If an influential politician was promising to increase gambling in Washington state by $23 billion a year — a twenty-fold increase — you’d think you’d hear about it in the media, right?
For that is exactly what Tim Eyman is promising when he asks voters to accept I-892’s legalization of slot machines in exchange for a $400 million property tax cut, and yet the press has been awfully quiet about the numbers.
How do I come up with $23 billion? Well, first I read the initiative. Then a did a little research (okay… I Googled.) And then I did the math.
Here’s how it breaks down. I-892 establishes a 35% tax on the “net win” (an odd term that actually means what the gambler loses.) 99% of these tax revenues go to reduce the state property tax; the other 1% goes to the Washington State Council on Problem Gambling (which happens to be controlled by the same corporations financing I-892. Go figure.)
We can thus calculate the net win required to produce Eyman’s projection quite easily: ($400 million / 35%) / 99%) = $1.2 billion
That represents how much money Washington citizens must lose each year to fund a $400 million tax cut. Quite a bargain, huh?
But how do we calculate the amount wagered? Well, all we need to know is the “payback” on slot machines… that is, the amount a slot machine pays back for every dollar gambled. Essentially, the odds. You can google this yourself, but it turns out the industry average is just about 95%. That means a casino makes only a nickel in profit from every dollar gambled on slots… which is part of what makes slot machines so addictive.
So, divide $1.2 billion by $.05, and you get $23 billion in gross wagering. (Okay, you get $24 billion, but the $1.2 billion figure was rounded up, and I like to be accurate.)
I know… boring blog material. But I promised I would occasionally get wonkish.
Anyway, the point is, when I-892’s opponents talk about the most massive expansion of gambling in state history, they’re not kidding. But you’d think they were, considering the media’s refusal to do the math and print the actual numbers.