During the past two decades, the US casino industry has expanded dramatically. According to the American Gaming Association, there are now nearly 1,000 commercial and tribal casinos in the country.
- Social Effects Of Gambling
- Effect Of Gambling On Economy Today
- Effects Of Gambling On A Country Economy
- Effect Of Sports Gambling On The Economy
Plans to expand casino gaming are typically controversial. Massachusetts presents one of the most interesting cases, with voters currently contemplating a measure to reverse casino legalization this coming Tuesday November 4.
The cost benefit analysis
The negatives of casino gambling are well documented. Those negatives include not only behavioral problems associated with gambling, but also other individual, family, social and economic problems. Gambling availability is associated with increased problem and pathological gambling behaviors among individuals in the casino neighborhood. The effect of recessions on US aggregate expenditures of three major gambling activities (casino gambling, lottery, and pari-mutuel wagering) are investigated and the outcomes are compared to other economic consumption series, such as consumption of recreational activities, services, and nondurable goods. This often delays recovery and treatment and allows a gambling addiction to lead to other serious effects, including loss of jobs, failed relationships, and severe debt. Problem gambling is often associated with mental health problems, including depression, anxiety, and mood disorders. A Good Way to Wreck a Local Economy: Build Casinos. Half of casino visitors are over age 50, but casinos market themselves to the over 70 and even over 80 market, to whom gambling offers an escape from boredom and loneliness into a hypnotic zone of rapid-fire electronic stimuli.
Each time casino legalization or expansion is considered, similar issues come up. Casino proponents argue that casinos will create tax revenues, jobs, and can push average wages higher.
Opponents argue that the social costs, such as crime, industry “cannibalization,” and problem gambling, outweigh the potential benefits. Both sides discount the opposition’s claims. So what does the research show?
When it comes to the economic benefits of casinos, there have been several studies on economic growth, employment, and wages. Perhaps the most comprehensive study on employment and wages was done at the US county level.
Controlling for a variety of factors, the results showed that counties with casinos have higher employment (by around 8%) than those without; wages were slightly higher in casino counties.
There is also published evidence that casinos have a positive impact on state-level economic growth, though that evidence has not been consistent over time.
Tax benefits
Perhaps the most important political benefit of casinos is tax revenues. Although in most states legalized gambling provides a very small proportion of state tax receipts (usually far less than 5%), casino taxes do make it easier for politicians to avoid spending cuts or other tax increases.
In Massachusetts, one of the motivations for casino legalization is that many Bay State residents gamble at casinos in Connecticut and Rhode Island. If new casinos keep hundreds of millions of casino revenue in the state, that means additional tax revenue for the state.
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Problem gamblers
On the cost side of the equation, researchers agree that the majority of costs are attributable to problem gamblers, who make up around 1% of the population. These people develop a variety of problems, including reduced employment productivity; financial problems, bad debts and bankruptcies; committing crimes to get money for gambling; and lying to friends and family.
Interestingly, the spread of casinos across the country may not have caused a significant increase in the prevalence of problem gambling. Research has suggested that when casinos expand in an area, there is a short-term increase in the problem gambling rate, but that the rate levels off over time. The result has been a fairly stable prevalence of problem gambling across place and time.
Since the 1990s researchers have been trying to put a monetary value on these social costs of problem gambling. Unfortunately, such measurement is tricky.
Researchers have estimated that around 70% of problem gamblers have other problems, such as drug or alcohol abuse. Thus, it becomes impossible to attribute social costs specifically to the person’s gambling problem. Nevertheless, the scientific literature on the types of difficulties associated with problem gambling is well-developed.
Crowding out competitors
Casino critics typically argue that casinos will harm other industries. This is so-called “industry cannibalization.” The fact is that any new business that competes with existing businesses does the same thing. This is simply a part of market economies.
One can sympathize with existing firms; they never like having more competition. But in the end, a new casino creates a new option for consumers. If they didn’t enjoy gambling, consumers wouldn’t spend their money at casinos.
What about casinos’ impacts on lotteries? There have been recent claims that casinos could significantly harm the Massachusetts lottery. Recent empirical evidence from a study we did in Maryland tends to contradict this.
We found that the establishment of casinos in Maryland led to about a 2.75% decrease in lottery sales. This is hardly a major impact, but it is nothing to sneeze at.
Massachusetts has the most successful lottery in the country, and casinos will probably have a small negative impact on lottery sales. On net, though, gambling tax receipts will almost certainly increase with casinos.
How, then, to assess impact
Policymakers in different parts of the country have taken different approaches to understanding the impacts of casinos. Some states have commissioned comprehensive studies, while others have acted without much empirical evidence. Massachusetts has commissioned a comprehensive multi-year study of the economic and social impact of the introduction of casino gambling.
It’s true that casinos have a variety of impacts on their host communities; they create both costs and benefits, both of which are probably less important than casinos’ strongest supporters and opponents claim.
But from a purely economic perspective, even considering the difficulties in measuring them, the benefits from casinos likely outweigh the costs – with the key benefits being those to consumers who like casino gambling.
This article is part of a series on gambling in America. You can read the rest of the series here.
(Redirected from Economics of Gambling)
As a result of gambling, some are driven to extreme lengths to cover debt. Severely addicted gamblers spend most of their energy following their addiction. They cost companies loss of productivity and profit. Gamblers themselves may suffer from depression and bankruptcy. Some may go into severe debt and suffer anxiety because of it. The social costs to society are varied and include unemployment benefits, family services and medical treatment to gamblers.[1]
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During times of economic success, casinos tend to take labor supply away from neighboring businesses. Since casinos offer higher wages than regular neighboring businesses, such as restaurants, employees leave the neighboring business and works for the casino. Customers who normally go to the neighboring restaurants now instead go to the casino for food. This demonstrates how not all growth by a casino can be attributed as economic growth; sometimes casinos merely transfer growth from other businesses into their own.[2]
Social Effects Of Gambling
![Effect Of Gambling On Economy Effect Of Gambling On Economy](/uploads/1/2/5/2/125250394/545984688.jpg)
Economic benefits[edit]
Gambling provides jobs since all commercial games require labor. Casinos require intensive labor including security guards, technical support staff, gaming staff, among others. In 1996, around 300,000 employees earned a total of US$7.7 billion within the US nation. This number does not include those who are indirectly involved with gambling, such as racing organizers. Employment resulting from gambling is difficult to estimate since gambling involves employees in many different stages. Entertainment is interlinked with gambling as well, for instance, the many shows available in casinos in Las Vegas. Hotel services and chauffeurs are also in higher demand because of gambling. Gambling increases aggregate demand for goods and services in the economy. In 1996, Americans spent one in every ten dollars on commercial gaming. This money goes directly toward stimulating the economy. This expenditure on gambling can also be magnified when considering the multiplier effect.[3]
Reasons for gambling institutions[edit]
Effect Of Gambling On Economy Today
In a study by Grinols, it was found that in the US, even though a state may not want to support a gambling institution, it would be economically beneficial for them to do so. If they did not support the institution, there would be many repercussions. This is because, neighboring states have gambling institutions. Residents of the local state will travel to these institutions and gamble nonetheless. This would take away profit and revenue form the resident state. Since these gamblers will gamble anyway, it is economically beneficial for a state to allow and support gambling institutions.[2]
Another study compared personal income to personal gambling expenditure and found that gambling occurs whether or not the country is in a recession. This aspect will attract states to invest in an institution that is basically recession-proof. During the Early 1990s recession, GGR (Gross Gambling Revenue) increased 9.4% even though the recession slowed personal income to 5.95%. This shows resilience of gambling to the effects of recessions.[3]
See also[edit]
References[edit]
Effects Of Gambling On A Country Economy
- ^Grinols, E L. (2004). Gambling Economics: Summary Facts. USA: Baylor University.
- ^ abGrinols, E L. (2004). Gambling in America: Costs and Benefits. Cambridge, UK: Cambridge University Press.
- ^ abChristiansen, E. M. (1998). Gambling and the American Economy. Annals of the American Academy of Political and Social Science, 556(1), 36-52.
Effect Of Sports Gambling On The Economy
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