Specifically, we compared the effects on real per-capita personal income and job growth rates of the counties with and without casinos. We found that the effects of casinos on economic growth to be positive but relatively small. Casino expansion was estimated to have increased the short-term per-capita income growth rate by 0. But after controlling for spatial or neighboring-county correlation effects, the effect of casinos on the long-term income growth disappeared.
On the job side, casino expansion was estimated to have increase the year salary job growth rate by 0. Our study did not examine the negative externalities of casinos. The negatives of casino gambling are well documented. Those negatives include not only behavioral problems associated with gambling, but also other individual, family, social and economic problems.
Gambling availability is associated with increased problem and pathological gambling behaviors among individuals in the casino neighborhood. Also, casinos lead to higher crime rates, but those rates decrease with distance, and the proximity of casino gambling is found to be associated with higher bankruptcy rates.
If the economic benefits are short term and small, but the harm to society is long term and potentially irreversible, rather than focusing on the temporary gains, one must weigh the benefits and costs in a comprehensive, holistic manner. Extension and Ag Research News Accessibility.
By Siew Hoon Lim, Associate Professor NDSU Agribusiness and Applied Economics Department Casino legalization is controversial because, historically, gambling is perceived by some as immoral, foolish and irrational, and unlike other entertainment businesses, gambling creates social and economic costs that must be borne by gamblers and nongamblers. Filed under: economic-development Spotlight on Economics. Outlawing casinos is one way to protect people from their own bad judgment.
Local residents and politicians are often opposed to casinos because they fear increased traffic and crime and may want to protect their community's image. Also, many state governments are running lotteries and do not want competition from casinos for their residents' gambling dollars.
Elected officials and civic leaders had an even more positive view of casinos in their communities. Native American tribes that encounter opposition to their casino plans attribute opposition to the same issues faced by corporate casinos, although some also see racism as a factor. Jonathan B. Taylor and Joseph P. Navajo do not have casinos, and the Navajo reservation has more than ten times the membership of any other Native American tribe. Most tribal lands are located in areas of the country that have limited natural resources and industry, so tribal casinos often bring much needed wealth to the tribes and their neighbors.
For example, in Del Norte was one of the more indigent counties in California : the biggest economic development in the works was a new maximum-security prison in Crescent City. It quickly became the county's largest employer, providing over five thousand new jobs for tribal and nontribal members of the community by Another example is the Tunica-Biloxi Tribe in central Louisiana , which was one of the poorest parishes counties in the state until the tribe built the Paragon Casino and Resort in NIGA reports that the casino contributes greatly to the local economy by providing jobs and scholarships.
Some critics suggest that casinos encourage and perpetuate a cycle of dependence: tribe members who were formerly dependent on the federal government are now dependent on their tribal governments. They believe that, ultimately, casinos will hurt the culture and political stability of the tribes. Simmons of the California State Library catalogs all the known positive and negative effects that Native American casinos had had on California communities.
According to Simmons, Native American casinos led to slightly higher incidences of bankruptcy and crime, particularly violent crimes such as aggravated assault. The casinos also strained the local infrastructure. Most of the casinos brought many people into rural areas with narrow two-lane roads and limited sewage systems.
Even though casinos helped the economies of their immediate communities, they often siphoned money away from adjacent communities: people spent their money at casinos rather than at stores and eating establishments in their own neighborhoods. The commission concluded that a lack of objective research data on gambling issues is a major hurdle in determining the extent of its effects on society.
The U. The GAO finds some evidence that pathological gambling in areas with casinos results in increased crime and family problems, such as intimate partner violence and child abuse , divorce, and homelessness. However, the GAO suggests that some of these effects might actually be primarily due to other problems that usually accompany pathological gambling, such as alcohol or drug abuse.
Most casinos have been huge successes for their investors, who range from middle-class stockholders in major corporations to billionaires such as Donald Trump — and Stephen A. Wynn —. Most tribal casinos have been economically successful as well, bringing unimagined wealth to Native Americans , many of whom were at the very bottom of the U.
Casinos are also labor-intensive businesses that employ hundreds of thousands of people, who support their families, pay taxes, and buy goods and services — factors that contribute to the economic health of their communities. The economic effects of casinos on local and state governments are also significant. Commercial casinos pay billions of dollars every year to government agencies in the form of application fees, regulatory fees, wagering taxes, and admission taxes.
Even though governments incur increased costs for more police, roads, and sewers, casino taxes and fees help fund programs that improve the quality of life in the immediate vicinity or state. Tribal casinos, though exempt from state and local taxation, pay billions of dollars each year to compensate states and municipalities for regulatory and public-service expenses. See Figure 6. These increases were due to the opening of three new racetrack casinos in Pennsylvania and one in Florida.
Gaming taxes can be a substantial portion of a state's revenue. The Indian Gaming Regulatory Act requires that net revenues from tribal gaming be used to fund tribal government operations and programs, to promote tribal economic development, to donate to charitable organizations, and to help fund operations of local government agencies. The revenues earned by tribal casinos are not taxable because the casinos are operated by tribal governments: just as the U.
Therefore, tribal casinos generate less tax revenue than commercial casinos. Tribe members who live on reservations and are employed at tribal enterprises, such as casinos, are not subject to state income taxes. However, tribe members do pay federal income tax , Federal Insurance Contributions Act tax, and Social Security tax on their wages, even if those wages are earned at tribal enterprises. Wages paid to tribe members living off reservations and to nontribe employees are subject to state income taxes.
That amount included employer and employee Social Security taxes, personal and corporate income taxes, and excise taxes. In , , people were employed in commercial casinos. See Table 6. Tribal casinos employed , people in Employment was slightly down from the previous year, but up significantly from Because they are employed in an entertainment and hospitality industry, gaming workers need excellent communication and customer-service skills, but the financial aspect of casino activities also requires personal integrity and the ability.
A high school diploma or the equivalent is usually preferred for all entry-level jobs. Table 6. All casino employees — from managers to dealers to slot repair technicians — must be at least twenty-one years old and have licenses from the appropriate regulatory agency. Obtaining a license requires a background investigation — applicants can be disqualified from casino employment. Requirements for education, training, and experience are up to individual casinos. Occupationsingamingare predictedtobe among the fastest growing U.
The growth of the casino employment market has spurred a related increase in vocational and professional training for casino workers. The University of Nevada, Las Vegas , only 1. At Tulane University's School of Continuing Studies in New Orleans , students can choose from several programs lasting between one and four years, including a bachelor's degree in casino resort management. Students pursuing a degree in hospitality and tourism management at the University of Massachusetts can specialize in casino management.
Central Michigan University, which is located near the Soaring Eagle Casino and Resort operated by the Saginaw Chippewa Tribe, offers a business degree in gaming and entertainment management, including course-work in the protection of casino table games, gaming regulations and control, the mathematics of casino games, and the sociology of gambling.
When it opened in , it was the first gaming school in the country affiliated with a community college. According to the AGA, in State of the States , commercial casinos employed , people in A large proportion of this increase was due to the opening of new racetrack casinos in Florida and Pennsylvania.
Employment at commercial casinos grew rapidly during the s, then stagnated overall between and , before rising in and then falling again in Casino employment rose dramatically in Missouri Even though employment numbers fell and then rose again between and , commercial casino wages rose steadily. About , of those jobs were at tribal casinos; the other jobs were at ancillary facilities such as restaurants and hotels.
Another ninety thousand jobs were attributed to the indirect effects of tribal casinos — for example, businesses at which casino workers spent their wages. The NIGA estimates that tribal casinos were indirectly responsible for , other jobs by purchasing goods and services from businesses around the country. Capital construction projects e. In total, the NIGA credits tribal gaming for the employment of , people during In some cases the percentages reflected the fact that several tribes had fewer members than employees.
Historically, employees at tribal casinos have not been covered by the federal labor laws that protect workers at commercial casinos. As sovereign entities, tribes were considered excluded from Title VII of the Civil Rights Act of and Title I of the Americans with Disabilities Act of , which prohibit discrimination in employment on the basis of race, sex, physical impairment, and other criteria. In addition, the National Labor Relations Act exempts government entities from the requirement that they allow employees to form unions.
Tribes, having been ruled to be sovereign governments by both the National Labor Relations Board NLRB and a federal court, operated under their own laws and blocked unions if they chose to do so. However, some court cases have held that Occupational Safety and Health Administration requirements, the Fair Labor Standards Act , and the Employee Retirement Income Security Act do apply to tribal businesses conducted on reservations.
The election was held on November 24, , and most employees voted in favor of the union. No destination better represents the marriage between gambling and tourism than Las Vegas. It has had its ups and downs, however. In the early s the city experienced a steep decline in revenues because of competition from legal gambling on riverboats and tribal casinos in other states. To counteract this development, the city began a drive to shift its focus from an adult playground to a family destination.
Theme hotels became the big draw. Adult entertainment along the Strip, such as topless shows, gave way to magic shows, circus events, and carnival rides. The result was a huge increase in visitors. However, children distracted their parents from gambling.
Casino owners noticed that the changes did not bring in more gambling revenue, so during the late s the city began to change its image again. Adult entertainment made a comeback along the Strip: casino-hotels began offering more topless and nude shows, although managers insisted that the nudity presented at their casinos would always be tasteful and artistic. MGM Grand shut down its family theme park in See Figure 4. The resurgence of travel it slowed for two years after the September 11, , terrorist attacks may have been another factor.
Las Vegas tourism faces one particular future challenge: It relies heavily on visitors from California, so the advent of tribal gaming in California could create stiff competition. Tourism in Atlantic City increased following the introduction of casino gambling, but not as fast or as much as many had hoped.
From the s to the s Atlantic City was a major tourist destination, particularly for people living in the Northeast. Visitors went for the beaches and to walk along the town's boardwalk and piers, which featured carnival-like entertainment. During the s and s the town fell into economic depression as tourists ventured farther south to beaches in Florida and the Caribbean. Casino gambling was legalized in in the hopes that the city would recapture its former glory and rival Las Vegas as a tourist destination.
Progress was slow through the s and early s. Even though visitors began to go to Atlantic City, they mostly arrived by bus or car and stayed only for a day or two. The economic troubles that had ravaged the town's businesses before gambling was legalized were not easily overcome. Vacant lots, buildings in disrepair, and housing projects surrounded the casinos. The overall atmosphere was not particularly appealing to vacationers or convention-goers.
Accordingto Kelly, Atlantic City's thirty million annual visitors actually represented about five million people making multiple trips. In the late s initiatives by the CRDA and other groups began to pay off. Hundreds of new homes were built, and commercial businesses were established. One of the largest convention centers in the country it has 31 acres [ The city's image began to improve, and tourism showed a moderate surge.
Regardless, city and casino officials still see three factors that limit tourism growth in Atlantic City: lack of a major airport, lack of usable land, and cold winters. Restrictions on smoking on the casino floor, which went into effect in , also worry officials. Officials must realize that legal gambling will attract an unsavory element that can jeopardize the safety and well-being of the city's residents and the many visitors who come to gamble. When gambling was legalized in Nevada in , the law kept corporations out of the casino business by requiring that every shareholder obtain a gaming license.
This law, which was designed to safeguard the integrity of the casinos, unintentionally gave organized crime a huge advantage. The nation was in the midst of the Great Depression — , and building a flashy casino-hotel was expensive. Few legitimate businessmen had the cash to finance a casino, and banks were reluctant to loan money for what they saw as a poor investment.
Organized crime groups had made fortunes selling bootleg liquor during Prohibition — , so they were able to make the capital investments needed to build and operate lavish casino-hotels that attracted visitors. The marriage between casinos and organized crime in Nevada lasted for decades but was eventually ended by gaming officials and law enforcement.
In the twenty-first century, there is no strong evidence of organized crime activity in the casino industry. Regulatory agencies keep a watchful eye on casinos to make sure mobsters and their associates do not gain a new foothold. Casinos keep an equally watchful eye on their patrons and employees. The casino floor is constantly monitored by a host of security guards and cameras. Observers watch dealers and patrons at the gaming tables and all money-counting areas.
Some casinos use high-tech facial recognition programs to scan incoming patrons and quickly identify any known felons or other undesirables. Even though the industry does not release data on crimes committed by casino employees, analysts believe employee theft and embezzlement account for millions of dollars in losses each year. Vice crimes, particularly prostitution, as well as weapons crimes also occur. Commission agents filed 1, charges between July and June This total included charges for acts committed at the casinos as well as arrests made for criminal activities that did not occur on casino property.
Over three hundred people were charged with violating gambling laws, and people were charged with stealing. The amount of crime in a community with a casino has a direct relationship to the maturity of the casino, according to Earl L.
Grinols and David B. The researchers collected crime data from all 3, counties in the United States with and without casinos between and Their analysis shows that when a casino first opened in a county, crime changed very little, but slowly rose and then grew steadily in subsequent years.
Even though increased employment and expanded law enforcement might reduce crime initially, over time these effects were overtaken by factors related to casinos. The possible link between casino gambling and suicide rates has been the subject of much investigation. For example, in December David P. Phillips, Ward R. Welty, and Marisa M. However, five years later Richard McCleary et al. Even though increased suicide rates were noted in Atlantic County, New Jersey, and Harrison County, Mississippi, after the advent of gambling, the increases were not considered statistically significant.
McCleary et al. Chrystal Mansley, and Kylie Thygesen find that suicidal ideation and suicide attempts are more likely among pathological gamblers. However, the history of suicidal thoughts generally preceded problem gambling behavior by an average of more than ten years.
The researchers conclude that previous mental health disorders, such as clinical depression, put individuals more at risk for both suicide and gambling problems. In other words, gambling itself does not cause suicide attempts. Nevada, a state in which gambling is widely practiced, had the third-highest suicide rate in the nation in This was nearly twice the national average of Many mental health experts attribute Nevada's high suicide rate to the huge inflow of new residents who lack a support system of family and friends.
Loneliness and despair are more likely to overwhelm such people than those who have an emotional safety net in place. In general, suicide rates are higher in the western states than in any other region. Even Utah, which allows no legal gambling, had the seventeenth-highest suicide rate in , with a rate of fourteen suicides per one hundred thousand population.
Establishing a definitive link between gambling habits and bankruptcy is difficult. The researchers compare bankruptcy-filing rates during for 3, counties. They find that the counties in which casinos operated had a bankruptcy rate that was The AGA disputes the researchers' findings by pointing out that other factors were not considered, such as liberal bankruptcy laws and the ease with which credit cards can be obtained.
Ernest Goss and Edward A. According to their analysis, those counties actually saw a drop in bankruptcies when the casinos first opened. The researchers reason that the insurgence of revenue and jobs brought in by the casino likely helped the residents' financial situation.
However, after a casino was open for nine years bankruptcies trended the other way. Eventually, the bankruptcy rate in a county with a casino was 2. Many casinos operate self-exclusion programs in which people can voluntarily ban themselves from casinos. A number of states also offer self-exclusion programs for all casinos within their borders.
First of all, whether casinos have a counter-cyclical effect on an economy remains ambiguous. Even if casinos may contribute economically, the AGA reckons that they are not immune to external macroeconomic conditions. Economic uncertainty, consumer confidence and consumer spending also have considerable impacts on casino visitation and revenues, and consumers cut back on gambling during recessions.
We examined the short-term three-year and long-term year county-level economic growth rates. Specifically, we compared the effects on real per-capita personal income and job growth rates of the counties with and without casinos. We found that the effects of casinos on economic growth to be positive but relatively small.
Casino expansion was estimated to have increased the short-term per-capita income growth rate by 0. But after controlling for spatial or neighboring-county correlation effects, the effect of casinos on the long-term income growth disappeared. On the job side, casino expansion was estimated to have increase the year salary job growth rate by 0.
Our study did not examine the negative externalities of casinos. The negatives of casino gambling are well documented. Those negatives include not only behavioral problems associated with gambling, but also other individual, family, social and economic problems. Gambling availability is associated with increased problem and pathological gambling behaviors among individuals in the casino neighborhood.
Also, casinos lead to higher crime rates, but those rates decrease with distance, and the proximity of casino gambling is found to be associated with higher bankruptcy rates. Skip to Left Navigation Bar. Skip to Organizational Offices. Skip to Bottom Navigation.
Proceedings of the Northeastern Recreation Research Symposium. Newtown Square, PA: U. View the larger document. Description Cities, towns and communities have developed casinos for several reasons. The first of which is to: attract more tourists, remain competitive with other destinations and more fully utilize the existing tourism infrastructure; the second is to keep local money inside the local economy by giving residents the opportunity to gamble at home.
Although several states have developed casinos in their respective jurisdictions, casino gaming remains a controversial economic and social activity. There has been rising debate with respect to the real value of casinos as an economic development tool, and much discourse has resulted from the political debate in jurisdictions still considering whether or not to legalize casinos. Gaming has opponents and advocates. Both parties provide arguments to support their position.
Research on the impacts of casino gaming has indicated mixed results. This research examined the effect of non-local visitors to Detroit casinos on the local economy, based on visitors' spending. Additionally, a typology of casino gamers based on visitors' primary tip purpose was developed to indicate the relationship that exist between the casinos and other community tourism-related attractions.
Modern casino gambling is computer gambling. The typical casino gambler sits at a computer screen, enters a credit card and enters a digital environment carefully constructed to keep them playing until all their available money has been extracted. David Frum. Small "wins" are administered at the most psychologically effective intervals, but the math is remorseless: the longer you play, the more you lose.
The industry as a whole targets precisely those who can least afford to lose and earns most of its living from people for whom gambling has become an addiction. It's the problem gambler who keeps the casino in business. Slot machine payouts vary state by state. Others leave that decision up to the casino, as in Georgia and California. Some states require casinos to disclose their payouts. In others, that information is kept confidential. When New Jersey allowed casinos into Atlantic City back in , casino advocates promised that gambling would revive the town's fading economy.
The casinos did create jobs as promised. But merchants who expected foot traffic to return to the city's main street, Atlantic Avenue, were sorely disappointed. The money that comes to the casinos, stays in the casinos. Liquor stores and cash-for-gold outlets now line the city's once-premier retail strip. The impact of casinos on local property values is "unambiguously" negative, according to the National Association of Realtors.
Casinos do not revive local economies. They act as parasites upon them. Communities located within 10 miles of a casino exhibit double the rate of problem gambling. Unsurprisingly, such communities also suffer higher rates of home foreclosure and other forms of economic distress and domestic violence. The Institute for American Values is sometimes described as a socially conservative group, but with important caveats.
Its president, David Blankenhorn, has publicly endorsed same-sex marriage, and its board of directors is chaired by Bill Galston, a former policy adviser to Bill Clinton. The IAV is as worried that casinos aggravate income inequality as by their negative impact on family stability. Before the spread of casino gambling, the IAV comments, the typical gambler was more affluent than average: it cost money to travel to Las Vegas.
That's no longer true. Low-income workers and retirees provide the bulk of the customers for the modern casino industry. And because that industry becomes an important source of government revenue, the decision to allow casino gambling is a decision to shift the cost of government from the richer to the poorer, and, within the poor, to a subset of vulnerable people with addiction problems.
More Videos See "Location of Pennsylvania Casinos. Assuming a local pool of potential casino employees is available, and the casino can draw a regional? If that opportunity is to be turned into reality, however, more has to happen than simply opening a casino on a vacant site somewhere in the area. If local residents are to become the majority of the casino's workforce, a systematic effort has to be made to reach potential workers and provide them with training opportunities well before the casino opens its doors.
In Bethlehem, Pennsylvania, the casino formed a partnership with the local community college to train its workforce. The college even opened a satellite facility adjacent to the casino. More than 85 percent of the Sands Casino workforce lives within a mile radius. Many live in the adjacent South Side neighborhood. The SugarHouse Casino in Philadelphia signed a community benefits agreement with the New Kensington Community Development Corporation, which led to a significant number of local residents being hired in the casino, as well as other neighborhood improvements.
The location of the facility is equally important. Putting a casino on an unused site outside a city center near an interstate highway exit may minimize traffic and crime effects on the city, but at the cost of essentially eliminating the possibility of positive economic spin-off effects. Placing the casino in the heart of the city, however, does not in itself guarantee positive spin-offs.
How the casino is designed and how it relates to the rest of the community are critical considerations. The Atlantic City casinos were built to be self-contained environments that would keep their patrons inside the facility to the maximum extent possible. Even after more than 30 years, spin-offs, such as noncasino restaurants, shopping, and entertainment venues, are few and far between.
I believe a major goal for any city hosting a casino should be for it to be built in a way that not only permits but encourages constant movement of visitors between the casino and the rest of the city. Constant flow between city and casino is a rarity in the industry. From what I have observed, I suggest that cities would do well to push back against resistance to such an approach. In Massachusetts, for example, the state and a given city should recognize that they are offering a casino operator a regional monopoly worth billions.
That is a prize for which an operator will gladly pay, not only in design concessions, but by making a serious investment in community amenities and facilities. The sophisticated casino operator understands that such amenities and facilities ultimately benefit the casino as well by making the destination more attractive to visitors. In Bethlehem, the casino made a significant financial contribution to redeveloping other parts of its site, the old Bethlehem Steel Works, for a major arts facility and new studios for the regional Public Broadcasting System station.
These facilities have become attractions in their own right and are now an integral part of the casino's marketing package. With the proliferation of casinos across the United States, there is a growing risk that, from a national perspective, building a casino is a zero-sum game. Casinos can still bring benefits to their host communities, however, if local governments and other local stakeholders take the opportunity to become active partners in the siting and planning of a casino, to ensure that it is integrated into the community's physical and economic fabric and that the residents of the community share in the jobs and other opportunities it brings.
Contact him at amallach comcast. Alan Mallach, Brookings Institution. President Rosengren. By Alan Mallach. May 29, PDF of the article pdf. Thirty Years of Experience Nonetheless, after more than 30 years since casinos spread outside Nevada, we can identify features that could maximize the benefits of a new casino to a host community.
Planning for Positive Impact If local residents are to become the majority of the casino's workforce, a systematic effort has to be made to reach potential workers and provide them with training opportunities well before the casino opens its doors. Endnotes  The number is 38 states if Native American casinos are included. Information about organizations and upcoming events is strictly informational and not an endorsement.
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