Legalized gambling in Alabama could bring USD 700 M annually

The Study Group on Gambling, a gubernatorial committee formed by Gov. Kay Ivey earlier this year, released a report last week stating that legalized gambling in Alabama could bring up to $700 million into state coffers annually and create as many as 19,000 new jobs.

Former Montgomery Mayor Todd Strange, the chair of the group, said at a press conference on the State Capitol steps that the group concluded the state could absorb the costs. 

"Gambling will work in the state of Alabama, and we feel the advantage outweigh the disadvantages in that endeavor," he said. "There is $600 to $700 million that start and stabilizes growth. There are new jobs created that are twice what the per capita income is on an annual basis."

The 876-page report adds some new data to an ongoing debate over the size and scope of gambling in Alabama, and whether the state government should get involved with it. 

Alabama’s constitution bans gambling, and the state is one of only five in the nation without a state lottery. The Poarch Band of Creek Indians, who operate under federal law, operate casinos in Atmore, Montgomery, and Wetumpka. Local constitutional amendments allowed electronic bingo at dog tracks like VictoryLand in Macon County and GreeneTrack in Greene County, though the Alabama Supreme Court has narrowed the application of those amendments in recent years. 

Attempts to allow a lottery or expand existing gambling in the Alabama Legislature have tripped down an endless flight of M.C. Escher stairs. Several members of the Republican supermajority have moral objections to gambling. The Poarch Band, which has sought a centralized regulatory body for state gambling, has opposed efforts to clarify the legal status of electronic bingo at the dog tracks. 

Legislators from communities with dog tracks have opposed a lottery, arguing it could give the Poarch Band access to machines denied to the dog tracks, the Gadsen Times reports.

Rep. Steve Clouse, R-Ozark, planned to introduce a gambling bill at the start of the 2020 session. But Ivey said she wanted to get clear data on the impact of a bill before the Legislature passed it. 

"Anytime I ask people how much money the lottery would bring in, they say ‘I think about ….,’" the governor said in February. "We’ve got to have the facts to make a decision."

Ivey said in a statement Friday that the group’s research "will be pivotal as gambling policies are being considered, debated and potentially voted on." But the governor did not endorse any course of action. 

"I continue to maintain the final say on gambling belongs to the people of our great state, and if and when I have a recommendation regarding a specific course of action, I will do so in full transparency to the people of Alabama, working hand-in-hand with the Alabama Legislature," the statement said. 

The report estimated that a lottery would bring in $200 to $300 million a year to state coffers, with tax revenue from five to seven casinos in the state bringing in $300 to $400 million. The report also estimated sports betting would bring in $10 million. 

Members of the group also noted that expanded gambling could bring costs, particularly with gambling addiction and potential increases in crime. 

"It is important to note, however, that while there are costs associated with gambling, the taxation of regulated gambling activities creates an opportunity to dedicate public funds to gambling treatment, prevention, or education services," the report said.

The group also recommended the formation of a state regulatory body with the power to enforce laws on gambling, whatever they may be. Strange said they recommended an independent body, with members nominated by the governor and confirmed by the Alabama Senate. 

The report laid out five options for lawmakers: do nothing; prohibit gambling but create a state body to enforce existing laws; allow a lottery only; allow a lottery and limited gambling (like sports betting) or allow full gambling. Any move to legalize gambling would require a constitutional amendment, which needs 60% of the support of both legislative chambers to pass, then must win voter approval.

Members of the group did not make recommendations on addressing the legal status of gambling at the dog tracks or how the money generated by gambling should be spent. The money generated would at most be equal to about 10% of the $7.2 billion education budget, and about a third of the $2.3 billion General Fund. 

Democrats for years have pushed for a lottery to fund education. Messages seeking comment were left with House Minority Leader Anthony Daniels, D-Huntsville, and Senate Minority Leader Bobby Singleton, D-Greensboro, on Friday. Clouse’s lottery bill would have split proceeds between pre-kindergarten programs and higher education scholarships.

Strange said the Legislature would make those decisions. But he said their research suggested limiting the spending to a handful of areas.

"Some of the more successful situations have only three or four uses of those moneys," he said. "If you try to nickel and dime to fill holes in general funds, that’s generally not successful."

Incoming Senate President Pro Tem Greg Reed, R-Jasper, said in a statement Friday he would review any proposed legislation on the matter. Sen. Del Marsh, R-Anniston, a longtime gambling proponent, plans to file a bill this year on the subject. 

"I believe it is time to address this issue, and it appears the report from the Governor’s Gaming Commission supports that position," Marsh said in a statement.