Casinos’ Economic Impact

Hiring people, or “providing jobs,” is not the same thing as economic development. Creating jobs may be a part of economic development, but simply looking at how many people a casino might hire is not an economic analysis.  This is why economists will often rely on studies of real income to judge economic development.

Very little research even attempts to asses economic development.  The best research to date, based on data from 11 states over a 15 year period (1991 to 2005), economics professors Douglas M. Walker and John D. Jackson, concluded,

“ … the casino industry does not have an impact on economic growth at the state level.”

Although they suggest the casino development may bring “initial positive growth” any positive economic effects “die out over time.” Again, as with the casino impact on employment growth, economic growth depends upon a number of conditions.

Additionally, the “social costs” of gambling addiction can have an economic effect on a local economy.

SOCIAL COSTS OF ADDICTION

The “social costs” of casino development are notoriously difficult to estimate.  Estimating the effect of those costs on the local or state economy presents another difficult task.  This is one reason why economic studies, like the one by Walker and Jackson cited above, are important.  That study, however, does not assess casino impact on local economic development.  Estimates of local social costs, however, suggest that the impact is potentially significant.

Two widely cited estimates give us an idea of how much those costs can affect the local economy.

First, from a study conducted in 1999,  The National Gambling Impact Study Commission  reports that “lifetime costs (bankruptcy, arrests, imprisonment, legal fees for divorce, and so forth)” are estimated “at $10,550 per pathological gambler, and $5,130 per problem gambler.

Second, again from the PICA report in 2007, economist Earl Grinols,

“put the cost of apprehension, adjudication, incarceration, and regulation at between $20,500 and $45,700 per pathological gambler per year. The Mayor’s Gaming Task force estimates Philadelphia’s diagnosable pathological population to be as many as 9,450. Even on the low end of the estimated cost per pathological gambler, if Grinols numbers are accurate, the costs would be close to $200 million.”

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