Rolling the Dice? Casinos, Tax Revenues, and the Social Costs of Gaming

Abstract

ABSTRACT:Advocates for casino gambling in urban centers point to the benefits from increased taxes and job opportunities. While there is evidence to sustain those claims, those who oppose legalized gambling point to the personal and social costs that result from increased numbers of addicted gamblers and believe those negative outcomes exceed the fiscal gains. Each time voters and public officials are asked to vote for or against expanded gambling centers to produce more tax revenue, advocates for the opposing positions point to different studies— some illustrating increased social and personal costs, while others extol the fiscal returns to urban areas. Using trend line and regression analyses of outcomes in three states with casinos—Michigan, Indiana, and West Virginia—as well as Ohio that borders these states, this study attempts to provide a new perspective. The work reported here finds no significant negative changes in unemployment, bankruptcy, or crime rates after casinos opened. Further, while in some regression models small increments in personal bankruptcy filings were noted, the most stringent model found no significant increases in personal bankruptcies related to a casino’s presence. While one study of three social problems will not close the gap between casino advocates and opponents, these results provide voters and public officials with important information from which to weigh the fiscal gains from casinos to determine if the benefits are attractive enough to warrant what is found to be a small risk of very modest (or no) increments in some selected social problems.