Illinois’ growing gambling is a harmless revenue stream ... WANNA BET?

 

Illinois is soaked with gambling, from lotteries and casinos to off-track betting and video slots in what seems like every gas station with a few square feet of seating over by shelves of over-priced junk food.

This month, things will probably accelerate, and March Madness is only part of it.

Betting on Bradley, Illinois State or other area teams can start under a new state law permitting wagers at state-licensed sportsbooks on the outcomes of games played by in-state college teams (but not on in-game plays, athletes’ performances, etc.).

Passed last fall, the law set March 5 as the deadline for the Illinois Gaming Board to allow sports bettors to sign up online from their computer or phone instead of registering in-person at sportsbooks at racetracks, casinos, etc. Physically, sportsbooks sites themselves aren’t casinos since there aren’t poker or table games, nor slots, roulette, etc. But since March of 2020, more than 90% of legal bets in Illinois were made online, so letting your fingers do the betting is the default position for most sports betting.

Ever since 2018, when the U.S. Supreme Court struck down the prohibition on states authorizing sports betting, it’s expanded faster than hungry greyhounds chasing a real rabbit around a fenced-in dog park.

Illinois’ legislature authorized betting on sports in 2019, and since March of 2020 Illinois gamblers reportedly wagered more than millions of dollars on college squads from outside the state.

Last March, Illinoisans bet $633.6 million in one month with NCAA and NBA basketball action, so this month, under the lure of Illinois colleges being part of the action, sports betting is sure to grow.

To what end?

To benefit schools (like the misleading promise when the lottery launched)?

To make up for state shortfalls in public-pension funding?

To establish better health care or child care?

To cut taxes?

Apart from such remote possibilities, sports betting could take off faster than Tom Ricketts unloading the Cubs roster. Already, in just the last several months, Illinois has entered the top three states (with Nevada and New Jersey) in the amount of money wagered, according to the state Gaming Board.

Raising revenue isn’t bad, of course, but in some ways it’s a hidden tax on many people who can’t afford the expenditure any more than they can easily drop dough on a Ponzi scheme or a long-shot corporate startup.

“Everyone starts out a loser, and most stay a loser, as far as betting goes,” commented Bill Krackomberger – who operates the KrackWins website and is frequently featured on VSIN (the Vegas Stats & Information Network).

“I’m trying to help people,” he told the Chicago Sun-Times. “It means more to me to have safe, responsible gambling.”

But gambling is Big Business. Operators (and states) count on the temptation of getting something for nothing. New Jersey gamblers placed $1 billion in wagers in one month for the first time in September. Big Business means political clout and resources to use sophisticated marketing to generate suckers (um, customers, that is).

“Let the buyer beware,” as Gilded Age capitalists sniffed.

In dozens of states that have legal sports betting, corporations are competing online and over the public airwaves in a frenzy comparable to ravenous sharks swirling around chum, and we are the chum.

(Not the “chums.”)

Some bettors could lose their week’s take-home pay, a chunk of their savings, or worse.  That’s so obvious that – in a minimal concession to risks – broadcast commercials include warnings about “problem gambling” and sports such as the NFL have programs on responsible betting.

It’s a problem as global as pandemics, of course.

“Children as young as 15 are losing large amounts of money gambling online in Ireland,” said Anita Bedell, executive director of Illinois Church Action on Alcohol and Addiction Problems in Springfield.

“They start gambling around age 11 in Australia, and there are 55,000 problem gamblers under the age of 16 in the UK,” she continued. “These countries are introducing reforms to limit bets and gambling advertising to address increases in underage gambling, suicide and addiction.”

True, sports betting – even about Illinois college teams – isn’t as short-sighted as previous administrations having seemingly made prisons seem like economic-development boons. However, promoting gambling is neither creative nor without unintended – and potentially harmful – consequences.

The law enabling sports betting on in-state college teams is scheduled to be automatically repealed on July 1, 2023, unless lawmakers extend it.

You can bet they will.

News analysis: Most media miss forest for the trees on inflation

 News coverage of rising prices isn’t exactly Chicken Little stoking widespread panic, but most misses the causes and consequences while deferring to partisan finger-pointing.

Inflation doesn’t happen in a vacuum; it’s not an inevitable result if some natural force, like gravity.

Customers understandably squawk, and retailers blame wholesalers, who blame distributors who blame manufacturers…

But in an unfettered “free market,” regular consumers’ option is to stop shopping, a difficult choice when the product is natural gas for winter heating bills or food.

Consumer prices rose in 2021 by 7%, the largest 1-year gain since 1982. However, that’s not high by historical levels, which shows that 11%-13% weren’t uncommon inflation rates. Also, the biggest increases – housing, health care, higher education – have increased substantially for decades with little outcry from conservatives (except for election years). 

A few questions remain unanswered by most media: What’s behind inflation? How high will it go (and how long)? What can be done, and by whom? (See below.)

During the pandemic, business bailouts, stimulus aid, Paycheck Protections, enhanced and extended jobless benefits, etc., all meant more money in people’s pockets or bank accounts, so spending followed, and businesses were unprepared, so too many dollars pursued too few goods.

Reality check: The Bureau of Labor Statistics says half of inflation is due to cars and energy, and half from furnishings, housing and appliances. So people protecting themselves from COVID were suddenly shopping for washers and dryers, couches and trucks?

Inflation isn’t some economic self-correction to pent-up demand. Scarcity can create an opportunity for management greed under the cover of helplessness amid powerful financial forces.

Sure, corporations’ first duty is to maximize profits, not to be good corporate citizens, but that can damage the economy, too. Nevertheless, some wring their hands and cite a lack of semiconductors – used in vehicles and many consumer products – for rising prices.

No: computer chips are inanimate objects. Some person or department or board of directors decided to boost prices.

Others point to the increasingly exaggerated supply bottleneck and profitable shipping companies. (See “Blame game” below.)

Some price hikes go way beyond increases in wages or production costs, implicitly indicating some businesses are just taking advantage of the media attention.

“The biggest culprit for rising prices that’s not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices,” said Robert Reich, one-time labor Secretary and author of Saving Capitalism: For the Many, Not the Few.

Last year, Exxon Mobil and Chevron profits bounced back in a major way due to oil’s rising prices. They passed along higher costs to consumers and benefited enormously: Chevron reported a $15.6 billion profit; Exxon reported a $23 billion profit. They weren’t outliers.

Meanwhile, there are still too many Americans without jobs – millions more unemployed than before COVID hit – and consumer confidence remains healthy, according to the Conference Board. Its index was 111.9 in November, 115.8 in December, and 113.8 last month. Plus, the U.S. economy grew by 6.9% in 2021, the biggest one-year jump since 1984, rebounding in the pandemic’s second year in spite of two COVID variants that shook the country.

 “We live in this sort of funhouse-type economy where we can see stock markets breaking records, corporate debt markets breaking records, while the middle class is really treading water with stagnant wages and falling further behind,” says Christopher Leonard, author of The Lords of Easy Money: How the Federal Reserve Broke the American Economy.

Some media imply the Federal Reserve, the country’s central bank, will be the savior. But it does one main thing: create currency, “expanding or contracting the supply of money,” Leonard continues. “When the Fed creates new dollars, it doesn’t create them in the checking account of normal people. It creates new dollars on Wall Street in the bank accounts of 24 select institutions… the folks you’d suspect: JPMorgan, Goldman Sachs, Wells Fargo.”

Perhaps reflecting frustration at having little influence on business, two-thirds of U.S. voters disapprove of President Biden’s handling of inflation, according to ABC News-Ipsos polling – as if the nation’s chief executives alone have ever had the economic levers to pull or magic incantation to say, “Inflation, be gone!”

Leonard adds that there are actually two kinds of inflation anyway: price inflation and asset inflation. Price is obvious; what’s less recognized – but promoted by the manipulative Fed for years – is inflation of assets, the increase in value of homes, stocks and corporate bonds.

“We’ve actually had runaway asset inflation for a decade,” he says, and “the Federal Reserve is responsible for the price inflation, at least to a certain degree, by pumping all of this money into the economy.”

 

 

 

Inflation: the blame game

 “Conventional wisdom” about inflation says its fundamental cause is demand outpacing supply, and in the last two years a combination of financial assistance from government and supply-chain disruptions triggered higher prices.

But there’s more.

 

Generally, business owners chose to raise prices. Some felt they had no choice because they had to meet their own increased costs. However, higher up the financial food chain, many businesses raised prices because they’ll still sell their products and will make more money. It’s worked for them so far. During the pandemic, U.S. corporations made $2.4 trillion in net income (profits), according to the Bureau of Economic Analysis – some $6 billion more than before COVID hit.

 

“Price-gougers can get away with ramping up price tags when consumers are desperate for things they can’t get anywhere else,” commented economist Dylan Gyauch-Lewis, an independent researcher.

 

So: At least one of the factors is business decision-makers deciding to exploit the opportunity; excessive profits can’t be seen as irrelevant.

 

Increasing prices result in a boon for the upper class, which has enriched billionaires.

 

“In the first full year of the COVID pandemic, Elon Musk’s wealth skyrocketed from $25 billion to $150 billion,” said Jane McAlevey, author of A Collective Bargain: Unions, Organizing, and the Fight for Democracy. “Jeff Bezos became the first person on the planet to possess a fortune of more than $200 billion. Flexjet and NetJets – two of the most well-known private-jet charter companies operating in the United States – recently stopped accepting new clients because they simply can’t acquire enough jets to accommodate the explosive growth of the billionaire class.”

 

Reporting in The Nation, she added, “Our new Gilded Age of obscene wealth and arrogance stands in stark contrast to the everyday struggles faced by tens of millions of exhausted workers fighting just to stay healthy and alive, avoid eviction, make the next month’s rent payment, or find the kind of job that will leave enough free time to help their children with homework.”

 

Specifically, shipping corporations are making the largest profits in their histories. Eighty percent of all worldwide shipping is controlled by nine companies working through three cartels, showed the Los Angeles Times, which noted that these businesses obviously have no incentive to solve the supply-chain problem.

Another example is Big Pharma, especially vaccine makers Moderna and Pfizer. Those two corporations’ top investors and executives have reaped $10.3 billion in new wealth just since the Omicron COVID variant emerged, according to a study from Global Justice Now.

 

“Corporate profiteering is the driver of current inflationary trends,” said Gyauch-Lewis. “All it takes to confirm this is taking a look at corporate-earnings calls. Executives are al too delighted to explain to shareholders how they have been able to increase profit margins by charging consumers more.”

Inflation: Illinois’ short-term aid, Fed rate hikes, no gov’t intervention

Illinois Gov. J.B. Pritzker this month announced an Illinois Family Relief Plan to save consumers coping with inflation $1 billion in 2022 by freezing or lifting taxes on gasoline and groceries, and offering a one-year property-tax rebate of up to $300 this year.

 

In Washington, the Federal Reserve Board is expected to raise benchmark interest rates next month, and it may make additional hikes later this year.

 

The goal of the central bank is to cause people to make credit more expensive to discourage spending and encourage saving, decreasing demand, which ideally would result in businesses lowering prices to attract customers. However, that ignores less-flexible spending on health care, housing, education, child-care, food, heating and more.

 

“While so-called inflation hawks are quick to highlight the cost of higher prices, they rarely, if ever, mention the costs associated with the higher interest rate policy they recommend – costs that include higher unemployment and lower wages for working people,” said Martin Hart-Landsberg, a Professor Emeritus of Economics at Lewis and Clark College in Portland, Ore.

 

Indeed, after a Fed rate increase, mortgage rates will probably go up, and variable-interest debt such as credit cards are sure to rise. However, interest rates paid TO consumers through savings accounts, Certificates of Deposits or Money Market accounts historically don’t increase, at least for a while.

 

Some economists warn that a rate hike will hurt everyday workers, who could lose pay or jobs, justified by the Fed’s description of the economy as having a labor shortage.

 

“There’s no ‘labor shortage’ pushing up wages,” said former Labor Secretary Robert Reich. “There’s a shortage of good jobs paying adequate wages to support working families. Raising interest rates will worsen this shortage.

 

“There’s no ‘wage-price spiral’ either, even though Fed chief Jerome Powell has expressed concern about wage hikes pushing up prices,” continued Reich, professor of public policy at the University of California- Berkeley and author of Saving Capitalism: For the Many, Not the Few.

 

“To the contrary, workers’ real wages have dropped because of inflation. Even though overall wages have climbed, they’ve failed to keep up with price increases – making most workers worse off in terms of the purchasing power of their dollars.”

 

The biggest sectors driving inflation are energy prices and auto sales, so a logical reaction – a serious response – would seem to be targeting those responsible for undesirable pricing: doing something about oil and gas sellers, and automakers and used-vehicle dealers.

 

The federal government has anti-trust tools it doesn’t use much, and price-controls power it’s used even less. Republican President Richard Nixon by Executive Order in 1970 imposed a 90-dat freeze on wages and prices; Democratic President John Kennedy didn’t resort to that, but in 1962 intervened twice in the steel industry, brokering a “non-inflationary” contract with the Steelworkers and an agreement to refrain from price hikes by 11 steel companies (which a few temporarily violated).

 

Publications ranging from The Guardian to New York Magazine have endorsed price controls.

Or, government could try something different.

 

“We need new policies that can transform our economy with the aim of employing more people, working significantly shorter workweeks under conditions that are humane and fulfilling, for a living wage, producing the goods and services required to meet majority needs in socially and environmentally sustainable ways,” Hart-Landsberg said.