The impact of casinos on local economies and communities is an important issue. While casinos may create jobs and boost the economy, they can also have negative effects.
Generally, casino gambling appears to benefit local economies, and in particular the tourism industry. However, it is important to consider whether these benefits outweigh the social costs associated with pathological gambling.
Increased Tourism
Casinos draw visitors from across the state or even the nation, and the revenue generated by these visitors creates new jobs and businesses in the hospitality industry, including restaurants and hotels. Tourism money also helps the economy by generating additional income from taxes, such as park entrance fees and employee income taxes.
Proponents often cite the drop in local unemployment after casinos open as evidence that casinos improve local employment. However, when looking at these statistics, it is important to take into account other factors, such as population changes and the local business cycle.
In addition, the money that is brought in by tourists helps governments invest in infrastructure improvements, such as improved roads and highways, developed parks and public spaces, and safe and advanced airports. This helps attract more tourists and leads to new job opportunities for residents in the services industry, such as dining options, entertainment venues and transportation services. These jobs are usually well-paying and provide a source of stability for the community.
Increased Spending
Aside from the revenue they generate through gambling, casinos also promote tourism in surrounding areas, encouraging locals to spend money at hotels, restaurants and other tourist attractions. However, these gains may be offset by a decrease in local retail sales, especially in rural casino regions. Only empirical testing can determine the impact of this trade-off on local economies.
In addition to generating tax revenue, casinos often employ many workers from the area. This helps reduce unemployment rates in the area, which is often cited as one of the benefits of casinos. However, this benefit is not always realized, as some of the workers that are employed at the casino might be from outside the community.
Moreover, the drop in unemployment in a casino area may be the result of other factors such as changing economic conditions, social attitudes towards gambling and policing and judicial practices. Therefore, it is important to compare local changes in unemployment with statewide changes before concluding that casinos have an effect on employment.
Increased Taxes
While casinos do provide a large number of benefits, they also generate tax revenues. These taxes are used to help local governments pay for various services, such as education. Some studies have found that casinos cause a slight decrease in overall education spending, while others find that casinos increase total education spending.
One study that examined the impact of casinos on local economic growth and employment found that counties with casinos saw an uptick in employment and wages compared to those without casinos. However, this type of analysis should be done with caution as other factors, such as population changes and statewide business cycles, may have also played a role.
Another concern is that a casino’s increased revenue can divert local residents from other entertainment and recreation activities, such as dining out and going to the movies. This is often called the substitution effect. In addition, it is important to note that while casinos do increase gambling tax revenues, they typically do not boost other forms of state and local taxes, including sales and property tax.
Increased Crime
Many communities depend on casinos to generate significant amounts of revenue, helping to keep local politicians from cutting services or raising taxes elsewhere. This revenue can help to stimulate other local businesses and increase the average wages in the casino’s immediate neighborhood.
However, casinos also tend to attract crime at rates similar to those of other tourist attractions. This can include theft, burglary, and even murder.
Another issue is that casinos generally require a skilled labor force in order to operate. This labor will likely come from outside of the local community. Therefore, while a casino may decrease unemployment for the new arrivals, it can still raise unemployment for the original less skilled residents of the area. This issue can be exacerbated when changes in local unemployment are compared to statewide unemployment statistics without adjusting for population shifts and other local business conditions. This can provide a misleading picture of the economic impact of casinos.
