The legalization of casino gambling is often cited as a means to stimulate economic development. The research on casinos and economic development is extensive. Some work has focused on particular case studies evaluating the economic impact resulting of a particular project. Other studies have examined the impact of a particular type of gaming, such as tribal casinos or lotteries. After reviewing a wide range of research, this analysis selected studies conducted by either the federal government or by academics.105 These studies incorporate large samples and examine the impact of casino developments across many jurisdictions (with the exception of the GAO report). More so than case studies, the studies selected allow for more sophisticated controls over the effect of external influences on economic outcomes. Table III.15 contains the six studies selected, and summarizes their methodologies and primary findings.
Research methods for the studies range from regression analysis of panel data to a meta-analysis of over 100 different research sources. The latter was conducted by Adam Rose and Associates on behalf of the National Gambling Impact Study Commission (NGISC). Many academic studies have utilized a database compiled by the University of Chicago’s National Opinion Research Center (NORC) for NGISC.106 The United States General Accounting Office (GAO) report reviews the 1999 NGISC Report and also provides a case study of the economic impact of the legalization of casino gaming on Atlantic City, New Jersey.
Each of the six studies finds net economic benefits to the region hosting a new casino development. The largest positive impacts are from the introduction of tribal casinos.107 The larger net benefit from tribal gaming is not surprising given the limited economic opportunities on many reservations. The two studies that examine destination casino developments, GAO
105 Much of the work in this area has been funded or performed by developers or casino opponents. Research by academics or federal government sources is less likely to be subject to biases.
106 The NORC database included an extensive set of economic and social indicators for 100 counties in the United States. Casino gaming facilities were developed in 40 of these counties. The NORC dataset covers the years 1980-1997.
107 Jonathan B. Taylor, Matthew B. Krepps and Patrick Wang, The National Evidence on the Socioeconomic Impacts of American Indian Gaming on Non-Indian Communities (Harvard University, John F. Kennedy School of Government, 2000).
(2000) and Baxandall and Sacerdote (2005), both find evidence of positive economic benefits from destination casino development. 108
Findings regarding the impact of casinos on employment (or unemployment) are particularly robust. The NGISC (1999) found that a new casino reduces unemployment by 12 percent.
Evans and Topoleski (2002) later found that there is an increase in the number of jobs per adult in counties where a new tribal casino is located, as well as in counties that are located within 50 miles of a new tribal casino development. Baxandall and Sacerdote (2005) find that the number of people reporting full or part-time employment increased 6.7 percent in counties with casinos, compared to those without.109 The GAO examined unemployment in its case study on Atlantic City, reporting declines in unemployment following the introduction of casino gaming.
However, the GAO also found that unemployment rates in Atlantic City have remained above the state average.
The studies also show a positive impact with regard to income maintenance programs and welfare participation. The NORC study concluded that the introduction of a casino is associated with a statistically significant decline in welfare and unemployment insurance.110 Examination of certain areas where casino gaming has been introduced suggests that the introduction of casino gaming is accompanied by a reduction in welfare rolls. The GAO’s study of Atlantic City found that there was a reduction in welfare rolls in the period following the introduction of casino gaming.111
108 U.S. General Accounting Office, Impact of Gambling: Economic Effects More Measurable Than Social Effects, GGD-00-78, April 2000; Phineas Baxandall and Bruce Sacerdote, “The Casino Gamble in Massachusetts,” working paper, (Harvard University, John F. Kennedy School of Government, 2005), 2.
109 Baxandall and Sacerdote, The Casino Gamble in Massachusetts, 6.
110 Gambling Impact and Behavior Study (1999) p. 71.
111 U.S. General Accounting Office, Impact of Gambling, 18.
Table III.15 Major Studies of the Regional Impact of Casino Development
Title Author Methodology Findings
The Regional Economic Impacts of
Overall Impact: Generally positive effects in the host region: “a new casino, of even limited attractiveness and placed in a market that is not already saturated, will yield positive economic benefits on net to its host economy” (p.
31) Gambling Impact and Behavior
Study, prepared for the National Gaming Impact Study Commission (1999).
National Opinion Research Center at the University of Chicago
Panel of 100 communities from 1980 to 1997. Casinos opened in 40 of these communities.
Overall Impact: “The net picture in the economic and crime data is on the positive side but not in an overwhelming way.” (p. 71).
Employment Impact: Decrease in the percentage of the labor force that is unemployed and a decrease in the level of welfare and unemployment insurance payments (p. 70). No change in overall per capita income. (p. 70-71);
Impact of Gambling: Economic
Employment Impact: Casino development led to an increase in private sector employment in Atlantic City (p.
17); jobs created by the casino industry led to a decrease in welfare caseload (p. 18) although other factors also contributed to this outcome (p. 19). Unemployment and in particular seasonal unemployment remains a problem in Atlantic City (p. 20).
Analysis of 24 communities in the 1999 NORC database that experienced the introduction of a non-Indian casino, and 16 communities where an Indian casino was introduced.
Overall Impact: "[W]hile total income is statistically unchanged by casinos, the reductions in unemployment and welfare income lend some credence to the widely held notion that casinos are a useful economic development strategy for reducing poverty." (p. 14) and "Indian casinos have substantial beneficial economic and social impacts on surrounding communities" (p. 1).
Employment Impact: Reduction of unemployment rates in communities within 50 miles of a new casino.
Income Maintenance/ Transfer Payments Impact:
"Casinos generally could be expected to have a 6% decrease in payments from income maintenance programs, whereas Indian casinos precipitate a more profound 32% decline" (p.
22).
Table III.15 Major Studies of the Regional Impact of Casino Development
Title Author Methodology Findings
The Social and Economic Impact of Native American Casinos, Working resulting impact from tribal casinos.
Used county-level data on bankruptcy from 1989 - 1999 for 2,222 with controls for counties hosting a casino or counties within 50 miles of a casino.
Overall Impact: "These casinos appear to have changed the economic climate on reservations considerably. Four or more years after a casino is opened, population increased by 11.5%, employment rose by 26%, the employment to population ratio increased by 12%, and the fraction unemployment and working but poor fell by 14%" (p. 46).
Employment Impact: Statistically significant increase in number of jobs per adult following the opening of a casino (p. 69). focus on the county-level impact of Indian-owned casinos. Employed data from 365 Indian casinos in 156 counties across the country (excluding casinos in states that have both Indian casinos and commercial casinos).
Data was divided into six sets defined by population and casino size. One of the sets included three counties with large resort destination casinos similar to those proposed in MA.
Overall Impact: "The introduction of a casino does appear to produce a few modestly positive effects, a few modestly negative impacts, and, in several areas, no statistically
significant effects at all" (p. 2).
Employment Impact: "For all counties, the introduction of a casino did not cause statistically significant differences in unemployment compared to counties without casinos...the unemployment rate dropped by 1.2% in the nine counties with large populations and large casinos" (p. 7). Two counties with mega-casinos experienced a downward shift of 0.5% in unemployment rate; the other remained roughly the same. All three mega-casino counties showed improvements in the relative employment rates.
IV.FISCAL IMPACT OF DESTINATION CASINO DEVELOPMENT
The development of additional revenue for the Commonwealth is one of the reasons cited by Governor Patrick for the legalization of casino gaming.112 The draft legislation involves both an initial licensing and annual ongoing gaming tax from casino operators. The draft legislation also specifies the use to which fee revenues are to be put. This study focuses on the revenues received by the Commonwealth from the legalization of casino gaming.113 However, the study also computes the amounts that would be utilized for different public purposes given the allocation mechanism specified in the draft legislation.
In this section, the study first briefly summarizes the fee structure proposed in the draft legislation and the portions of the legislation that specify the amounts earmarked for mitigating the impact of casinos on public health, local services and the state lottery. Second, the study presents the results of a simple model of the effect of the legalization of casino gaming on revenues from all sources of gaming as well as the impact on lottery revenues. Third, the study addresses the relationship between revenue and economic development goals that arise in the context of commercial destination casino development.