Economic Impact of Casinos on Local Communities: Pros and Cons

Casinos are one of the most popular forms of entertainment worldwide, attracting millions of visitors annually. They offer a variety of games, such as slot machines, table games, poker, bingo, and sports betting, as well as other amenities, such as restaurants, bars, hotels, spas, and shows. Casinos are also a major source of revenue for the states and local communities that host them, generating taxes, fees, and jobs. However, casinos also negatively impact local economies and societies, such as increased crime, problem gambling, social costs, and competition with other businesses. In this article, we will examine the pros and cons of casinos on local communities based on the evidence from academic research and industry reports.

Pros of Casinos on Local Communities

– Casinos can boost the regional economies by creating direct and indirect employment, stimulating business growth, and increasing tourism. According to the American Gaming Association (AGA), in 2019, the U.S. casino industry supported 1.8 million jobs, contributed $261 billion to the U.S. economy, and generated $41 billion in tax revenues for federal, state, and local governments. Casinos can also attract visitors from outside the region, who spend money on other goods and services in the area, creating a multiplier effect. For example, a study by Oxford Economics estimated that in 2014 casino visitors spent $34 billion on non-gaming activities, such as transportation, lodging, food and beverage, entertainment, and retail.

– Casinos can provide fiscal benefits for the states and local communities that host them by generating tax revenues that can be used for public services and infrastructure. Casinos are subject to various taxes and fees at different levels of government, such as gaming taxes, license fees, admission fees, income taxes, sales taxes, property taxes, hotel taxes, and payroll taxes. According to the AGA, in 2019, the U.S. casino industry paid $10.2 billion in gaming taxes and $30.8 billion in non-gaming taxes to federal, state, and local governments. These tax revenues can help fund education, health care, public safety, transportation, environmental protection, and other public goods.

– Casinos can contribute to the social welfare of the local communities by supporting charitable causes and community development initiatives. Casinos often donate money or in-kind services to local non-profit organizations, such as schools, hospitals, arts and cultural groups, social services agencies, and civic associations. For example, according to the AGA, in 2019, the U.S. casino industry donated $367 million to charitable causes. Casinos also partner with local governments and community organizations to support economic development projects, such as urban renewal, affordable housing, workforce training, and small business development. For example, according to a report by Spectrum Gaming Group, In 2016, the casino industry in Atlantic City, New Jersey, contributed $22 million to various community development initiatives, such as the Casino Reinvestment Development Authority, the Atlantic City Development Corporation, and the Atlantic City Special Improvement District.

Cons of Casinos on Local Communities

– Casinos can negatively affect the local economies by competing with or displacing other businesses, such as restaurants, bars, retail shops, and entertainment venues. Casinos may capture a large share of the local spending that would otherwise go to these businesses, reducing their revenues and employment. Casinos may also reduce the diversity and quality of the local economy by creating a dependence on a single industry that is vulnerable to external shocks and market fluctuations. For example, a study by Douglas M. Walker and John D. Jackson  found that casinos are associated with increased per capita income in the construction, hotel, lodging, recreation, and amusement industries but decreased per capita income for those working in local restaurants and bars. The financial benefits of casinos are also more impressive in economically depressed communities that lack nearby casinos than in more prosperous and competitive regions.

– Casinos can increase the social costs of the local communities by contributing to crime, problem gambling, suicide, bankruptcy, and other social problems. Casinos may attract or create criminals who target casino patrons or employees for robbery, fraud, or violence. Casinos may also facilitate money laundering, corruption, or organized crime activities. Casinos may induce or exacerbate problem gambling behavior among some individuals who lose control over their gambling habits and suffer from financial, emotional, or health problems as a result. Problem gamblers may also impose costs on their families, friends, employers, and society at large by neglecting their responsibilities, abusing substances, committing crimes, or attempting suicide. Casinos may also increase the risk of bankruptcy among individuals who incur large debts from gambling losses or borrow money to finance their gambling. For example, a study by Earl L. Grinols and David B. Mustard found that counties with casinos had higher crime rates than counties without casinos, even after controlling for other factors. The authors estimated that the social crime costs attributable to casinos were $75 per adult per year. Another study by John Warren Kindt found that the introduction of casinos in Illinois was associated with a 10% increase in personal bankruptcies in the state.

Conclusion

Casinos positively and negatively impact the local communities that host them. They can provide economic benefits, such as employment, business growth, tax revenues, and tourism, as well as social benefits, such as charitable donations and community development initiatives. However, they can also have economic costs, such as competition with or displacement of other businesses, and social costs, such as crime, problem gambling, suicide, bankruptcy, and other social problems. The net effect of casinos on local communities depends on various factors, such as the size, location, type, and regulation of the casinos, the characteristics of the local economy and society, and the preferences and behavior of the casino patrons and employees. Therefore, policymakers and stakeholders should carefully weigh the pros and cons of casinos on local communities before deciding whether to legalize or expand casino gambling in their regions.