Oregon’s lottery profits are off 20 percent from their 2008 peak, a combination of effects from the down economy and a bar smoking ban. (Oregon’s lottery includes so-called Video Lottery Terminals, video poker- and slot-style machines found in bars where patrons can no longer gamble and smoke simultaneously.) As a result, the state plans a significant cutback in programs to help compulsive gamblers quit.

The funding drop is the result of an automatic formula — 1 percent of lottery profits are dedicated to helping problem gamblers — but the shift underscores a conflict of interest that is unfolding in states across the country. States have long taken an interest in discouraging “sin” activities like smoking and gambling, for a variety of reasons to do with both public welfare and promoting morality. But states are also increasingly dependent on revenues derived from taxes on these activities.

Over the last 30 years, this dependence has particularly grown in the areas of smoking and gambling. Thirty years ago, casino gambling was illegal almost everywhere except Nevada and Atlantic City, while only 13 states (all in the northeast and Midwest) had lotteries. Now, every state except Utah and Hawaii has some form of legal gambling, with the government routinely taking a cut. Meanwhile, state cigarette taxes are 248 percent higher today than they were in 1983, after adjusting for inflation.

High cigarette taxes (and the high implicit or explicit taxes that states levy on gambling) are justified as efforts to discourage consumption, or to make users pay for the negative externalities they impose. But they also make it costly for the government to be too effective in discouraging “sin,” lest revenues fall.

State governments’ position as gambling operators puts them in the odd position of encouraging people to gamble, even as they try to promote healthy living in other spheres — recently, I saw an ad for “Sweet Million” lotto in the New York subway, immediately across from another government ad discouraging the consumption of sugary beverages. And sometimes the need to encourage gambling wins out over attempts to impose public health: Last year, Atlantic City hastily repealed a new casino smoking ban, because it reduced gaming revenues too much.

As a libertarian, I’m troubled both by Nanny State efforts to discourage sinful behavior and by active government promotion of gambling. But I’m also a little bit hopeful that the impulses to raise revenue and to promote public morality will temper each other and cap the level of government infringement on liberty.

Looking back at Prohibition, federal dependence on alcohol excise taxes was a key obstacle to prohibiting alcohol; the introduction of the federal income tax not only greatly expanded the federal government, but made it fiscally possible to ban alcohol. The upside of states’ reliance on gambling receipts is that new gambling bans are unlikely.

Indeed, while nearly every state has expanded gambling offerings in the last three decades, contractions of legal gambling have been exceedingly rare. A decade ago, South Carolina outlawed small-scale video-poker operations that existed in the state. And in 2008, Massachusetts banned greyhound racing due to concerns about animal cruelty; horseracing remains legal. Otherwise, legal gambling has marched steadily forward.

I don’t think Oregon is following an explicit strategy to leave compulsive gambling untreated. (Though it wouldn’t necessarily be a bad one — according to the Oregonian story linked above, 50 percent of video lottery revenues come from the 10 percent of its customers who lose more than $500 per month.) But as with any other sin tax, an addiction to gambling revenues will reduce the state’s incentive to discourage gambling.