While the Illinois Gaming Board considers allowing riverboats to stay open 24 hours and Rep. Lou Lang (D-Skokie) hints at more casino licenses on the horizon, many states are taking a step back from expanding legalized gambling. In an article in the New York Times Magazine, Christopher Caldwell reports that Massachusetts lawmakers have decided against allowing gambling in their state, and that an effort is underway in the Maryland State Senate to limit gaming there as well.
While criticism of gambling is often morally-based, Caldwell reports that the current skepticism stems from questions over whether state-sponsored casinos actually represent significant revenue sources:
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.
It's even harder to offset the economic toll of all the required infrastructure when gambling proceeds are falling in your state, as the latest Illinois Gaming Board Monthly Riverboat Casino Report (PDF) indicates.
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The drop in profits (which prompted the Illinois board to consider 24-hour gambling) is not unique to Illinois. Caldwell reports that casino profits are known to drop as the economy worsens:
Gambling appears a less glamorous habit when the country is digging its way out of mortgage and credit-card debt. In mid-March, the Colorado Division of Gaming announced that revenues at local gambling resorts were down 10 percent. The next day, Moody’s Investors Service reported that casino revenues in January dropped 17 percent in Illinois, 10 percent in Atlantic City and 8 percent in Indiana.
Caldwell's article also provides some striking figures regarding the portion of the "revenue" that comes from compulsive gamblers' losses:
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.
