Boom or bust? Casino gaming and host municipalities.

• Author: Alexander, Ross C.

Introduction

A myriad of literature exists that addresses the impact of legalized casino gaming on cities that host the venture from a multitude of perspectives--socially, economically, culturally, morally, psychologically, with regard to crime, in terms of gambling addiction, and even from an individual and family stress perspective. Whereas many of these studies insist that legalized gaming has had a net negative impact, others extol its positive virtues, especially economically. In sum, existing literature on the topic is contradictory, ambiguous, and difficult to analyze because, whether pro or con, most offer valid arguments that are quite persuasive. The trend among most scholars studying this phenomenon is that someone makes a claim and someone else deconstructs it by arguing the exact opposite. It is frustrating to say the least! Who is to be believed?

On the negative side, the best constructed and most often cited arguments warn largely against the economic pitfalls and social evils associated with legalized casino gaming. These studies assert that casinos "cannibalize" or take profits away from local businesses or that, because most gamers are local, there is no net fiscal gain for the local economy. As a consequence, monies gambled are simply dollars exchanged among local gamblers rather than monies infused into the local economy by outside sources.(1) With regard to the perceived social ills associated with gambling, many scholars argue that costs such as increased crime and gambling addiction outweigh any potential positive fiscal impact derived from legalized casino gaming over the long term.(2)

On the positive side, many authors maintain that gaming results in a net positive gain for municipalities more often than not, especially economically. Some of these studies refute the cannibalization thesis as being based on poor methodology or the infallibility of trying to quantify social costs.(3) Others maintain that the vast quantities of revenue being generated into blighted and needy communities (over $30 million annually, in some cases) outweighs almost any negative social impact.(4) Still others contend that the effect on crime has been exaggerated.(5) Finally, placing the debate in a political context, the best argument for gaming, according to some of its advocates, may be that since citizens and politicians favor it and neighboring states possess it, states and municipalities should invest in it lest they lose valuable revenue to their neighbors.(6) Thus, as one can see, with few exceptions, there is little middle ground surrounding the gambling debate.(7)

This study does not attempt to undertake a comprehensive examination of the gaming debate. Rather, it examines the impact that gaming has had economically on municipalities that possess it. The authors of this study have surveyed those officials in host communities who may not be best qualified to comment upon the overall impact of gaming on the municipal economy, but who do possess unique insight into the economic health and priorities of their respective communities--economic development professionals--appointed officials (for the most part) well-versed in all aspects of the economic affairs of their respective communities, including casino gambling. These officials are not gaming lobbyists, but rather professionals hopefully making decisions in the best interests of the community they serve in the realm of economic development.

This study does not try to make any value judgments regarding the gaming debate. Rather, it focuses on a simple research question: "In your opinion, how has legalized casino gaming affected the economy of your municipality?" The findings of this study suggest that economic development professionals in those cities that possess it support gaming overwhelmingly. According to those surveyed, gaming seems to have had a significant positive overall economic effect in most host cities, especially those with riverboat or land-based non-Native American gaming enterprises.

Methodology

A nineteen-item questionnaire was mailed to economic development professionals in every city that possesses some form of legalized casino gambling in the United States, excluding those communities that have multi-site, extensive, land-based casino developments (i.e., Las Vegas, Atlantic City, and cities in coastal Mississippi), to guage opinions about the economic effect that gaming has had upon their respective communities as well as the level of local support for the enterprise in general. The survey focused on these officials because they are uniquely qualified to comment upon the overall economic health, direction, and priorities of their communities with a modicum of professionalism and accuracy.(8) Ultimately, the authors of this study tried to determine the effect that a single (or, in some cases, two or three) casino development has had upon the local economy.

Of the approximately 350 communities that possess some form of legalized casino gaming in the United States (riverboat, land-based Native American, or land- based non-Native American), 140 local economic development professionals from twenty-two states returned the survey, an encouraging response rate of forty percent.(9) The survey attempted to glean attitudes and opinions regarding the economic viability, effect, and influence of gaming on individual host communities as well as distinguish its viability as a revenue generation mechanism as opposed to an economic development mechanism (or both in many cases). In short, did the casino development infuse a significant amount of money into the local economy which then spurred secondary or tertiary economic development? The survey also tried to determine exactly how much revenue the development generates annually, how that money is allocated, what...