Changes in the US Economic and Employment due to Gambling

It bears stating the obvious in this discussion: A number of formerly struggling communities across this nation have undergone an economic renaissance in recent years without turning to gambling. It is also worth noting that much of a recent wave of casino expansion occurred in the early 1990’s, when the country was mired in an economic recession. So, for example, while the Commission heard testimony of the casino-inspired “Mississippi Miracle,” in reality the unemployment rate in Mississippi declined at about the same rate as the national average in the years from 1992 to 1998. 22

A number of arguments have been advanced to promote gambling in an area or to demonstrate its positive impact. The most significant are associated with economic growth and employment. As was noted earlier, it is important to distinguish among the various forms of gambling. Two segments, casinos and pari-mutuel, are the most labor intensive aspects of gambling. 23 In 1996 more than half a million people were employed by the legal gambling industry, earning more than $15 billion. 24

In 1996 Arthur Anderson conducted a study on behalf of the American Gaming Association to determine the influence of casino gambling on the American economy. They found that in 1995 the casino industry recorded $22-25 billion in total revenues, paid a total of $2.9 billion in direct taxes (including federal and state, property, construction sales and use, and gambling taxes), directly employed almost 300,000 people and paid $7.3 billion in wages, paid an average national wage of approximately $26,000 (which exceeds that paid in most related fields) and invested $3 for every $1 earned, created 13 direct jobs for every $1 million in revenues, supported 400,000 indirect jobs paying $12.5 billion in wages, and spent a large majority of its revenues within the United States on payroll, taxes and other expenses. 25

The economic benefits of casino gambling have been especially powerful in economically depressed communities where opportunities for economic development are scarce. State, local, and tribal government officials from other communities with casino gambling testified with near unanimity to the positive economic impact of gambling. Mayor James Whelan of Atlantic City told the Commission that “Atlantic City would be dead without casino gambling.” 26 When members of the Commission visited the Atlantic City Rescue Mission, its director, Barry Durman, who says he personally opposes gambling, agreed with the Mayor on this point, but also noted that at least 22 percent of the homeless served by the Mission say gambling is the cause of their homelessness. 27

State Senator Earline Rogers, whose district includes Gary, described that city’s efforts over a 15-year period to replace the 70,000 jobs lost due to the decline of the steel industry:

“Our attempts to recruit major businesses to locate in Northwest Indiana were not successful. The State of Indiana spent millions of dollars luring major manufacturing operations to Indiana, often spending hundreds of thousands of dollars for jobs. Not one was located in Northwest Indiana. We knew something had to be done when we found ourselves championing our economic development successes at a ribbon cutting for a McDonald’s restaurant in Gary, Indiana.” 28

22 Mississippi’s unemployment rate declined from 8.2 percent in 1992 to 4.8 percent in 1998. The national unemployment rate declined from 7.5 percent to 4.1 percent in that same period. 23 E. M. Christiansen, Gambling and the American Economy, 556 Annals of the American Academy of Political and Social Science (James Frey, ed) at 43 (March 1998). 24 Ibid. 25 Arthur Anderson L. L. P., Economic Impacts of Casino Gaming in the United States, Volume 1: Macro Study (December 1996). 26 James Whelan, testimony Before the National Gambling Impact Study Commission, Atlantic City, New Jersey (January 21, 1998) (Mayor of Atlantic City). 27 Rev. Barry Durman, written testimony before the National Gambling Impact Study Commission, Atlantic City Site Visit (January 21, 1998) p. 17.