David R. Francis

Do benefits outweigh the social costs of casinos?

Casinos are usually judged on the dollars they'll bring in. But what about the social costs, for problem gamblers and the community?

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    A dealer handles chips during a test day for recently legalized table games at the Sands Casino Resort Bethlehem in Bethlehem, Pa., in this July 16 file photo. Cash-starved states are increasingly drawn to the lure of easy money in casinos, sometimes without stopping to calculate the social costs.
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When the Puritans sailed from England in the 1630s to establish the Massachusetts Bay Colony, they imposed a ban on "games of chance." For a short time, the Pilgrims couldn't even possess dice or cards – a moral stance that still colors American attitudes today.

Nearly half of Americans currently view the overall impact of casino gambling on society as negative, compared with 25 percent who see it as positive, according to a Rasmussen Reports poll of 1,000 adults.

Nevertheless, gambling (or "gaming" as the industry likes to call it) is legal in every state except Hawaii and Utah. Latest numbers find gross revenues totaled $92 billion in 2007, including $34 billion from commercial casinos and $26 billion from Indian casinos. And any gambling expansion, such as the proposed establishment of casinos in Massachusetts and Texas, is debated largely on its economic merits and demerits.

Does gambling have a positive economic impact? That's how it's sold to legislators, who are told it will provide jobs and profits for businesses, such as restaurants and hotels, and extra revenues for states and cities, often for education.

The 13 commercial casino companies in the US contributed $5.6 billion to state and local governments in 2009, down 1.6 percent from 2008, reports the American Gaming Association, which represents those casinos. The great recession prompted a 5.5 percent drop in their revenues, since gambling for most people is a "discretionary" expense.

But as opponents of more gambling note, gambling has costs in the form of bankruptcy, broken families, extra crime, depression, suicide, and so on. Gambling loses its "discretionary" aspect for problem gamblers.

The "gambling industry has emerged as an economic mainstay in many communities," creating jobs, sometimes reducing unemployment and welfare payments, the National Gambling Impact Study Commission concluded in 1999. But it also calculated that gambling costs society about $1,200 per adult in social costs, says Keith Whyte, who heads the National Council on Problem Gambling, a Washington-based body that attempts to help "pathological" or "compulsive" gamblers. Ten years later, the costs would have soared, he figures.

A commission survey found that about 2.5 percent of American adults were problem gamblers. Mr. Whyte translates that to 2 to 3 percent of adults, or 4 million to 6 million people, today. That compares with an estimated 5 to 7 percent of adults with alcohol problems. Problem gamblers probably cause even more financial devastation than alcoholics, Mr. Whyte suspects.

As gambling has become more pervasive in the US, the telephone calls to his organization's "help line" with its staff of 525 "national certified gambling counselors" has grown some 10 to 15 percent per year over the past decade.

The gambling industry sees itself as providing recreation, of course, and most gamblers would agree. Whether gambling's social costs exceed its economic benefits is a matter of contention. Melissa Kearney, now an economist at the University of Maryland, tried to spell out the "winners" and "losers" in a 2005 paper, after reviewing the academic literature and research on gambling.

One of her conclusions is that Indian casinos have a positive economic impact on their reservations, but not necessarily on surrounding communities. Overall, it's hard to say whether gambling is economically helpful or harmful for a community, she finds. It is "specific to a particular place."

David R. Francis writes a weekly column.

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