States | featured news

Faced with a drop in gambling revenue, states are adding games, considering new casinos and increasing lottery options — anything to keep their cut of the profits rolling in.

On the recession's front lines, governors are struggling to chart the road ahead for states staggered by unrelenting joblessness and cut-to-the-bone budgets even as Washington reports signs of economic growth.

"The worst probably is yet to come," warned Gov. Jim Douglas, R-Vt., chairman of the National Governors Association, at the group's meeting Saturday. He called the situation "fairly poor" in most states, adding that it "doesn't look too good."

States are looking to the federal government for more help balancing their budgets, but the Senate is not heeding their call.

Frustrated by the banks' inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-to-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.

Health officials said almost 100 children have died from the flu, known as H1N1, and 46 states now have widespread flu activity.

U.S. employment opportunities remain bleak as September's regional and state unemployment rates climbed in 23 states and the District of Columbia.

At least 15 states are in various stages of considering or implementing furloughs, with mixed results.