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Does Society Gain or Suffer from Casino Gaming?

The Myths and Facts of Casino Gaming

Do communities with casinos experience unique or elevated levels of social problems?
If casinos open in a community, will there be an increase in the number of pathological gamblers?
Do bankruptcy rates increase when casinos are introduced into a community?
Does the introduction of legalized gaming increase the level of street crime in a community(1)?
Does the introduction of legalized gaming increase the level of street crime in a community(2)?
How many pathological gamblers are there?

Casinos are responsible players in our communities.
TGA Continues this Tradition.
The Facts are in…Commercial Casinos will help Texas.

Q: Do communities with casinos experience unique or elevated levels of social problems?

A: The preponderance of evidence demonstrates that the social problems in communities with casinos are no different than those in communities without casinos.

A study issued by the General Accounting Office (GAO), the investigative arm of the U.S. Congress, found “no conclusive evidence on whether or not gambling caused increased social problems in Atlantic City.”¹ And a leading business group in Baltimore looking at data from other existing gaming jurisdictions concluded that “…casinos are not likely to have a substantial impact on crime and other social problems.”²

An important—but frequently ignored—factor in assessing potential social impact is the rate of problems in a community before the legalization of casino gambling. Casinos typically are approved as an economic stimulus to a community and therefore are located in areas that have higher existing rates of problems that often are influenced by poverty.³

In many cases, studies have shown that because casinos are labor-intensive businesses, they can actually alleviate some common social problems. According to research conducted for the National Gambling Impact Study Commission (NGISC), some of the most common indicators of social welfare improved with the advent of casino gaming. A report by the University of Chicago’s National Opinion Research Center (NORC) found those communities closest to casinos experienced a 12 percent to 17 percent drop in welfare payments, unemployment rates and unemployment insurance after the introduction of casino gaming.

This document is based on American Gaming Associations: 2004 Gaming Industry FAQ.

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Q: If casinos open in a community, will there be an increase in the number of pathological gamblers?

A: A significant body of research strongly indicates that the number of individuals with gambling disorders does not increase if there is an expansion of legal gambling. A comparison of findings of two federal study commissions shows that, despite the dramatic expansion of gaming across the country in recent years, the prevalence rate of pathological gambling has remained relatively unchanged.

According to the Commission on the Review of the National Policy Toward Gambling, the U.S. pathological gambling prevalence rate was 0.77 percent in 1976, when casino gambling was legal only in the state of Nevada.⁴ More than two decades later, with commercial and Native American casinos operating in 38 states, gambling participation rates doubling and consumer spending exceeding $65 billion annually, the National Gambling Impact Study Commission (NGISC) determined a similar prevalence rate of 0.6 percent.⁵

Further NGISC research conducted by the National Opinion Research Center at the University of Chicago (NORC) supports this finding. According to a random national survey, prevalence rates are not affected by distance to a casino. The NORC final report stated: “[W]e found little difference in the prevalence of at-risk gambling in the combined survey [patron and phone surveys], and differences in prevalence were not statistically significant in the RDD [phone] survey [alone].”⁶

Charles Wellford, a University of Maryland criminologist who directed a National Academy of Sciences panel commissioned by the NGISC to study pathological gambling, stated in testimony before the Maryland House of Delegates that expanded legal gambling opportunities in that state would not lead to significantly higher levels of pathological gambling and would generate revenues in excess of costs.⁷

Other independent commissions reached similar conclusions. A 2000 report by the Public Sector Gaming Study Commission, a nonpartisan panel composed primarily of state and local public officials, also concluded that the level of pathological gambling cannot be linked to gambling expansion. It stated: “In short, there is no solid basis for concluding that the wider legalization of gambling, which has cut into illegal gambling and friendly betting, has caused a concomitant increase in pathological gambling. In fact, it appears that pathological gambling is quite rare within the general population, (and) it does not appear to be increasing in frequency.”⁸

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Q: Do bankruptcy rates increase when casinos are introduced into a community?

A: A series of independent government studies conducted during the late 1990s failed to establish a link between casinos and bankruptcy, and statistics support that finding.

At the request of the U.S. Congress, the Department of the Treasury conducted a study on this topic in 1999 and found “no connection between state bankruptcy rates and either the extent of or introduction of gambling.” Furthermore, the report stated: “This result is supported by a county level analysis that shows no statistically significant casino effect (proximity to a casino) with regard to county bankruptcy rates.”⁹

The National Opinion Research Center at the University of Chicago (NORC), in research conducted for the National Gambling Impact Study Commission (NGISC), echoed the Treasury Department findings. The study reported that instances of bankruptcy were no greater in communities with casinos than in communities that do not have casinos.¹⁰

In another federally funded study, the General Accounting Office (GAO), in a seven-month investigation of the social and economic impact of gaming in Atlantic City, N.J., found similar results. The report stated that it “could not find data to show a cause-effect relationship between gambling and bankruptcies.”¹¹

To study the impact of legalized gambling, Indiana created a state commission in 1998 similar to the federal commission—and reached similar conclusions on bankruptcy. After an examination of questionnaires completed by petitioners for bankruptcy in Evansville, Gary and Indianapolis, the commission found that “… there is not evidence from this survey that people filing bankruptcy were more likely to have problems with gambling.”¹²

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Q: Does the introduction of legalized gaming increase the level of street crime in a community(1)?

A: A series of independent government studies conducted during the late 1990s failed to establish a link between casinos and bankruptcy, and statistics support that finding.

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Q: Does the introduction of legalized gaming increase the level of street crime in a community(2)?

A: Communities with casinos are just as safe as communities without casinos. While anecdotal evidence and popular myth have perpetuated claims by gambling opponents that the introduction of casinos causes a rise in street crime, recent studies—both publicly and privately funded—as well as testimony from law enforcement agents working in casino jurisdictions, refute this claim.

In their reports to the National Gambling Impact Study Commission (NGISC), neither the National Research Council (NRC) of the National Academy of Sciences nor the University of Chicago’s National Opinion Research Center (NORC) was able to confirm a relationship between crime and legalized gaming. The casino effect was “not statistically significant” for any of the crime outcome measures, according to the NORC report.¹³

In 2000, the Public Sector Gaming Study Commission reached similar conclusions, finding “no link between gambling, particularly casino style gambling, and crime.” In fact, the 2000 report recognized that casinos are more of a crime deterrent than an instigator. According to the report, “[T]he security on the premises of gambling facilities, the multiple layers of regulatory control, and the economic and social benefits that gambling seems to offer to communities are effective deterrents to criminal activity.”¹⁴

Statements by law enforcement agents in gaming jurisdictions across the country also refute critics’ claims that gaming causes crime. Twenty-four sheriffs and chiefs of police submitted their findings to the NGISC, stating there was no connection between gaming and crime in their jurisdictions.¹⁵ Other law enforcement officials from gaming jurisdictions who testified before the commission agreed with those submissions, and some pointed to a decrease in street crime in their areas.¹⁶

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Q: How many pathological gamblers are there?

A: Unfortunately, a small percentage of the population does not gamble responsibly, just as a small percentage of the population does not use credit cards responsibly or drink responsibly. In its 1999 report, the federally funded National Gambling Impact Study Commission (NGISC) stated: “[T]he vast majority of Americans either gamble recreationally and experience no measurable side effects related to their gambling, or they choose not to gamble at all. Regrettably, some of them gamble in ways that harm themselves, their families, and their communities.”²³

Studies suggest pathological gambling is confined to about 1 percent or less of the U.S. adult population. According to research commissioned by the NGISC, the rate could be anywhere from 0.1 percent or 0.6 percent²⁴ to 0.9 percent.²⁵ According to a 1997 meta analysis conducted by Harvard Medical School’s Division on Addictions, 1.1 percent of the adult population of the United States and Canada can be classified as having the clinical disorder known as pathological gambling.²⁶ The results of the Harvard study, later published in the American Journal of Public Health, have been praised by the National Research Council of the National Academy of Sciences as “the best current estimates of pathological and problem gambling among the general U.S. population and selected subpopulations…”²⁷

Regardless of the number of people affected, the industry has been pro-active in promoting responsible gaming. Through a combination of public education efforts and funding of peer reviewed, independent research, the industry has worked to improve diagnosis, prevention and treatment of this disorder.

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Casinos are responsible players in our communities.

The casino gaming industry has long implemented employee and public education programs to increase awareness of disordered gambling and promote responsible gaming practices, both at the company and industry-wide levels.

In 1996, the National Center for Responsible Gaming (NCRG) was founded. This organization was exclusively devoted to funding peer-reviewed scientific research that helps increase understanding of pathological and youth gambling and finds effective methods of treatment for the disorder and to conducting public education about responsible gaming research.

More than $22 million has been committed to the NCRG through contributions from the casino gaming industry, equipment manufacturers, vendors, related organizations and individuals. And in 2000, the NCRG provided financing for the Institute for Research on Pathological Gambling and Related Disorders, a program of the Division on Addictions at the Cambridge Health Alliance, a teaching affiliate of Harvard Medical School. The Institute is responsible for the selection of projects and disbursement of research grants funded by the NCRG.

The Facts are in…Commercial Casinos will help Texas. Putting Texas Ahead of the Game. In addition, the American Gaming Association created the Responsible Gaming National Education Campaign, an industry-wide umbrella program focused on educating casino employees and the public about responsible gaming. This campaign includes the annual Responsible Gaming Education Week (RGEW) and the Responsible Gaming Lecture Series, which brings responsible gaming experts to gaming jurisdictions.

Plus, the AGA has also launched a series of responsible gaming public service announcements (PSAs). The PSAs offer tips on how to gamble responsibly and remind casino visitors “when you play for fun, you’ve already won.” Following the debut of the television PSAs, the AGA created print versions to be customized by member companies.

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TGA Continues this Tradition:

The Texas Gaming Association is making a commitment towards responsible gaming, by dedicating a portion of the gaming tax revenue to fund a problem gambling and addiction grant program to help treat and prevent problem gaming in Texas.

The Problem Gambling and Addiction Grant Program will provide treatment for problem gaming and gambling addiction, alcoholism, drug abuse, and other addictive behaviors. The grant will also provide funding for research related to the impact of gambling on state residents.

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Footnotes

Overview

Some have argued that Texas should not expand gaming because of the increased social costs associated with casino gaming. Numerous peer-reviewed studies have looked at the impact of legalized gambling on social behavior. Together, those studies support the proposition that there are some who have difficulty gambling responsibly, but that percentage of the population has remained steady at or around 1% during a period of time when the number of states with legalized gambling has increased from Nevada and New Jersey to include over 40 states with some form of casinos.

Texans are already spending close to $4 billion each year at casinos in neighboring states and Nevada. The ready availability of gambling opportunities, including online gambling, illegal sports books, eight-liners, the lottery, and nearby casinos, means that Texans who struggle with pathological gambling likely already incur whatever social costs may be associated with expanded gaming in our state. What does not exist, however, is a funding mechanism to help those who are unable to gamble responsibly.

House Joint Resolution 112 and Senate Joint Resolution 34 acknowledge the occurrence of pathological gambling and dedicates significant money, estimated to reach around $60 million per year, to fund a compulsive gambling program to assist those who struggle with gambling disorders. The funding would easily exceed the contributions made by any other state, and would be sufficient to fund treatment for all pathological gamblers in the state.

This document looks at several commonly asked questions relating to the social costs associated with expanded gaming and provides a factual, documented answer to those questions

This document is based on American Gaming Associations: 2004 Gaming Industry FAQ.Putting Texas Ahead of the Game.

What are the economic impacts of

the casino gaming industry?

The introduction of casino gaming creates employment opportunities and generates tax revenue for state and local governments, while also serving as an economic stimulus for local communities.

In 2002, the commercial casino industry provided more than 350,000 jobs in the United States, with wages and benefits totaling $11 billion. An estimated 400,000 additional jobs are supported by casino industry spending.(1) State and local governments nationwide received more than $4 billion in casino tax revenue, which helped fund local infrastructure improvements, education, public safety, housing and health care, among other programs, and provided tax relief to local citizens.(2)

A two-year study of legalized gambling in the United States conducted by the congressionally mandated National Gambling Impact Study Commission (NGISC) found much evidence confirming the positive economic impact of casino gaming. The 1999 NGISC final report concluded the following: “As it has grown, [gambling] has become more than simply an entertainment past-time: the gambling industry has emerged as an economic mainstay in many communities and plays an increasingly prominent role in state and even regional economies.”(3)

Research conducted on behalf of the commission confirmed that casino gaming creates jobs and reduces the level of unemployment and government assistance in communities that have legalized it. The University of Chicago’s National Opinion Research Center (NORC) found that communities closest to casinos experienced a 12 percent to 17 percent drop in welfare payments, unemployment rates and unemployment insurance after the introduction of casino gaming. NORC also found that communities with casinos have 43 percent higher earnings in their hotel and lodging sectors than those communities farther from casinos.(4)

In other commission-funded research, Adam Rose, an economist at Penn State University, concluded: “...[A] new casino of even limited attractiveness, placed in a market that is not already saturated, will yield positive economic benefits on net to its host economy.”(5)

In its final report, the NGISC summarized the testimony heard from more than 20 elected officials from jurisdictions with casino gaming: “... Without exception [they] expressed support for gambling and recited instances of increased revenues for their cities. They also discussed community improvements made possible since the advent of gambling in their communities and reviewed the general betterment of life for the citizenry in their cities and towns.”(6)

1. Arthur Andersen, Economic Impacts of Casino Gaming in the United States, Volume 1: Macro Study (Washington, D.C.: American Gaming Association, December 1996), 7.

2. State of the States: The AGA Survey of Casino Entertainment (Washington, D.C.: American Gaming Association, 2003).

3. National Gambling Impact Study Commission, Final Report (Washington, D.C.: GPO, June 1999), 3-1.

4. National Opinion Research Center, et al., Gambling Impact and Behavior Study, report prepared for the National Gambling Impact Study Commission (Chicago: University of Chicago, April 1, 1999), 70-71.

5. Adam Rose and Associates, The Regional Economic Impacts of Casino Gambling: Assessment of the Literature and Establishment of a Research Agenda, report prepared for the National Gambling Impact Study Commission (State College, Pa.: Adam Rose and Associates, Nov. 5, 1998), 22.

6. National Gambling Impact Study Commission, 7-5.

Does casino gambling prey on the

poor and the elderly?

Assumptions about the relationship between this industry and its older customers fails to take into account some of the latest research examining the impact of casino gambling on senior citizens as well as actual customer demographics

A 2003 study funded by the National Institute of Justice compared the casino gambling practices of the elderly to those of younger gamblers in eight new casino jurisdictions, concluding that the data “do not support the view that casino gambling is a major threat to the elderly, preying on the aged and leading them to destructive gambling practices.” Furthermore, the study found that the elderly “generally exercise better money management and experience proportionately fewer gambling problems than the general population.”(1

Other research reached similar conclusions. According to a published study of elderly women gamblers conducted by researchers at Michigan State University, “The primary motivation for gambling with elderly women is excitement and entertainment. ... Money, reliance on source of income and addiction do not appear to be motivators for this group. As such, problem gambling is not expected to be a problem with elderly women gamblers.”(2)

A study of older Minnesotans had comparable results. Co-directed by researchers at The College of Saint Benedict/St. John’s University and St. Cloud University, the study found “no evidence that casino gambling activities threaten [older Minnesotans’] well being. For most respondents the social benefits were the most salient parts of this activity and they were well aware of the danger signs of problem behaviors. ... Public concerns and media images may be based on socially constructed assumptions and fears.”(3)

Survey research supports the findings of these studies. According to NFO WorldGroup, casino customers are better educated with higher incomes than the average U.S. household. The median household income of U.S. casino customers is $50,716, compared to $42,228 for the overall U.S. population. And casino customers are more likely to have attended college and hold a white-collar job than the average American.(4)

Additionally, the survey research found that the casino customer base is a reflection of the overall U.S. population. NFO WorldGroup data determined that the median age of the U.S. casino customer is only slightly higher than that of all adult Americans (47 years versus 45 years). According to research conducted in 1999 for the National Gambling Impact Study Commission, a smaller proportion of senior citizens gamble than any other adult age group.(5

For those senior citizens who do choose to gamble, the data shows that the vast majority of them come to casinos for the social interaction. Fun and entertainment, not gambling, is their primary motivation, according to a 2000 poll conducted by Peter D. Hart Research Associates and The Luntz Research Companies. Sixty-two percent see casinos as an “inexpensive day out” for someone on a fixed income.

Not only do seniors like to gamble for fun, but they also don’t want someone else telling them how to spend their time and disposable income. According to the Hart/Luntz poll, 90 percent of senior citizens believe gambling is a question of personal freedom, and they should be able to go into a casino, have their own budget, and spend their disposable income the way they want. More than 80 percent of seniors always or usually set a budget.(6)

1. B. Grant Stitt et al., “Gambling Among Older Adults,” Experimental Aging Research 29 (2003): 189-203. 2. John Tarras et al., “The Profiles and Motivations of Elderly Women Gamblers,” Gaming Research & Review Journal 5, no. 1: 33-46. 3. Janet Hope and Linda Havir, “You Bet They’re Having Fun! Older Americans and Casino Gambling,” Jounal of Aging Studies 16, no. 2 (May 2002): 177-97. 4. Harrah’s Survey 2003: Profile of the American Casino Gambler (Las Vegas: Harrah’s Entertainment, Inc.), 18. 5. National Opinion Research Center, et al., Gambling Impact and Behavior Study, report prepared for the National Gambling Impact Study Commission (Chicago: University of Chicago, April 1, 1999), 9. 6. State of the States: The AGA Survey of Casino Entertainment (Washington, D.C.: American Gaming Association, 2000).

Q: Does the introduction of legalized gaming increase the level of street crime in a community?

A:

Putting Texas Ahead of the Game.

Communities with casinos are just as safe as communities without casinos. While anecdotal evidence and popular myth have perpetuated claims by gambling opponents that the introduction of casinos causes a rise in street crime, recent studies—both publicly and privately funded—as well as testimony from law enforcement agents working in casino jurisdictions, refute this claim.

In their reports to the National Gambling Impact Study Commission (NGISC), neither the National Research Council (NRC) of the National Academy of Sciences nor the University of Chicago’s National Opinion Research Center (NORC) was able to confirm a relationship between crime and legalized gaming. The casino effect was “not statistically significant” for any of the crime outcome measures, according to the NORC report.13

In 2000, the Public Sector Gaming Study Commission reached similar conclusions, finding “no link between gambling, particularly casino style gambling, and crime.” In fact, the 2000 report recognized that casinos are more of a crime deterrent than an instigator. According to the report, “[T]he security on the premises of gambling facilities, the multiple layers of regulatory control, and the economic and social benefits that gambling seems to offer to communities are effective deterrents to criminal activity.”14

Statements by law enforcement agents in gaming jurisdictions across the country also refute critics’ claims that gaming causes crime. Twenty-four sheriffs and chiefs of police submitted their findings to the NGISC, stating there was no connection between gaming and crime in their jurisdictions.15 Other law enforcement officials from gaming jurisdictions who testified before the commission agreed with those submissions, and some pointed to a decrease in street crime in their areas.16

13 National Opinion Research Center, 70. 14 Public Sector Gaming Study Commission, 37. 15 Crime and Gaming: A Statement of Findings, submission to the National Gambling Impact Study Commission, Sept. 11, 1998.

16 See National Gambling Impact Study Commission testimony of Peter Verniero, New Jersey attorney general, Jan. 21, 1998; Mayor Donald Sandridge, Alton, Ill., May 20, 1998; Bob Waterbury, Mississippi Coast Crime Commission, Sept. 10,1998; and Mayor Ann Hutchinson, Bettendorf, Iowa, May 20, 1998. See also New Jersey Casino Control Commission report to the National Gambling Impact Study Commission, 29.

Q: How many pathological

gamblers are there?

A:

Unfortunately, a small percentage of the population does not gamble responsibly, just as a small percentage of the population does not use credit cards responsibly or drink responsibly. In its 1999 report, the federally funded National Gambling Impact Study Commission (NGISC) stated: “[T]he vast majority of Americans either gamble recreationally and experience no measurable side effects related to their gambling, or they choose not to gamble at all. Regrettably, some of them gamble in ways that harm themselves, their families, and their communities.”23

Studies suggest pathological gambling is confined to about 1 percent or less of the U.S. adult population. According to research commissioned by the NGISC, the rate could be anywhere from 0.1 percent or 0.6 percent24to 0.9 percent 25. According to a 1997 meta-analysis conducted by Harvard Medical School’s Division on Addictions, 1.1 percent of the adult population of the United States and Canada can be classified as having the clinical disorder known as pathological gambling.26 The results of the Harvard study, later published in the American Journal of Public Health, have been praised by the National Research Council of the National Academy of Sciences as “the best current estimates of pathological and problem gambling among the general U.S. population and selected subpopulations...”27

Regardless of the number of people affected, the industry has been pro-active in promoting responsible gaming. Through a combination of public education efforts and funding of peer reviewed, independent research, the industry has worked to improve diagnosis, prevention and treatment of this disorder.

23 National Gambling Impact Study Commission, 1-1. 24 National Opinion Research Center, 25. 25 National Research Council, Pathological Gambling: A Critical Review (Washington, D.C.: National Academy Press, 1999), 3. 26 Meta-analysis, 38. See also the American Journal of Public Health 89, no. 9 (1999): 1371. 27 National Research Council, 67.

Q: If casinos open in a community, will there be an increase in the number of pathological gamblers?

A:

A significant body of research strongly indicates that the number of individuals with gambling disorders does not increase if there is an expansion of legal gambling.

A comparison of findings of two federal study commissions shows that, despite the dramatic expansion of gaming across the country in recent years, the prevalence rate of pathological gambling has remained relatively unchanged. According to the Commission on the Review of the National Policy Toward Gambling, the U.S. pathological gambling prevalence rate was 0.77 percent in 1976, when casino gambling was legal only in the state of Nevada.4 More than two decades later, with commercial and Native American casinos operating in 38 states, gambling participation rates doubling and consumer spending exceeding $65 billion annually, the National Gambling Impact Study Commission (NGISC) determined a similar prevalence rate of 0.6 percent.5

Further NGISC research conducted by the National Opinion Research Center at the University of Chicago (NORC) supports this finding. According to a random national survey, prevalence rates are not affected by distance to a casino. The NORC final report stated: “[W]e found little difference in the prevalence of at-risk gambling in the combined survey [patron and phone surveys], and differences in prevalence were not statistically significant in the RDD [phone] survey [alone].”6

Charles Wellford, a University of Maryland criminologist who directed a National Academy of Sciences panel commissioned by the NGISC to study pathological gambling, stated in testimony before the Maryland House of Delegates that expanded legal gambling opportunities in that state would not lead to significantly higher levels of pathological gambling and would generate revenues in excess of costs.7

Other independent commissions reached similar conclusions. A 2000 report by the Public Sector Gaming Study Commission, a nonpartisan panel composed primarily of state and local public officials, also concluded that the level of pathological gambling cannot be linked to gambling expansion. It stated: “In short, there is no solid basis for concluding that the wider legalization of gambling, which has cut into illegal gambling and friendly betting, has caused a concomitant increase in pathological gambling. In fact, it appears that pathological gambling is quite rare within the general population, (and) it does not appear to be increasing in frequency.”8

4 Commission on the Review of the National Policy Toward Gambling, Gambling in America (Washington, D.C.: GPO, 1976), 73. 5 National Opinion Research Center, 25. 6 National Opinion Research Center, 28-29. 7 Testimony of Charles Wellford, 3. 8 Public Sector Gaming Study Commission, Gambling Policy and the Role of the State (Tallahassee, Fla.: Florida Institute of Government, Florida State University, March 2000), 50.

The TGA does not support a gambling monopoly to Texas track owners by authorizing video lottery terminals at racetracks. Neither do Texas voters.

Texas Gaming Association