The Economic Impact of Gambling
For some time the economics of gambling has been a controversial subject. Now those times are behind and people believe that real money casinos help improve the economies of local communities. This article explores whether there is anything behind these beliefs and whether casino expansion leads to a better economy.
Economics and Gambling
Over the past 30 years, there have been numerous researches on the economic benefits of gambling, though the results are controversial. The American Gaming Association claims that casinos may benefit the economy, yet they are affected by external circumstances. Besides, more casinos can result in competition which in the future will greatly reduce the positive economic impact.
Researchers have studied the correlation between casinos and the economy within counties in U.S. states. They examined short-term and long-term indicators of economic growth. They discovered that the impact of the industry on economics was positive but rather modest.
Employment
Economists found positive but not lasting labour-market gains from casinos in Canada. The beneficial effects on employment and income are only evident for about 5 years, with the benefits limited to the hospitality and entertainment industries. Using data for counties in the Mid-Atlantic region of the U.S. it’s been found that positive effects on income and employment eventually fade and that the economic effects of gambling are more significant in metropolitan areas and may actually be negative in suburban regions.
Overall, modest employment gains are likely, mostly in the short term, thanks to casinos, which appear to be mainly related to the hospitality and entertainment sectors.
Tax Revenues
Increased state tax revenues appear to be the most important political motivation for legalising the gambling industry, besides economic development and job creation. In 2011, a study was published that analysed data from all the American states, from 1985 to 2000. The effect of gambling on state government revenues was insignificant, despite pretty high taxes in some states. However, considering the economic impact of casinos on tourism and economic boosts at the state level, the results show that casinos have a modestly positive influence on state tax revenues.
Dr. Kahlil Philander and his colleagues suggest that fixed licence-based taxes may be preferable to taxes based on gross gaming revenue. They found that higher casino taxes lead to less casino employment. But this option may benefit the states with low casino taxes: it is estimated that these state governments can gain $430,000 in tax revenue for every job destroyed by increasing casino tax rates.
Industry Competition
Some contemporary research tried to link online casino gambling and traditional casinos. Dr. Philander discovered that the two concepts are complementary. The study is based on self-reported gambling activity of UK respondents. A positive correlation was found between online poker and offline gaming. As the former’s profits grow, so do the latter’s, and vice versa.
Social Impact
Many of the social consequences are the negative effects related to disordered gambling and may include decreased productivity at work, depression and physical illness due to stress, increased suicide attempts, debt and bankruptcy, and divorce.
Numerous researchers have attempted to measure the monetary value of these issues. These estimates are typically presented as an amount per pathological (disordered) gambler, per year. They have turned out to range from about $2000 to over $30,000.
Summary
Reviews of the economics of casino gambling suggest modest and transient beneficial effects. Casinos boost tax revenues, employment, and per capita income, though primarily by affecting the hospitality and entertainment industries.
