Expanded Gambling is Bad for Local Businesses

Posted: December 5, 2010 | Author: | Filed under: Edgewater Casino | Tags: , , , , , , , , | Leave a comment

The following article was written by US Senator Jamie Eldridge. The article cites some reputable studies from reputable economist professor Earl Grinols.  We have no evidence as yet that gambling improves the economic climate for neighbouring businesses.

“People will spend a tremendous amount of money in casinos, money that they would normally spend on buying a refrigerator or a new car. Local businesses will suffer because they lose customer dollars to the casinos.”

– Donald Trump, casino owner[1]

Casinos will hurt local restaurants, hotels and entertainment businesses. Money that would otherwise be spent at locally-owned small businesses will instead be dumped down predatory slot machines owned by out-of-state corporations. Massachusetts dollars are shipped far away to wealthy owners and investors, and little of that money is being reinvested in the local community.

Casinos and slots won’t help locally-owned tourism businesses. Casinos will divert tourists and residents away from local historic, cultural, and natural attractions from Cape Cod to the Berkshires, hurting businesses that rely on those visitors. To the extent that people do travel to Massachusetts for a resort-style casino, they’ll stay at a casino hotel, eat at casino restaurants, and go to casino-sponsored entertainment events. Casinos drain money from the local economy.

When discretionary income is spent on gambling, local businesses suffer. Consumers have less money to spend on clothing, electronics, furniture, automobiles, or any other locally-sold product. A study on the costs and benefits of casinos found that for every $1000 in increased casino revenue, businesses up to 30 miles away lost $243. [2]

Job growth in the casino industry will lead to job cuts elsewhere. As the Boston Business Journal notes, the claim that casinos will create 20,000 new jobs “is bogus because the diversion of billions of dollars into one sector is destined to cause job losses in other sectors”.[3]

Expanded gambling hurts worker productivity. Local businesses can anticipate increased personnel costs due to increased job absenteeism and declining productivity of workers.[4]

Expanding gambling is not an effective economic development strategy. It drains money from local economies, hurting local businesses. As the Wall Street Journal notes, “a growing body of research and experience suggests the odds are not stacked in the state’s favor”[5] when it comes to economic development. There are better strategies for creating jobs and promoting economic growth in the Commonwealth that don’t come with the significant downsides that casinos bring.

[1] “The Jackpot State.” The Miami-Herald. March 27, 1994

[2] Grinols, Earl L. Gambling in America Costs & Benefits. Cambridge University Press, 2004. Pg. 77.

[3] “It’s all about the money.” Boston Business Journal. December 21, 2007

[4] Grinols, Earl L. and David B. Mustard. “Business Profitability versus Social Profitability: Evaluating Industries with Externalities, the Case of Casinos.” Managerial and Decision Economics. 2001. Pg. 151.

[5] Whitehouse, Mark. “Bad Odds.” Wall Street Journal. June 11, 2007.