Fearing that North Carolina will miss out on millions of dollars now flowing into the sports betting arena, a bipartisan group of state Senators passed a bill last week legalizing sports gambling. This action, which when added to the millions of dollars the state rakes in from the state lottery, will only increase the flow of dollars that are being enticed from low income families- those who can least afford to participate in “get rich quick” schemes. That bill now goes to the State House, where hopefully, that chamber will close the door on yet another form of regressive taxation.
In 2005 Democrat state legislators, complaining that the state was losing money to neighboring state lotteries, passed the N.C. Education Lottery in the dark of night. Democrat Gov. Mike Easley and the Democrat legislative leadership, using a parliamentary trick, waited until the very end of that year’s long session to introduce and pass the state’s lottery bill. The action was so tenuous that Lt. Gov. Beverly Perdue was called in to cast the deciding vote at midnight to break a tie in the Senate.
Now the state Senate has approved a bill to legalize sports betting in the state. Despite a lack of support from their own caucus, Republican Senate leaders joined with Democrats to bring to the floor a bill legalizing sports betting. The bill passed on a 26-19 vote with only nine of the 24 Republicans supporting the motion while all but four Democrats supported it. The bill now goes to the state House for consideration.
There is no question that betting is taking place in other states, and due to the ubiquitous nature of the internet, it is being done across state lines, sometimes illegally. State Senator Jim Perry (R), Lenoir County, told reporters, “We know they’re already spending, choosing to spend, their money that way. And I believe I owe it to the people I represent to try to find alternative means to meet the needs of the community.”
But catering to the lowest common denominator should not be the job of legislators. Yes, gambling does take place in almost every facet of group activities. Now that the football season has begun fantasy leagues are everywhere, in the office and among neighbors. Unfortunately, a casual activity has now morphed into a major business that seeks to separate many individuals from their hard earned dollars for the benefit of the few.
Dr. Mark Steckbeck, associate professor of economics and the Lundy Chair in Business at Campbell University, noted in a 2019 article critical of the state’s NC Education Lottery, described the lottery as a “regressive tax” that disproportionately hurts lower-income families. “Studies show that lower-income households spend a greater percentage of their income on lottery tickets, roughly 5 percent, relative to families with higher household income,” he noted. There is every reason to believe this statistic will also hold for participants in sports betting.
Dr. Steckbeck noted that although people gamble voluntarily, “nearly all do so unwittingly.” He concludes that, “It’s not so much as a dream the NC Education Lottery is peddling, but instead false hope.”
That conclusion of false hope will also apply to anyone engaged in sports betting and particularly those who are in financial distress.
John Rustin, president of the N.C. Family Policy Council, also cautioned that social ills in the form of gambling addiction, as well as the potential of financial calamity resulting from this addiction, are not being considered in the sports betting bill.
There is no question that gambling has become a major financial success for the “house,” the organization handling the money and establishing the rules and odds. It is the opportunity to tax those revenues that has the legislature’s attention.
Under the proposal, the state would authorize the N.C. Education Lottery commission to issue 10 to 12 interactive sports wagering operator licenses. The state would collect 8% of the operators’ gross revenues with half designated for a fund to attract sporting events to the state with the remainder going to the state’s general fund. The total income for the state is estimated to range from $8 to $24 million according to the legislature’s fiscal staff. Sen. Perry has even higher expectations, telling reporters following the Senate’s decision that he expects that the state’s take on the gambling action could be $40 to $50 million per year.
The only consideration to the possible negative social impact of state’s legalized gambling proposal is that $1 million would be allocated to address gambling addiction.
The licensees could, if the legislature approves, open their doors to betting as early as January for professional, college and “some amateur” sports.
The argument that other states have legalized sports betting and that it is already happening on a national and international level due to the broad access available via the internet is poor justification. Considering the lack of structure for the uses of the potential income, as well as the structure for establishing licenses, the House of Representative would be wise to demand more details and allow more discussion of the topic.
There is one fact of gambling that will never change - “The House always wins,” which means that the individual always pays and therefore loses.