Disclosure statement Doug Walker has served as a consultant for a variety of gaming-related organizations, including government and industry groups. He is currently a visiting professor at the Cambridge Health Alliance, Division on Addiction. The views expressed in this article are the author’s, and do not necessarily represent the College of Charleston or the Division on Addiction. Casinos like this one in Maryland bring benefits as well as costs. 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. 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 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. 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. 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.
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. 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. 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. The fact is that any new business that competes with existing businesses does the same thing. This is simply a part of market economies. 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. 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. This article is part of a series on gambling in America. You can read the rest of the series here. March Madness: With gambling legal in eight states, who really wins? Alzheimer’s disease: have we got the cause all wrong? Stay informed and subscribe to our free daily newsletter and get the latest analysis and commentary directly in your inbox. Problem gambling is an urge to gamble continuously despite harmful negative consequences or a desire to stop.