, however, prohibit all activities and products which can cause harm. For example, even though 38,000 Americans died from accidental poisonings and 3,000 died from unintentional drowning in 2013, and we do not ban keeping cleaners or chemicals in our homes or outlaw swimming pools. We do not ban credit cards because some people run up excessive debts or ban cars because they can be used as get away vehicles in robberies.
Furthermore, prohibiting an activity does not prevent it from occurring. Efforts to enforce the law are costly, and the costs of enforcement must be factored into the equation. Problem gamblers may harm themselves worse when betting illegally than in a casino.
Prohibition as societal self-constraint must balance the harm avoided against the costs imposed, including the restriction of freedom for responsible gamblers. Ideally we should combine freedom with increasingly rigorous restrictions on those exhibiting signs of problem gambling. I believe that legal gambling is more likely to achieve this than prohibition.
Some gambling foes point to allegedly higher rates of crime in places where gambling is legal as grounds for prohibition. But any such association is irrelevant because people can, and millions of Americans do, gamble without stealing or committing assaults. We do not close parks or other places where crimes often occur, but instead employ police and punish the criminals.
Prohibition based on some peoples’ dislike for gambling, I think, is a poor argument. Why should one group of citizens be allowed to impose their preferences on how to live life on others? When government is allowed to ban consensual activities, ultimately any activities lawmakers decide are sufficiently disliked can be banned. Why should we set up a political process in which our own favorite leisure activities can be banned if they fall into disfavor? Furthermore, politicizing consensual activities unnecessarily creates conflict. Alabamians would not be required to buy lottery tickets or visit casinos, so nongamblers can still live as they wish with expanded gambling. The Golden Rule provides wise counsel that we shouldn’t go down this conflict-filled path at all.
Does gambling provide a good revenue source for state governments? Because people largely pay gambling taxes voluntarily, the economic costs of collecting a gambling tax will be small, which is a factor in favor of taxation. A gambling tax is disproportionately paid by lower income households, and so is what is known as a relatively regressive tax. But legal gambling does not have to be heavily taxed, and the argument for legalization is based on freedom, not a relatively small amount of revenue. Gambling would only saddle low income households with a heavy tax burden if we chose to tax gambling heavily.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at and like the Johnson Center on Facebook.

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About Dan Sutter

I am the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

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