Riverboat Casinos Impact on the Economy of The United States
that did occur tended to be greater the smaller the community.33
Similarly, a separate study of the Illinois riverboat communities concluded that one fact is clear: any city fortunate enough to be selected as a site for a riverboat casino is guaranteed a windfall.” However, the same report continues with the caveat that “little is known about the impact that gambling has had on the dozens of municipalities in the region surrounding each riverboat.”34 Thus, it is possible that the benefits to a host community may come at the expense of the surrounding area.
Opponents counter claims of local benefit with the specter of “cannibalization.” This term refers to the phenomenon where the apparent increased economic activity produced by a casino may actually be the result of its having drained money away from local non-gambling businesses. The fate of an area’s restaurants is a commonly used example: subsidized facilities on riverboats may thrive by taking customers away from their landbased, non-casino counterparts. Thus, opponents allege, what appears as an increase in spending on restaurants due to the presence of a casino may in fact represent only a simple transfer of customers and spending from one place to another.
There has also been much information provided to this commission that counters this view. Arthur Andersen’s study of the gaming industry considered “cannibalization,” or the “substitution theory” as it is sometimes called, and reported the following: First, the size of the U.S. economy is not fixed; rather, it expands over time as new jobs are created. Second, at the macroeconomic level, the industries which some maintain have been affected by consumer spending on gaming have grown concurrently with the gaming industry. Third, economists have known for centuries that for an economy to grow, it must produce the goods and services which consumers prefer. Fourth, casino gaming relies more heavily than most industries on domestic labor and domestic supplies (including capital). In addition, spending by foreigners in U.S. casinos also represents an export activity for the domestic economy.36 The study conducted by Arthur Anderson of the micro-economic impacts of casino gambling also contained information relative to the “substitution theory.” In each jurisdiction surveyed, this study documented the creation of economic growth fostered by the casino gaming industry. For example, in Biloxi/Gulfport, Mississippi37: · Prior to the arrival of casinos, the combined value of commercial construction permits in 1991 and 1992 was $12 million. During the three years following the arrival of casinos, the combined total was $447 million. · From 1990 to 1995, the construction industry added almost 1,300 new jobs¾an increase of 50 percent. · Retail sales growth rates increased from an average of 3 percent a year from 1990 through 1992 to approximately 13 percent between 1993 and 1995.
However, the record of riverboat casinos in promoting general tourism development is mixed: It appears to have been most successful in places such as Galena, Illinois, where the tourism industry was already well established.38 But in other places, the expected boom has yet to appear. The most important reason for this lagging development is that the “evidence shows that most gambling at riverboat casinos is from regional, or day-trip, patrons who do not incur the expense of an overnight stay.” These daytrippers, or “excursionists,” tend to concentrate almost entirely on gambling and to spend little or