The economic impact of casino gambling
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43 THE ECONOMIC IMPACT OF CASINO GAMBLING ________________________________________________________________________ CHAPTER OUTLINE The Perceived Impact of Casino Gambling Local Substitution The "Modest" Upside of Casino Gambling The Economic Reasons for Opposing Casino Gambling Summary LEARNING OBJECTIVES LO1: Describe the potential economic impact of casino gambling in the context of the local substitution problem. LO2: Apply the concept of externalities to casino gambling. LO3: Summarize the local economic impact of casino gambling while noting that it depends greatly on where the casino is located. KEY TERMS Externalities- Effects of a transaction which hurt or help people who are not part of that transaction. Vig- The expected percentage of any gamble that a casino will keep. DISCUSSION QUESTIONS
THE WEB-BASED QUESTION Part I.
In April 2000, the United States General Accounting Office (GAO) sent a report to Congress, the “Impact of Gambling: Economic Effects More Measurable than Social Effects,” which examines the costs and benefits associated with legalized casino gambling in the United States. This report reviews the 1999 findings of the National Gambling Impact Study Commission (NGISC), which was created by Congress in 1996 to study the social and economic effects of gambling. The GAO report also investigates the points raised in the NGISC study through a case study of Atlantic City, New Jersey. The entire report is available at the GAO website, www.gao.gov/archive/2000/gg00078.pdf. Visit this website and view the findings of the NGISC’s study and the Atlantic City case study. GAO Director of Government Business Operations Issues, Bernard L Ungar, summarizes the findings of the GAO report in a letter to Congressman Frank R. Wolf. Both problem gamblers, who do not meet all the American Psychiatric Association’s criteria for pathological gambling, and pathological gamblers have difficulty controlling their gambling habits. Given the laws of probability, addicted gamblers cannot “win” in the long run. The odds are always set to favor the casino, and there are severe financial consequences from repeated gambling. Addicts will often become involved in illegal activities. They jeopardize jobs, educational opportunities, and personal relationships. Family members, employers, and society, in general, bear the costs of these externalities. Because data on family problems, crime, and suicide do not indicate the reason for these problems and because pathological gamblers often have other behavioral disorders, neither the NGISC nor the Atlantic City case study were able to offer any conclusive “cause and effect” evidence showing increased social problems as a direct result of gambling. However, both studies uncovered testimonial confirmation that gambling, and especially pathological gambling, increased domestic violence, child abuse, divorce, crime, and suicides. Examine Appendix II of the GAO’s report and summarize their findings on the social effects of gambling on family problems. Part II.
The GAO’s report to Congress, the “Impact of Gambling: Economic Effects More Measurable than Social Effects” (www.gao.gov/archive/2000/gg00078.pdf), refers to Atlantic City as “a typical ‘destination-style’ gambling operation.” In this type of enterprise, the local community with the casino can secure the economic benefits without suffering the full burden of the increased social costs. The GAO report states that casinos created about 50,000 jobs in Atlantic City. Additionally in 1998, the casinos paid 80 percent ($86 million) of Atlantic City’s property taxes, $41.7 million in school taxes, $25 million in county property taxes, and $319 million to the State of New Jersey. Between 1985 and June of 1999, Atlantic City casinos contributed $900 million in community reinvestment funds that were used for local redevelopment. Clearly, the Atlantic City community has received significant economic benefit from the gambling casinos, while much of the social costs have returned home with the problem and pathological gamblers. When a gambling addict visits a casino that is out of state, the home state of the addict experiences the worst possible outcome from gambling. The local community and state in which the addict resides bears much of the external costs associated with this addictive behavior, but the casino’s state receives the benefit from the gambling tax revenue. If tax funds paid to the casino’s state are sufficiently large, there is strong incentive for the home state to establish a casino within its own state boundaries. In this way, the home state and local community would collect tax revenue, which in turn would help pay for the external costs of gambling that it already bears. The University of Massachusetts Dartmouth Center for Policy Analysis examined patron origins at Connecticut’s two casinos, Foxwoods Resort Casino and Mohegan Sun Casino. In their report, “New England Casino Gaming: Update 2006,” they estimated the indirect income to the Connecticut state treasury that was collected as a result of gaming activities from the residents of New York and four other New England states, Massachusetts, Rhode Island, Maine, and New Hampshire. What is the revenue that was collected from the residents of each state? How much was collected in total from these out-of-state residents? List the estimated revenue in the table below. Currently, two of the four New England states are actively looking into possible legislation that would permit casino gambling. Given the strong economic incentive for the home state to establish casino gambling within its jurisdiction, which two states do you think are considering new gambling legislation? ANSWERS TO STUDY QUESTIONS SUGGESTED ANSWERS TO THE DISCUSSION QUESTIONS
SUGGESTED ANSWER TO THE WEB-BASED QUESTION Part I. The findings on the social effects of gambling on family problems from the GAO’s report to Congress, the “Impact of Gambling: Economic Effects More Measurable than Social Effects” are summarized below.
Sources: The GAO’s report to Congress, the “Impact of Gambling: Economic Effects More Measurable than Social Effects” (http://www.gao.gov/archive/2000/gg00078.pdf). Part II. In their report, “New England Casino Gaming: Update 2006,” The University of Massachusetts Dartmouth Center for Policy Analysis estimated the indirect income to the Connecticut state treasury that was collected from the residents of New York and four other New England states, Massachusetts, Rhode Island, Maine, and New Hampshire. The tax funds were collected as a result of gaming activities at the State’s two casinos, Foxwoods Resort Casino and Mohegan Sun Casino. The estimated revenue data are listed in the table below. In 2005, Massachusetts and Rhode Island are losing $122.9 million and $44.5 million, respectively, in state taxes to the State of Connecticut. Both are currently looking into possible legislation that would permit casino gambling. Directory: sites sites -> Answer True False 2 points Question 2 sites -> 587 Return function, r i(X) r i(0) r i(1) r i(2) r i(3) 1 0 2 4 6 Thermal Station, I 2 0 1 5 6 3 0 3 5 6 10 sites -> Glossary for Chapter 1 Algorithm sites -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose sites -> Northern England’s set-jetting locations sites -> Physical custody of 1033 program property accountibility form statement of Physical Custody: By signing for the below 1033 property I am a Law Enforcement Officer of the aforementioned Law Enforcement Agency sites -> Nstructions for Acquiring Excess Equipment online, through the 1033 Program sites -> Memorandum of agreement Download 31.48 Kb. Share with your friends:
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