States that put it all on double zero and let it ride may start wishing they’d listened to Ace Rothstein, and walked out instead of choosing to take the money — and the hammer. The casino industry — once considered recession-proof — is starting to feel the pinch of the current downturn. The New York Times reports that some of the biggest gambling havens, including Nevada, New Jersey and Illinois, have seen massive drops in gambling-related tax revenues. New Jersey’s take was down $62 million, Nevada dropped $122 million, and Illinois spun and lost $166 million in tax revenues.

One expert quoted by The Times says the odds are stacked against States that count on gambling revenue to fill budget gaps:

“The data shows that states take a real chance in depending on gambling because this revenue is not likely to keep pace with growing budgetary needs,” said Lucy Dadayan, a senior analyst at the Nelson A. Rockefeller Institute of Government at the State University at Albany. … “In the absence of new types of gambling, it can become a zero-sum game as states compete for the same pot.”

However, adding new gambling options often just raises the ante, as neighboring states rush to create their own “racinos,” lotteries and full-scale casinos. And gambling critics contend that the social ills brought on by casinos — including crime rates that jump by 10% and personal bankruptcy rates that go up as much as 42% — outweigh any fiscal benefits brought about through legal gambling.

That’s not likely to stop states from holding out for one more hand. States from Colorado to Ohio to Missouri are loosening gambling restrictions and taking their chances with everything from racinos to full-on casinos. Hey, you never know.

States Face Drop in Gambling Revenues [New York Times]

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