Economic Impact of Gambling Term Paper

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The results, however representative, would be met by skepticism if not downright hostility. While the positive impacts on the economy are duly noted, indeed, many a problem has found a quick solution in a gaming establishment, a careful perusal of the hidden costs show that maybe the economic impact of gaming in the long run does not meet the expectations from the initial results and estimates -- in fact, some sources claim that the long terms consequences may be downright dismal. One of the problems is depreciation of property values. This is due to perceptions of the local citizenry of the kind of elements that might be attracted to places of gaming.

Ronald Reno has shown through surveys and interviews that the promise of increased tourism positively affecting local businesses has not been brought to fruition. In parts of Minnesota, Iowa (Reno, 1997)

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Reports have typically decried the need to have gambling in local areas. They affirm that most of the population would typically not vote for gambling in their areas. That it is the politicians fueled by the gaming lobby that pushes for gaming establishments with the canard that "if we don't do, it our neighbors will." While Table 1 showed the huge sums of money that are become state revenues, the economic costs borne by the individual and the local government that provides remedial services is quite immense. These costs are hidden. For instance, a pathological gambler's pursuits will wreak devastation on those near him. It is estimated that the state and local government spends approximately 13,000 dollars per gambler in services like Gambler's anonymous. The Wisconsin Policy research conservatively estimated that it cost the state of Wisconsin 160 million dollars per year for social programs that catered to those affected by problems related to gambling.

Term Paper on Economic Impact of Gambling Along Assignment

Another point to be noted is that gambling, like the state lotteries are more palatable to the poor and disenfranchised, who hope to get out of their poverty ridden status in one fell swoop. As a result, blacks often fall prey to legalized gambling interests of the state -- whether state-sponsored or commercial. In 1994, more than $350 were spent by the state in advertising their products. The California state lottery, three years previously, was the largest purchaser of advertising in Los Angeles. Interestingly, state lotteries also attracted players by using psychological tactics. The State of Massachusetts entertained to its citizens the notion that if they desisted from playing regularly, they might miss out on the one-day their lucky numbers were called out. A combination of poverty, a proclivity to obtaining "quick money" and the State's involvement makes for potentially dangerous consequences. States also played upon the tendency of the players not to blame the government. (Goodman, 1995)

Crime is one of the major social negatives of gambling; and, the economic consequences are enormous. Gamblers and the gambling environs are more susceptible to violent crime, juvenile crime, drug and alcohol related crime, child abuse and organized crime. In fact even associations as insulated as the Indian Casinos are becoming hotbeds of criminal activities. The conservative opinion writer Rich Lowry writing in the National Review Online edition writes that, to acquire rights to build a casino a tribe must have at least 30 members. (Lowry, 2003) Many criminal organizations like the mafia have set up casinos in the name of tribes which were dwindling numbers, and whose tribesmen did not have the financial resources or capabilities to build casino infrastructure. Thus these casinos will serve as a "launderable" front for organized crime families.

A survey of 400 Gamblers Anonymous members indicated that 57 per cent admitted to stealing to finance their gambling. Collectively they stole $30 million dollars -- average 135,000 per individual. Some crimes included employee theft and credit card fraud. With gamblers, the problem extends to children. People addicted to gambling have been known to abandon their children to roam freely through casinos where the activities are generally restricted to adults. Or the children are seated besides their parents and view the entire process. (Jones, 1998) Each time a gambler involved in a crime, approximately $1,000 of police time is used. The entire legal process, superficially costs the state or the local government $10,000. (NORC, 1999)

Tables 2 and 3 show the direct and indirect (respectively) economic costs from gambling. The indirect economic costs come from social factors. The source for these tables is the National Opinion Research Center based at the University of Chicago, the Lewin Group and Gemini Research. Table 2 shows the economic problems associated with gambling ranging from unemployment benefits, to welfare, household incomes and the status of their solvency. The people polled ranged from those who did not gamble at all to those who were pathological gamblers. This "misery index" is clearly exacerbated in the case of the pathological is high for all the cases considered. Table 3 shows the result of one years and a lifetime's cause and effect relationship from non-gamblers to pathological gamblers. (NORC, 1999) The cases considered were poor emotional and physical health, the effect on loved ones and dependents, and criminal behavior. Once again pathological gamblers had a higher propensity towards all the negatives.

In conclusion, it would seem that gambling would always remain a vice. At the same time, even if all the gaming institutions were eradicated, the gambler would find a way to "stake material possession with a motive to profit." One can of course place the blame on the government forcing it to create conditions that would force people not to gamble. Eventually, the ultimate responsibility lies in the hands of the individual. In a capitalistic society, the need for a product ensures that people will pay for it. This is the market at work. Surely, gambling has done economic good. But the economic harm is also considerable -- notwithstanding the social and personal harm. So we turn to the individual to make a decision. As Thomas Jefferson also echoed the person as the power behind everything: "I know of no safe repository of the ultimate power of society but the people themselves."

Table 1: Statistics for Gambling Provided by the American Gaming Association ( dollar amounts are in million dollars. Abbreviations created for brevity are defined at the bottom of the table. (, 2002)













Cas, RB, Rc





Wg ($)

GR ($)

TR ($)


L, H, G

E, L

Ec, L

L, G, E

G, L, RD

L, E

E, L

SC, Ec













Number of Casinos; Fm = Format; Emp = Number of Employees; Wg = Employee Wages; GR = Gross Revenues; TR = Tax Revenues; TS = Taxes Spent For; COD = Casino Opening Date; LD = Legalization Date; RT = Tax Rate; LM = Mode of Legalization; VV = Visitor Volume (in millions)


IL = Illinois; IN = Indiana

Local Communities, G = General Fund, E = Education, H= Historic Preservation

SV = Statewide Vote; LL = Legislative Action, Ec = Economic Development; LV = Local Vote; RD = Rainy Day Fund; SC = Senior Citizens; DT = Department of Tourism

Cas = Casinos, RB = River Boat; Rc = Race Track

Financial Characteristics and Effects by Type of Gambler

Lifetime Gambling Behavior


Nongambler Low- Risk At-Risk Problem Gambler Path. Gambler Any unemployment benefits, 12 mos.

Received welfare benefits, 12 mos.

Household income, 12 mos. (RDD)

Household debt, current (RDD)

Filed bankruptcy, ever


Statistical significance of differences between groups tested using multivariate logistical regression, with control variables for age, gender, ethnicity, education, child in household, and alcohol and drug use/abuse. Gamblers with no problems were used as the base group.

Significance tests: pathological and problem types tested separately; statistically significant at the: *** = 0.01 level; ** = 0.05 level. * = 0.10 level. Pathological and problem types combined for significance testing; statistically significant at the: =0.01 level;?

= 0.05 level. = 0.10 level.

Percentage of Lifetime and Past-Year Gambler Types by Health, Mental Health,

Substance Abuse, and Other Problems



Low-Risk Gamblers At-Risk Gamblers Problem Gamblers

Path. Gamblers Lifetime PastYear

Lifetime PastYear

Health poor/fair

Mentally troubled

Mental health


Manic symptoms



Drug use

Any job loss




Source: National Opinion Research Center at the University of Chicago, Gemini Research, and The Lewin Group. Gambling Impact and Behavior Study. Report to the National Gambling Impact Study Commission.

April 1, 1999. Table 9, p. 29.

Bibliography State of States: The Aga Survey of Casino Enterntainment 2002. 2002. Available: August 23, 2003.

DeBerry, Jarvin, and Rhonda Bell. "Deadly Compulsion." Times Picayune Novermber 23, 1997: A1

Goodman, Robert. The Luck Business: The Devastating Consequences and… [END OF PREVIEW] . . . READ MORE

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