The fallacy of prohibition: Gambling edition

An Austin Statesman story today by Patrick George quotes police decrying "light penalties" for business operating eight-liner gambling machines, calling for harsher punishments and stricter city ordinances aiming to drive them further underground. However, an earlier Statesman story (Sept. 8) pointed out how Duval County in South Texas received 9% of its annual budget from fees paid by eight-liner operations. Wrote Eric Dexheimer:

It could be the local government success story of the year: Confronted with a struggling economy and stagnant tax revenues, entrepreneurial officials in a county perhaps best known for its rich history of graft and political corruption uncover a lucrative new source of revenue.

But there's a small catch.

"Of course the machines are illegal, as I understand it," said Jo Ann Ehmann, the part-time bookkeeper for the tiny city of Gregory.

Just northeast of Corpus Christi, Gregory — population 2,000 — has collected about $800,000 in the 18 months since it started enforcing its $1,000-per-machine game room ordinance. The city's annual budget is about $1 million.

Together, a half-dozen or so rural counties and municipalities have earned millions of dollars from recently enacted fees levied on the gaming machines.

Grits considers bans on these devices counterproductive, ensuring they'll be operated mainly by a criminal element instead of in a regulated environment. The traditional mafia in the northeast was vanquished not so much by successful law enforcement efforts to lock up mobsters as by the creation of legal (often state operated) lotteries that eliminated illegal numbers running. Similarly, legalizing eight-liners - which are essentially slot machines - would reduce crime, generate revenue and allow their regulation and taxation, as so many small towns have discovered.

Harsher penalties won't eliminate illegal gambling - they never have, after all - but merely drive the activity further into the shadows of society. They also eliminate substantial revenue streams from government, relegating the activity, and income, to the black market. Regrettably, such observations were absent in today's Statesman article, which followed the tired, traditional format of articulating a problem then voicing police calls for harsher punishment as seemingly the sole solution. The issue, though, is more complicated than that. "Light penalties" aren't the real problem: Prohibition is.