Until yesterday, the most harebrained argument I had heard against the legalization of gambling in Washington was that dog racing would imperil the lives of some rabbits.
However, one of my colleagues has topped that with a line of reasoning that makes the cruelty-to-bunnies argument look like profound socio-economic analysis.
In his District Line column yesterday, Bill Gold quoted a friend who opposed the May 6 referendum that would allow lotteries, dog racing and jai alai in the nation's capital. The friend didn't agree with the ministers and others who seek to legislate morality, but he maintained:
"This bill would permit jai alai and dog racing and other things that are being pushed very hard by people who stand to make a ton of money as owners of dog tracks and jai alai frontons.
"These private entrepreneurs would siphon off a tremendous percentage of the profits from jai alai and racing, whereas lottery profits and numbers profits would go almost entirely to the District treasury . . . You ought to favor gambling here as a revenue-raising measure, but you should not favor this particular proposition because most of the activity it legalizes will enrich private promoters rather than the District government."
There is a reason that governments let private entrepreneurs run race tracks. Building a dog track or a jai alai fronton is this city will require millions of dollars in capital expenditures. And the venture will involve a high degree of risk.
Both dog racing and jai alai would be new to this part of the country, and there is no assurance that either will succeed in Washington. Plenty of race tracks lose money; some go flat broke. I, for one, would not want to invest a cent in the proposition that jai alai will catch on in Washington.
So the government permits private investors to put up the money and take the risks in exchange for the chance to make a profit, while the government gets risk-free, guaranteed tax revenue. This is hardly some nefarious political scheme.It sounds more like the American free-enterprise system at work.
When race tracks make money, they don't exactly rake in outlandish profits while the state government goes empty-handed. Gold's insight in the subject might had increased had he taken a look at the prosperous Maryland racing industry. Last year the three major thoroughbred tracks made a combined profit of $1 million. The state, meanwhile, took $18 million in tax revenue from racing.
This hardly seems a case of "enriching private promoters rather than the . . . government."
Gold is correct that lotteries can generate more revenue than racing, but the reason is not that private entrepreneurs wind up with so much money in their pockets. The reason is that tracks take about 17 percent from each betting dollar and return the rest, while lotteries customarily take an extortionary 40 percent. They could probably take 90 percent and still get the business of plenty of naive customers.
It is intelligent for a community to generate tax revenue through legalized gambling. But there comes a point when this taxation becomes a cruel rip-off of people who don't have an elementary understanding of odds. A lottery that takes 40 cents from each dollar borders on being such a rip-off.
Aside from their relative fairness as gambling games, there is another reason why pari-mutuel establishments would be more desirable than lotteries. They would do more for Washington than raising revenue.
Dog tracks, horse tracks and jai alai frontons provide entertainment. The dog tracks and frontons in Miami are major tourist attractions.Race tracks like Pimlico can become integral parts of the social life of their communities.
A dog track or fronton would provide entertainment for thousands of Washingtonians who now have to travel to Baltimore or Largo or Charles Town for nighttime sports or gambling diversions. Somehow, lining up in a liquor store to buy lottery tickets wouldn't seem the same.