Casinos and the economy

Factual Questions
1

Are casinos good or bad for the economy?

On one hand, you have a lot of money going into one place from all over the region (nation, or world in some cases) and a lot of it could just stay in the casinos safe.

On the other hand however, a casino is great for distribution of wealth, if a person wins a $10,000 jackpot, he could go and buy all sorts of things that normally he wouldn’t, or couldn’t.

Have there been any in depth studies on how a casino effects the economy as a whole.

I have been to some casinos that are in extremely run down indian reservations, and others that are in high-class neighborhoods. So i really have no idea. Any insight?

2

Don’t forget to take into consideration the vast amount of jobs associated with casinos, from casino staff, to the support industries surrounding it (gaming manufacturers, etc.), to entertainment personnel, to restaurant staff, etc., etc… That’s a lot of jobs that wouldn’t exist without the casinos.

3

A simple view of the economy is that it produces wealth or otherwise increases welfare. For some parts of the economy this is obvious. Manufacturing directly produces wealth using raw materials and labor to make things more valuable than the inputs. (This is true even if the output is cocaine which can be viewed as bad. It is more valuable than its inputs.) Other jobs like trucking, produce wealth by moving things from places where their value is lower to where their value is higher.

Some jobs like medicine or teaching don’t directly produce wealth (unless you count human capital as wealth), but they increase welfare. They do transfer wealth, of course, but that is different. With some jobs like police protection, it might even be hard to say they increase human capital, but they certainly increase welfare.

You’d be hard pressed to say that casinos increase wealth. Certainly some casino jobs like chefs do, but that isn’t the point of the casino. To the extent that gamblers enjoy the experience, you could say they increase welfare just as other entertainment like a sporting event does.

Casinos certainly transfer wealth (as do other forms of entertainment), but again that’s different. To the extent that this transfer goes from those who can afford that entertainment to those who need the job (and the increase in wealth), they’re probably good for the economy. The difficulty with casinos, is by an large the entertainment value is more individual, unlike say a movie or a sporting event which can be enjoyed by many at once with out diminishing the enjoyment of others.

4

You are assuming the money spent in casinos would just be lost to the economy if they weren’t there. That is not so, it would get spent elsewhere. Whether it would generate more or fewer jobs depends on where exactly it gets spent of course.

5

It is true that it is not the purpose of casinos to create jobs. What business does have that for their reason to exist? They are just trying to make money. But a lot of jobs are created in that pursuit.

6

I’m not quite sure how you read that assumption in my two brief sentences; I didn’t make any claims of the sort at all. My only point was that casinos create many, many jobs, inside and outside the casino, and if you’re going to talk about a casino’s effect on the overall economy, that needs to be taken into consideration.

7

Casino’s are an entertainment industry. They make money, as the statistical odds are in favor of the house winning more than 50% of the time. They make money on volume, no different than a movie theater or a restaurant. Since businnesses are good for the economy from an employment perspective, as other posters mention, yes they are good for the economy. However, as the economy tightens, people are tightening their entertainment spending and as such the volume of $$$ gambled at casinos is down.

8

When we’re talking about jobs created by casinos, let’s not forget positions in debt counseling, psychiatry, Gamblers Anonymous and other jobs related to casino growth.

Communities and governments that have started to depend on gambling for income are finding out that their cash cows are going belly up.

*"Today, Atlantic City, in the eyes of one gambling executive, Tim Wilmott, is in a “death spiral.”

Rows of slot machines stand eerily empty. Over the summer, the Tropicana was sold in bankruptcy court; another 3 of the town’s 11 casinos are currently under bankruptcy protection. The lender for yet another, Resorts International, is in talks to take it over and could by year-end. Resorts was the first casino outside of Las Vegas to offer legal gambling, in 1978.

Many of the rooms stuffed inside luxurious towers built during the high times are empty during the week. And plans for a majority of the megacasinos have been shelved. Only one, the Revel, is under construction — and many question whether its developers will be able to raise enough money to finish the project."*

So what happens when casinos face the prospect of going under? Local governments find themselves pressed to give more tax relief and other economic concessions to these businesses, and the benefits the communities were depending on are transformed into liabilities.

9

I don’t see how casinos are generally an economic plus. If you look at the big picture, you have a bunch of people traveling to give money to casino owners; there are some people who win but the overall flow is from the players to the owners.

The way the money is distributed doesn’t reflect any social benefit. The people who win didn’t do so because they were smarter or more creative or more productive; they were just lucky. The casino owners themselves aren’t creative geniuses; they’re generally just people who had access to the capital and connections needed to open a casino and whatever profits they collect are usually just plowed back into expanding their gambling operations.

10

To this analysis I would add: Gambling appeals to a certain demographic-and that group is now dying off. These are the people (65-80) who are retired, sold their homes at the peak of the real estate boom, and have multiple pensions. They gamble because they can afford to lose.
In contrast, most of the “baby Boomers” will retire into poverty-many have NEGATIVE net worth! These folks will NOT be going to Las Vegas-they will be bagging groceries at Safeway!:confused::eek::mad:

11

Casinos provide entertainment. Some people prefer to be entertained by casinos, so those that go there feel that their dollars are best being spent being entertained by gambling. In that they provide this good, whether or not it is tangible, they are a plus to the economy.

One would have to make the argument that their negatives are worse than this benefit to convince me that they are a drag on the economy. The only convincing argument I can think of is the potential for gambling addiction, because that creates the opposite effect on the economy: forcing resources to go into a “black hole” to solve a problem that didn’t exist before.

Yes, people will get paid for counseling, but it’s just another Broken Window effect: if casinos did not exist they could spend their time doing other things to boost the economy.

One other, weaker, argument is that the capital and expenses that people use in building and operating casinos would be more usefully spent in other projects, and I couldn’t disagree since I am not a fan of casinos :wink: Unfortunately, despite my personal preferences, by looking at the crowds it appears that the current investment in casinos does return more value in entertainment than the moneys would have returned in other entertainment venues or manufacturing.

I am reminded of another argument, that it appeals to people who will then turn to the social welfare system for support. This is a drag on the economy because providing help through the government is less efficient than people having the money to begin with, all other things being equal. I still don’t think on the balance that casinos provide a net drag on the economy despite my dislike of them.

12

There’s no question that gambling destinations such as Las Vegas are feeling the effects of the current economic situation, and feeling it hard. But I take it you haven’t been to Vegas lately, or ever, if you’re under the impression that only or mostly people 65-80 (or even only wealthy people) go there and gamble? A trip there and a look around the casinos will divest you of that idea.

And if you don’t want to go and have a look (you should, it’s fun!), here’s some statistics. This is from 2008, the latest I could find quickly. Visitors to Vegas age 65 and up accounted for 22% of the total visitors that year. 25% of the visitors were 21-39.

Almost 50% of the visitors had a household income of less than $79,000.

http://www.lvcva.com/getfile/2008%20Las%20Vegas%20Visitor%20Profile.pdf?fileID=107

(PDF; page 81 for the visitor statistics)

Again, I know that’s from 2008 and the economy has taken a downturn since then, but I was in Vegas in November, and the place was packed with younger people.

13

I’m wasn’t trying to say it’s not the purpose of casinos to create jobs and it was the purpose of other businesses to do so. I was saying that some businesses directly create wealth. They take raw inputs including labor and make outputs that are worth more. Or (like fishing or mining) they get stuff with value and make it more readily available.

Other businesses like casinos and investment firms and banks primarily are involved in the movement of existing wealth around. This may be helpful for other people to produce wealth (we’d like to think bank loans do this – get money from those who currently have excess to those who have profitable physical investments to make) or it may not (probably casinos fit here).

14

I’d like to know what casinos you’ve been to that are in high-class neighborhoods.

15

I don’t know about TNWPsycho but I thought that the neighborhood around the casino in Monte Carlo was pretty nice.

16

Casinos are entertainment, pure and simple. Is it any different if I use my money to go to a pro football game or a casino? I have an empty wallet at the end of the day and nothing tangible to show for it either way. A special case might be made that various governments have come to believe that gambling is the goose that lays golden eggs, and I think that is not good for the economy. But put a casino and an amusement park side by side and I just don’t see much difference.

Casinos are NOT good for distribution of wealth. They take as much money from their customers as they can get and they pay their employees as little as they can get away with, like any other business. They aren’t distributing wealth, they are selling dreams and they need to deliver one from time to time to keep the illusion alive.

17

Mystic Lake Casino in Prior Lake, MN is surrounded by million dollar homes and multi-million dollar businesses.

18

Economics does not attempt to make value judgments about how people spend their money, because this would be impossible. For you, money spent attending a pro football game might be a wasteful and irresponsible extravagance. To me, it might be an important component of my quality of life.

How, then, should we value my purchase of a pro football ticket? Simple–we value it at the price I paid for it, and leave moral judgment to others. A dollar spent on a prostitute or pornography is the same as a dollar spent buying books for children.

With respect to casinos, money changing hands between bettors is an economic wash. Income for the winner offsets a loss for the loser. However, the money which remains in the casino’s hands is recorded as a purchase, as revenue to the casino, and thus as one component of GDP. (Remember that gambling losses can only offset gambling winnings.)

By definition, therefore, and tautologically, casinos are good for the economy. They generate economic activity.

You may say, were it not for the casino, people would spend that money in other ways. Maybe, but you could say that about any business, so it’s a meaningless argument.

You may say, casino activity isn’t as good as other economic activity, because it’s immoral, or because it’s not based on value-added production. That’s your opinion, and you’re welcome to it, but once we start down that road, we’ll be arguing all night. Casinos generate economic activity, period. They’re good for the economy. They may not be good for society–I’ll leave that argument to others–but they’re good for the economy.

19

A lot of arguments here, but not much in the way of evidence. Here’s one cite:

The report is a good deal more complicated thatn the summary, but as I read it, it seems to suggest that if you put a casino with 500 jobs in a poor rural county, you add 500 jobs to the county’s employment base, but you don’t really get a halo effect of stimulating local restaurants, gift shops, etc. In a more dynamic, urban economy, the addition of casino jobs may offset the decrease in jobs in other sectors, but it doesn’t really “create” additional jobs.

20

Since when was the purpose of any business to create jobs, or should it be? That sounds like a government program. Businesses are there to create profit and return to their shareholders.

Again, a casino is no different than an amusement park, and its impact on the economy.