Positive Gambling Impact on Crime in the US

There is general agreement that legalized gambling has offered regulators the opportunity to locate gambling activities where incomes are depressed, thus providing, in some cases, an economic boost to needy people and places. So doing, however, has the negative consequence of placing the lure of gambling proximate to individuals with few financial resources. The Commission is concerned about the significant danger posed by the continuing expansion of legalized gambling into places where the economy is already prospering. In the extreme, the Commission can imagine competition among localities driving the extent and location of gambling toward an outcome in which most gambling establishments are just one more business in prosperous areas, most employees are people who easily could get other jobs, and therefore, the economic benefits are small. Not only are the net benefits in these new areas low, but the benefits to other, more deserving places are diminished due to the new competition. And, as competition for the gambling dollar intensifies, gambling spreads, bringing with it more and more of the social ills that led us to restrict gambling in the first place. It is easy to imagine jurisdictions competing for the gambling dollar, with the consequent overexpansion of legalized gambling; shrinking social benefits are overwhelmed by rising social costs.

What the Commission can agree on is that analysis of the economic effects of gambling is poorly developed and quite incomplete. Further, almost all studies have been conducted by interested parties. These typically have gone no further than to estimate local jobs and income from the gambling industry. But since the economic effect of an activity is its value added above what the same resources would be adding to value if employed elsewhere, these studies are deficient and may mislead readers to conclude that the introduction of gambling activities in an area will result in significant benefits without attendant costs, which may, in fact, overwhelm the benefits. Without an estimate of the opportunity cost of the resources used in gambling, the Commission can generate no meaningful estimate of its net effect. Beyond this, the social costs of gambling are so important to regulatory decisions that even an accurate estimate of the net income generated by the gambling industry would constitute only the start of a full cost-benefit analysis. No one¾not tribal leaders, governors, mayors or citizens¾should make, or should be forced to make, a decision without an assessment of both economic and social benefits and costs.

The NRC concluded in its report to the Commission that while gambling appears to have net economic benefits for economically depressed communities, the available data are insufficient to determine with accuracy the overall costs and benefits of legal gambling. The NRC study stated that pervasive methodological problems in almost all existing studies prevent firm conclusions about the social and economic effects of gambling on individuals, families, businesses, and communities, generally.

Historically, there is a view that the introduction of legalized gambling will increase crime in a community. It is also claimed that legalized gambling reduces crime because it eliminates incentives for illegal gambling. Since the types of crime involved in each of these hypotheses are different, it is not surprising that proponents of both views are able to advance research to support their views. The reliability of many of these studies, however, is questionable. As one commentator observed:

The story of the relationship between legalized casino gambling and street crime is far from written. The problem is that although a great deal has been written on the subject, so much of the writing on all sides is bombast and blather that it is difficult to discern any strong facts. 58