NYT - Bad Bet

Good article in the New York Times about the illusory economic benefits of casinos. Of course "benefits" become even more illusory when you talk about the lower fees paid by Indian casinos such as the one being proposed by the Mashpee Wampanoag for Middleboro, Massachusetts.

There is a catch, though. The most important segment of gamblers is not free. And those gamblers are important because they are not free. Compulsive and problem gamblers make up only 2.4 percent of gamblers, according to the National Gambling Impact Study Commission, but they account for a third of receipts, or more. A 1995 Minnesota study found that 1 percent of patrons made half the wagers. Where you have saturation gambling, as in Las Vegas, about two-thirds of residents at least try it — and 2.4 percent of that two-thirds is a ton of problem gamblers. It translates into rises in suicide, embezzlement and bankruptcy that have real social costs.

Nonpathological gambling has its costs, too. Introduce casinos in Massachusetts, and you will indeed recapture some of the hundreds of millions of dollars that Bay Staters drop in the resorts of Connecticut. But you will also capture a lot of money that people would have spent in local restaurants and movie theaters. The infrastructure required for gambling — from road building to hiring new police — is costly as well. Once you make those adjustments, the economic upside of gambling evaporates. The economist Earl Grinols estimates the ratio of gambling costs to gambling benefits at higher than three to one. Voters sense this. The rule of thumb, according to Grinols, is that pro-gambling interests lose referendum battles whenever they do not outspend their opponents by at least 75 to 1.

I'm still waiting for the casino proponents to tell me how the Middleboro casino is a good deal when the payments will most likely not even cover costs.

The other thing that gives me a chuckle is the idea that the Indian casino is more regulated than a commercial one. The lack of transparency and difficulty in getting information out of these facilities is well known. It is mentioned several times in the National Gambling Impact Study Commission report. Anybody who had done any realistic investigation of Indian casinos would know this.