During the past two decades, the US casino industry has expanded dramatically. According to the American Gaming Association, there are now nearly 1,000 commercial and tribal casinos in the country.
Plans to expand casino gaming are typically controversial. Massachusetts presents one of the most interesting cases, with voters currently contemplating a measure to reverse casino legalization this coming Tuesday November 4.
Casinos: Lessons Learnt from Cost-Benefit Analysis In: Economic Aspects of Gambling Regulation: EU and US Perspectives. Author: Tom Coryn. Gambling Policy in the European Union: Monopolies, Market Access, Economic Rents, and Competitive Pressures among Gaming Sectors in the Member States.
The cost benefit analysis
Each time casino legalization or expansion is considered, similar issues come up. Casino proponents argue that casinos will create tax revenues, jobs, and can push average wages higher.
Opponents argue that the social costs, such as crime, industry “cannibalization,” and problem gambling, outweigh the potential benefits. Both sides discount the opposition’s claims. So what does the research show?
When it comes to the economic benefits of casinos, there have been several studies on economic growth, employment, and wages. Perhaps the most comprehensive study on employment and wages was done at the US county level.
Controlling for a variety of factors, the results showed that counties with casinos have higher employment (by around 8%) than those without; wages were slightly higher in casino counties.
Nevada Gaming Regulations
There is also published evidence that casinos have a positive impact on state-level economic growth, though that evidence has not been consistent over time.
Tax benefits
Perhaps the most important political benefit of casinos is tax revenues. Although in most states legalized gambling provides a very small proportion of state tax receipts (usually far less than 5%), casino taxes do make it easier for politicians to avoid spending cuts or other tax increases.
In Massachusetts, one of the motivations for casino legalization is that many Bay State residents gamble at casinos in Connecticut and Rhode Island. If new casinos keep hundreds of millions of casino revenue in the state, that means additional tax revenue for the state.
Problem gamblers
On the cost side of the equation, researchers agree that the majority of costs are attributable to problem gamblers, who make up around 1% of the population. These people develop a variety of problems, including reduced employment productivity; financial problems, bad debts and bankruptcies; committing crimes to get money for gambling; and lying to friends and family.
Interestingly, the spread of casinos across the country may not have caused a significant increase in the prevalence of problem gambling. Research has suggested that when casinos expand in an area, there is a short-term increase in the problem gambling rate, but that the rate levels off over time. The result has been a fairly stable prevalence of problem gambling across place and time.
Since the 1990s researchers have been trying to put a monetary value on these social costs of problem gambling. Unfortunately, such measurement is tricky.
Researchers have estimated that around 70% of problem gamblers have other problems, such as drug or alcohol abuse. Thus, it becomes impossible to attribute social costs specifically to the person’s gambling problem. Nevertheless, the scientific literature on the types of difficulties associated with problem gambling is well-developed.
Crowding out competitors
Casino critics typically argue that casinos will harm other industries. This is so-called “industry cannibalization.” The fact is that any new business that competes with existing businesses does the same thing. This is simply a part of market economies.
One can sympathize with existing firms; they never like having more competition. But in the end, a new casino creates a new option for consumers. If they didn’t enjoy gambling, consumers wouldn’t spend their money at casinos.
What about casinos’ impacts on lotteries? There have been recent claims that casinos could significantly harm the Massachusetts lottery. Recent empirical evidence from a study we did in Maryland tends to contradict this.
We found that the establishment of casinos in Maryland led to about a 2.75% decrease in lottery sales. This is hardly a major impact, but it is nothing to sneeze at.
Massachusetts has the most successful lottery in the country, and casinos will probably have a small negative impact on lottery sales. On net, though, gambling tax receipts will almost certainly increase with casinos.
How, then, to assess impact
Policymakers in different parts of the country have taken different approaches to understanding the impacts of casinos. Some states have commissioned comprehensive studies, while others have acted without much empirical evidence. Massachusetts has commissioned a comprehensive multi-year study of the economic and social impact of the introduction of casino gambling.
It’s true that casinos have a variety of impacts on their host communities; they create both costs and benefits, both of which are probably less important than casinos’ strongest supporters and opponents claim.
Gaming Industry Regulations
But from a purely economic perspective, even considering the difficulties in measuring them, the benefits from casinos likely outweigh the costs – with the key benefits being those to consumers who like casino gambling.
This article is part of a series on gambling in America. You can read the rest of the series here.
A gaming control board (GCB), also called by various names including gambling control board, casino control board, gambling board, and gaming commission) is a government agency charged with regulatingcasino and other types of gaming in a defined geographical area, usually a state, and of enforcing gaming law in general.
- 1Rules and regulations
- 3Gaming control boards
- 3.2Regional and tribal associations
- 3.2.3North America
- 3.2Regional and tribal associations
Rules and regulations[edit]
Gaming control boards are usually responsible for promulgating rules and regulations that dictate how gaming activities are to be conducted within a jurisdiction. The rules and regulations stem from the jurisdiction's enabling act. Generally, the enabling act is passed by the legislature and sets forth the broad policy of the jurisdiction with regard to gaming; while the rules and regulations provide detailed requirements that must be satisfied by a gaming establishment, its owners, employees, and vendors. Typically, rules and regulations cover a broad range of activity, including licensing, accounting systems, rules of casino games, and auditing.
Licensing[edit]
Gaming control boards also have complete authority to grant or deny licenses to gaming establishments, their ownership, employees, and vendors. Generally, in order to obtain a license, an applicant must demonstrate that they possess good character, honesty and integrity. License application forms typically require detailed personal information. Based upon the type of license being sought, an applicant may also be required to disclose details regarding previous business relationships, employment history, criminal records, and financial stability.
Generally, the gaming license application process and subsequent investigation is quite burdensome in comparison to the process of obtaining other government-issued licenses. The difficulty of the process is intended to dissuade participation by unsavory people and organized crime.
Recently, in order to simplify the application process, various gaming control boards have collaborated on the design of 'multi-jurisdictional' application forms. Persons or vendors who are involved in gaming in multiple jurisdictions may now complete one application form and submit copies to each jurisdiction.
Enforcement[edit]
In some cases, Gaming Control Boards are responsible for enforcing the rules and regulations that they create. In other cases, a separate body or a division of the Gaming Control Board carries out the enforcement function. Most Gaming Control Boards have full authority to hear and decide civil cases brought before them by the enforcement body and thus are considered quasi-judicial bodies.
Gaming control boards[edit]
Inter-regional associations[edit]
- Gaming Regulators European Forum (GREF)
- International Association of Gaming Regulators (IAGR)
- North American Gaming Regulators Association (NAGRA)
Regional and tribal associations[edit]
Asia[edit]
- Macau: Macau Gaming Inspection and Coordination Bureau
- Singapore: Casino Regulatory Authority of Singapore
Europe[edit]
- Denmark: Spillemyndigheden
- france : service central des courses et des jeux , part of Central Directorate of the Judicial Police
- Gibraltar: Gibraltar Regulatory Authority
- Hungary: Gaming Board of Hungary
- Malta: Malta Gaming Authority
- Norway: Norwegian Gaming and Foundation Authority - part of Ministry of Culture
- Portugal: Inspectorate General on Gaming
- Slovenia: Office for Gaming Supervision - part of the Ministry of Finance
- Sweden: National Gaming Board
- United Kingdom: Gambling Commission
- Alderney: Alderney Gambling Control Commission
- Isle of Man: Isle of Man Gambling Supervision Commission
North America[edit]
Canada[edit]
In Canada, gambling is regulated exclusively by the provinces rather than federal law. But there is also the National Trade Association of Canada - The Canadian Gaming Association (CGA). This works to advance the development of Canada's gaming industry. The association’s mandate is to promote the economic value of games in Canada; Use research, innovation and best practices t.[1][2] Regulatory agencies include:
- Nova Scotia Alcohol and Gaming Authority
- Quebec Régie des Alcools des Courses et des Jeux
United States[edit]
In the United States, gambling is legal under federal law, although there are significant restrictions pertaining to interstate and online gambling.
States[edit]
Individual states have the right to regulate or prohibit the practice within their borders. Regulatory agencies include:
- California Gambling Control Commission
- Delaware Lottery
- Maryland Lottery (Controls both the lottery and the state's slot-machine program)
- Nevada Gaming Commission[3]
- New Jersey Casino Control Commission
Tribes[edit]
In the United States, some Native American tribal nations have established their own gaming control boards for the purpose of regulating tribe-owned casinos located within reservations. Although the tribal nation also owns the casino, appointing an independent gaming control board to oversee regulatory activities provides tribal members with assurances that the casino is operated within expected standards and that tribal revenue is accurately collected and reported. Native American casinos are subject to the provisions of the Indian Gaming Regulatory Act, which is enforced by the National Indian Gaming Commission (NIGC). The NIGC establishes minimum internal control standards and other requirements that each Native American gaming control board must follow. However, the NIGC does not have jurisdiction over state-regulated entities.
Oceania[edit]
- New South Wales, Australia: Gaming Tribunal of New South Wales
- Queensland, Australia: Queensland Office of Gaming Regulation/Queensland Gaming Commission
- Victoria (Australia): Victorian Commission for Gambling Regulation
- South Australia: South Australia Independent Gambling Authority
References[edit]
- ^'Canadian Gaming Association'. canadiangaming.
- ^'CanadianFreeSlots'. May 15, 2019.
- ^'Gaming Regulation in Nevada'(PDF). Archived from the original(PDF) on August 9, 2007. Retrieved 2007-08-17.