The Economic and Social Effects of Casinos
The Economic and Social Effects of Casinos
NATIONAL PUBLIC OPINION
THE EFFECTS OF NATIVE AMERICAN CASINOS
THE LACK OF BALANCED DATA
DIRECT GOVERNMENT REVENUE
EMPLOYMENT AND CAREERS
Assessing the effects of casinos on society is complicated because many factors have to be considered. Most relate to economics, but some address quality of life and moral issues. Proponents of casino gambling consider it part of the leisure and entertainment sector—like amusement parks or movie theaters. In a casino, participants exchange their money for a good time. Those who support casino gambling generally do not see it as a moral issue.
Opponents are less unified in their opinions. Some disapprove of gambling on religious grounds, because it contradicts moral principles of thrift, hard work, and sober living. Others are wary of an industry that was associated with mobsters, swindlers, and corrupt politicians throughout much of its history in this country. Still others point out that casinos provide a place for those who are prone to problem gambling to act on those urges. Easy accessibility to casinos, they suggest, encourages some people to gamble who otherwise would not and should not. Outlawing casinos is one way to protect people from their own bad judgment.
There is also the so-called NIMBY factor: “not in my backyard.” Some people support casinos in theory and may even visit them on vacation, but they do not want them in their hometown, for whatever reason. According to the American Gaming Association (AGA), in 2004 State of the States: The AGA Survey of Casino Entertainment (2004, http://www.americangaming.org/assets/files/2004_Survey_for_Web.pdf), four out of ten Americans did not want a casino in their own neighborhoods in 2003. Local residents and politicians are often opposed to casinos because they fear increased traffic and crime and may want to protect their community's image. Also, many state governments are running lotteries and do not want competition from casinos for their residents' gambling dollars.
According to Paul Taylor, Cary Funk, and Peyton Craighill of the Pew Research Center, in Gambling: As the Take Rises, So Does Public Concern (May 23, 2006, http://www.americangaming.org/assets/files/aga_2008_sos.pdf) that more than two-thirds (69%) of those surveyed in 2007 believed casinos brought widespread economic benefits to other industries and businesses in their region. Furthermore, in 2007 State of the States: The AGA Survey of Casino Entertainment (2008, http://www.americangaming.org/assets/files/aga_2007_sos.pdf), the AGA indicates that in 2006, 67% of those surveyed agreed that legalized casino gambling was a good way for cities and states to generate revenue without having to raise taxes.
Elected officials and civic leaders had an even more positive view of casinos in their communities. The AGA reports in 2005 State of the States: The AGA Survey of Casino Entertainment (2005, http://www.americangaming.org/assets/files/uploads/2005_State_of_the_States.pdf) that a 2004 poll asked 201 elected officials and civic leaders about the effects of casinos in their communities: 79% said casinos had had a positive impact, whereas only 13% saw a negative impact. Some 63% praised casinos as helping other businesses, and 79% touted casinos as being responsible corporate citizens.
Native American tribes that encounter opposition to their casino plans attribute opposition to the same issues faced by corporate casinos, although some also see racism as a factor.
|TABLE 6.1 Public opinion on the impact of casinos on local communities, 2006|
|OVERALL, WOULD YOU SAY CASINOS HAVE A POSITIVE OR NEGATIVE IMPACT ON THE LOCAL COMMUNITY?|
|All adults||Casino nearby||Casino not nearby||Been to casino?|
|SOURCE: Paul Taylor, Cary Funk, and Peyton Craighill, “Are Casinos Good for the Local Community,” in Gambling: As the Take Rises, So Does Public Concern, Pew Research Center, May 23, 2006, http://pewresearch.org/assets/social/pdf/Gambling.pdf (accessed August 8, 2008)|
The National Indian Gaming Association (NIGA) notes in An Analysis of the Economic Impact of Indian Gaming in 2005 (2005, http://www.indiangaming.org/NIGA_econ_impact_2005.pdf) that tribal gaming and associated businesses had:
- Generated revenues of $22.6 billion in 2005 from Native American gaming
- Generated another $2.7 billion in gross revenue from related hospitality and entertainment services
- Created six hundred thousand jobs
- Paid $6.9 billion in wages
- Paid $7.6 billion in federal taxes and revenue savings
- Paid $2.2 billion in state taxes, revenue sharing, and regulatory payments
- Paid more than $100 million to local governments
- Funded essential tribal programs, such as schools, hospitals, water and sewer systems, roads, police and firefighting programs, and cultural and social projects
Jonathan B. Taylor and Joseph P. Kalt find in The American Indians on Reservations: A Databook of Socioeconomic Change between the 1990 and 2000 Censuses (2005) that income increased by 35% between 1990 and 2000 on non-Navajo gaming reservations, whereas income only grew by 14% on nongaming, non-Navajo reservations. (Navajo do not have casinos, and the Navajo reservation has more than ten times the membership of any other Native American tribe.)
Most tribal lands are located in areas of the country that have limited natural resources and industry, so tribal casinos often bring much needed wealth to the tribes and their neighbors. The NIGA (August 2004,http://www.indiangaming.org/info/Final_Impact_Analysis.pdf) points to specific instances in which gaming helped revitalize impoverished communities in and around Native American lands. For example, in 1995 Del Norte was one of the more indigent counties in California: the biggest economic development in the works was a new maximum-security prison in Crescent City. Then the Tolowan Tribe opened Elk Valley Rancheria and Casino, also in Crescent City. It quickly became the county's largest employer, providing over five thousand new jobs for tribal and nontribal members of the community by 2004. Using money from the casino, the tribe helped finance a $35 million wastewater-treatment plant in the county. Another example is the Tunica-Biloxi Tribe in central Louisiana, which was one of the poorest parishes (counties) in the state until the tribe built the Paragon Casino and Resort in 1994. NIGA reports that the casino contributes greatly to the local economy by providing jobs and scholarships.
Critics contend that tribal casinos:
- Unfairly compete against local hotels, restaurants, and pari-mutuel operators
- Hurt state lottery sales
- Place an increased burden on states to address problems resulting from pathological gambling
- Introduce opportunities for money laundering (the act of engaging in transactions designed to hide or obscure the origin of illegally obtained money) and organized crime
Some critics suggest that casinos encourage and perpetuate a cycle of dependence: tribe members who were formerly dependent on the federal government are now dependent on their tribal governments. They believe that, ultimately, casinos will hurt the culture and political stability of the tribes.
In Gambling in the Golden State: 1998 Forward (May 2006, http://www.library.ca.gov/crb/06/04/06-004.pdf), Charlene W. Simmons of the California State Library catalogs all the known positive and negative effects that Native American casinos had had on California communities. According to Simmons, Native American casinos led to slightly higher incidences of bankruptcy and crime, particularly violent crimes such as aggravated assault. The casinos also strained the local infrastructure. Most of the casinos brought many people into rural areas with narrow two-lane roads and limited sewage systems. Even though casinos helped the economies of their immediate communities, they often siphoned money away from adjacent communities: people spent their money at casinos rather than at stores and eating establishments in their own neighborhoods.
In 1996 Congress created the National Gambling Impact Study Commission (NGISC) to examine the economic and social impacts of legalized gambling. After conducting hearings in Las Vegas, Nevada; Atlantic City, New Jersey; Chicago, Illinois; San Diego, California; and Biloxi, Mississippi, the commission published Final Report (June 1999, http://govinfo.library.unt.edu/ngisc/reports/fullrpt.html), which included the following assessments:
- Casinos are associated with increased per capita income in the construction, hotel, lodging, recreation, and amusement industries but decreased per capita income for those working in local restaurants and bars.
- The financial benefits of casinos are particularly impressive in economically depressed communities.
- Casinos create full-time entry-level jobs that are badly needed in areas suffering from chronic unemployment and underemployment.
- Unemployment rates, welfare payments, and unemployment insurance declined by approximately one-seventh in communities close to newly opened casinos.
- In terms of income, health insurance, and pensions, casino jobs in the destination resorts of Las Vegas and Atlantic City are better than comparable jobs in the service industries.
- Small business owners located near casinos often suffer from the loss of business.
- Tribal casino workers have complained about the lack of job security, an absence of federal and state anti-discrimination laws, and the lack of workers' compensation benefits.
- Elected officials from casino towns expressed support for casinos because they improved the quality of life in their towns and funded community improvements.
- Problems with pathological gambling increased in seven out of nine communities surveyed.
- The AGA is the largest source of funding for research on pathological gambling.
- Many casinos train management and staff to identify problem gamblers among customers or employees.
- Many tribal casinos contribute money to nonprofit groups dealing with problem gambling.
The commission concluded that a lack of objective research data on gambling issues is a major hurdle in determining the extent of its effects on society. The U.S. General Accounting Office (GAO; now the U.S. Government Accountability Office) followed up the commission's report with Impact of Gambling: Economic Effects More Measurable than Social Effects (April 2000, http://www.gao.gov/new.items/gg00078.pdf). The GAO finds some evidence that pathological gambling in areas with casinos results in increased crime and family problems, such as intimate partner violence and child abuse, divorce, and homelessness. However, the GAO suggests that some of these effects might actually be primarily due to other problems that usually accompany pathological gambling, such as alcohol or drug abuse.
The AGA notes in 2008 State of the States that in 2007 commercial casinos took in over $34.1 billion. In National Indian Gaming Commission Newsletter (Summer 2008, http://www.nigc.gov/LinkClick.aspx?link=NIGC+Uploads%2fNewsletters%2fSummer.2008.pdf&tabid=140&mid=760), the National Indian Gaming Commission indicates that tribal casinos took in $26 billion that same year. As such, American casinos—commercial and tribal— took in $60.1 billion during 2007, making the casino industry an extremely big business. Most casinos have been huge successes for their investors, who range from middle-class stockholders in major corporations to billionaires such as Donald Trump (1946–) and Stephen A. Wynn (1942–). Most tribal casinos have been economically successful as well, bringing unimagined wealth to Native Americans, many of whom were at the very bottom of the U.S. economic ladder only a decade ago. Casinos are also labor-intensive businesses that employ hundreds of thousands of people, who support their families, pay taxes, and buy goods and services—factors that contribute to the economic health of their communities.
The economic effects of casinos on local and state governments are also significant. Commercial casinos pay billions of dollars every year to government agencies in the form of application fees, regulatory fees, wagering taxes, and admission taxes. Even though governments incur increased costs for more police, roads, and sewers, casino taxes and fees help fund programs that improve the quality of life in the immediate vicinity or state. Tribal casinos, though exempt from state and local taxation, pay billions of dollars each year to compensate states and municipalities for regulatory and public-service expenses.
From Commercial Casinos
In 2008 State of the States, the AGA reports that commercial casinos generated tax revenues of $5.8 billion in 2007, up from $5.2 billion in 2006. (See Figure 6.1.) Nevada generated the most gambling tax revenue in 2007 ($1 billion), followed by Indiana ($842 million) and Illinois ($834 million). (See Figure 6.2.) According to the AGA, racetrack casinos paid taxes of $2.2 billion to local and state governments in 2007, up 54.6% from the previous year. The biggest increases were in Pennsylvania, which paid $461.1 million in taxes in 2007, a 2555% increase from
2006, and in Florida, which paid $101.2 million in taxes in 2007, a 1862% increase from the previous year. These increases were due to the opening of three new racetrack casinos in Pennsylvania and one in Florida.
Gaming taxes can be a substantial portion of a state's revenue. For example, Amanda Fehd reports in “Nevada Senate Approves State Education Budget” (Associated Press, June 1, 2007) that Nevada's budget in 2007 was $18 billion. Fees and taxes paid by casinos made up about 28% of the state budget. Total taxes collected in Mississippi in 2007 amounted to $6.4 billion, as reported by the U.S. Census Bureau, in “State Government Tax Collections: 2007” (February 29, 2008, http://wwwcensusgov/govs/statetax/0725msstaxhtml). According to the Mississippi Gaming Commission, in “Tax Revenues from Gaming” (September 8, 2008, http://www.mstc.state.ms.us/taxareas/misc/gaming/stats/gamtax.pdf), gaming taxes amounted to approximately 5% of those taxes, with $332 million collected during the fiscal year (FY) ending June 30, 2007.
The AGA notes in 2005 State of the States that in 2004, 67% of elected officials and civic leaders with
casinos in their communities said that the casinos had increased the tax revenue in their communities. More important, 73% of those community leaders agreed that such tax revenue and casino-development agreements allowed their communities to complete projects that would not have been feasible without the additional revenue.
From Native American Casinos
The Indian Gaming Regulatory Act requires that net revenues from tribal gaming be used to fund tribal government operations and programs, to promote tribal economic development, to donate to charitable organizations, and to help fund operations of local government agencies.
The revenues earned by tribal casinos are not taxable because the casinos are operated by tribal governments: just as the U.S. government does not tax the states for revenue earned from lottery tickets, it does not tax tribal governments for revenue earned from casinos. Therefore, tribal casinos generate less tax revenue than commercial casinos. Tribe members who live on reservations and are employed at tribal enterprises, such as casinos, are not subject to state income taxes. However, tribe members do pay federal income tax, Federal Insurance Contributions Act tax, and Social Security tax on their wages, even if those wages are earned at tribal enterprises. Wages paid to tribe members living off reservations and to nontribe employees are subject to state income taxes.
In Analysis of the Economic Impact of Indian Gaming in 2005, the NIGA reports that tribal casinos and associated business generated $6.1 billion in federal taxes during 2005. That amount included employer and employee Social Security taxes, personal and corporate income taxes, and excise taxes. In addition, Native American gaming produced $1.5 billion in federal revenue savings through reduced welfare and unemployment payments.
According to the NIGA, tribal governments spent $323 million on regulatory costs in 2005, including $245 million on tribal regulatory entities, $66 million paid to state agencies, and $12 million paid to the National Indian Gaming Commission for oversight expenses.
In 2007, 360,818 people were employed in commercial casinos. (See Table 6.2.) Tribal casinos employed 248,000 people in 2006. (See Figure 6.3.) Employment was slightly down from the previous year, but up significantly from 1998. (See Figure 6.4.) Because they are employed in an entertainment and hospitality industry, gaming workers need excellent communication and customer-service skills, but the financial aspect of casino activities also requires personal integrity and the ability
|TABLE 6.2 Commercial casino jobs by state, 2006-07|
|aFigure for locations with gross gaming revenue in excess of $1 million for fiscal year2007.|
|bMississippi employment figures for 2006 have increased compared to last year' reported figures due to a calculation error in the 2007 State of the States.|
|cThere are no 2006 statistics for Pennsylvania because stand-alone casinos there only became operational in 2007.|
|dThe significant decrease in the number of employees in South Dakota comes mainlyfrom a change in data collection. 2007 data came from the South Dakota Department ofLabor, while 2006 data was collected by the South Dakota Gaming Commission.|
|SOURCE: “Commercial Casino Jobs by State, 2006 vs. 2007,” in 2008 State of the States: The AGA Survey of Casino Entertainment, American Gaming Association, 2008, http://www.americangaming.org/assets/files/aga_2008_sos.pdf (accessed August 1, 2008)|
to maintain composure when dealing with angry or emotional patrons. A high school diploma or the equivalent is usually preferred for all entry-level jobs. Table 6.3 describes the duties, qualifications, training requirements, and earnings of several categories of casino workers.
All casino employees—from managers to dealers to slot repair technicians—must be at least twenty-one years old and have licenses from the appropriate regulatory agency. Obtaining a license requires a background investigation— applicants can be disqualified from casino employment
for a variety of reasons, including links to organized crime, a felony record, and gambling-related offenses. Requirements for education, training, and experience are up to individual casinos. The Bureau of Labor Statistics (April 14, 2007, http://www.bls.gov/oco/ocos275.htm) considers the overall employment outlook for the industry to be good, as increasing competition should result in more jobs for gaming
workers. Occupationsingamingare predictedtobe among the fastest growing U.S. occupations between 2006 and 2016, which are projected to grow by 23% during this period.
The growth of the casino employment market has spurred a related increase in vocational and professional training for casino workers. The University of Nevada, Las Vegas, only 1.5 miles (2.4 km) from the Strip, offers a major in gaming management that includes instruction in gaming operations, marketing, hospitality, security, and regulations. At Tulane University's School of Continuing Studies in New Orleans, students can choose from several programs lasting between one and four years, including a bachelor's degree in casino resort management. Students pursuing a degree in hospitality and tourism management at the University of Massachusetts can specialize in casino management. Central Michigan University, which is located near the Soaring Eagle Casino and Resort operated by the Saginaw Chippewa Tribe, offers a business degree in gaming and entertainment management, including course-work in the protection of casino table games, gaming regulations and control, the mathematics of casino games, and the sociology of gambling. The Casino Career Institute, which includes a large mock casino, is a division of Atlantic Cape Community College in downtown Atlantic City. When it opened in 1978, it was the first gaming school in the country affiliated with a community college.
|TABLE 6.3 Casino occupations, 2008|
|Title||Responsibilities||Education training||Median salary|
|SOURCE: Adapted from ‘Gaming Services Occupations,’ in Occupational Outlook Handbook, 2008-09 Edition, U.S. Department of Labor, Bureau of Labor Statistics, 2008, http://www.bls.gov/oco/ocos275.htm (accessed August 12, 2008)|
|Gaming managers||Plan, organize, direct, control, or coordinate gaming operations in a casino. Formulate gaming policies. Interview, hire, train, and evaluate new workers and create work schedules and station assignments.||Associates or Bachelor's degree. Hands-on experience may be substituted for formal education. Most managers gain experience in other casino jobs, typically as dealers, and have a broad knowledge of casino rules, regulations, procedures, and games.||$62,820|
|Gaming supervisors||Oversee gaming operations and personnel in an assigned area. Circulate among the tables to ensure that all stations and games are attended to each shift. Interperet the casino's operating rules for patrons. Plan and organize activities for guests staying at a casino hotels. Address service complaints.||Associates or Bachelor's degree. Hands-on experience may be substituted for formal education. Most supervisors gain experience in other gaming jobs before moving into supervisory positions.||41,160|
|Slot key persons (also called slot attendants or slot technicians)||Coordinate and supervise the slot department and its workers. Verify and handle payoff winnings to patrons, reset slot machines after payoffs, refill slot machines with money, make minor repairs and adjustments to the machines, enforce safety rules and report hazards.||No formal eduation requirements, but completion of technical training helpful. Most positions are entry-level and provide on-the-job training.||22,720|
|Gaming and sports book writers and runners||Assist in the operation of games such as bingo. Scan tickets presented by patrons and calculate and distribute winnings. May operate equipment that randomly selects the numbers, announce numbers selected, pick up tickets from patrons, collect bets, or receive, verify, and record patrons' cash wagers.||High school diploma or GED. Usually trained on the job.||18,800|
|Gaming dealers||Operate casino table games such as craps, baccarat, blackjack, or roulette. Determine winners of game, calculate and pay winning bets, and collect losing bets. May be required to monitor patrons to determine if they are following the rules of the game.||Completion of a training program at a vocational or technical school. An in-depth knowledge of casino games may be substituted for formal education. Most casinos require employees to audition for such jobs.||14,730|
Employment at Commercial Casinos
According to the AGA, in 2008 State of the States, commercial casinos employed 360,818 people in 2007. Nevada accounted for 56% of the total. (See Table 6.2.) In addition, racetrack casinos in Delaware, Florida, Iowa, Louisiana, Maine, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, and West Virginia employed 27,258 people during 2007, up 22.2% from 2006. A large proportion of this increase was due to the opening of new racetrack casinos in Florida and Pennsylvania.
Employment at commercial casinos grew rapidly during the 1990s, then stagnated overall between 2000 and 2005, before rising in 2006 and then falling again in 2007. Despite the 2007 drop, overall employment figures in the casino industry rose from 325,432 in 1998 to 360,818 in 2007, an increase of 11%. (See Figure 6.4.) Casino employment rose dramatically in Missouri (11.6%) and Michigan(9.9%) between 2006 and 2007, but fell in Nevada (6.1%) and New Jersey (7.5%). (See Table 6.2.)
Even though employment numbers fell and then rose again between 2000 and 2005, commercial casino wages rose steadily. According to the AGA, in 2007 commercial casinos paid $13.8 billion in wages, up from $13.3 billion in 2006.
Employment at Native American Casinos
In The Economic Impact of Indian Gaming in (2007, http://www.indiangaming.org/info/pr/press-releases-2007/NIGA_econ_impact_2006.pdf), the NIGA reports that tribal gambling directly employed 248,000 people in 2006. (See Figure 6.3.) About 178,000 of those jobs were at tribal casinos; the other jobs were at ancillary facilities such as restaurants and hotels. Another ninety thousand jobs were attributed to the indirect effects of tribal casinos—for example, businesses at which casino workers spent their wages. The NIGA estimates that tribal casinos were indirectly responsible for 315,000 other jobs by purchasing goods and services from businesses around the country. Capital construction projects (e.g., casino building) were associated with the creation of seventeen thousand other jobs. In total, the NIGA credits tribal gaming for the employment of 670,000 people during 2006.
The NIGA estimates that in 2006 roughly 25% of tribal casino employees were Native Americans and 75% were non–Native Americans. In some cases the percentages reflected the fact that several tribes had fewer members than employees.
Historically, employees at tribal casinos have not been covered by the federal labor laws that protect workers at commercial casinos. As sovereign entities, tribes were considered excluded from Title VII of the Civil Rights Act of 1964 and Title I of the Americans with Disabilities Act of 1990, which prohibit discrimination in employment on the basis of race, sex, physical impairment, and other criteria. In addition, the National Labor Relations Act exempts government entities from the requirement that they allow employees to form unions. Tribes, having been ruled to be sovereign governments by both the National Labor Relations Board (NLRB) and a federal court, operated under their own laws and blocked unions if they chose to do so.
However, some court cases have held that Occupational Safety and Health Administration requirements, the Fair Labor Standards Act, and the Employee Retirement Income Security Act do apply to tribal businesses conducted on reservations. Furthermore, the NLRB, after a 2004 challenge by UNITE HERE, a union that represents hotel and restaurant employees, overturned thirty years of precedent and ruled in San Manuel Indian Bingo & Casino (341 NLRB 1055  aff'd. 475 F.3d 1306 [D.C. Cir. 2007]) that the San Manuel Indian Bingo and Casino in Southern California could not stop the formation of a union.
The NLRB http://www.nlrb.gov/shared_files/Regional%20Decisions/2008/34-RC-02261-05-02-08Attachment.pdf) explains that in 2007 San Manuel Indian Bingo & Casino was used as a precedent to rule against theMashantucket Pequot Tribe's contention that employment at Foxwoods could not be regulated by federal law because of the tribe's status as a sovereign nation. On October 24, 2007, a Decision and Direction of Election was issued to allow the United Auto Workers and the American Federation of Labor and Congress of Industrial Organizations to organize dealers at Foxwoods. The election was held on November 24, 2007, and most employees voted in favor of the union. Employer appeals were overruled by the NLRB (2008,http://www.nlrb.gov/shared_files/ALJ%20Decisions/2008/JD-NY-09-08.htm). The union was officially certified on June 30, 2008 (http://www.nlrb.gov/shared_files/Board%20Decisions/352/v35292.pdf).
According to the AGA, in 2006 State of the States: The AGA Survey of Casino Entertainment (2006, http://www.americangaming.org/assets/files/2006_Survey_for_Web.pdf), 72% of those polled in 2005 said casinos can play an important role in a community's entertainment and tourism options.
No destination better represents the marriage between gambling and tourism than Las Vegas. It has had its ups and downs, however. In the early 1990s the city experienced a steep decline in revenues because of competition from legal gambling on riverboats and tribal casinos in other states. To counteract this development, the city began a drive to shift its focus from an adult playground to a family destination. As part of the campaign, $12
billion was spent to refurbish almost every hotel on the Strip and to add entertainment facilities. Theme hotels became the big draw. Adult entertainment along the Strip, such as topless shows, gave way to magic shows, circus events, and carnival rides. The Las Vegas Convention and Visitors Authority focused advertising on families. The result was a huge increase in visitors.
However, children distracted their parents from gambling. Casino owners noticed that the changes did not bring in more gambling revenue, so during the late 1990s the city began to change its image again. Adult entertainment made a comeback along the Strip: casino-hotels began offering more topless and nude shows, although managers insisted that the nudity presented at their casinos would always be tasteful and artistic. They were anxious not to offend shareholders of their parent corporations or to alienate women, potential gamblers who make up nearly 60% of Las Vegas visitors. MGM Grand shut down its family theme park in 2001.
Theresa Howard reports in “Vegas Goes for Edgier Ads” (USA Today, August 3, 2003) that in early 2003 the Las Vegas Convention and Visitors Authority launched a somewhat risqué ad campaign with the slogan “What Happens Here, Stays Here.” It may have been part of the reason that Las Vegas tourism and casino revenue increased substantially in 2005 and 2006. (See Figure 4.2 in Chapter 4.) The resurgence of travel (it slowed for two years after the September 11, 2001, terrorist attacks) may have been another factor.
Las Vegas tourism faces one particular future challenge: It relies heavily on visitors from California, so the advent of tribal gaming in California could create stiff competition.
Tourism in Atlantic City increased following the introduction of casino gambling, but not as fast or as much as many had hoped. From the 1880s to the 1940s Atlantic City was a major tourist destination, particularly for people living in the Northeast. Visitors went for the beaches and to walk along the town's boardwalk and piers, which featured carnival-like entertainment. During the 1950s and 1960s the town fell into economic depression as tourists ventured farther south to beaches in Florida and the Caribbean.
Casino gambling was legalized in 1976 in the hopes that the city would recapture its former glory and rival Las Vegas as a tourist destination. Progress was slow through the 1980s and early 1990s. Even though visitors began to go to Atlantic City, they mostly arrived by bus or car and stayed only for a day or two. In 1984 the state established the Casino Reinvestment Development Authority (CRDA) to revitalize the city using the funds from a 1.25% tax on casino revenues.
The economic troubles that had ravaged the town's businesses before gambling was legalized were not easily overcome. Vacant lots, buildings in disrepair, and housing projects surrounded the casinos. The overall atmosphere was not particularly appealing to vacationers or convention-goers. Mike Kelly notes in “Gambling with Our Future: City Poised to Hit Jackpot, or Lose Everything” (The Record [West Paterson, New Jersey], July 1, 1993) that in 1993 the city was “trapped in a web of poverty and blight.” At that time, the typical visitor was a retiree who arrived bybus andstayedonlyfor theday.Accordingto Kelly, Atlantic City's thirty million annual visitors actually represented about five million people making multiple trips.
In the late 1990s initiatives by the CRDA and other groups began to pay off. Hundreds of new homes were built, and commercial businesses were established. One of the largest convention centers in the country (it has 31 acres [12.5 ha] of space) opened in May 1997. The city's image began to improve, and tourism showed a moderate surge. Regardless, city and casino officials still see three factors that limit tourism growth in Atlantic City: lack of a major airport, lack of usable land, and cold winters. Restrictions on smoking on the casino floor, which went into effect in 2008, also worry officials.
Officials must realize that legal gambling will attract an unsavory element that can jeopardize the safety and well-being of the city's residents and the many visitors who come to gamble.
—Federal Bureau of Investigation, FBI Law Enforcement Bulletin (January 2001)
When gambling was legalized in Nevada in 1931, the law kept corporations out of the casino business by requiring that every shareholder obtain a gaming license. This law, which was designed to safeguard the integrity of the casinos, unintentionally gave organized crime a huge advantage. The nation was in the midst of the Great Depression (1929–1939), and building a flashy casino-hotel was expensive. Few legitimate businessmen had the cash to finance a casino, and banks were reluctant to loan money for what they saw as a poor investment. Organized crime groups had made fortunes selling bootleg liquor during Prohibition (1920–1933), so they were able to make the capital investments needed to build and operate lavish casino-hotels that attracted visitors.
The marriage between casinos and organized crime in Nevada lasted for decades but was eventually ended by gaming officials and law enforcement. In the twenty-first century, there is no strong evidence of organized crime activity in the casino industry. Regulatory agencies keep a watchful eye on casinos to make sure mobsters and their associates do not gain a new foothold.
Casinos keep an equally watchful eye on their patrons and employees. The casino floor is constantly monitored by a host of security guards and cameras. Observers watch dealers and patrons at the gaming tables and all money-counting areas. Some casinos use high-tech facial recognition programs to scan incoming patrons and quickly identify any known felons or other undesirables. Even though the industry does not release data on crimes committed by casino employees, analysts believe employee theft and embezzlement account for millions of dollars in losses each year.
Vice crimes, particularly prostitution, as well as weapons crimes also occur. Details of the type of crimes found around casinos are illustrated by the Missouri Gaming Commission, in Annual Report to the General Assembly: Fiscal Year 2006 (2006, http://www.mgc.dps.mo.gov/annual%20reports/2006_ar/annual2006.pdf). Commission agents filed 1,767 charges between July 2005 and June 2006. (See Table 6.4.) This total included charges for acts committed at the casinos as well as arrests made for criminal activities that did not occur on casino property. More than eight hundred (46%) cases involved people who obstructed the judicial process in cases involving gambling. Over three hundred people were charged with violating gambling laws, and 189 people were charged with stealing.
|TABLE 6.4 Arrests made by Missouri Gaming Division troopers, by charges filed, July 2005-June 2006|
|Type of charge||Number|
|*These totals reflect the number of charges filed by agents of the commission. The number of individuals arrested will be lower as some individuals may have multiple charges filed as a result of an individual incident. These totals also include arrests made attendant to outstanding warrants for criminal activity that did not occur on property of excursion gambling boats.|
|Health & safety||2|
|Miscellaneous federal charges||14|
|Obstruction of judicial process||812|
The amount of crime in a community with a casino has a direct relationship to the maturity of the casino, according to Earl L. Grinols and David B. Mustard, in “Casinos, Crime, and Community Costs” (Review of Economics and Statistics, vol. 88, no. 1, April 2006). The researchers collected crime data from all 3,165 counties in the United States with and without casinos between 1977 and 1996. Their analysis shows that when a casino first opened in a county, crime changed very little, but slowly rose and then grew steadily in subsequent years. Even though increased employment and expanded law enforcement might reduce crime initially, over time these effects were overtaken by factors related to casinos. Grinols and Mustard note, “Specifically, problem and pathological gamblers commit crime as they deplete their resources, nonresidents who visit casinos may both commit and be victims of crime, and casino-induced changes in the population start small but grow.” Overall, 8.6% of property crimes and 12.6% of violent crimes (which include robberies) in counties with casinos were due to the presence of the casinos. They find “mixed evidence” about whether casino openings increase crime rates in neighboring counties.
The possible link between casino gambling and suicide rates has been the subject of much investigation. For example, in December 1997 David P. Phillips, Ward R. Welty, and Marisa M. Smith concluded in “Elevated Suicide Levels Associated with Legalized Gambling” (Suicide and Life-Threatening Behavior, vol. 27, no. 4) that “visitors to and residents of major gaming communities experience significantly elevated suicide levels.” The researchers found that in Atlantic City “abnormally high suicide levels” for visitors and residents appeared only after casinos opened. However, five years later Richard McCleary et al., in “Does Legalized Gambling Elevate the Risk of Suicide?” (Suicide and Life-Threatening Behavior, vol. 32, no. 2, July 2002), found little to no correlation between suicide rates and the presence of casino gambling in U.S. communities. After comparing the 1990 suicide rates of 148 metropolitan areas in different regions of the country, the researchers found that the presence of casinos could account for only 1% of the regional differences in suicide rates. They also compared “before and after” suicide rates for cities in which gambling had been legalized. Even though increased suicide rates were noted in Atlantic County, New Jersey, and Harrison County, Mississippi, after the advent of gambling, the increases were not considered statistically significant. McCleary et al. noted that suicide rates dropped significantly in Lawrence County, South Dakota, after casino gambling was introduced in the town of Deadwood.
In “Risk Factors for Suicide Ideation and Attempts among Pathological Gamblers” (American Journal on Addictions, vol. 15, no. 4, 2006), David C. Hodgins,
|TABLE 6.5 Twenty states with highest suicide rates, by number and rate per 100,000 population, 2005|
|SOURCE: Adapted from ‘2005, United States Suicide Injury Deaths and Rates per 100,000,’ in WISQARS Injury Mortality Reports, 1999-2005, Centers for Disease Control and Prevention, National Center for Injury Prevention and Control, 2008, http://webappa.cdc.gov/sasweb/ncipc/mortrate10_sy.html (accessed August 2, 2008)|
Chrystal Mansley, and Kylie Thygesen find that suicidal ideation and suicide attempts are more likely among pathological gamblers. However, the history of suicidal thoughts generally preceded problem gambling behavior by an average of more than ten years. The researchers conclude that previous mental health disorders, such as clinical depression, put individuals more at risk for both suicide and gambling problems. In other words, gambling itself does not cause suicide attempts.
Nevada, a state in which gambling is widely practiced, had the third-highest suicide rate in the nation in 2005. (See Table 6.5.) The Centers for Disease Control and Prevention indicates in WISQARS Injury Mortality Reports (2008, http://webappa.cdc.gov/sasweb/ncipc/mortrate10_sy.html) that the suicide rate in Nevada was 19.9 suicides per 100,000 population in 2005. This was nearly twice the national average of 11.1 per 100,000 population. Many mental health experts attribute Nevada's high suicide rate to the huge inflow of new residents who lack a support system of family and friends. Loneliness and despair are more likely to overwhelm such people than those who have an emotional safety net in place. In general, suicide rates are higher in the western states than in any other region. Even Utah, which allows no legal gambling, had the seventeenth-highest suicide rate in 2005, with a rate of fourteen suicides per one hundred thousand population.
Establishing a definitive link between gambling habits and bankruptcy is difficult. The Council on Compulsive Gambling of New Jersey notes in the press release “Correlation between Gambling and Bankruptcy Holding Strong” (August 22, 2001,http://www.800gambler.org/ArticleDetails.aspx?ContentID=90) that a 2001 study by SMR Research Corporation of Hackettstown, New Jersey, attributes 14.2% of U.S. bankruptcy filings to gambling problems. The researchers compare bankruptcy-filing rates during 2000 for 3,109 counties. They find that the 244 counties in which casinos operated had a bankruptcy rate that was 13.6% higher than counties without a casino. The AGA disputes the researchers' findings by pointing out that other factors were not considered, such as liberal bankruptcy laws and the ease with which credit cards can be obtained.
Ernest Goss and Edward A. Morse of Creighton University examine in The Impact of Casino Gambling on Individual Bankruptcy Rates from 1990 to 2002 (August 25, 2005, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=801185) the bankruptcy rates between 1990 and 2002 in 253 counties with casinos. According to their analysis, those counties actually saw a drop in bankruptcies when the casinos first opened. The researchers reason that the insurgence of revenue and jobs brought in by the casino likely helped the residents' financial situation. However, after a casino was open for nine years bankruptcies trended the other way. Eventually, the bankruptcy rate in a county with a casino was 2.3% higher on average than a county without a casino.
The AGA indicates in 2003 State of the States: The AGA Survey of Casino Entertainment (2003, http://www.americangaming.org/assets/files/AGA_survey_2003.pdf) that participants were asked in 2002 to indicate who they thought bore the most responsibility for addressing compulsive gambling in the United States. Most respondents (63%) said gamblers themselves should be held most responsible, whereas 15% thought the society at large should take the most responsibility, and 10% put the burden on the owners of gambling facilities. In 2008 State of the States, the AGA explains that in 2007 a majority (84%) of casino gamblers set a budget before they began gambling, and that half of gamblers allowed themselves to lose no more than $100 per day.
Many casinos operate self-exclusion programs in which people can voluntarily ban themselves from casinos. A number of states also offer self-exclusion programs for all casinos within their borders. For example, Missouri's Voluntary Exclusion Programhttp://www.mgc.dps.mo.gov/nav_prob_gamb_main.htm) was created in 1996 after a citizen requested that he be banned from the riverboats because he was unable to control his gambling. The Missouri Gaming Commission requires that the
casinos remove self-excluded people from their direct marketing lists, deny them check-cashing privileges and membership in players' clubs, and cross-check for their names on the list before paying out any jackpots of $1,200 or more. The casinos are not responsible for barring listed people from the casinos, but anyone listed is to be arrested for trespassing if he or she violates the ban and is discovered in a casino. However, self-excluded people can enter the casino for employment purposes.
Programs in other states are similar. If a self-excluded person is discovered in an Illinois casino, his or her chips and tokens are taken away and their value is donated to charity. The Illinois self-exclusion program runs for a minimum of five years. After that time, people can be removed from the program if they provide written documentation from a licensed mental health professional that they are no longer problem gamblers. Self-exclusion in Michigan is permanent; a person who chooses to be on the Disassociated Persons List is banned for life from Detroit casinos. In New Jersey the Casino Control Commission allows people to voluntarily suspend their credit privileges at all Atlantic City casinos. The commission maintains a list of those who have joined the program and shares the list with the casinos.
Besides casinos and states, companies that provide the ATMs and cash-advance services for casinos have put self-exclusion programs into place. For example, Global Payments provides self-exclusion and even self-limit services for people with gambling problems. Those who put their names on the self-exclusion list are denied money or cash advances, whereas the self-limit program puts a limit on how much money patrons can withdraw in a specified period.
Hotlines and Treatment
All the states operate gambling hotlines that either refer callers to other groups for help or provide counseling over the phone. According to the Mississippi Council on Problem and Compulsive Gambling (2008, http://www.msgambler.org/), 55% of the callers to its hotline in 2007 obtained the number through a casino. Nora K. Bock of the Division of Alcohol and Drug Abuse explains in A Report of the Compulsive Gambling Program (December 2006, http://www.dmh.mo.gov/ada/progs/CG%20Annual%20Report%20FY06%20for%20web%202-07.pdf) that Missouri operates a gambling hotline that received 2,827 calls in FY 2005, down substantially from FY 2004, when the hotline received 3,686 calls. Between its inception and the end of 2005 the hotline had received nearly twenty thousand calls.
Missouri also offers free treatment to residents suffering from problem gambling and to their families. The program is administered by the Department of Mental Health through a network of private mental health providers who have been certified as compulsive-gambling counselors. Casinos are required to pay $2 to the state for each person who enters the casinos. Up to $0.01 of this fee can be deposited in the state's compulsive gamblers fund, which funds the treatment. Bock notes that in 2006, 407 people received free treatment for gambling addiction through this program.
Iowa' Department of Public Health tracks statistics on clients admitted to its gambling treatment program. In “Profile of Gamblers Admitted to Treatment for State Fiscal Year 2007” (2007,http://www.1800betsoff.org/common/pdf/profile_of_gamblers.pdf), the department indicates that in comparison to other Iowa residents, gamblers admitted to the treatment program tended to be older, less educated, single, and unemployed. Howard J. Shaffer et al. of Harvard Medical School explain in The Iowa Department of Public Health Gambling Treatment Services: Four Years of Evidence (October 25, 2002, http://www.1800betsoff.org/common/pdf/Iowa_harvard_report.pdf) that gamblers held an average of $14,000 in gambling debt and lost about $522 weekly. Over half (58%) of clients said their primary wagering in the past six months had been done on slot machines. Another 14% said their primary wagering had been at table games in casinos. In 2006, 29% of clients were aged twenty-five to thirty-nine, 41% were aged forty to fifty-four, and 22% were aged fifty-five and over. (See Table 6.6.) Clients were overwhelmingly white (93%). Nearly six out of ten (58%) were employed full time, 11% were employed part time, and 11% were looking for work. Two-thirds (64%) had a monthly individual income of over $1,000, and nearly one-third (31%) had declared bankruptcy.
AGA Educational Efforts
In Code of Conduct for Responsible Gaming (September 15, 2003, http://www.americangaming.org/assets/files/Code_with_bookmarks.pdf), the AGA describes the actions that AGA members pledge to take to ensure that responsible gambling is conducted and encouraged at casinos. These actions include the proper training of employees and the promotion of responsible gambling on company Web sites and through brochures and signs posted at the casinos. AGA members also agree to provide opportunities for patrons to self-exclude themselves from casino play.
The legal gambling age in all commercial casinos in the United States is twenty-one; in tribal casinos it varies from eighteen to twenty-one.
The AGA indicates in 2003 State of the States that participants were asked in 2002 who they thought bore the most responsibility for addressing the problem of underage gambling in the United States. Respondents
|TABLE 6.6 Clients admitted to the Iowa Gambling Treatment Program, by selected characteristics, 2006|
|SOURCE: Adapted from “Profile of Clients Admitted to IGTP Agencies in FY2006,” in Iowa Gambling Treatment Program Historical Summary, Iowa Department of Public Health, June 2007, http://www.legis.state.ia.us/lsadocs/SC_MaterialsDist/2007/SDDPW000.PDF (accessed August 1, 2008)|
|Employed full time (35 or more hours per week)||411||58%|
|Employed part time (less than 34 hours per week)||80||11%|
|Not in labor force||140||20%|
|Unemployed (looking for work in past 30 days)||78||11%|
|Individual monthly income|
said owners of gambling facilities should be held most responsible (39%), followed by gamblers themselves (24%) and the society at large (22%). When asked to rate the job that the casino gaming industry was doing in preventing underage gambling, a majority (65%) rated the casino industry as doing a fairly good or very good job. The reputation of the casino industry for doing a good job in preventing “underage use of their product” was considered superior to that of the gun (42%), alcohol (38%), and tobacco (30%) industries.
The Nevada Gaming Commission reports in Nevada Gaming Control Act and Ancillary Statutes (August 2008,http://www.gaming.nv.gov/stats_regs.htm) that as of January 2000, Regulation 14 banned slot machines with themes that were “derived from or based on a product that is currently and primarily intended or marketed for use by persons under 21 years of age.”
|TABLE 6.7 Contacts with minors in casinos in Detroit, MI, by selected statistics, 2007|
|MGM Grand 1/1/07-12/31/07||Motor City 1/1/07— 12/31/07||Greektown 1/1/07-12/31/07||Totals|
|SOURCE: Adapted from “Casino Licensees' Reported Contacts with Minors on Licensed Casino Premises during Calendar Year 2007,” in Annual Report to the Governor, Calendar Year 2007, Michigan Gaming Control Board, April 2008, http://www.michigan.gov/documents/mgcb/annrerp07_231975_7.pdf (accessed July 18, 2008)|
|1. The number of minors who were denied entry into the casino.||685||4,861||792||6,338|
|2. The number of minors who were physically escorted from the casino premises.||13||1||10||24|
|3. The number of minors who were detected participating in gambling games other than slot machines.||1||1||2||4|
|4. The number of minors who were detected using slot machines.||4||0||2||6|
|5. The number of minors who were taken into custody by a law enforcement agency on the casino premises.||13||1||9||23|
|6. The number of minors who were detected illegally consuming alcohol on the casino premises.||0||0||2||2|
The so-called slots-for-tots regulation is supposed to prevent the introduction of slot machines displaying cartoon characters that might appeal to children. The issue receives particular attention in Nevada because the state's casinos allow escorted children to walk through the casino. Most states prohibit the passage of minors through the gambling area.
The AGA lists in Code of Conduct for Responsible Gaming a number of rules that member casinos should follow to ensure that minors do not gamble in casinos. For example, they should not display cartoon figures, pictures of underage people, or pictures of collegiate sports athletes on the casino floor. They are also supposed to stop any minor from loitering on the casino floor, and casino employees are to be trained to deal with minors who attempt to buy alcohol or gamble.
Casinos seem to be successful in following the guidelines. For example, data compiled by the Michigan Gaming Control Board are shown in Table 6.7. A total of 6,338 minors tried to enter the three Detroit casinos in 2007, but were denied entry. Twenty-four minors were caught on casino premises and escorted out by casino personnel, and twenty-three other minors were taken into custody by law enforcement agencies.
Gambling and politics have always been linked, largely because casinos and other gaming establishments are so heavily regulated, the number of licenses available is often limited, and so much money can be made by
people who get those licenses. Lobbying (a common factor in the political system) can easily turn into influence peddling and bribery at all levels of government.
Some jurisdictions have become so concerned about the confluence of political pressure and money that they prohibit casino license applicants from making contributions to political candidates. Mississippi decided to prevent this temptation by setting no limit on the number of casinos that can be built. State officials claimed their policy would prevent the bribery, extortion, and favoritism that had plagued neighboring Louisiana, where the number of licenses available for riverboat casinos was set at fifteen. Those licenses were so highly prized that Governor Edwin Edwards (1927–) extorted $3 million from people who wanted them. In May 2000 he was convicted of racketeering, extortion, and fraud and sentenced to ten years in prison.
On the federal level, politics and gambling intersect on issues that affect more than one state or Native American tribe. At that intersection, some people see opportunities to make a lot of money. One such operator was Jack Abramoff (1958–), a prominent lobbyist in Washington, D.C., who pleaded guilty to fraud, tax evasion, and conspiracy to bribe public officials in January 2006. He was sentenced to five years and ten months in prison and ordered to pay $21 million in restitution.
Many credit Abramoff and his colleagues with securing the defeat of the Internet Gambling Prohibition Act of 1999. The bill was one of the first anti–Internet gambling bills proposed in Congress. It was passed in the U.S. Senate in 1999 and was put forth in the U.S. House of Representatives the following year. At the time, Abram-off was working for eLottery, an Internet site that wanted to sell state lottery tickets online. Their business was threatened by the legislation, so Abramoff sent money to conservative special interest groups to get them to pressure conservative House members to drop the bill because it contained exceptions for horse racing and jai alai. Through procedural maneuvering, a two-thirds majority was needed to pass the bill; it failed. When the bill's original supporters demanded that it be revived, Abramoff targeted ten Republican House members in vulnerable districts with media and direct-mail campaigns that accused them of being “soft on gambling” if they voted for the bill. The representatives received so much pressure from their constituents that the House Republican leadership, fearing the party might lose four seats in the 2000 election, decided not to bring the bill up for another vote.
Later in his career, Abramoff and his team defrauded Native American tribes out of millions of dollars. Typically, he promised that, as their lobbyist, he could secure funding from the government for special projects, such as wider roads or new schools, and that he could keep the government from interfering in their operations, including casinos. In return, the tribes paid his lobbying firm and a public relations company over $85 million.
In some instances, Abramoff worked against a tribe behind the scenes and then offered to help it out for huge sums of money. For example, in 2002 he and his colleagues were instrumental in shutting down the Speaking Rock Casino in El Paso, Texas. He then went to the Tigua Tribe, which operated the casino, and claimed that he and his colleagues could get Congress to reopen the casino. The tribe paid $4.2 million in lobbying fees, but the casino never reopened.
"The Economic and Social Effects of Casinos." Gambling: What's at Stake?. 2009. Encyclopedia.com. (May 26, 2016). http://www.encyclopedia.com/doc/1G2-1838500012.html
"The Economic and Social Effects of Casinos." Gambling: What's at Stake?. 2009. Retrieved May 26, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-1838500012.html