These States Are Getting Rich Off Sin

From 24/7 Wall St.: In 2011, state governments collected more than $50 billion in taxes and proceeds from vice: gambling, smoking and alcohol consumption.

Some argue that state governments should not profit from residents’ vices. However, some states rely on these activities for a substantial proportion of their budget. In Nevada, “sin taxes” accounted for nearly 6% of the state’s revenue. Based on data from the Census Bureau and the American Gaming Association, 24/7 Wall St. identified the states where the largest percentage of revenue came in the form of proceeds from alcohol, tobacco and casino taxes, as well as the lottery and state-regulated liquor stores. These are the states profiting most from sin.

Excise taxes on tobacco are among the most politically charged and varied in the country. While Rhode Island charges $3.50 in taxes per pack of cigarettes, states like Virginia and Missouri charge less than $0.50.

Frequently, consumption is higher in the states making the most from sin taxes. For example, many of the states that profit the most from sin rely heavily on tobacco revenue. While tobacco tax rates are relatively low in some of these states, sales are higher than the national average. In fact, the states with the highest taxes for alcohol and tobacco do not necessarily bring in the most money.

Relative to some of the other sin-related sources of income, taxes on alcohol are not a big source of revenue. However, some state governments opt to control liquor sales, which can involve regulating stores and collecting commissions. In others, it can even mean warehousing and selling the liquor directly to consumers. In New Hampshire, state-controlled liquor sales accounted for 1% of the state’s income.

While alcohol and tobacco are factors in some of the states that profit most from sin, gambling is almost always a much more significant source of income. In five states, casino tax revenue accounted for more than 2% of state revenue.

In Nevada, not surprisingly, it was nearly 5% of revenue. Lotteries were also a major source of income. The Rhode Island, Delaware and West Virginia Lotteries all brought in well over 3% of state income. The reason for this, according to the American Gaming Association, is that these states operate and own all commercial casinos in the state not run by Native Americans.

The moral question of whether states should be profiting from its residents’ bad habits is a difficult one. Some argue that states are attempting to encourage better life choices. The case might be made most strongly for cigarette taxes. In states like New York, which has a $4.35 cigarette tax, there are signs that residents are quitting smoking because it is becoming too expensive.

Others, like the Tax Foundation’s Scott Drenkard, argue that some states are motivated by profit. Specifically, increasing state revenues through higher taxes. This is clear in the case of state casinos, which are being added quickly all over the country. Drenkard Added “A better discussion is ‘is this worthwhile for these communities’ rather than ‘is this the sort of thing we can squeeze money out of?”

In order to identify the states that profit most from sin, 24/7 Wall St. reviewed state tobacco taxes, alcohol taxes, casino taxes, as well as proceeds from state-controlled liquor stores and state lotteries. These sources of income represented the largest proportion of total state income in these states. Tobacco, alcohol, liquor store and lottery income came from the Census Bureau’s State Government Finances report. Casino taxes came from the American Gaming Association’s “State of the States” report. All figures are for fiscal year 2011, the most recent year for which there is consistent data available for all income. 24/7 Wall St. also reviewed excise tax rates from the Tax Foundation, as well as alcohol consumption data from the Center for Disease Control.

These are the states profiting most from sin, according to 24/7 Wall St.:

UPDATE 1-Atlas Copco in talks to take over Edwards Group – report

STOCKHOLM, Aug 17 (Reuters) – Swedish engineering group Atlas Copco is in advanced talks with Edwards Group to take over the British industrial technology firm Sky News reported on Saturday.

Iran has 18,000 uranium centrifuges, says outgoing nuclear chief

DUBAI (Reuters) – Iran has installed 18,000 uranium-enrichment centrifuges, the country’s outgoing nuclear chief was quoted as saying by Iranian media on Saturday.

Guessing game as Pakistan’s powerful army chief prepares to retire

ISLAMABAD (Reuters) – In a nation long plagued by military coups, the question of who will replace Pakistan’s all-powerful army chief has taken on new urgency this year as the country tries to shake off the legacy of decades of military dictatorship.

DO-RA Is An Environmental Sensor That Plugs Into Your Phone & Tracks Radiation Exposure


There’s a thriving cottage industry of smartphone extension hardware that plugs into the headphone jack on your phone and extends its capabilities in one way or another — feeding whatever special data it grabs back to an app where you get to parse, poke and prod it. It’s hard to keep track of the cool stuff people are coming up with to augment phones — whether it’s wind meters or light meters or even borescopes. Well, here’s an even more off-the-wall extension: meet DO-RA — a personal dosimeter-radiometer for measuring background radiation.

Granted, this is not something the average person might feel they need. And yet factor in the quantified self/health tracking trend and there is likely a potential market in piquing the interest of quantified selfers curious about how much background radiation they are exposed to every day. Plus there are of course obvious use-cases in specific regions that have suffered major nuclear incidents, like Fukushima or Chernobyl, or for people who work in the nuclear industry. DO-RA’s creators says Japan is going to be a key target market when they go into production. Other targets are the U.S. and Europe. It reckons it will initially be able to ship 1 million DO-RA devices per year into these three markets. The device is due to go into commercial production this autumn.

The Russian startup behind DO-RA, Intersoft Eurasia, claims to have garnered 1,300 pre-orders for the device over the last few months, without doing any dedicated advertising — the majority of pre-orderers are apparently (and incidentally) male iPhone and iPad owners. So it sounds like it’s ticking a fair few folks’ ‘cool gadget’ box already.

The DO-RA device will retail for around $150 — which Intersoft says is its primary disruption, being considerably lower than rival portable dosimeters, typically costing $250-$400. It names its main competitors as devices made by U.S. company Scosche, and Japanese carrier NTT DoCoMo. Last year Japan’s Softbank also announced a smartphone with an integrated radiation dosimeter, with the phone made by Sharp. This year, a San Francisco-based startup has also entered the space, with a personal environmental monitoring device, called Lapka (also costing circa $250), so interest in environmental-monitoring devices certainly appears to be on the rise.

DO-RA — which is short for dosimeter-radiometer — was conceived by its Russian creator, Vladimir Elin, after reading articles on the Fukushima Daiichi nuclear disaster in Japan, and stumbling across the idea of a portable dosimeter. A bit more research followed, patents were filed and an international patent was granted on the DO-RA concept in Ukraine, in November last year. Intersoft has made several prototypes since 2011 — and produced multiple apps, for pretty much every mobile and desktop platform going —  but is only now gearing up to get the hardware product into market. (Its existing apps are currently running in a dummy simulation mode.)

So what exactly does DO-RA do? The universal design version of the gadget will plug into the audio jack on a smartphone, tablet or laptop and, when used in conjunction with the DO-RA app, will be able to record radiation measurements — using a silicon-based ionizing radiation sensor — to build up a picture of radiation exposure for the mobile owner or at a particular location (if you’re using it with a less portable desktop device).

The system can continuously monitor background radiation levels, when the app is used in radiometer mode (which is presumably going to be the more battery-draining option — albeit the device contains its own battery), taking measurements every four seconds. There’s also a dosimeter mode, where the app measures “an equivalent exposure over the monitoring period” and then forecasts annual exposure based on that snapshot.

The company lists the main functions of the DO-RA mobile device plus app as:

– Measuring the hourly/daily/weekly/monthly/annual equivalent radiation dose received by an owner of a mobile/smart phone;

– Warning on allowable, maximum and unallowable equivalent radiation dose by audible alarms/messages of a mobile/smart phone:”Normal Dose”, “Maximum Dose”, “Unallowable Dose”.

– Development of trends of condition of organs and systems of an owner of a mobile phone subject to received radiation dose;

– Advising an owner of a mobile/smart phone on prevention measures subject to received radiation dose;

– Receiving data (maps of land, water and other objects) on radiation pollution from radiation monitoring centres collected from DO-RA devices;

– Transferring collected data through wireless connection (Bluetooth 4.0) to any electronic devices within 10 meters.

Why does it need to transfer collected data? Because the startup has big data plans: it’s hoping to be able to generate real-time maps showing global background radiation levels based on the data its network of DO-RA users will ultimately be generating. To get the kind of volumes of data required to create serious value they’re also looking to shrink their hardware right down — and stick it inside the phone. On a chip, no less.

The DO-RA.micro design, which aims to integrate the detector into the smartphone’s battery, is apparently “under development” at present. The final step in the startup’s incredible shrinking roadmap is in which the radiation-sensing hardware is integrated directly into the SoC. “This advanced design is under negotiations now”, it says.

It will doubtless be an expensive trick to pull off, but if DO-RA’s makers are able to drive their technology inside millions of phones as an embedded sensor that ends up being included as standard they could be sitting atop a gigantic environmental radiation-monitoring data mountain. Still, they are a long way off that ultimate goal. In the meantime they are banking on building out their network via a universal plug-in version of DO-RA, which smartphone owners can use to give their current phone the ability to sniff out radiation.

In addition to the basic universal plug-in, they have created an apple-shaped version, called Yablo-Chups (pictured left), presumably aimed at appealing to the Japanese market (judging by the kawaii design). They are also eyeing the smartwatch space (but then who isn’t?), producing a concept design for an electromagnetic field monitoring watch that warns its owner of “unhealthy frequencies.” It remains to be seen whether that device will ever be more than vaporware.

All these plans are certainly ambitious, so what about funding? Elin founded Intersoft Eurasia in 2011 and has managed to raise around $500,000 to-date, including a $35,000 grant from Russia’s Skolkovo Foundation, which backs technology R&D projects to support the homegrown Tech City/startup hub. In September 2013 Intersoft says it’s expecting to get a more substantial grant from the Foundation — of up to $ 1 million — to supplement its funding as it kicks off commercial production of DO-RA. It also apparently has private investors (whose identity it’s not disclosing at this time) willing to invest a further $250,000.

Even so, DO-RA’s creators say they are still on the look out for additional investment — either “in the nuclear sphere” or a “big net partner to promote DO-RA” in their main target markets. Additional investment is likely required to achieve what Intersoft describes as its “main goal”: producing a microchip with an embedded radiation sensor. That goal suggests that the current craze for hardware plug-ins to extend phone functionality may be somewhat transitionary — if at least some of these additional sensors can (ultimately) be shrunk down and squeezed into the main device, making mobiles smarter than ever right out of the box.

TechCrunch’s Steve O’Hear contributed to this article

Egyptian youth leader backs army in battle with Brotherhood

CAIRO (Reuters) – Mahmoud Badr, whose petition campaign helped to bring down Egypt’s Islamist president, insists the bloodshed that has followed is a necessary price for saving the nation from the Muslim Brotherhood.

McDonnell Scandal Gets Even More Complicated

By Brendan O’Brien

Aug 17 (Reuters) – The first lady of Virginia bought and held Star Scientific stock when she and her husband Governor Robert McDonnell were promoting the nutritional supplements maker, the Washington Post reported on Saturday.

The relationship between the McDonnells and Star Scientific has been the subject of criminal investigations after loans and gifts the company’s Chief Executive Jonnie Williams gave to the governor were uncovered.

Bill Burck, an attorney for first lady Maureen McDonnell, told the Post she purchased 6,000 shares of Star Scientific stock on June 1, 2011, the day she publicly voiced her support for the company at a gathering of physicians and investors.

The first lady’s purchase, which amounted to about $30,000, came a few days after Williams wrote a $50,000 check to her, according to the paper.

Burck also disclosed to the paper that Maureen McDonnell bought another 522 shares for about $2,000 two months later, the same day that she set up a meeting between Williams and a state health official.

The Washington Post said the first lady, a few weeks after the meeting between Williams and the official, hosted a luncheon at the governor’s mansion for the company’s launch of a product, an event attended by the governor.

Burck said she sold the shares in December, 2011, for a loss and then used the proceeds to buy 6,672 shares in January, 2012.

The governor’s annual statement of economic interest did not disclose the ownership, as required by law, according to the newspaper.

In July, McDonnell said his family had repaid more than $123,000 in loans to Williams and apologized for the embarrassment that it had brought the state.

Williams has given a number of gifts to the governor’s family, including $15,000 in catering for the wedding of the governor’s daughter and a watch to the first lady, according to local media.

Federal and state authorities are probing the relationship between the McDonnells and Williams.

There was no response on Saturday to a phone call to the governor’s communications office.

AngelList Tells SEC New Fundraising Rules Will Kill Startups

Death Sentence

Startups could face a “death sentence” one year ban from fundraising if they violate awkward new general solicitation fundraising rules, AngelList co-founder Naval Ravikant wrote in a letter to the SEC this week. Ravikant says the Regulation D and Form D changes that go into effect soon are designed for Wall Street, not Silicon Valley, and must change or they’ll harm rather than help startups.

Last month the SEC voted to implement some parts of the JOBS Act, including lifting the ban on General Solicitation. This allows startups and funds to openly advertise that they’re looking for investors, rather than quietly using private communication to solicit money. The theory is that this will make it easier for startups to raise money, build companies, and create jobs.

The problem is that the SEC also decided to add a bunch of red tape to the fundraising process too. This includes notifying the SEC 15 days prior to fundraising, filing all changes to written investor materials to the SEC, and providing verbose disclosures whenever soliciting funding. As TechCrunch contributor and Seattle lawyer William Carleton wrote, ”the SEC’s proposed new Reg D rules and filing requirements, if adopted, will make general solicitation more of a burden than an efficiency.”

Ravikant shares Carleton’s opinion, and delivered to it to the SEC in more forceful terms, hoping the rules can changed.

“We are concerned that the newly proposed Form D filing rules could create disastrous unintended consequences for the startup community…Rules that may be easy for Wall Street are a death sentence for startups…Since young companies are responsible for most of the job growth in the US, we believe this is against the spirit of the JOBS Act” Ravikant writes.

He explains that while Wall Street actors are used to this level of formality and have lawyers to navigate it, they would cause big problems for budding companies. Startups likely can’t afford expensive legal counsel to help them avoid breaking the rules, yet “the very severe penalty for non-compliance (not fundraising for a year) is a death penalty for a not-yet-profitable business.”

Startups are often in a constant state of fundraising as they test the waters of investor interest. That makes it tough to know when to file the start-of-fundraising notice, and could force them to turn away spontaneous opportunities. As startups often iterate quickly and evolve the messaging to investors by updating their websites, filing each of these changes with the SEC would be a huge hassle. And it would nearly impossible to fit a proper disclosure into a tweet soliciting investment.

Some of these rules are designed to protect inexperienced investors that would be allowed to fund companies if the equity crowdfunding portion of the JOBS Act is finally implemented. Right now only accredited investors, people with over $1 million in personal wealth, are allowed to invest. They’re generally tougher to dupe into sham investments. But if average Joes can invest, they may need greater protections afforded by tighter regulations.

The hope is that more focused rules that actually guard amateur investors could be put in place alongside true crowdfunding so the frictions described here wouldn’t be necessary.

After breaking down the threats to startups in his letter, Ravikant provided the SEC with a list of remedies:

  1. “Allow third parties to do the filing on issuer’s behalf via API” provided by sites like AngelList
  2. “Allow the company (or a third party like AngelList) to hold the financing materials so the SEC can access them” via a permalink URL to an updated set of materials
  3. “Only require legends and disclosures when terms are communicated” instead of in tweets, public statements, or other time fundraising is more casually mentioned
  4. “Drop the 15-day-in-advance before financing rule entirely” and use the existing file-after-the-fact system
  5. “Don’t impose death penalties for noncompliance. Instead, reduce the costs of compliance” and keep more Form D information confidential so startups don’t have to reveal sensitive information too early
  6. “Don’t be overly broad in the penalty application” by only punishing the violator, not surrounding businesses and funding platforms that support them.

The question now is whether the historically slow-moving SEC will budge on these rules, despite the sound logic behind Naval’s suggestions.

Postscript: The suggestions Ravikant makes surely would benefit his company, but they would like help many others too.