Gambling and public policy - how gambling hurt Tempe judge Stephen Mirretti

from the Center for Arizona Policy -

NOT A SAFE BET: GAMBLING AND PUBLIC POLICY

By Brad Frese Director of Research

Three decades ago, former Tempe city judge Stephen Mirretti was on top of the world. He had been appointed to be the presiding judge for Tempe’s court system at the age of 26, making him the youngest judge in the nation. His court room was even used as a model of efficiency shown to other judges in training.

Contrast that with Mirretti’s appearance in September 2007 in front of another judge for probation violations. In 1996, former judge Mirretti was sentenced to eight years in prison and five years probation for taking bribes and paying kickbacks to court contractors. How could a man with so much going for him wind up in a situation like this?

Apparently he found it necessary to commit fraud and accept bribes in order to fund a voracious appetite for gambling. Judge Mirretti did much of his gambling in Las Vegas—in fact, his gambling addiction developed well before Arizona started allowing casinos to be built in the state.

Now that we’ve invited gambling into the state, can we expect that more people will fall to the allure of gambling? Absolutely, because it is already happening.

Gambling Leads to Corruption

For example, a former PTO president at Magnet Traditional School in Phoenix admitted to embezzling $20,244 in PTO funds to support her gambling habit. The woman was also charged with planning to extort $20,000 from another mother by kidnapping her six-year-old son’s playmate.

In another case, a senior bank manager at Metris Direct in Scottsdale stole more than $10,000 in a credit card scam of her bank’s customers. She admitted having gambled away more than $6,000 in about 90 minutes in October of 2002. In all she had run up more than $50,000 in gambling debts and has filed for bankruptcy because of them.

Only a few months ago, a Scottsdale School District employee was arrested for forging checks and embezzling more than $300,000 from a school district bank account. Investigators were able to trace the funds and found that hundreds of thousands of dollars had gone to local casinos.

Phoenix Suns fans will almost certainly recognize the corrupting influence of gambling. Referee Tim Donaghy, who officiated the third game in the NBA Western Conference Semifinals, made several key — and controversial — calls against the Suns which may very well have cost them the series. It was later revealed that the referee owed huge sums in gambling debts and paid off those debts by throwing games for organized crime. Now he faces up to 25 years in prison. Not only does it look like he’ll lose his freedom, but it also appears that his 12 year marriage is coming to an end.

Why tell the stories of these gamblers? Because they illustrate that gambling has the very real potential to wreck the lives of actual families. None of the people had shown any propensity toward criminal activity before their gambling activities spiraled out of control.

Gambling Invasion

Despite the dangers, Arizona let its guard down in 1980 when a ballot initiative created the state lottery in Arizona. Previously, the only gambling available was sparsely-attended dog and horse tracks.

The 2006 fiscal year brought the highest sales ever for the lottery, exceeding $468 million.

The tragedy is that the lottery profits most from the people who can afford it the least. The Tucson Citizen reported last year that households in the richest areas of Tucson spent about $9 a year on lottery tickets. Households in the poorest areas spent an average of up to $372. The lottery preys on an illusory hope: riches can come easily. All the lottery’s marketing efforts are designed to appeal to this lie.

The next wave of gambling came in the early 90s when the legislature granted the governor the power to enter gambling compacts with the various Native American tribes in the state. Arizona has gone from zero casinos to 22 in less than 15 years. Last year Arizona casinos grossed nearly $2 billion, an 8.6 percent increase from the year before. To put this into perspective, casinos made a gross profit of $315 for every man, woman, and child in the state.

The Human Cost

Would the people described at the beginning of this article have ever started gambling if they had known it would eventually lead to a lengthy prison stay? Doubtful. The problem is that no one knows whether or not they are susceptible to a gambling addiction before they start.

Admittedly, prison is not the usual outcome for compulsive or problem gamblers. But far more gamblers face consequences that also rip apart families. In regions where gambling is readily available, studies have shown that bankruptcies can be as much as 35 percent higher in counties where five or more gambling facilities are located. The Arizona Office of Problem Gambling reported:

• The number of bankruptcies reported on the Arizona Problem Gambling Helpline increased from 28 in 2004 to 58 in 2005 to 73 in 2006.
• A total of 389 clients of Arizona's Office of Problem Gambling reported bankruptcy since 2002.
• In 2006, 228 callers to Arizona's Problem Gambling Helpline reported some kind of household payment default related to gambling debt. This represented 22.5% of callers.

Just as each of the stories about individuals in the news illustrated the effect of gambling, each of the statistics above represent real families impacted by gambling. But these statistics are just the tip of the iceberg, because they represent only those who have called for help.

Public Policy

The Center for Arizona Policy believes that public policy should serve to discourage rather than encourage gambling. Gambling may seem to be a shortcut to wealth, but the Bible teaches that diligence is the way to achieve financial gain. Proverbs 10:4 says, “Lazy hands make a man poor, but diligent hands bring wealth.”

Gambling does not just affect limited segments of the population. It can wreck the marriages of rich and poor alike, tear apart families, cause debt and bankruptcy, and as we have already seen, can lead to serious crimes such as theft or embezzlement.

For the protection of families, the poor, and for the general welfare, government should not sponsor lotteries or other games of chance and should restrict gambling to protect families from the destruction that comes from the proliferation of gambling.

The state should resist any attempts to expand gambling, even if it means foregoing extra tax revenue on gambling profits. Economists have calculated that the social costs outweigh any profits from gambling by a ratio of 5.6 to 1. In other words, the cost to society in terms of lost productivity and other economic losses due to divorce, suicide, bankruptcies, and crime cost $5.60 for every dollar of “profit” made through gambling.

The government will inevitably have to spend more money to try to correct the problems that gambling has created, including more money for divorce courts, more money for criminal investigations and prisons, more money to take care of those devastated by suicide.

Gambling is based on a seductive lie that riches can be gained by chance rather than honest effort and hard work. Unfortunately it is a lie that has been accepted by many in our culture. As long as government continues to allow and encourage gambling in any form, families will bear the brunt of the costs.