One unintended consequence of the new welfare reform act may be to boost the sagging fortunes of the U.S. gambling industry. As states assume fiscal responsibility for major anti-poverty programs, they may look to gambling as an easy way to create jobs and expand revenues without imposing tax hikes. PNS analyst Paban Raj Pandey is a Bay Area based economic analyst who writes for Nepal's leading English language daily newspaper.

After heady growth, the U.S. gambling industry of late has hit a speed bump thanks to an improved economy and growing public disapproval. Now the welfare reform law could change all that.

Under the new law, major anti-poverty programs such as Aid to Families with Dependent Children and Supplemental Security Income will be transferred to the states. They will be granted fixed block grants, and will be responsible for keeping the programs afloat. Short of funds, states will have two electorally-unpopular choices: cut welfare benefits or hike taxes.

Enter gambling. Gambling has long provided states with a means to raise revenue without having to tinker with the tax laws. Gambling revenues are not a cure-all for states' budget woes, but without question they do ease the pressure. Just a few years ago, Washington, D.C.'s former mayor Sharon Pratt Kelly even proposed casinos as a means of financing a $500 million convention center.

Little surprise, then, that legalized gambling in United States during the last two decades has grown into a $40 billion industry. In Nevada, 40 percent of state revenues come from gaming taxes. From Las Vegas land-based casinos to Mississippi's riverboats to more recent Internet wagering, gambling has come a long way. If airlines succeed in getting the law banning gambling on flights to and from the U.S. repealed, gambling could be heading for newer heights.

Just two decades ago, it was legal to gamble only in Nevada and New Jersey. Today, only Utah and Hawaii do not permit gambling. Since New Hampshire became the first state to approve a state lottery in 1964, 36 more states have joined the club. Their argument: It serves a good purpose since about 40 percent of the lottery revenue is channeled towards public education, economic development, the general fund, etc. The bottom line for each and all: revenue enhancement.

There are other reasons for the explosion of casinos over the last decade. During this period, public attitudes toward gambling shifted, even as the industry successfully promoted gambling as entertainment.

Additionally, despite the social and economic costs linked to gambling, it is an industry that creates jobs. Following the collapse of its oil and gas industry in the early '80s, Louisiana went ahead and permitted commercial gaming in 1991. In Mississippi, Tunica county, the poorest county in the nation according to the 1980 U.S. Census, used to depend on a rural economy. Since the state legalized gambling in 1990, the county's cash crop has shifted from cotton to gambling chips. In Indian reservations economies that offer gambling have changed in similar ways.

For some states, there is another temptation: If California, for example, had commercial casinos instead of just card rooms, the state could be saving billions that Californians spend every year in Nevada casinos. And in Tennessee, officials, fed up with Memphis residents gambling away in Tunica casinos, tried to legalize gambling. They failed.

In fact, in 1994 and 1995, there were no victories at the ballot box for gambling interests. The number of states that allow full-fledged gambling remains at 10: Nevada, New Jersey, Iowa, South Dakota, Colorado, Illinois, Mississippi, Louisiana, Missouri, and Indiana. This list does not include states that allow casino operation on Indian lands.

In contrast to the heady days of the late '80s and early '90s when casinos -- including those on Indian reservation lands -- literally mushroomed across the nation, gambling has been treading water. Organized resistance groups have proliferated, and public approval of gambling has begun to decline. Congress is now seeking to create a commission on the economic and social impact of gambling.

However, the recent reversal in gambling's fortunes may be temporary. Perhaps the most important factor holding back its growth has been the expansionary cycle that followed the 1990-91 recession -- an expansion that no economist expects to last forever. As boom follows bust, and states desperately seek additional sources of revenue, gambling will again become an enticing option.

Even without a recession, states will be looking for ways to expand job rolls under the new welfare reform act which requires welfare recipients to go to work within two years of applying for benefits.

Gambling may not be an ideal way to go about raising revenue or creating jobs. But don't be surprised if the very same officials who inveighed against welfare cheaters or the addictive dangers of tobacco are mum on gambling. They may be eyeing the casino or the lottery as their one safe fallback.