Global Gaming Business
Frank J. Fahrenkopf, Jr.
As several states consider tax revenues from gaming operations as potential solutions to continued budget shortfalls in 2004, it will be important for voters and legislators to be well informed about the true impact of gaming on communities across the nation.
It has been more than 10 years since the expansion of gaming to states beyond Nevada and New Jersey, and commercial casinos are now located in 11 states. With the prospect of more expansion, opponents of gaming are more vocal than ever in their assertions against the industry. Unfortunately, these assertions are often baseless—relying on rhetoric and bluster, rather than facts and figures, in an effort to persuade decision makers to oppose gaming.
This month, the American Gaming Association (AGA) is proud to debut a new feature on our Web site to counter these claims and set the record straight on the real effects of gaming. This resource, presented in the form of frequently asked questions (FAQ) about the impact of the gaming industry, compiles the most current and highly regarded research on the industry in a single, easy-to-navigate location. It responds to some of the common misperceptions about gaming based on the findings of a congressionally mandated, federally funded gaming commission, as well as numerous independent studies on the social and economic impact of gaming.
The research presented on the site stands in stark contrast to the arguments against gaming that have been recycled again and again over the past several years. These answers tackle the most common questions, offering documented evidence, research and statistics to debunk the myths and stereotypes surrounding our industry.
The FAQ Web resource first addresses the economic impact of the gaming-entertainment industry. We have long discussed in these pages the proven economic benefits of gaming, and existing research supports this position. In 2002, the commercial casino industry provided more than 350,000 jobs in the United States, with wages and benefits totaling $11 billion. In addition, the University of Chicago’s National Opinion Research Center (NORC) found that communities closest to casinos experienced a 12 percent to 17 percent drop in welfare payments, unemployment rates and unemployment insurance. NORC also found that communities with casinos have 43 percent higher earnings in their hotel and lodging sectors than those communities farther from casinos.
There is also significant data refuting the popular antigaming assertion that other businesses suffer when casinos are introduced into a community. In fact, several studies indicate casinos actually stimulate local economies, resulting in communitywide growth in population, jobs, incomes and industry. For example, after studying numerous U.S. casino jurisdictions, researchers at the University of New Orleans concluded in their 1997 report, The Effects of Casinos on Local Restaurant Businesses, that “[W]hen casinos are developed, all aspects of the local food and beverage business increase: the number of establishments increases, the number of people employed increases, and payroll increases at an even greater rate than the first two.”
In its final report, the NGISC made numerous observations about the positive economic impact of gaming. The commission clearly and unequivocally found that “destination-type resorts,” such as casinos, offer major economic advantages to communities because they create quality jobs, economic development and capital investment in their communities. The commission noted that “…[E]specially in economically depressed communities, casino gambling has demonstrated the ability to generate economic development through the creation of quality jobs.”
Based on this most recent data, it is nearly impossible to dispute the purely economic benefits of gaming. Faced with this reality, critics of the industry have more recently voiced the argument that the alleged social costs of gaming outweigh this proven economic benefits. The new FAQ Web resource addresses several of these assertions, including claims that the introduction of casinos increases local rates of pathological gambling, bankruptcy and crime.
According to a large body of research, national and international prevalence rates of pathological gambling have either remained stable or even decreased, despite the introduction of new gambling facilities. A state government study that compared prevalence rates in Connecticut in 1991 versus 1996 revealed that “…[P]robable pathological gambling rates may actually have fallen in Connecticut, and have certainly not risen, during a period in which one of the largest casinos in the world was opened in the state.” Follow-up studies in nine other states and international gaming jurisdictions uncovered similar results.
In addition, Harvard Medical School’s 1997 meta-analysis of the prevalence of pathological gambling found no regional differences in the prevalence of gambling disorders, suggesting areas with a higher concentration of gambling opportunities do not experience higher levels of gambling disorders than other regions of the country.
As to whether the introduction of casinos into a community results in increased bankruptcy and crime rates, available research clearly refutes these claims. At the request of the U.S. Congress, the Department of the Treasury conducted a 1999 study that found “no connection between state bankruptcy rates and either the extent of or introduction of gambling.” NORC reached a similar conclusion in a study for the NGISC, reporting that instances of bankruptcy were no greater in communities with casinos than in communities without casinos.
And, in their reports to the NGISC, neither the National Academy of Sciences nor NORC was able to confirm a relationship between crime and legalized gambling. In fact, several law enforcement officers who testified before the commission actually pointed to a decrease in street crime in gaming jurisdictions.
This information is only a taste of the wealth of research available in the new FAQ section of the AGA Web site. In addition, the AGA is expected to complete and distribute this spring a hard-copy version of the FAQ information that can be used to educate employees, local officials, decision makers and others. I encourage all gaming industry representatives to utilize this resource and share the information with local decision makers. For far too long, gaming critics have had the last word, with their dire warnings and misinformed rhetoric. The reality of the impact of gaming is far different than they would have the American public believe. Now, we all have the facts to challenge these myths. The truth can be a powerful tool.