Is Legalized Gambling Good Economics for States?

By Cabot, Anthony N. | The World and I, March 1997 | Go to article overview

Is Legalized Gambling Good Economics for States?


Cabot, Anthony N., The World and I


Casinos are good business, say their proponents. Case studies show that legal casino gaming can increase tourism, employment, sales of noncasino goods, and tax revenues. In Nevada, gaming employs 211,000, or 24.41 percent of the workforce. Direct annual state gaming taxes total over $500 million, or more than 42 percent of the state budget. In contrast, the cost to regulate the gaming industry was less than $21 million. Las Vegas alone attracts thirty million visitors annually.

New Jersey, the second state since 1931 to legalize casino gaming, also realizes significant revenues. In 1996, total direct tax revenues were over $232 million. Since casino gambling's inception, the state has realized $3 billion in direct taxes and millions more in property and luxury taxes. Gaming has resulted in 91,600 direct and indirect jobs, and community reinvestment money from casinos has totaled about $500 million.

In South Dakota, the government predicted that it would generate $1 million in tax revenues in the first year of operation. From November 1989 to August 31, 1990, the City of Deadwood alone received more than $4.3 million in taxes. Taxable sales increased 41 percent in the first year of operation. Tourism increased 300 percent. In this formerly depressed area, the casinos created more jobs than there are residents. Consequently, some workers must commute from surrounding communities.

Perhaps the greatest beneficiaries of casinos have been some Native American tribes. While previously plagued by high unemployment, poor medical care, poor infrastructure, and other problems, many reservations now enjoy employment, job training, new schools, new hospitals, and college scholarships, all provided by casino gambling. Some tribes have wisely invested their revenues in new businesses that are not casino-related to provide diversity and a new economic base.

Casinos are bad business, claim their opponents. They say that while I percent of the population has a problem with gambling before the introduction of legal casinos, this number may jump two to seven times after introduction. With problem gamblers, assert the opponents, come the social costs of broken families, white-collar crimes, suicides, alcoholism, and the inability to hold jobs. This, the critics claim, extrapolates to billions of dollars in costs each year and far exceeds any economic benefits.

So Americans ask, Who is right? Yet, maybe they do not understand enough to ask the right questions. The campaigns for legalizing casinos in various states address only a few of the policy issues. The inquiry has focused on narrow issues that are of interest to the average voter as opposed to a full debate on the merits of legal gambling. Inevitably, these campaigns have, on one hand, proponents arguing that casino gaming will bring untold wealth to the states through increases in tax revenues, tourism, and employment. On the other hand, opponents inevitably respond by claiming that social problems caused by casinos will wreak economic havoc on the governments and on families. While important, these issues fail to provide a complete understanding of the factors surrounding gaming policy.

MORALISM AND LIBERALISM

Left out of the larger debate on casino gambling are two important, but disfavored, philosophical positions: moralism and liberalism. Moralists usually oppose gambling based on feelings dictated either by theology or personal notions of social order. Moralists claim that gambling affects the public's values and priorities, and causes people to interact differently. Societal attitudes may emerge that people are better off being lucky than working hard or that accumulation of wealth is a person's most important achievement. As Sir Patrick Delvin observed: "Societies disintegrate from within more frequently than they are broken up by external pressures. There is disintegration when no common morality is observed, and history shows that the loosening of moral bonds is often the first stage of disintegration. …

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