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The Bay State’s current fiscal crisis has, not surprisingly, revived discussions on increasing revenue by expanding legalized gambling here. At the Commonwealth Forum “Taking a Gamble: Risk, Reward, and Rolling the Dice in Government and Society,” held on June 11 at the Omni Parker House Hotel in Boston, panelists discussed the role of risk-taking at all levels of American society, from slot machines to the stock market. Robert Keough, editor of CommonWealth Magazine, moderated the forum.
Featured speaker Jackson Lears, author of Something for Nothing: Luck in America (see “Trusting to Luck,” CW, Spring 2003) advised policy-makers that before making decisions regarding gambling they need to acknowledge “the complex needs that gambling satisfies in American society.” Lears, a history professor at Rutgers University, noted that the country’s attitude toward different forms of risk-taking has been inconsistent, if not hypocritical: “Public policy has talked about gambling in the context of other vices [and] illicit activities…but when ‘speculation’ succeeds, no matter how wild, it is embraced.”
This equivocation is also prevalent in Massachusetts, according to panelist Robert Pozen, chief of commerce and labor for the state, who admitted that the governor is “ambivalent” about the expansion of gambling as well. “The citizens of the Commonwealth are split 50-50” on the issue of casino gambling, he said, adding that while no new gambling ventures are included in this year’s budget, “if economic conditions get worse, then I think gambling will be back on the table.” As an alternative to full-blown casinos, Pozen said, he preferred forms of gambling that could be taken down as quickly as they can be put up. He suggested following Rhode Island’s lead by allowing recreation halls to lease slot machines. “One facility generated $700,000 a day” in revenue, which can be taxed at a rate of 51 percent, Pozen said. “There’s nothing permanent…not a fancy facility, but a modest building.
George Donnelly, editor of the Boston Business Journal, agreed with Pozen that experiments like leased slot machines make more economic sense than the “overkill” solution of large casinos. “A slot machine pays for itself in 100 days of operation,” he said; after that, the gambler’s losses are pure profit. “That’s a remarkable business model.” But Donnelly also warned that “you don’t need to be around these places long to realize that they don’t add any value to the state.” He worried about increased gambling addiction and other social costs and asked, “Would a plain old tax [increase] do less harm?”
Sheryl Marshall, a stockbroker and founding partner of Axxon Capital, brought the discussion around to the role of chance in our economy, especially the risks that are inseparable from modern investing. “The only difference [from gambling] is that with investing you have an illusion of control,” Marshall said, “but as we now know, the markets can be extremely erratic.” She added that the bursting of the dot-com bubble has left many investors more wary of risk-taking.
Returning to the role of government, Keough asked Pozen about the risks that accompany “public investments” such as the Big Dig and education reform. “We have totally vacated and made meaningless the concept of investment,” Pozen responded. “Whenever we spend money now, we call it an investment,” he lamented, saying that the concept should be restricted to situations where one expects “a financial return larger than the money we put in.” He cited not only the Big Dig but also the new Boston convention center as examples of expenditures that may be warranted but don’t meet his definition of investment. “I can guarantee four years from now we will all be paying $20 million a year to subsidize the convention center,” he said.
Lears returned to the broader topic of risk-taking, suggesting that the real threat to America’s entrepreneurial spirit will not be from a faltering economy but from the “sharks and cheats who…want to rig the casinos for the rest of us and never took a chance in their own lives.” But, he concluded, “the country that added bluffing to poker is not going to settle for mere diligence as the only path to success.”
The Commonwealth Forums are a joint project of MassINC and the Massachusetts Foundation for the Humanities. A transcript of this forum provided by State House News Service can be found by clicking here.