Economic Impact of Legalized Gambling in America

Economic Impact of Gambling

Economic Impacts Of Gambling

The economic impact of legalized gambling in the United States

The economic challenge of the contemporary period requires that renewed focus be given to any approaches that may improve the economic fortunes of states and ultimately the country. Gambling is one of approaches to economic development that is stymied with both positive and negative economic opportunities. States that legalize gambling are often faced with a factor that improves the fortunes of some groups and reduces or limits the gains of others. Thus the economic impact of gambling; while it is demonstrably a mixed experience continues to thrive because of the fiscal benefits to the state, and powerful individuals in the society.

When one examines the economic impact of legalized gambling there is a need to examine what happens to communities, legitimate businesses, and the state. This work will confine its analysis to these areas, even though there is an acknowledgement that gambling is a mechanism for the entry of illegal funds into the legal economy. Criminal groups and underworld figures may utilize gambling as a means to "wash" illicit currency. This challenge aside the impact to the three dominant arenas in society is quite diverse and pronounced. One of the reasons it is difficult to be definitive on the economic impact of legalized gambling is that the research into the value of gambling is often encumbered by political concerns, and the twisting of data, designed to sway government officials who must give their consent for the establishment of casinos and other concerns.

The main types of legal gambling enterprises are casinos, racetracks and lotteries. The economic impact of these activities centers on the movement of cash into and out of a particular community. The social issues raised by gambling problems should also be factored into the economic costs because the costs of gambling addiction must be carried by both the state and the individual family. These social costs are often not effectively measured because of the inherent nature of the problem. This ineffective and inaccurate measurement means that the true fiscal cost of gambling cannot be effectively estimated.

Looking at the question of cash flow into or out of the region where the gambling enterprise is to be established there is a plethora of buzz words that describe the economic benefit of gambling. Gambling supporters often suggest that legalizing gambling would generate "economic development," bring new tourist to the region which in turn stimulates further economic growth. As tourists spend money to gamble they also spend money on other services. These services like hotel rooms, food services, taxi services and other services should develop alongside the casino or gambling concern. The money from the tourists is money that would have otherwise not come to the region. In this manner there is an obvious improvement to the economy of the state concerned. Cash flows into the area and like the proverbial tide it is supposed to lift all the boats in the harbor. Consequently everyone benefits from having a gambling interest in the state or area.

It should be noted that one type of gambling that has demonstrated the inaccuracy of the tourism argument is the river boat casino. In a study to examine the value of gambling to Illinois it was determined that 84% of the persons who gamble at the casinos were from the state and only 16% were out of state. Additionally, an overwhelming majority of the gamblers lived within 50 miles of the casino, this distance also applied to persons from out of state (Thompson 2002). Only 12% of the out of state visitors stayed in local hotels (Thompson 2002). The evidence suggests that the benefit to be derived from tourism is minimal at best.

Another area of purported economic growth is that of jobs. As noted earlier the casinos function as a hub around which other services develop. These services require service personnel; to meet this demand workers must be hired. When considered directly and indirectly legal gambling has the potential to reduce unemployment. It should be noted that the majority of the jobs created through gambling are jobs in the service sector. These service sector jobs have their associated problems. The persons who generally work in these areas receive low wages. In addition to the low wages they receive, they work long hours, thus the compensation is commensurate with the requirements and demands of the job. This in this industry there is high worker turnover and high levels of dissatisfaction with the jobs individuals perform. These two elements work negatively to reduce the effective economic contribution of the legal gambling industry.