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Social Impacts of Casinos: Facts and Fallacies

Today, the gaming industry’s record as a good neighbor is hard to refute.

Social Impacts of Casinos: Facts and Fallacies

Any time a casino comes up for debate in a community, two camps face off: supporters, who talk up potential jobs, investment and fresh tax dollars; and critics, who believe casinos mean increased crime, decreased quality of life, compulsive gambling and general moral decline.

Sometimes, the argument goes from merely contentious to frankly absurd. Take Kentucky’s 2019 gubernatorial race, in which then-Governor Matt Bevin said, “Every night somewhere in America, somebody takes their life in a casino because they’ve wasted the last semblance of dignity and hope that they had. Families are ruined. Lives are ruined.”

Bevin later disavowed the statement, and claimed he’d never said it. Alas for him, it was part of a taped radio broadcast. He lost the election to former Attorney General Andy Beshear, who is pushing not just casinos but sports betting and online poker to top up Kentucky’s underfunded pension system.

 

The ‘Sin Card’

These days, with gaming ubiquitous across the United States, the moral argument against it—let’s call it the “sin card”—has been played out, as Matt Bevin almost certainly now knows.

“The industry is in 40 states,” says Bill Miller, president of the American Gaming Association. “The people in those communities have actually seen, touched, experienced, been employed by and benefited from the casino industry. All the bogeymen are trotted out at the start, but when the reality happens, the bogeymen are gone. People recognize we are economic engines in those communities.”

Before casinos were widespread, he says, most Americans’ perceptions of the industry were drawn from TV and movies, most of which focused on the mobbed-up origins of casinos in Las Vegas.

“Today, as people experience the casino that came to their town—the place their neighbors work, or where they work—they know these are good community partners,” Miller says.

Unlike some big corporations that demand big incentives to move into a market—think Amazon, which sought $3 billion in tax breaks to open a second headquarters in Queens, New York—casinos are both economic drivers and taxpayers.

“We pay the highest taxes of any business in any state we come into,” says Miller. “Our record as it relates to diversity and opportunity among disadvantaged populations is exemplary. When you talk about tribal operations, the story is even more incredible—gaming has quite simply changed their fortunes.”

 

Adding It Up

The revenue figures back him up. According to the AGA’s 2019 State of the States report, released last June:

  • Commercial casinos in the United States generated $41.7 billion in gaming revenue in 2018, up 3.46 percent from the previous year, for the highest-ever annual total.
  • Those gaming halls paid $9.7 billion in taxes to state and local governments.
  • According to the most recent statistics from Oxford Economics, in 2017 commercial casinos employed more than 361,000 people, who earned more than $17 billion in wages, benefits and tips.
  • Tribal casinos generated more than $31 billion in gaming revenues for the same year; the state of Oklahoma, for one, collected nearly $139 million from exclusivity fees, breaking the previous record for the fourth year in a row.

“Today, as people experience the casino that came to their town—the place their neighbors work, or where they work—they know these are good community partners.”—Bill Miller, President and CEO, American Gaming Assoc.

Those figures don’t include the revenues gaming halls spend with local and regional businesses. In 2017, for example, Iowa’s 19 casinos bought $239 million in goods from vendors in the Hawkeye State. In 2019, Harrah’s Cherokee Casinos in North Carolina paid more than $50 million to area vendors. Last October, when Rush Street Gaming CEO Neil Bluhm visited Waukegan, Illinois, to talk about a proposed Rivers Casino there, he promised a “Waukegan First policy” for vendors and suppliers, and made a commitment to provide opportunities to businesses owned by minorities and women.

“One of the most exciting parts of this job is to visit communities all over the country and see the actual impact this industry has,” says Miller. “Unlike others, we don’t go to state capitals and say, ‘Hey, we might be willing to locate in your state if you give us a tax abatement.’ We’re the exact opposite.”

Douglas Walker, professor of economics at the College of Charleston, South Carolina, and the author of Casinonomics: The Socioeconomic Impacts of the Casino Industry, points to a 2008 study that contended casinos lead to higher employment (by around 8 percent) in counties where they exist, and create slightly higher wages in those counties. The study, published in the Journal of Gambling Business and Economics, isn’t the last word on the subject, and hasn’t been updated since, but according to Walker, those conclusions generally have held up over time.

“It’s no different from any other growing industry, which would have a positive impact on the economy as measured by per-capita income,” he says.

Walker agrees that the industry has become acceptable in the mainstream. “For most people, it’s becoming less of a moral issue. As an economist, I look at the costs and benefits—I don’t start out with some bias against gambling as an activity.”

 

Better Business

Despite Bevin’s contention that problem gambling often or even regularly leads to suicide—a statement the AGA slammed as “patently false and irresponsible”—most estimates put the number of problem gamblers in the U.S. at 1.4 percent of the population. Research shows that the vast majority of American adults gamble recreationally, or not at all.

Of course, the comparatively low incidence of problem gambling doesn’t mean it shouldn’t be strenuously addressed, by both public health experts and by the gaming sector. Keith Whyte, executive director of the National Council on Problem Gambling (NCPG), says the industry has made “tremendous progress” on that front.

“Back in the 1970s, no one had best practices in responsible gambling for the land-based industry,” he notes, “but by the late 2000s, there was a national council to establish responsible gambling principles and encourage folks to harmonize their programs.”

“As an economist, I look at the costs and benefits—I don’t start out with some bias against gambling as an activity.” —Douglas Walker, author, Casinonomics: The Socioeconomic Impacts of the Casino Industry

The Responsible Gambling Collaborative, founded in 2018, brought together commercial and tribal gaming associations, including lotteries and racing interests, with gaming equipment manufacturers and public health organizations including the Yale School of Medicine and Harvard University’s T.H. Chan Public School of Health.

Whyte says the next step—and it’s an important one—is to standardize responsible gambling requirements and get everyone on board.

“This is a tale of leaders and followers,” he says. The leaders—mammoth firms like MGM Resorts, Caesars Entertainment and Las Vegas Sands Corp.—are “way out in front” in terms of social responsibility, and recognizing and working to prevent problem gambling.

“Those companies have pushed it forward,” says Whyte, “but others are going to follow the regulations in their jurisdiction, check the box, and that’s all. In many jurisdictions, the regulations are minimal, with none of the tax money from gambling going to help people with gambling problems. They require employees to be trained, and that’s about it.

“The good news for the industry is that, with advocates like us and associations like the AGA, there’s a pretty big movement towards defining the standards for good responsible gambling, and helping the industry meet those standards.”

Whyte says consistent, rigorously enforced standards are simply good business. “Then you’re able to attract and retain high-quality employees, people who are looking for a company that willingly, honestly addresses the downside, and you’ll build stronger relationships with customers. Between employees and customers, that’s the lifeblood of any business.

“And let’s not forget that good, aspirational responsible gambling programs are going to keep you in the good graces of regulators, legislators and advocates like us. It’s pretty much a bottom-line, dollars-and-cents argument.”

The NCPG is fighting on Capitol Hill to get federal funds to study problem gambling, which often occurs alongside other problems such as depression, anxiety and substance abuse.

Miller agrees that gaming firms have an implicit “social license, a moral license” to identify and protect problem gamblers, “because we have the most vested interest.”

Look for the debate to continue whenever a casino is proposed for a town or city that doesn’t have one. Gaming is not a golden ticket to fiscal security, and it’s not a neon-lit road to perdition; like other flourishing major industries in the U.S. that are tied to consumer confidence and discretionary income, it has its ups and downs, pluses and minuses. Miller would argue that the scale is firmly tipped in the plus column.

“I want the politicians in Washington who sit in Congress and the Senate, state and local politicians, and communities and people to have a strong sense of what we bring in terms of jobs and tax revenue,” he says. “The AGA will always be on the offensive to make sure the portrayal of our industry is accurate.”