Free Market Institute of Kentucky Calls for Expanded Gambling

Expanded Gambling in Kentucky

Riverboat gambling on the other side of the Ohio River is accessible, as USA Today pointed out.

Gary Stratton and John C. Schweingrouber of the Free Market Institute of Kentucky called for a statewide referendum on expanded gambling recently. The two pointed out in the Courier-Journal that Kentucky Lottery and horse racing industry have expanded gambling in recent years.

While Kentucky has fairly restrictive rules towards land-based gambling, that prohibition is circumvented by proximity to expanded gambling in nearby states — in almost every direction.¬†Stratton and Schweingrouber noted that 5 states adjacent to Kentucky have expanded casino gambling.

Kentucky gamblers visit those five states (Illinois, Indiana, Missouri, Ohio, and West Virginia), which represents unnecessary capital flight from the state.

Kentucky Gaming Laws

Despite the logic of legalizing, regulating, and taxing casino gambling in Kentucky, state lawmakers seem to have no stomach to do so. With a history of conservative politicians like Mitch McConnell and Rand Paul, one would expect a conservative, hands-off approach to an issue like gambling. People should have the right to spend their money as they wish, while taking personal responsibility for their actions.

Instead, Kentucky politicians expand the scope of government by banning most forms of gambling. While they profess to be for personal liberty, that stops when it comes to “vices” like gambling. Kentucky’s legislators protect the horse racing industry by banning casinos. Meanwhile, they support the most one-sided form of gambling: lottery betting.

Kentucky State Lottery’s Keno Drawings

The Kentucky state lottery now offers a form of Keno which has a drawing every 5 minutes. The represents 226 lottery drawings every single day, so problem gamblers have no trouble finding legal bets to make. Keno is a Chinese lottery game, so players are gambling on a game with a 40% house edge. It would be illegal for a private operator to offer such odds, but it’s legal, because the State of Kentucky’s lottery corporation offers it.

State lotteries in the United States have perfected their public relations techiques. Most state lotteries claims their proceeds go into public education, whether through an education fund or a General Fund. In truth, those promises are a shell game. Whether the state generates funds for public education through direct taxes or lottery gaming, it all goes into the state treasury. If the Kentucky state treasurer can depend on the lottery producing a certain amount of cash each year, he or she can allot less money from direct taxes to education.

Of course, lottery betting is an accepted form of gambling in most parts of the United States. Bettors would not accept excuses, if they did not want an excuse to gamble. An excuse always can be found. John C. Schweingrouber and Gary Stratton argue that expanded gambling is logical, because expanded gambling in some forms already exists. But the question is whether the already-existing gaming interests in the state can benefit, because they do not want new competition.

Pari-Mutuel Horse Racing Gaming Machines

The Kentucky pari-mutuel horse racing industry has gained concessions, too. They offer slots-style “horse racing” gaming machines which allow people to bet on historical horse races. These are pari-mutuel bets, so they are legal in the eyes of the state.

Still, people are wagering on a game with a similar mechanic to slot machines, which many opponents of the gambling industry claim is the worst form of betting. The rapid-fire nature of slot machines, combined with the lack of skill or strategy, creates a way people can lose a lot of money quickly — often thoughtlessly.

Due to the presence of the Kentucky Derby at Churchill Downs, the horse racing industry in the Bluegrass State has tremendous prestige and influence. For that very reason, Kentucky has pari-mutual horse racing in the form of slot machines. Few other states which take a principled stand against gambling would offer such a concession. Due to the longstanding influence the horse racing industry has in Kentucky, it is a forlorn hope that casino gambling might be legalized in the state.

Schweingrouber and Stratton’s Argument

John C. Schweingrouber and Gary Stratton argue that expanded gambling already exists. They also argue that Virginia and Tennessee likely will enact expanded gambling in the near future, closing the ring of neighboring states that entice Kentuckians to gamble out-of-state.

If so, the two activists from the Free Market Institute believe the wisest course would be to allow casino gambling in the state. Whether that is going to happen is another matter entirely, though the prospect of having easy access to legal gambling near the border in every direction means Kentucky would lose hundreds of millions of dollars a year to other states. Maintaining a casino-free state at that point might be a matter of principle, but those principles will be undermined every single day by the Kentuckians who gamble across state lines.