Features correspondent
The net impact of legalised gambling on a community is difficult to assess, and its economic costs and benefits vary around the globe.
Propositions to legalise or expand commercial
gambling are never without controversy, yet they never stop surfacing.
The argument for commercial gambling
says that it stimulates the economy by promoting tourism, increasing tax
revenue and creating jobs. The argument against says that commercial gaming harms
both the economy and people by increasing rates of bankruptcy,
addiction, violent crime, theft and substance abuse, in addition to taking
business away from surrounding attractions. Both sides are right. But the gaming
industry’s economic impacts don’t look the same everywhere in the world.
Macau was just named the world’s second fastest growing economy,
a title owed almost entirely to its casinos. This Special Administrative Region
of China rakes in more than five times the amount of gambling
revenue that Las Vegas does each year; in 2012 alone, its casino revenue rose 13.5% to 303 billion Macau patacas.
Macau’s casino boom has created a lot of jobs, too. About 45,000 casino-related
jobs have opened up in the last seven
years, causing the unemployment rate to drop to a mere 2%, according to the
Associated Press (AP). These jobs don’t require a high level of education, but they
do pay well, offering salaries often 30% to 40% higher than comparable
non-casino jobs in Macau, the AP reports. That’s not necessarily the case everywhere
though; in the US, for instance, gaming dealers can make as
little as minimum wage. (The Boston Globe provides this
glimpse into the kinds of jobs US casinos
create and their associated salaries.)
The situation in Macau has a lot to do
with geography. It is the only place in China where casino gambling is legal,
so the vast majority of gamblers are tourists from mainland China. If casino
gambling was to become legal elsewhere in the country, there’s a strong chance
that Macau’s economic growth could start to slow.
This is what happened to New Jersey’s
gambling destination, Atlantic City. Since 2006, surrounding areas in
Pennsylvania, Delaware, West Virginia, New York and Maryland have built casinos;
and each year since 2006, Atlantic City’s gambling revenue has steadily dropped, reports the Atlantic magazine.
Even in Macau, there have been social
costs. According
to the AP, the country’s income gap has grown,
property prices have risen and there’s been an increase in problem gambling. One study on gambling addiction finds
that living within 80km of a casino makes someone twice as likely to become a
problem gambler. In tiny Macau (with a land area of just 29sqkm), all residents
live within a short driving distance from the casinos.
The potential ill-effects of commercial
gambling on a community’s own citizens cannot be ignored. It was for this
reason that in Monaco, home to the infamous Monte Carlo Casino, gambling has always been illegal for its own residents. When Princess
Caroline developed Monte Carlo Casino in the mid-1800s, she was adamant that
Monegasques should not be allowed inside,
and that gambling revenue should come only from foreigners. In exchange,
citizens of Monaco do not have to pay income taxes.
Monaco’s successes, with its citizens enjoying a high standard of living, can also be contributed to the fact that the
city does not rely solely on its casinos for economic development. Its efforts
to be a well-rounded tourism destination have
resulted in 11% of its revenue
coming from tourism, compared to just 4% coming from gambling. Finance and
banking account for a large chunk of its economy as well.
Another tourism-driven economy – that of
the Bahamas – is currently dealing with the question of whether its own
citizens should be allowed to gamble. The referendum on 28 January concerns
exactly that. Currently Bahamians are banned from gambling inside the beach
resort casinos, meant for tourists only. However, underground gaming locales, called
“web shops”, have emerged where locals can place
illegal bets on US lotteries that are broadcast on television. This month,
citizens will decide whether these web shops should be made legal and whether
they would support the creation of a national lottery. They would still not be
allowed to gamble in the casinos aimed at tourists.
Plenty of economists argue that casinos
do not only create social woes, but economic burdens as well. According to a
paper from the University of Illinois at Urbana-Champaign, multiple
studies in the US have found that casino
gambling costs taxpayers three times the amount that it generates in state
taxes – because it tends to cause an increase in social welfare costs,
regulatory costs, criminal justice costs and infrastructure costs.
Multiple studies also show that certain forms of
gambling amount to a “regressive tax” on the poor. Numbers lotteries in
particular (the same ones in question in the Bahamas right now) have been shown
to take money away from the people who can afford it the least. A strong case
can also be made for slots machines in casinos creating a regressive tax, since
these operate much like lotteries, producing the worst odds for players and the
best odds for the house. For this reason, some governments tax slots games at a
higher rate than other casino activities, such as table games.
University of Illinois business
professor John Warren Kindt argued that although casinos initially create jobs, in the long-term, legalised gambling can cause job loss as well. For
one thing, gambling addiction has been
linked to job loss, with problem
gamblers twice as likely to lose their jobs as nongamblers. For another, casinos often take profits away from surrounding
businesses. Casinos work to keep customers inside their establishments (and out
of nearby businesses) by providing them with drinks, food, shopping and accommodation,
and by implementing strategic interior design techniques.
Local businesses also have a hard time competing, writes Kindt, because casinos
have addiction on their side. If, as a result, surrounding businesses are
forced to close, non-casino jobs are lost.
At the end of the day, the net impact of
legalised gambling on a community is difficult to assess. What seems clear,
though, is that making casinos a silver bullet for the economy is a risky bet.
If gaming inhabits a space within a diversified tourism industry and within a
diversified economy, though, communities may benefit – if they can successfully
measure and manage gambling’s social and economic costs.
Travelwise is a BBC Travel column
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