With sports gambling taxes, pensions are no longer the ‘sword of Damocles’

By: Keith Kappes
Columnist
Carter County Times

In Greek mythology, the “sword of Damocles” represents an impending disaster. It never goes away, constantly waiting to drop.

       That analogy aptly described the pressure for many years on the Kentucky General Assembly to find a solution to the state’s public pension crisis. 

       That problem reached the point that unfunded pension liabilities exceeded $30 billion and damaged the state’s credit rating. 

        But that worry apparently no longer exists, according to a glowing report on the first year of sports gambling taxes in Kentucky.

        In what now appears to be akin to a stroke of genius, the Republican-dominated legislature followed the age-old tradition of sanitizing the state’s newest “sin tax” to guarantee the solvency of public pension systems.

        A “sin tax” historically is applied to something the public wants but society might discourage, such as gambling on horse racing or the sale of tobacco products or the manufacture and sale of alcoholic beverages

        Combined with the state’s healthy general fund surplus, the millions from sports gambling means that state and local government employees, including public school personnel, won’t have to worry if their pensions will be there when they retire.

        Sports gambling in Kentucky exceeded $2 billion in its first year and the state’s share was $37 million in taxes, far more than the anticipated $23 million. A steady revenue stream from sports gambling should mean no future concerns about the fiscal health of public pensions.

       That leaves us with the moral question of have we started something for a public purpose that may have a very negative private impact on Kentucky families, i.e., gambling addiction. 

        Nationally, directors of gambling addiction treatment groups are saying that calls to their helplines are dramatically increasing because of the legalization of sports betting and the growing popularity of sports betting apps. 

       “We believe, nationwide, the rate and severity of gambling problems have increased across the United States since 2018,” said Keith Whyte, executive director of the National Council on Problem Gambling, a non-profit organization devoted to minimizing the costs and harms of gambling addiction. The group operates the helpline 1-800-GAMBLER. 

     “We have every reason to believe the growth of online sports betting is a major contributing factor to the increase in gambling problems,” Whyte said.

      Whether we consider addiction an unintended consequence or not, we should use part of that gambling tax windfall to help problem gamblers.     Contact Keith at keithkappes@gmail.com.