Saturday, June 23, 2012 a society we should not put our confidence in the legalization of gambling for Bahamians ... we should rather rely on our abilities, discipline and hard work ...and appropriate public policy to improve our circumstance

Put not your confidence in gambling

By Phillip P. Sands

The Progressive Liberal Party’s pledge to conduct a referendum on aspects of gambling is the right thing to do in light of the sustained public debate on the issue.  Political parties should refrain from politicizing this matter as occurred in the 2002 referendum.  Civil society and individuals should lead the debate.

I oppose the government endorsing gambling by Bahamians in The Bahamas not because of any religious piety on my part, but due to my increasingly strong conviction that the arguments advanced by those in support of gambling are faulty, misguided and short-sighted.

Three main arguments are advanced to support allowing Bahamians to gamble in The Bahamas namely: constitutional discrimination; unenforceable laws; and enhancement of state revenues.   However, each of these arguments is fundamentally flawed and/or lacking sufficient objective evidence to support claims made.

Constitutional discrimination

It is clear that casino gambling in The Bahamas is discriminatory, but this does not violate the constitution.  The principal purpose of the constitution is to outline the fundamental rights and responsibilities of the country’s residents.  Bahamians cannot gamble and tourists can, but tourists are unable to engage many of the constitutional rights and responsibilities (like voting and employment rights) reserved for residents.  So, the constitution is discriminatory, but this does not make it self-violating and neither under the letter or spirit of the constitution can gambling be considered a right or responsibility.  Even if this were a constitutional matter, the right action to take would be to have the tourists conform to the current standard set for Bahamians and not vice versa.

Unenforceable laws

There is little doubt that it has been virtually impossible for law enforcement agencies to “break” gambling activities among Bahamians in The Bahamas.  However, a similar fate befalls the police in their attempts to stamp out strip clubs, the drug and firearms trades and prostitution.  Therefore, does this mean that the current inability of the police to tackle these problems should lead to their acceptance?

Using the premise that difficult to enforce laws should be abandoned, why not decriminalize the marijuana trade?  It also involves a large proportion of the population and, despite the high public expenditure devoted to its eradication, many of its users are never caught.  Of those who are imprisoned, thousands of dollars are spent to warehouse them in an overcrowded prison environment which, many argue, does little to rehabilitate and more to create hardened criminals of its inmates.

Families also pay a tremendous monetary and emotional price during and after the incarceration of their sons and fathers who often struggle to re-integrate into society, including the labor market, as they are saddled with a criminal record and the stigma of having been to prison.  Because of this, ex-cons seemingly are never able to repay their debts to society – some just for smoking a marijuana cigarette.  Yet, as a society, we have decided rightly that marijuana is contraband and its use is not permitted.  So, if we hold firm on this, why should our position be any different in relation to illegal gambling?  Decisions like this should be taken on principle, not on a whim.

Finally, if it is impossible to control web shops now that gambling for Bahamians is illegal, why do some of us think that the government would be able to regulate (including collecting all taxes due) these establishments which have become skilled at circumventing and defying laws, rules and regulations?

Enhanced state revenues

According to the May 24, 2012 edition of The Tribune, a national lottery could generate $190 million.  This money, unlike that gained from casino gambling, is money already in the local economy.  Yes, there will be some multiplier effects, but not anything more than if the money were used on some other forms of recreation (e.g., going to the movies and the bowling alley).

While prime minister, Hubert Ingraham projected the government collecting $30-40 million in taxes, which would represent about two percent of government expenditure, currently at $1.8 billion per year.  But, for the sake of argument, let’s be generous and project that the government would receive 40 percent of the $190 million.  This would total $76 million, or about four percent of the current government expenditure.

With average annual household income equaling $30,318 in 2008, a significant portion of household income would have to be devoted to gambling as reflected below in the chart.

According to the Bahamas Living Conditions Survey Report, the average Bahamian household spent 12.6 percent of its income in 2001 on personal care, clothing, footwear and entertainment collectively.  So, if 70 percent of Bahamian households participated in gambling, they would need to spend two-thirds of the money that they should be spending on these items ($2,592.17) on gambling alone.

Since lotteries, like any business, advertise and try to convince and entice people to buy their product, if the government facilitates Bahamians gambling, it would become party to encouraging its citizens in irresponsible behavior.  When families make poor money management decisions and neglect their responsibilities (i.e., housing, utilities, etc.) then the government too will be partially at fault – all for a mere four percent of its income.

The nature of the game

Moreover, gambling is a zero sum game and for every winner, there must be losers.  In fact, for every winner there are many losers.  If one spends $1 and wins $600 playing the numbers, I estimate that at least another 999 people must lose (assuming they spent $1 each).  State-sponsored gambling is a tax.  We already have an unjust regressive taxation regime which disproportionately burdens the poor.  What Bahamians should really be calling on their government to do is to restructure the system of taxation where the upper middle and wealthy classes “man-up”, embrace “the Buffet Rule” and take on a greater share of the tax burden.

Yes, many Bahamians currently gamble and there is a loud call for its legalization.  However, under scrutiny the justifications offered for the legalization of gambling are fatally flawed.  It may be true that currently there is little that the state can do to stamp out the illegal gambling which takes place in the country; and even if the majority of citizens voted against it, thousands of Bahamians will continue to gamble in The Bahamas.

So, the real issue is not whether or not our laws vis-à-vis gambling are discriminatory or that the government cannot enforce its current prohibition related to Bahamians gambling, or even that the proceeds from gambling can supplement government revenue.   The real issue is whether or not the society and government, without strong justification, should endorse gambling, which is likely to create other more fundamental policy and moral dilemmas and problems.

I say as a society we should not put our confidence in the legalization of gambling for Bahamians, but rather we should rely on our abilities, discipline and hard work and appropriate public policy to improve our circumstance.

Jun 22, 2012