History of Riverboat Casinos in The US

Riverboat casinos are a relatively new, and uniquely American, phenomenon. Riverboat casinos began operating in Iowa in 1991, and quickly expanded throughout the Midwest. By 1998 there were over 40 riverboat casinos in operation in Illinois, Indiana, Missouri, Iowa, and nearly 50 riverboat and dockside casinos in Louisiana and Mississippi.31 In 1997 revenues for riverboats totaled $6.1 billion. The same year, riverboats paid over $1 billion in gambling privilege taxes. And growth has continued, with revenues up 11.3 percent from 1996 to 1997.32 With these original states now approaching saturation point, several state governments have decided to take a closer look at the record compiled so rapidly by this industry. Iowa, the pioneer state, recently legislated a 5-year moratorium on the expansion of casinos, in part to allow time to assess the impact to date; Indiana has established a commission to examine and report on the economic and social effects stemming from the state’s experience with gambling.
In this regional pause, advocates for and against casinos strive to make their arguments heard. The record of state decisionmaking regarding riverboats is not comforting. In the hierarchy of considerations of state policymakers, the original arguments in favor of tourism and economic development have often been displaced by the need to generate and maintain tax revenues. The various states’ decisions have been driven to a surprising extent not by a steadfast concern for the public welfare but by a fierce interstate competition for tax dollars (and in the process revealing remarkably similar patterns of decisionmaking).
Prominent in each state’s calculations have been the twin desires of securing tax revenues from 31 The term “riverboat” casino refers to a boat that is capable of selfcontained operation away from land whether or not it ever leaves the dock. “Dockside” casinos float on water but are permanently moored. 32 Gross Annual Wager, International Gaming and Wagering Business Magazine (August 1998). the citizenry of neighboring states while also blocking those same states from undertaking a similar raid of their own. Riverboat casinos seemed to be ideal instruments for delivering this budgetary nirvana: when located on the borders of other states, often conveniently near major population centers across the river, they could be assured of drawing at least some of their revenues (and thus tax receipts) from the populations of their benighted neighbors. Unfortunately, the spectacle of their citizens’ taxes going to benefit other jurisdictions proved too stress-inducing for the public officials in the targeted states, who quickly retaliated with riverboats of their own in the name of “recapturing” the revenues of their wayward citizens. The fact that they were not above attempting their own raids by locating a portion of their new boats near the casino-deprived populations in states far afield from the original aggressor meant that the pattern tended to be self-propagating.
Despite the intense search for money from outside their borders, the resulting counteractions have meant that the net revenue gains from, and losses to, non-resident populations tend to cancel each other out. But the very same strategy has ensured that every state’s population is now within an easy commute of the casinos. In setting out to tap into their neighbors’ pocketbooks, state governments have ended up tapping into that of their own citizens.
Measuring the impact of a single industry in a dynamic economy is often complicated by an inability to determine a clear cause-and-effect relationship. For example, a 1994 study by the Illinois Economic and Fiscal Commission on the impact of riverboats found that there had in fact been a measurable increase in non-gamblingrelated commercial activity in the riverboat communities, but concluded that although some locations did appear to have benefited economically from the casinos, in most locations the improvement was more likely due to an upturn in the general economy than to the riverboats. It did find, however, that those gains