Is Gaming a Sure Bet
for Economic Growth?

By Zanetta Doyle, Digest Editor

Many communities looking to stimulate their local economies have turned to the controversial gaming industry. While critics see gaming as an immoral way to generate revenue, beneficiaries of the economic boost – very often depressed communities, plagued with high unemployment rates – readily welcome its benefits.

According to the American Gaming Association (AGA), in 2000, the commercial casino industry had gross gambling revenue (GGR) of more than $24 billion and paid $3.5 billion in taxes, which helped to finance a wide range of community improvements, including increased education spending, improvement of local infrastructures, expansion of municipal services, and the protection and beautification of neighborhoods.

The gaming industry has created more than 1 million jobs nationwide.

The gaming industry has created more than 1 million jobs nationwide. The AGA reports that from 1999 to 2000, more than 13,000 new jobs were created in the commercial casino industry with employees earning more than $10.9 billion in wages, including tips and benefits, a $1 billion increase within the 12-month period.

A recent article in the Arizona Republic (February 2002), reported that Indian tribes reached an agreement with Governor Jane Hull (R-AZ), giving the state an estimated annual $83 million share of gambling profits in exchange for liberalized casino rules on the reservations. This money will be dedicated to education, health care, tourism and cash assistance to impoverished communities, according to David LaSarte, Executive Director of the Arizona Indian Gaming Association. This agreement will legalize blackjack and allow tribes near Phoenix and Tucson to double the size of their casinos.

A report by the Howard Consulting Group of Reno, estimates that Arizona could reap as much as $1 billion in casino taxes over 10 years. “Gaming is a worthwhile opportunity that can provide economic benefits, but the jury is still out on its social impact,” said Ken Sweet, Executive Director of the Northern Arizona Council of Governments in Flagstaff, Arizona, an EDA funded district.

Gaming opponents argue that communities with legalized gambling could experience several negative economic and social impacts including, increased problem gamblers, growing bankruptcy, crime, and in extreme cases, suicide. According to the Legalized Gambling as a Strategy for Economic Development Report, by Robert Goodman, Director United States Gambling Study, gambling has increased employment and tax revenues, but has also resulted in the decline of jobs and revenues in other businesses. The report also claims that gambling has even impacted real estate in Atlantic City, resulting in increased crime rates, which has reduced property values by $24,000.

Additionally, an article by the Concerned Women for America (CWA) (Dangerous Gambling, 1997), reported that the bankruptcy rate was 71 percent higher in Atlantic City than in any other town in New Jersey. The rates were also high in Las Vegas, and in certain cities around Mississippi Riverboat casinos. Furthermore, in Florida, even though some politicians claim video poker and lotteries help raise funds for the state, the Florida Office of Planning and Budgeting found the expense of incarcerating new gamblers who turn to crime has cost Florida residents $6.08 billion (Family Voice, July/August 1999).

The report indicated several other economic downfalls of gambling. For example, poor and working people spend a disproportionate part of their incomes on gambling. It also revealed that researchers have called gambling the fastest growing teenage addiction, with the rate of pathological gambling among high school and college age youth about twice that of adults.

Alice Click, CWA’s State Director in West Virginia, and, who has been actively fighting the increased presence of video poker machines in the state, recently commented that she receives more than 20 e-mails every day from people voicing their concerns regarding video poker addiction. She added that one CWA member witnessed a mother illegally selling $100 worth of food stamps for $40 to support her gambling addiction.

Gaming Sails On in Missouri

Missouri has reaped major economic benefits since the first casino opened there in 1994. Approximately 23 million people visited the casinos during 2001 with revenues just over $1 billion. There are currently 10 riverboat complexes that employ 10,300 persons, with wages averaging $26,000 a year plus benefits.

The state’s riverboat casinos are located in St. Joseph, Riverside, LaGrange, St. Charles, Maryland Heights, downtown St. Louis, Caruthersville and two in Kansas City. According to the Missouri Riverboat Gaming Association, riverboat gaming and admissions are the sixth largest source of tax dollars for the state. Only individual income, sales, gasoline and corporate income taxes rank ahead of riverboat gambling.

The industry pays state and host-city gaming and admissions taxes. The state receives $1 per admission and 18 percent of the Adjusted Gross Revenue (AGR), which has generated approximately $900 million for various local projects including veterans programs, National Guard Scholarships, The Early Childhood Education Fund and the Missouri College Guarantee Program. The host city also receives $1 per admission equaling $243 million and 2 percent of AGR, or $105 billion.

The financial impact has been apparent, however, Missouri initially received criticism from anti-gaming groups that warned of the aforementioned negative social and economic implications. The Missouri Department of Mental Health, which provides free treatment for Missouri residents with gambling disorders, or counseling for family members of problem gamblers, reported that 250 people sought treatment in 2001. The Missouri Gaming Commission also developed a process by which people can exclude themselves from casinos. In six years, 2,100 people have placed themselves on the list.

In response to the concerns that riverboat gaming negatively impacts other local businesses, a statewide economic impact study was conducted to demonstrate an annual positive economic impact of $759 million and no measurable harm to the major Missouri industry sector. The MRGA also indicated statistics revealing a decrease in crime rates in casino jurisdictions.

For More Information: Visit the American Gaming Association at www.americangaming.org; Concerned Women for America at www.cwfa.org; the National Coalition Against Legalized Gambling at www.ncalg.org; the Missouri Riverboat Gaming Association's at www.mrga.org.

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Taking a Gamble on Indian Gaming

Is gaming in Indian Country a goldmine for our nation’s 2 million Native Americans? Yes and no.

The National Indian Gaming Association (NIGA) reports less than half (201) of the 562 federally recognized Indian tribes are engaged in gaming. While the industry in general is big business, tribal gaming operations represent less than 10 percent of total gaming revenues in the US. Further, Native Americans fill only 25 percent of the 250,000 jobs created by tribal gaming operations; and poverty rates continue to hover at 31 percent on tribal lands, compared to the national average of 11.3 percent in 2000.

The success of a few tribal casinos has left the impression that all tribes are making large amounts of money from slot machines, blackjack tables and bingo parlors. Some tribes, particularly those located near urban areas, have seen unemployment eliminated or greatly reduced because of their casinos. However, a 1997 study by Native Americans in Philanthropy (NAP) found that during a 12-month period two tribes accounted for one third of all gaming revenues and that over half of all gaming tribes generated less than $5 million in revenue a-piece.

The Indian Gaming Regulatory Act mandates tribes to use gaming revenues to fund tribal government operations or programs, provide for the general welfare of the tribe and its members, promote tribal economic development, fund charities, or help local governments. About 40 tribes have received approval of “revenue allocation plans” from the Secretary of Interior to make per capita payments to tribal members. Tribal members who do receive per capita payments pay federal income tax.

75 percent of tribal gaming revenues are allocated to tribal programs and community and economic development initiatives. Many gaming tribes also make charitable contributions to local governments.

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