(The Center Square) — The Pennsylvania gambling industry has seen major growth in recent years, bringing billions of dollars in tax revenue to the state budget — but also addiction problems and demands for subsidies.
Nationally, the commonwealth is near the top for gambling.
A ranking from WalletHub, a personal-finance site, placed Pennsylvania as sixth-friendliest for gambling. Those opposed to gambling’s expansion may have to resign themselves to it staying as a permanent feature, and not just the lottery.
“I think we have already crossed the bridge on the viability of State Lotteries as they are clearly here to stay,” Cornell University Visiting Professor of the Practice Michael Huyghue told WalletHub. “They do generate a significant amount of revenue for states but I do believe we need to study the impact on demographics within communities (particularly at-risk and low-income communities) that may be spending a disproportionate share on state lotteries.”
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Lottery money is separate from Pennsylvania’s tax revenue from gambling. More than $1 billion came from the Pennsylvania Lottery in fiscal year 2021–22; gambling revenues for the state’s general fund were much lower, but growing.
“While the tax revenues from gaming coming into the general fund are helpful, they were just $307.8 million in fiscal year 2021–22,” Frank Gamrat, executive director of the Allegheny Institute for Public Policy, wrote in a recent policy brief. “While gaming tax revenues are up 27 percent from the previous fiscal year, they comprise just 0.6 percent of the total general fund of $48.13 billion.”
Local revenue for municipalities and counties were about $210 million, and school property tax relief gained $1.1 billion, Gamrat noted.
At the same time, some forms of gambling, such as horse racing, receive massive subsidies. Since 2004, $3.5 billion has gone to sustain the horse racing industry in Pennsylvania, as The Center Square previously reported.
Gambling revenues have climbed dramatically, however.
“The state’s gaming industry set a new record with $5.21 billion in total revenues collected, topping 2021’s $4.73 billion,” Gamrat wrote. “While it’s much too early to speculate, 2023 appears to be on pace to set yet another record.”
Gaming should not be relied upon to solve any budget problems. The commonwealth’s leaders still need to keep expenditures in check and create a more business-friendly environment.
Further gambling expansion could add to that number, too. Advocates for regulating skill games, which operate outside the state’s gambling law, argue that the state could earn as much as $300 million in tax revenues annually, as The Center Square previously reported.
While the extra money could help the state address projected budget deficits in the next few years, it’s not a cure-all.
“It is always wise to keep in mind that for every dollar spent on gaming, it is a dollar not spent on other goods and services,” Gamrat wrote. “Building an economy on gaming is not a wise bet. For some, it is a recreational outlet. But for others, it could lead to addiction and other social problems.”
The Council on Compulsive Gambling of Pennsylvania estimates that “there are hundreds of thousands of people whose lives are impacted by problem gambling” statewide. Calls to the CCGP’s gambling problem hotline has more than doubled since 2019, from 1,100 calls to 2,600, and a recent survey found that one in three Pennsylvanians who gambled online thought their gambling habits were a problem.
Pennsylvania gambling expansions are not necessarily a fix for state finances, the Allegheny Institute argued.
“Gaming should not be relied upon to solve any budget problems,” Gamrat wrote. “The commonwealth’s leaders still need to keep expenditures in check and create a more business-friendly environment.”
Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
This article was republished with permission from The Center Square.