Just a Coincidence? Bankrupcties Highest Where Casinos Are ; A Study of US Counties Doesn't Show a Causal Link, but It Fuels Concerns That Gambling May Boost Risk of Insolvency

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A controversial new study has found that personal bankruptcy rates are twice as high in counties with gambling casinos than in those without.

Mike Osborne is surprised that anyone is even questioning it. He's a recovering compulsive gambler who started dabbling with sports betting in seventh grade. When he hit high school, he'd become the local school bookie but gave it up because he missed the thrill of "putting money on the line, risking something." By the time he was 22, the Baltimore real estate broker and father of three was more than a half million dollars in debt.

"Basically, I had tapped out every source I had available," he says. "At that point I didn't think of bankruptcy as an option. I had a suicide attempt and went into treatment. Then I realized bankruptcy was the only way I'd be able to provide for my family again."

With personal bankruptcy filings at historic highs, a growing number of grass-roots organizations contend that the phenomenon is fueled, at least in part, by the explosion of legal gambling in the United States over the past quarter of a century. Twenty-five years ago, legalized gambling was confined to Nevada and Atlantic City, N.J., along with a handful of racetracks and lotteries scattered around the country. Today, there are 648 legal casinos in the 31 states that allow legalized gambling, and most states have some form of a lottery. In the past decade, total personal US bankruptcies grew from 770,000 to 1.3 million, while business bankruptcies fell almost 40 percent.

Yet a fierce debate continues about whether those high bankruptcy rates can be tied to the easy access to betting parlors. The gambling industry insists the presence of casinos does not increase personal bankruptcy filings, arguing they instead create an economic boom that helps communities pull out of hard times. They point to several government studies, including the National Gambling Impact Study Commission, that found no link between gambling and bankruptcy. The industry says that other factors, such as higher levels of debt, easy access to credit, and "the reduced social stigma of declaring bankruptcy," are responsible.

"This is a very hot issue because the antigaming movement has always tried to make the argument that if you put a casino into a community, it will increase bankruptcies," says Frank Fahrenkopf, president and CEO of the American Gaming Association, the lobbying arm of the nation's gambling industry. "But every independent study I've seen flies in the face of that."

The new study just released by researchers at Creighton University in Omaha, Neb. …