Gaming Today: The Economic and Social Impact

Good afternoon.  I’m Frank Fahrenkopf, president and CEO of the American Gaming Association, which represents the U.S. commercial casino industry in Washington.  I’ve been asked to give you an overview of today’s commercial casino industry.  I’ll start with some numbers and a look at our impact on the communities where we operate, then I’ll get into what the people who know our industry best are saying about gaming.

Because our industry is entirely transparent, the commercial casino industry’s contributions to the economy are a matter of public record. The 445 casinos in 11 states generated nearly 29 billion dollars in gross revenues in 2004. Of that amount, nearly 4.7 billion dollars went toward gaming taxes paid to state and local governments. We’re also a labor-intensive business, providing more than 350,000 direct jobs paying more than 12 billion dollars in salaries, including benefits.

Racetrack casinos – or racinos – have witnessed explosive growth over the past few years, and they represent the fastest growing sector on the commercial side of the gaming business.  With 23 operational facilities located in seven states, racetrack casinos alone generated nearly 2.9 billion dollars in gross gaming revenue in 2004, which was 30 percent higher than the previous year.  Racetrack casinos employed more than 14,000 people in 2004, and generated in excess of 1 billion dollars for state and local governments.

Rather than just provide jobs, research shows that employment in the commercial casino industry helps improve lives.  According to a study of industry employees conducted in the late 1990s, more than 8.5 percent of commercial casino employees across the country reported they had left welfare as a result of their employment, and 16 percent said they had used their casino industry job to get off public assistance.  And 63 percent of casino employees said they had better access to healthcare benefits as a result of their employment.

The commercial casino industry also has long been dedicated to diversity in its hiring practices.  According to a 2003 study conducted by PriceWaterhouse Coopers, the U.S. commercial casino industry employs more Black executives, more females and more minorities overall than the general U.S. workforce.

Beyond direct employment and revenues, there have been supplemental benefits from the industry as well.  Back in 1996, a federal commission mandated by Congress conducted a two-year study of the impact of gambling. According to commission research released in 1999, communities closest to casinos experienced a drop in welfare payments, unemployment rates and unemployment insurance.

The research also refuted many claims previously made against the industry, finding that spending on social services was no different in places closest to casinos than in places farther from casinos. The research also found no link between gambling and bankruptcy or gambling and crime. The U.S. Treasury Department investigated a possible connection between gambling and bankruptcy around the same time and reached a similar conclusion.

When the commission looked at the magnitude of disordered gambling, they found it was not even close to what had been alleged and continues to be alleged today by many gambling opponents. Approximately 1 percent of American adults can be classified as “pathological gamblers,” according to the National Research Council of the National Academy of Sciences (NRC) and Harvard Medical School’s Division on Addictions.

As an economic impact report funded by the federal commission found, “… a new casino of even limited attractiveness, placed in a market that is not already saturated, will yield positive economic benefits on net to its host economy.” The commission also concluded that, especially in economically depressed communities, casino gambling has demonstrated the ability to generate economic development through the creation of quality jobs.

When you examine the research and look at real examples instead of the theory and economic models concocted by gambling opponents, you will see that this industry, like any other industry, makes important economic and social contributions to its communities.

But don’t take my word for it. The true testimony of casino gaming’s impact is best evidenced by the opinions of the civic and community leaders who live and work in gaming communities. Earlier this year, the AGA commissioned national pollster Peter Hart to conduct a survey of opinion leaders in communities with commercial and racetrack casinos. He interviewed 201 top local decision makers across the country, including mayors, city and county council members, state legislators, police and fire chiefs, school superintendents, economic development officials and other community leaders. Most of these leaders lived and worked in these areas before the introduction of casinos, giving them a first-hand and well-informed view of the effects of casino businesses on their communities.

The results of this survey underscore what the commission research and other studies have shown: Elected officials and civic leaders are strikingly positive about the impact casinos have had on their communities. They welcome the additional tax revenue, jobs, secondary economic development, and the contributions casino gaming makes to the community and charitable organizations. Fully 58 percent of those surveyed say that they had a positive initial reaction when casinos were first proposed in the community. After the casinos opened, more than 90 percent of those leaders believe the casinos have either met or exceeded their expectations.

Local opinion leaders highly value the additional tax revenue that casinos have generated for their communities. Fully 73 percent of community leaders say that tax revenue and local development agreements with casinos have allowed their communities to undertake projects that otherwise would not have been possible.

Officials who have watched the development of casinos in their communities have little question that casinos have been a positive force for other area companies, despite opponents’ claims otherwise. By a margin of more than three to one, community leaders are more likely to say that casinos have done more to help rather than hurt other businesses in the community.

When asked to evaluate casinos’ corporate citizenship in general, more than eight out of 10 report that casinos are good corporate citizens.  But possibly the most telling result of this survey is that if given the chance to vote again, a full three-quarters of civic leaders and elected officials would vote again to bring casino gaming to their communities.

In terms of acceptability of casino gaming, the general public overwhelmingly concurs with these opinion leaders. Year after year, an average of 8 out of 10 U.S. adults surveyed indicate that casino gaming is an acceptable form of entertainment for themselves or others, according to the AGA’s annual State of the States survey.

These attitudes of the public and local community leaders are a clear testament that casino gaming has evolved into vital part of the mainstream entertainment culture of our country.  Gone are the days when people visited casinos only for the gambling. Today, gaming operators are broadening their offerings for customers, providing a complete entertainment experience, with most resorts’ attractions actually found off the casino gaming floor – from spas and restaurants to theatrical performances and sporting events. Not surprisingly, more than 50 percent of the revenues made by casino businesses in Las Vegas now come from non-gaming sources. More attractions mean more customers, which translates into more jobs and more economic growth.

And this phenomenon of non-gaming amenities is not unique to Las Vegas. Operators in communities across the country recognize the importance of offering a wide range of entertainment options at their casinos. By a more than two to one margin, U.S. adults say that attractions like shows, restaurants and shopping are more fun for them than the gambling when they visit casinos.

So as you can see, the benefits of casino gaming are well documented through independent research and supported by the attitudes of community opinion leaders and the public. Through employment, economic stimulation and tax contributions as well as through its new focus on providing a total entertainment package for customers, our casino businesses continue to strive to make a positive difference in the communities where we operate.