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More Bad Fiscal News for States

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In another indication that no one is immune from this economic downturn, a new study reveals that, for the first time ever, the gambling industry is down on its luck.

And this is yet another blow for state budgets.

A new report from the Nelson A. Rockefeller Institute of Government reveals that gambling revenue in fiscal 2009 (which ended June 30) is down 2.8 percent from fiscal 2008.

This poses both a direct, and an indirect, problem for states and for K-12 education.

Directly, many states use gambling to pay a small part of the tab for K-12 education. Think of those "education" lotteries out there (in North Carolina, South Carolina, and Tennessee, to name a few). Overall, lottery revenue is down 2.6 percent. Casino revenue, which helps some states fund schools, is down 8.5 percent.

Indirectly, any slump in revenue from any source further throws state budgets out of whack, so states that have the heaviest reliance on gambling revenue could suffer the most. It's no surprise that Nevada, which gets 13.6 percent of its state revenue from gambling, is tops in reliance on gambling revenue. Second, though, is West Virginia, which gets 9.2 percent of its revenue from gambling.

So this might be a warning sign out there for governors and legislators who look to gambling to help patch budgets. Case in point is Ohio, where state officials were dealt a setback from the State Supreme Court, which ruled that a proposal to put slots in racetracks (which would help fund K-12 budgets) must be subject to a public referendum.

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