Are we to be shocked and surprised that the estimates
for the pulltab revenues for the Vikings
stadium were essentially made up by
gambling interests and not verified by the governor and legislature? Perhaps we should be no more so than was
Captain Renault in the movie Casblanca when he declared that: “I'm
shocked, shocked to find that gambling is going on in here!” The story of the Vikings pulltab debacle
unfortunately is a common occurrence, the result of pressure politics, money
and politics, and the often lack of capacity or will of public officials to
analyze and digest complex information.
The
Vikings deal was the proverbial effort to place lipstick on a pig. It was a bad deal for Minnesota no matter how
you cut it. As I point out in my recent
book American Politics in the Age of Ignorance: Why Lawmakers Choose Belief
Over Research, the evidence is practically incontrovertible–public
investments and subsidies for professional sports is perhaps the single worst
economic development investment that can be made by the government. Passing aside the arguments about such
subsidies being no more than welfare for sports owners or public gifts to a
private and heavily profitable private business, study after study demonstrates
that no matter how you measure it–number of jobs, cost per job, or overall
economic impact–public investments in professional sports is a terrible return
on investment.
So
why did Minnesota do it, especially when surveys were clear that the public
overwhelming opposed the use of tax dollars for the Vikings (as it did for the
Twins just a few years before)? A
cluster of reasons explain it. First,
the Zygi Wilf’s of the world deploy scarcity of teams, the threat of leaving a market,
and the emotional tugging of fan loyalty to pressure politicians to support
such deals. That was definitely the case
with the Vikings. It has to explain in
part Governor Dayton’s nearly inexplicable choice to make doing the stadium
deal a top priority for him. As a
business person he should have known better that this was a bad economic deal
for the state but he still pushed hard for it.
But
second, the Vikings stadium deal demonstrates the power of pressure of
politics. Since 2002, the Vikings have
directly spent more than $6 million lobbying the state legislature for a new
stadium. Wilf alone since he took over
at the owner has spent nearly $4.3 million lobbying. Add to that political contributions and then
money spent by other groups such as the Chamber of Commerce, the hospitality
industry, and the buildings and trade unions, totally expenditures to lobby for
a new Vikings stadium would easily top the ten million mark in the last decade
if not since Wilf took over.
The
legislature, especially the DFL last year, was under enormous pressure to do a
Vikings deal because the governor wanted it and his party wished to support
him. But the public was insistent that
no public dollars be spent, so how to make both the governor and the public happy? Find another source of revenue. Enter pulltabs. One can only suspect that the legislature and
the Gambling Control Board was under enormous pressure to make the pulltab
numbers work no matter what. Explicitly
or implicitly the understanding was this.
Yes solely consulting with the gaming interests was stupid and a
conflict of interest, but that stupidity was compounded along the way. At some point someone in the governor’s
office should have asked how the numbers were generated, or the same should have
occurred in the many legislative hearings.
But it did not. Why?
First,
no one really wanted to know. The deal
was more important. Second, One can see
a scenario of bureaucracy where everyone thought that someone else had checked
the numbers and thus by the time they got to them they just assumed the numbers
had already been vetted.
But
third, there is the capacity question.
By that, most of the people looking at these numbers lacked the skills
or knowledge to read them or make estimates regarding the pulltab revenue
stream. Yet there were many red flags
that should have given one reasons to question them. We were in the middle of a recession with
less disposable income for gaming, especially among the poor who were already
the biggest gamblers and among the most exploited by casinos and gambling
already. Minnesota already had a robust
and extensive lottery and charitable gaming industry–what evidence is there
that there was an untapped market that could be expanded? Finally, what evidence was there that there
were many organizations that wanted to do these pulltabs, again given how well
developed the existing gaming industry
was already?
These
are just some of the questions that should have been asked by legislators. That is there job. Maybe some did know better but they remained
silent, especially among the DFL who felt they had to support the
governor. Overall, DFLers produced 55%
of the votes for the stadium.
Additionally, of the 90 Democrats voting on the stadium 62 or 69% voted
for it, while 50 of 109 or 46% of the Republicans supported it. Given that a DFL governor pushed the bill,
the DFL produced the majority of the votes for the stadium, and over two-thirds
of them supported the Vikings proposal, the Democrats own the stadium. Yet the Republicans should not be let off the
hook–many of them voted for it and Senator Julie Rosen and Maury Lanning–Republicans, sponsored the bill in the Senate and House.
Government
can do better than it did here. The
bigger issue is how do we increase the capacity of public officials to make
good decisions. But here the Vikings
pulltab story points to a huge bipartisan public fiasco due to a pressure
politics, negligent or willful blindness to the facts, and simply bad decision
making. Given that, we should be no more
shocked about the Vikings deal than Captain Renault was about gambling in
Casablanca.