OPPapers.com

Legalized Gambling

Economic Impacts of Legalized Gambling

Class # & Title

By
Charles Conner
Baltimore, Maryland

December 6, 2005

Professor: Dr. Ira Sohn

The Economic Impacts of Legalized Gambling
Introduction
The effect of gambling on the standard of living will be pronounced if the gambling activity is regressive, meaning that the rate of participation (as a percentage of income) declines as people earn higher incomes. In other words, if most gamblers are poor, then gambling is more likely to affect the standard of living among the poor. One study showed many forms of gambling to be regressive.

Impact on Surrounding Communities
Much of the economic research investigating the ancillary economic benefits of casinos has focused on riverboat casinos. Riverboat casinos are a uniquely American establishment. They began operating in Iowa in 1991 and quickly expanded throughout the Midwest. By 1998, over 40 riverboat casinos were in operation in Illinois, Indiana, Missouri, and Iowa. 2 Nearly 50 riverboat and dockside casinos were in Louisiana and Mississippi (NGISC, 1999).
There does not appear to be empirical evidence of economic growth as a result of the expansion of riverboat casinos. In terms of generating local tourism, riverboats seem to have been most successful in places such as Galena, Illinois, where the tourism industry was already established. Case studies suggest that the bulk of patrons of riverboat casinos are day-trippers who spend virtually no time at local non-gambling establishments (NGISC, 1999). There, thus, appear to be few, if any, positive economic spillovers to the local hotel or restaurant industry. In support of the "cannibalization" hypothesis, Siegel and Anders (1999) provide empirical evidence that riverboat gambling in Missouri led to a displacement of revenue from industries that constitute substitutes for gaming activity, such as entertainment and recreation services. 3
Evans and Topoleski (2002) conduct a rigorous examination of...