In the mid-Michigan area, charities that survived by conducting bingos now find their customers have boarded buses for casinos instead of playing for small potatoes at the community hall. After Two Decades of Casinos, Time for Another Look at Economic Impacts
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The news that Native American Indian tribes now want government to allow them to operate off-reservation casinos has stirred a new look at gambling by policy-makers.
Over the 23 years since its approval, Indian gaming has become much more than just a support base for tribes. Some observers charge it appears to have morphed into a massive greedy monster gutting local businesses, churches and charities.
In the mid-Michigan area, charities that survived by conducting bingos now find their customers have boarded buses for casinos instead of playing for small potatoes at the community hall.
The brutal truth is that fundraisers are hard-pressed to come up with strategies to coax dollars out of local folks who are pouring their savings into slot machines at Indian casinos.
The phenomenal growth of pawn shops and gold-buying establishments near casinos seems to some observers to indicate a populace desperate to feed gambling addictions. Studies now underway may betray deeper erosion of the social fabric as a result of so-called "problem gaming."
Thomas A. Garrett, writing for the Federal Reserve Bank of St. Louis, MO, summarized: "Casinos have become a major industry in the United States over the past two decades. Prior to the 1980s, casino gambling was legal only in Nevada and Atlantic City, N.J."
The primary legislators involved in drafting the Indian Gaming Regulatory Act were Senator Daniel Inouye of Hawaii, Representative and then (as of 1987) Senator John McCain of Arizona, and Representative Mo Udall of Arizona. As S.555, the bill passed the United States Senate by voice vote on September 15, 1988. The House then passed the same bill, without it going through committee, by a 323 to 84 margin on September 27. President Ronald Reagan signed it into law on October 17, 1988. Since then, nearly 30 states have legalized casino gambling.
Wrote Mr. Garrett: "Many states have approved commercial casino gambling primarily because they see it as a tool for economic growth. The greatest perceived benefits are increased employment, greater tax revenue to state and local governments, and growth in local retail sales."
"Increasing fiscal pressure on state budgets, the fear of lost revenue to casinos in neighboring states and a more favorable public attitude regarding casino gambling all have led to its acceptance, according to the National Gambling Impact Study Commission's Final Report. In addition, the passage of the Indian Gaming Regulatory Act in 1988 allows Indian tribes to operate casinos on their reservations. Many states now have a combination of tribal and corporate casinos."
The National Gambling Impact Study Commission Report summarized evidence from across the country on the ancillary impacts of casinos on other forms of entertainment. Small business owners from Atlantic City, NJ testified that in 1978, the year that casinos opened, there were 311 taverns and restaurants in the city. Nineteen years later, only 66 remained.
Casino defenders point to added local employment as the main benefit. However, a New England study shows little positive impact from jobs at casinos.
Phineas Baxandall and Bruce Sacerdote examined the effects of Indian casinos on counties throughout the U.S. The authors find that the opening of a large casino was associated with a 0.6 percentage point drop in the host county's unemployment rate. Their 2005 report, "Betting on the Future: The Economic Impact of Legalized Gambling," was sponsored by the Rappaport Institute for Greater Boston.
A half-percent improvement in the unemployment rate does not seem to some analysts to justify the social and economic costs that result from the casino culture.
Problem and pathological gambling may be an invisible or silent disease, but costs borne by society as a whole include fraud, theft, bad loans, bad checks, lost work time, unemployment and welfare benefits, insured or publicly supported medical costs, and criminal justice system costs. Other social costs that result from gambling include increased suicide, vehicle accidents, and child abuse. Another study says that social costs should include lost productivity of spouses, impaired judgment and efficiency on the job, divorces, added administrative costs for unemployed, and the costs of depression and physical illness related to the stress and lower quality of family life.
State lotteries have been promoted as benefiting education. Mr. Garrett also wrote: "Numerous studies have found that in those states that earmark lottery funds for education, spending on education has not increased beyond historical trend levels after the introduction of the lottery. Essentially, contrary to the claim made by lottery officials, state lotteries do not appear to help public education. There is no reason to doubt the same result could occur with casino revenue."
The impact on tourism also was part of the New England gambling study. "In general, whether a casino will benefit or harm a local economy hinges on whether the casino is likely to attract tourists to the region. Destination casinos, such as those in Las Vegas, essentially export casino services to tourists, bringing in new dollars to the local economy.
"A dollar spent by a tourist in a destination casino may fund a local supplier providing food and beverages to the casino, which then spends that income on other goods and services in the local economy, thus multiplying the effect of the first dollar spent. The tourist, however, does not generally spend much in the communities surrounding a resort-style casino."
The study published by the New England Public Policy Institute states: "Casinos that cater to a local market generally do not bring outside money into the economy through the spending of their patrons. In fact, such casinos may have no net ancillary economic impacts. Residents patronizing such casinos may simply substitute gambling for other goods and services. The secondary impacts of spending on the foregone goods and services would therefore be lost, offsetting any ancillary benefits from gaming expenditures at the casino. However, if a casino attracts gamblers who otherwise would be gambling out-of state, it can have net positive ancillary economic effects."
Another researcher, William Eadington, concluded: "With the dispersion of the benefits of gaming comes a dispersion of the costs as well. If gaming becomes a more competitive market, each facility will have lower profits and therefore will have to compete more fully with other forms of entertainment such as restaurants, bars, or movie theaters."
Chippewa gaming in this area benefits local schools and governments with a distribution of two percent of revenues that are gratefully accepted by cash-strapped units. Critics, however, say the donations may not significantly offset added drug enforcement, police and judicial costs.
Mr. Garrett concludes: "Regardless of the specific issues, casino gambling in the United States is likely here to stay. The only question is to what degree its popularity will increase in the future."
Proponents of the view that gambling is harmful use a quote of Nobel Laureate Paul Samuelson: "(Gambling) involves simply sterile transfers of money or goods between individuals, creating no new money or goods. Although it creates no output, gambling does nevertheless absorb time and resources. When pursued beyond the limits of recreation, where the main purpose after all is to kill time, gambling subtracts from the national income."
The addition of Indian or non-Indian owned casinos appears to be one that Michigan residents will be considering in the near future, possibly from both a legislative and a ballot initiative perspective. Blind acceptance of casinos as positive economic tools may not be the best way to judge these issues, these studies and observations point out. An expansion of the casino culture may be more costly to local institutions than most citizens would prefer. ###
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Geraldine42 Says:
On April 30, 2011
at 10:54 AM
overlooked, I think, in Indian charitable giving is that the tribe decides which charities receive the donation. Locals had better be supportive of casino gambling and all that goes with it or they will be left out of the pot of gold.
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