The Government Gambling Racket

By:  Gregory A. Hession, J.D.
The Government Gambling Racket

Following the allure of fast money, governments are taking over an enterprise that was mainly a province of the mob. Are the projects becoming golden geese or just laying eggs?

Three decades ago, state governments muscled out organized crime to take control of the numbers gambling rackets in the United States and replace them with state-sponsored lotteries. Since the early 1990s, state and local governments have forged alliances with casinos, and have reaped billions in profits. Should government be the gambling racketeer-in-chief?

Five years ago, a great gambling colossus swaggered into the droopy little New England town of Palmer, Massachusetts (population 12,140), bearing promises of jobs, tax relief, and infrastructure improvement. Mohegan Sun, an Indian casino in rural southeast Connecticut, nominally run by a long-extinct Indian tribe, is one of the largest casinos in the world, with 6,500 slot machines in a 364,000 sq. ft. gambling space. It proposed a project nearly as splendid in Palmer, fittingly called Mohegan Sun Massachusetts.

The slick marketers who concocted the casino plan started spreading money all around town, and the money made many friends in government. Palmer is a typical former mill town where industry has fled and the population skews 20 years older than average. It has few good financial prospects, and the casino appeared to many officials and citizens to be the ticket back to prosperity.

The ultra-modern casino would be built on a bluff overlooking the town, with the whole project costing upwards of a billion dollars. That is much more than the total assessed value of all the other real estate in Palmer.

Mohegan rented local offices, curried favor, and promised to upgrade roads, sewers, and other infrastructure. Money was no object. As the town’s wish list expanded, no reasonable request for local aid was refused by Mohegan.

One obstacle remained: a vote of approval by the citizens. An ad hoc group of local opponents met and made efforts to be heard above the din of Mohegan’s massive media buys, getting relatively little attention. Professional “Yes for Palmer” billboards and signs popped up on corners and in yards everywhere, interrupted by only a few hand-lettered “No Casino” signs.

As the November 2013 vote approached, it appeared to be a foregone conclusion that the Mohegan Sun dreadnaught would steam to victory. But then a funny thing happened.

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