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Column: Casinos are a losing bet

The rosy projections that gambling concerns are offering up in Florida in exchange for more gaming have been heard elsewhere. But Floridians would be smart to examine the impact that expansion has had elsewhere before embracing casinos' overhyped and unsustainable claims.

To be sure, casinos generate jobs and tax revenue. But Floridians should consider:

• In Illinois, the state's 10 casinos employ 7,828 people. But as the Chicago Sun-Times reported, the state Gaming Board said 9,957 problem gamblers placed their name on a list that prohibits them from entering a casino. In other words, the casinos have helped create more gambling addicts than jobs.

• Tax benefits rarely come as advertised. The Ohio Department of Taxation told voters in 2009 that the annual tax revenue from gambling would be $1.9 billion. This fiscal year casinos are expected to generate just $868 million.

Even more misleading, the claims that casinos will spark tourism and other economic development rarely materialize.

When Detroit legalized casinos in the 1990s, then-Mayor Dennis Archer promised to use gambling revenues to hire more police and fund public works projects. A riverfront casino district was going to attract other development. In 2012, Detroit Free Press editorial page editor Stephen Henderson examined the promises and wrote the following: "As the casino plans unfolded, almost none of those benefits materialized." Last year, Detroit declared bankruptcy.

In New York, an Indian casino was supposed to boost economic development in Niagara Falls. But 10 years after that casino opened, "not many of the hopes have turned into reality," the Buffalo News reported last year.

"Unemployment rates in Niagara Falls are among the highest in the state, and only one major development project — the Niagara Falls Culinary Institute — has occurred in the last 10 years. Much of the area around the casino remains empty and blighted. In addition, law enforcement officials have pointed to some high-profile embezzlement cases that antigambling voices blame on casinos."

The newspaper touched on the most troubling aspect when it comes to selling the public on casinos: Supporters either ignore or downplay social and economic costs.

As the New York Times reported, government studies in the United States, Canada and Australia show that anywhere from 30 percent to 60 percent of the people who frequent a casino are repeat or problem gamblers.

Casinos don't generate new spending but instead divert it from other businesses. Even worse, according to Baylor University economist Earl Grinols, every $1 in revenue a casino generates creates $3 in costs.

Studies show crime often increases where casinos locate. So does the rate of bankruptcies, suicides and divorces. In Connecticut, the number of arrests for embezzlement increased 400 percent after two large Indian casinos opened, according to 2009 study by Spectrum Gaming: "Our research shows that many of those who stole from their employer used either part or all of the money to gamble at the two Indian casinos." The number of drunken driving arrests doubled in Norwich, a large municipality near the two casinos.

Perhaps the best case study of the impact of casinos is Atlantic City, where casinos were legalized more than 30 years ago to revitalize the struggling resort. Yet the town remains largely a dump. Residents living below the poverty line have grown to 29.3 percent from 22.5 percent. The unemployment rate remains around 18 percent, and the crime rate is almost three times that of the surrounding county.

Competition from other states has cut gambling revenue in Atlantic City by 45 percent. A number of casinos have filed for bankruptcy over the years and one recently closed. A recent report from the Center for Gaming Research at the University of Nevada, Las Vegas, called Atlantic City "a city in crisis." Is this really the economic model that Florida wants to emulate?

Florida can rest assured that casinos will likely deliver on one promise: A study released last year by two College of Charleston economists found the states that legalized casinos had an increase in conviction rates for public corruption.

Paul Davies is a fellow at the Institute for American Values, a New York-based nonpartisan think tank, where he edits a gambling blog at www.getgovernmentoutofgambling.org. He wrote this exclusively for the Tampa Bay Times.

Column: Casinos are a losing bet 01/27/14 [Last modified: Monday, January 27, 2014 3:37pm]

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