Keynes is not the only one who says that casinos are
bad....other economists say this too....
The following article is taken from: http://www.news.uiuc.edu/biztips/01/10gamble.html
A website of University of Illinois at Urbana-Champaign
Casino's costs far outweigh their economic benefits,
economist
says
CHAMPAIGN, Ill. Although promoted as an economic development
tool, casino gambling is a losing hand when subjected to rigorous
cost-benefit analysis, a University of Illinois economist
concludes.
Analysis of data compiled from around the country suggests that
opening a casino eventually costs a community at least 1.9 times
more than its benefits, Earl L. Grinols, a UI economist, writes.
This amounts to a yearly national loss of at least $27.5
billion.
Grinols co-edited a special issue on casino gambling in the
journal, Managerial and Decision Economics, with David B. Mustard,
a University of Georgia economist. In their paper, which concludes
the issue, Grinols and Mustard reviewed studies on the gambling
industry, which expanded rapidly in the 1990s and includes an array
of riverboat and Indian casinos. "Much of the information has been
funded by the gambling industry itself and is marked by poorly
executed or biased economic-impact studies that use incomplete data
or make conclusions not supported by facts," Grinols said in an
interview. "But there is a growing consensus by independent
economists on the benefits and costs of casinos." Putting together
the best available information was a major objective of the special
issue.
A major source of the social cost of gambling comes from the
relatively small (but growing) group known as problem and
pathological gamblers. "Two-thirds to 80 percent of gambling
revenues come from the 10 percent of the population that gambles
most heavily. Expressed in reverse, 90 percent of the population
may provide as little as 20 percent of casino revenues," Grinols
and Mustard wrote.
At least one in five compulsive gamblers file for bankruptcy after
they have exhausted multiple credit cards and other lines of
credit, often putting their families in jeopardy.
Lost productivity from sick days off for gambling and extended
lunch hours is another cost borne by the local economy. Between 21
and 36 percent of compulsive gamblers report losing a job because
of their gambling habit, according to information from gambling
treatment centers.
Grinols and Mustard identified higher crime rates as yet another
price of gambling. A county with a casino has about 8 percent
higher crime rates than a county without a casino four years after
the casino is opened, a study by Mustard and Grinols concluded in
1999.
So, too, pathological gamblers followed "a predictable path of
exhausting personal resources, selling insurance policies, selling
possessions and borrowing from family and friends." Overall, the
"cost-creating activities" of a pathological gambler is $13,586 a
year, the economists concluded.
The major benefits of gambling come from profits and tax revenues
from the casinos as well as possible price effects such as higher
wages or housing prices. However, a common fallacy involves just
computing the tax receipts and wages from a casino without
examining the ramifications of a casino on other economic activity.
Casinos are known, for example, to draw revenues from other
businesses and to discourage the location of new business.
