New Commentary on Maryland Slots Proposal

November 3, 2008

Tomorrow Marylanders will vote on a constitutional amendment to allow slot machines—also known as video lottery terminals, or VLTs—in five locations around the state to raise money for public education. Slots opponents and advocates have been fighting bitterly for years, and the issue will finally be decided.

Many opponents of this plan argue that VLTs are more likely than traditional state lottery games to lead to compulsive gambling. Some call them “video crack” because they allow players to bet repeatedly in a short period of time, providing the fast-paced, instant gratification that other lottery games generally don’t provide. Others oppose the games, and gambling generally, on moral grounds. Still others talk of voting for the slots plan to bolster Maryland’s horse-racing industry. However, there are tax policy considerations that most of these discussions overlook.

A new Tax Foundation commentary by senior economist Gerald Prante and staff writer Alicia Hansen analyzes the issue from two different tax policy perspectives, providing a list of the measure’s pros and cons. Both authors, however, agree that the ideal solution would be free competition in Maryland’s gambling industry, with the state’s involvement limited to levying explicit, transparent taxes.

Click here to read more Tax Foundation studies and blog posts on state-run lotteries.

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