Gambling: Casinos' Costs Far Outweigh Their =
Economic=20
Benefits, Economist Says
Dateline: CHAMPAIGN, Ill., Sept. 28 (Ascribe =
News) =E2=80=94
Although promoted as an economic development =
tool,=20
casino gambling is a losing hand when subjected to rigorous cost-benefit =
analysis, a University of Illinois economist concludes. Analysis of data =
compiled from around the country suggests that opening a casino =
eventually costs=20
a community at least 1.9 times more than its benefits, Earl L. Grinols, =
a UI=20
economist, writes. This amounts to a yearly national loss of at least =
$27.5=20
billion.
Grinols co-edited a special issue on casino =
gambling in=20
the journal, Managerial and Decision Economics, with David B. Mustard, a =
University of Georgia economist. In their paper, which concludes the =
issue,=20
Grinols and Mustard reviewed studies on the gambling industry, which =
expanded=20
rapidly in the 1990s and includes an array of riverboat and Indian =
casinos.=20
"Much of the information has been funded by the gambling industry itself =
and is=20
marked by poorly executed or biased economic-impact studies that use =
incomplete=20
data or make conclusions not supported by facts," Grinols said in an =
interview.=20
"But there is a growing consensus by independent economists on the =
benefits and=20
costs of casinos." Putting together the best available information was a =
major=20
objective of the special issue.
A major source of the social cost of gambling =
comes from=20
the relatively small (but growing) group known as problem and =
pathological=20
gamblers. "Two-thirds to 80 percent of gambling revenues come from the =
10=20
percent of the population that gambles most heavily. Expressed in =
reverse, 90=20
percent of the population may provide as little as 20 percent of casino=20
revenues," Grinols and Mustard wrote.
At least one in five compulsive gamblers file =
for=20
bankruptcy after they have exhausted multiple credit cards and other =
lines of=20
credit, often putting their families in jeopardy. Lost productivity from =
sick=20
days off for gambling and extended lunch hours is another cost borne by =
the=20
local economy. Between 21 and 36 percent of compulsive gamblers report =
losing a=20
job because of their gambling habit, according to information from =
gambling=20
treatment centers.
Grinols and Mustard identified higher crime =
rates as yet=20
another price of gambling. A county with a casino has about 8 percent =
higher=20
crime rates than a county without a casino four years after the casino =
is=20
opened, a study by Mustard and Grinols concluded in 1999. So, too, =
pathological=20
gamblers followed "a predictable path of exhausting personal resources, =
selling=20
insurance policies, selling possessions and 'borrowing' from family and=20
friends." Overall, the "cost-creating activities" of a pathological =
gambler is=20
$13,586 a year, the economists concluded.
The major benefits of gambling come from =
profits and tax=20
revenues from the casinos as well as possible price effects such as =
higher wages=20
or housing prices. However, a common fallacy involves just computing the =
tax=20
receipts and wages from a casino without examining the ramifications of =
a casino=20
on other economic activity. Casinos are known, for example, to draw =
revenues=20
from other businesses and to discourage the location of new =
business.
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