Impact of Gaming Industry on Local Employment and Personal Income

By McLain, P. Michael; Maheshwari, Sharad K. | Journal of Economics and Economic Education Research, September 1, 2006 | Go to article overview

Impact of Gaming Industry on Local Employment and Personal Income


McLain, P. Michael, Maheshwari, Sharad K., Journal of Economics and Economic Education Research


ABSTRACT

In the last decade gaming industry has grown steadily in the United State. According to American Gaming Association, its revenue has more than doubled between 1993 and 2003 from $34.7 billion to $72.87. Moreover, the casino gambling industry has spread from its traditional base in Nevada and New Jersey to the Gulf Coast, the Midwestern states and many other locations in the country including building of a large number of Native American casinos. However, community debate still continues whether to treat the gaming industry as any other business or treat it as a negative business necessary only to revitalize a community or to increase the revenue base for a given city and the state. Different state and local authorities provide different arguments in favor or against the industry. But the success of New Jersey approach in the Atlantic City to use casino industry as a revitalization tool for the community remains a very inspiring model.

However, it is important to note that not all gaming solutions result in the intent revenue increase, job growth or other socio-economic benefits for the local community. For example impact of gaming has been less than successful in many Native American experiments. In many Native American casino business has been slow and/or impact on the concerned Native Indian population has been much less than projected or in some cases it has been negative.

The purpose of this research is to study the impact of gaming, mainly casino industry, on the local community and how the economic impact varies with the size of population in the local community. This research will focus only on the communities where casino has made entry during the period of 1990-2000. That is, this study will exclude all old established gaming/casino centers. We will select a sample of thirty casino communities. For each center, we will collect data for 9 years. This will include 4 years of data prior to opening of major casino center, year of opening and 4 years after casino centers has been in existence. The data for this research will largely come from the Bureau of Labor Statistics and Bureau of Economic Analysis. The American Gaming Association will be the sources for the casino profiles data.

INTRODUCTION

In general the conclusions of previous research studies, regarding economic impact of gambling at the macro level, vary from somewhat positive to very negative. These differences between various research studies can largely be accounted by the methodology of performing the cost and benefit analysis of gambling industry. Many studies show (or assume) very high socio-economic cost of gambling (addiction, family breakup, incarceration, etc.) thus negates all the economic benefit of gambling to a community. Even though the evidence is very inconclusive in last two decades, an increasing number of states passed legislation to allow some form of gambling within their borders. The legislative rationales vary for this action but in general increase state revenue and/or rejuvenation of a depressed region in the state remain the basic motivating factors. In the United States, eleven states have legalized casino gambling. These states are Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Nevada, New Jersey, and, South Dakota. In addition, 28 states have Indian casinos. Little or economic data is available about Indian casinos. These casinos are not included in this study.

In this research, we considered regions where casino gambling has stated after 1990 therefore, excluding the states of Nevada and New Jersey. The states where annual casino revenues are less than one billion are not included in the studied. It is assumed that the economic impact of small revenue generating casinos may not very significant on the region. This excludes the states of South Dakota and Colorado. Most other new casinos regions are located into southern states of Louisiana and Mississippi or in mid-western states of Illinois, Indiana, Iowa, Missouri and Michigan. …

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