The United States Economic Benefits From The Gambling Industry

One commentator has called neighborhood gambling a “paradoxical perversity,” because in Massachusetts convenience stores have become “shrines to the shill” and “neighborhood gambling dens.” 56 The evidence available to us, so far, indicates there are no measurable societal benefits to be derived from the introduction or continuation of convenience gambling facilities; that these facilities benefit only a few operators, while bringing gambling into neighborhoods in close proximity to children and families. They carry with them all of the negative costs associated with gambling, while offering none of the economic benefits that may be contributed to destination-style casinos.

A Careful Look at Economic Benefits For some areas, it may well be argued that gambling has a measurable and significant economic impact. For other areas, the boon may be less clear. Even in the face of the apparent benefits touted by many in Atlantic City, at the time the Commission visited in January 1998, the unemployment rate stood at 12.7 percent, notwithstanding the legalization of gambling in 1978. That rate was considerably above both the national rate and the rate of unemployment for the rest of New Jersey at that time. It is unclear, therefore, whether the introduction of casino-style legal gambling in New Jersey has produced all of the benefits that are usually described by those who promote it.

One indirect method to get a qualitative sense of the net effects of gambling is to look at its effect on property values. An increase in property values reflects growing attractiveness of a location. For example, if a new factory increases property values in a metropolitan area, but depresses them near its location, one can draw conclusions about the near-by and the broader impacts of the factory. This method has been applied to evaluate the effects of airports, waste disposal, and other public sector activities. It has also been used to estimate the consequences of casino gambling on the economy of a community. Needless to say, it is not a simple matter to extract the effect of any particular presumed cause on property values.

One study that looked at counties that added casinos between 1991 and 1994 suggests several conclusions concerning the effect of gambling on property values. First, the counties that introduced gambling had relatively poor growth in property values before the introduction of gambling (compared to similar counties). The introduction of gambling increased the rate of growth of property values, making it similar to that in comparable counties that lacked casinos. The greatest effect of the introduction of gambling is on commercial property values, with residential property values not raised at all, perhaps even lowered by casino gambling. 57

One theme running through the testimony received before the Commission was that the economic benefits were generally most pronounced within the immediate vicinity of the gambling facilities, while the social costs tended to be diffused throughout a broader geographic region. In Tunica, Mississippi, the advent of legalized gambling provided jobs for an area of extreme poverty. Many citizens of Tunica have undoubtedly benefited by the increase in the wage base and the increased ability of its citizens to purchase homes and other amenities. Some area towns have even been adopted by the industry to improve employee preparation. The Commission heard similar testimony from representatives of other economically depressed communities such as Gary, Indiana and numerous tribal lands in Arizona and elsewhere. But the Commission also received substantial testimony from people outside these communities about losses of business and tourism, infrastructure problems and economic costs related to problem and pathological gambling resultant from the expansion of gambling into nearby communities.

55 Mayor of the City of Las Vegas, Jan Jones, testimony before the National Gambling Impact Study Commission, Las Vegas Nevada, (Nov. 10, 1998) (transcript available at http:\\ www. ngisc. gov). 56 Get Keno Out of the Corner Store, The Patriot Ledger (Quincy, MA), 18 (July 2, 1997) (editorial). 57 L. M. George, B. M. Ambrose, and P. Linneman, “What We Need to Know About Casino Gambling,” Wharton Real Estate Review, Vol. 11, no. 1 (Spring 1998).