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Gambling study flawed. Ask casino workers.

Did you know that a study used to promote the economic development benefits of gambling in Wichita has casino workers paying for a large part of the social costs of gambling?

There is a document titled “Economic & Social Impact Anlaysis [sic] For A Proposed Casino & Hotel” created by GVA Marquette Advisors for the Wichita Downtown Development Corporation and the Greater Wichita Convention and Visitors Bureau, dated April 2004. One presentation concludes that the average cost per pathological gambler is $13,586 per year. Quoting from the study in the section titled Social Impact VII-9:

Most studies conclude that nationally between 1.0 and 1.5 percent of adults are susceptible to becoming a pathological gambler. Applying this statistic to the 521,000 adults projected to live within 50 miles of Wichita in 2008, the community could eventually have between 5,200 and 7,800 pathological gamblers. At a cost of $13,586 in social costs for each, the annual burden on the community could range between $71 and $106 million.

If all we had to do was to pay that amount each year in money that would be one thing. But the components of the cost of pathological gamblers include, according to the same study, increased crime and family costs. That is, people are hurt, physically and emotionally, by pathological gamblers. Often the people harmed are those such as children who have no option to leave the gambler.

But this study makes the argument that the economic benefits of gambling will more than pay for this social misery: “While this community social burden could be significant, its quantified estimate is still surpassed by the positive economic impacts measured in this study.”

How does the report make this conclusion? The largest components of the positive economic impacts are employee wages ($37 million), additional earnings in the county, and state casino revenue share, along with some minor elements. Together these total $142 million, which is, as the authors point out, larger than the projected costs shown above.

But this analysis is flawed. Casino employee wages can’t be used to offset the social costs of pathological gamblers, as these employees probably want to spend their wages on other things!

Economic impact studies like this often assume that any economic activity the proposed development might create is due solely to its existence, and that these monies can be used to pay for whatever problems or costs the development causes.

Just ask the prospective casino employees where they want their wages to go: into their own pockets, or be used, as this study uses them, to pay for the social costs of gambling.

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2 Comments

  1. Anonymous April 7, 2007

    GVA Marquette Advisors was also used by Kathleen Sebelius. A simple Google search will reveal that GVA Marquette Advisors “is recognized as an expert in the rapidly expanding gaming industry, including Native American gaming, riverboat and dockside casinos…” http://www.americangaming.org/about/members_detail.cfv?ID=148

    For an objective study, see http://www.americanexperiment.org/uploaded/files/gamblinginminnesota.pdf

    So, how should we approach the gambling debate? By understanding the facts, asking the right questions, and applying some basic reasoning.

    Increased Bankruptcy – A national study has found that counties with gambling enterprises hadan average of 18 percent more bankruptcies than those without. Counties with five or more gambling establishments were found to have 35 percent more bankruptcies.

    Increased Crime – The research of economist Earl Grinols shows that casinos contribute to increased crime. Grinols has found that while crime does not begin to increase until approximately four years after the introduction of casinos, a noticeable increase occurs at that time. He explains the lag time as a result of gamblers depleting resources before turning to crime.

    Increased Suicide – Las Vegas has the highest levels of suicide in the nation for residents and visitors. Other states have seen marked increases in the suicide rate since introducing casinos.

    Increased Family Problems – The National Gambling Impact Study Commission and several other groups have found that easy access to gambling has led to increased rates of divorce, domestic violence, child abuse, and child neglect.

    Total Social Costs – Grinols estimates that casino gambling in America contributes $289 in social costs for every $46 of benefit.

    In addition to the tangible cost/benefit analysis, we should ask ourselves several questions dealing with the messages sent by expanding the state???s role in gambling. The questions include the following:

    ?? Should local and/or state governments serve as an enabler for the destructive habits of some of its citizens?

    ?? How can the we promote hard work and personal responsibility among citizens while trying to persuade those citizens to get rich quick at a state-owned casino?

    ?? Is expanded gambling trully a good way to gain revenue?

    ?? Will the growth of expanded gambling come at the expense of private businesses?

    ?? What are the real demographics of the casino users?

    ?? Of the total projected revenue received by the casino, how much is projected to be spent by demographic category compared to how much will stay within the city, county, state?

    ?? Who will oversee a state-owned casino?

    ?? What is the net job impact of ???value add??? jobs added vs value add jobs lost due to above?

    ?? Does a casino pass the Visioneering Wichita core values test? Let me remind you what they are; Integrity, Faith in God, Responsible, Innovative, Family Values, Excellence, Respect, Initiative, Appreciate Diversity.

  2. Margo May 25, 2008

    Very interesting article. I never have thought about the workers in the casino. Well, I have really often thought about the owners, about the people with the big bucks, but the little ants have remained until now unnoticed by me. Great article, thanks.

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