Beyond the Limits of Recreation: Social Costs of Gambling in Southern Nevada

By Thompson, William N.; Schwer, R. Keith | Journal of Public Budgeting, Accounting & Financial Management, Spring 2005 | Go to article overview

Beyond the Limits of Recreation: Social Costs of Gambling in Southern Nevada


Thompson, William N., Schwer, R. Keith, Journal of Public Budgeting, Accounting & Financial Management


ABSTRACT. This study seeks to find the dollar value of social costs of gambling. The authors use data from a survey of 99 members of Gamblers Anonymous (GA) groups in southern Nevada. The GA members were asked many questions about their behavior while they were active gamblers, such as how often they missed work because of gambling, how much they borrowed because of gambling, how much they stole because of gambling and their experiences with the judicial system and welfare systems because of gambling. Societal costs of each behavior were calculated and annualized. It was determined that each of the compulsive gamblers imposed social costs of $19,711 on others in southern Nevada. Of these costs, $1,428 (7.2%) were governmental costs, while $6,616 (33.6%) represented economic losses for southern Nevada. Using estimates of the numbers of pathological and problem gamblers in Nevada, it was determined that the overall social costs of compulsive and problem gambling in southern Nevada ranged from $314 million to $545 million per year.

INTRODUCTION

Debates over the legalization or expansion of the legalization of gambling usually focus on economic benefits that can be derived from jobs and taxation of gambling on the one side, and the moral downsides of gambling on the other side. The downside factors include increased crime and compulsive gambling. It is often very difficult to assess the net results of the debates as the costs of downside factors are rarely quantified into dollar terms. In this article the authors attempt to place a precise dollar sign value on the costs that compulsive gambling impose upon society. Some of the costs are imposed upon other non-gambling individuals in society; some are imposed upon governments; and some represent "dead weight" or general costs to an economy as a whole. The dollar sign values are determined by using data from a survey of 99 members of Gamblers Anonymous groups in southern Nevada.

THE SETTING: HIGH STAKES MECCA

The Las Vegas Strip is Mecca for gambling, and particularly for legalized casinos. Legalized gambling generates more revenues than any other popular leisure time activity in America. In 2001, gambling activities produced over $63 billion for their operators, which included private companies, state governments, Native American tribes, and nonprofit charity groups. Casinos produced nearly $42 billion of this amount. (American Gaming Association, 2002) In turn Nevada casinos had gross gambling profits (player losses minus prizes given to players) of $9.3 billion, with about $7 billion produced by the casinos of Clark County which includes the City of Las Vegas as well as the Las Vegas Strip. (Nevada Gaming Commission, 2002).

The revenues gained by gambling operatives exceed the combined revenues from ticket sales for live concerts, theater and movie performances (including video rentals), attendance at all professional sports games, and sales of all recorded music. Gambling revenues also exceed by 20% the sales figures for all cigarettes in the United States. The combined sales of all alcoholic beverages (beer, wine, and spirits, by the drink and by the take-out bottle) exceed total gambling revenues by only 10%. The revenues from gambling equate to over one percent of the national domestic product (United States Bureau of Statistics, 2002). Gambling is a major element in American popular culture.

Proponents of expanded legalization of gambling are quick to point out that the activity is responsible for approximately one million jobs. Commercial casinos alone give direct employment to 370,000 workers with an additional 450,000 jobs in related businesses supported by the casino industry (American Gaming Association, 2002). Moreover they can add that gambling brings money to governments, either directly through profits in state-run lottery games, or through taxes. These government revenues approach $20 billion a year.

Eleven commercial casino states received casino winnings taxes exceeding $3. …

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