Reality Paper

Relationship between casinos and economic progress

Casino represents one of the leading sectors in the USA. The country has legalized gambling activity in more than 30 states over the previous years.

Several US states have approved commercial gambling as it supports economic development. There are multiple benefits which come from commercial gaming including better employment, increased tax revenues, and local retail growth. The USA has also approved gambling for local tribes and now we have combinations of tribal and corporate gambling venues.

If we speak about money placed in US casinos, it crossed $370 billion during 2000. If you count per-person amount, it results in $1300. Casinos have achieved to earn about $26 billion per year while players have received 93% of the money in return.

Nevada is the state with the largest gambling market in the USA. The state records $9,5 billion gross revenues on one-year level. It is followed by Atlantic City which generates $4 billion per year while Missouri and Illinois made more than $1 billion of income.

Despite all these results, it is still unclear what is the relationship between the growth of commercial casino online and economic development.

Casinos support employment

Problem 1: Casinos lead to an increased rate of employment. To see the entire contribution, we should compare the unemployment rate in the local region with the rates in the whole state. If we see similar results, we can conclude that employment increase in casino sector comes from the natural movement of the industry. On the contrary, if the unemployment rate is lower in the local area than on state-level after casino introduction, one can conclude that casinos contributed to it.

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Problem 2:

Operation of casinos requires additional workforce which comes from local regions. As a result, the unemployment rate in the area has been reduced. The key question is not only whether casinos lower unemployment but for whom they do it. When the casino is located in the local region, it will attract the workforce from outside of the region. If the casino operates outside of the local region and people move to casinos, the unemployment rate in the local area will stay the same.

Casinos bring revenues to the state

Problem 1:

Some US states use taxes to finance state and local ideas. For example, Missouri has a tax rate of 18% and additional tax of 2% for local government.

Problem 2:

State governments utilize tax revenues for various purposes including public education. In most cases, authorities want to say that they increased education expenditures since the introduction of casino taxes. However, some studies have proved that earmarked funds from the lottery to education didn’t lead to an increase in education expenses. In addition, state lottery didn’t contribute to public education and the same could be applied to casino money.

Casinos support retail sales

Another interesting question is whether casinos support local retail sales. Do casinos attract people outside the local area compared to the visitors from local regions? When most of the casino clients come from the local area, people would expect that retail sales are negatively affected. It leads to substitution effect and customers change casino gambling for other activities. If the casino works as a touristic place where non-locals use to spend money in visiting museums and dinners, it leads to an increase in retail sales.

Rural regions which only have one or two gambling venues have more chances to pass through a decrease in local retail sales compared to urban places. Rural areas tend to promote casino venues with other locations in order to attract more visitors.

Despite current problems, casino betting in the USA will stay one of the favourite leisure activities. We can only wonder what will be the degree of casino popularity in the future.

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