In this regard, this paper intends to proffer answers for the following research questions: ¢ How effectively can casinos enhance tourism in their host communities? ¢ Do casinos eliminate or reduce the flow of gaming dollars to other communities? ¢ Has the growth of casinos increase or reduced personal bankruptcy filings in the host community? ¢ Has the crime volume increased or decreased the volume of crime in the local community? Literature Review.
While it might be inaccurate to say that casinos or gambling in general is a newcomer to the entertainment sector, it is obvious that the rapid development of casinos in the last three decades is unprecedented in history (Eadington, 1995). As a result, there are relatively fewer literatures on the topic of casinos. However, sociologists, economics and social scientists have written several articles on the topic dwelling on several economic models, philosophical or verbal arguments to present their opinions on the impacts of casinos.
A brief history of the development of casinos in the United States is however, necessary, before looking at the various opinions on the economic impacts of casinos. Eadington (1999) provided a brief history of casino development in the United States. The author explained that by the early 1960s, gambling was at its lowest ebb in America, and almost all forms of gambling were prohibited in the country except for Nevada where casinos and some other forms of gambling was legal.
Rose (1991) posited that there have been several previous waves of legalization and prohibition of gambling in the country. He explained that the second wave of gambling legalization was around 1910 and Nevada was the only state where gambling remained legal. Eadington explained that from the 1930s till as early as 1960s, gambling was seen by many as an immoral, sinful and criminal act that should not be allowed in the society. Nobody believed that any good thing could come of gambling.
To buttress this, the author stated that journalistic expose of the periods discussed in lucid details the corrupt and sensational events that surrounded the operations of casinos in Las Vegas, Nevada and identified ties to various criminal organization. However, the social perception, and legal status of casinos began to change in the 1970s after Nevada passed the Corporate Gaming Act of 1969, permitting publicly traded corporations to hold gambling licenses, for the first time in history.
Gazel (1998) also asserted that the passing of this Act is partly responsible for the rapid growth and acceptance of casinos afterwards. Gazel stated that as large corporations, such as the MGM, Holiday Inn, Ramada etc began to run casinos, public perception about casinos as a sinful, immoral activity that has ties to criminal organizations and the mafia, changed to that of clean, safe, theme-oriented activity (Gazel, 1998:67), and the rapid development of Las Vegas, Nevada, and later Atlantic city became good examples other states wanted to emulate.
Other factors that has spurred the growth of casinos in America, according to Gazel (1998) includes the fact that gambling is now regarded as a form of entertainment, especially as some churches and some other charitable institutions promote some form of gambling like lotteries, charitable bingo and events like Las Vegas nights, with the argument that the generated revenues are used for good purposes. Furthermore, several states and politicians have come to see legalized casinos as an easy solution to the budget problems several states face.
Revenues from casinos constitute an easy way to increase the economic strength of any community; county or state, without imposing new taxes on the people or increasing old taxes. These factors put together have helped to create a thriving medium for casinos in America. Several economic models have been employed in describing the economic impacts of casinos. Some of the important models are described below. The multiplier Concept: This concept is a central idea behind most economic impact studies, and it is derived from the Keynesian Theory (Eadington, 1995).
This concept can be explained thus: if one new dollar is injected into the economy through the purchase of a good or service, it has a direct impact of improving the output by one dollar. However, the new dollar becomes income to the person selling the product, who will, for instance, spend $0. 5 out of this income. As a result, the economic impact of the new one dollar injected in the economy is now $1. 5. Furthering this argument, the $0. 5 spent is income to someone else, who will also spend a part of the income. So, down the line, the economic impact of one dollar injected into the economy is far greater than one dollar.
Proponents of casinos use this argument to argue for the positive impact of casinos on local economies. They argue that casinos create jobs. The multiplier effect of the income paid to employees of casinos thus helps develop the economy of the local community. The Crowding Out Concept: Critics of casinos often use this concept to illustrate the negative economic impact of casinos. The idea behind this concept is that every single dollar spent by a local citizen in a casino would otherwise bee spent on other form of entertainments.
The study carried out by the National Gambling Impact Study Commission (1998) confirms this argument when in its report it stated that small business owners in Atlantic City, New Jersey testified that when casinos first stated in the city in 1978 there were 311 taverns and restaurants in the city, nineteen years later, only 66 survived. Using this concept as yardstick, critics believe that casinos offer no net positive economic impacts on a community. In this regard, Rose (1995) asserts that A casino acts like a black hole sucking money out of a local economy.
No one cares if you suck money out of tourists, but large scale casinos that do not bring in more new tourists dollars than they take away from local players and local businesses soon find themselves outlawed (1995:34). This last statement is often referred to as the International Trade concept. Critics argue that for casinos to have a net positive economic impact on the local economy, it must attract more tourist or out- of- state gamblers. This argument is based partly on the multiplier effect.
That is, every dollar spent by a tourist constitutes a new dollar injected into the local economy and therefore could potentially impact the economy positively. Although, some authors kick against this concept. In sum, several studies have employed different models and/or concept in analyzing the impacts of casinos on the local economy, and there appears to be no agreement on the topic. While using multiplier effect and input/output models, authors like Hammer (1995) reported net positive economic impact of casinos.
He reported that every job created in the casino industry in New Jersey creates an additional 1.09 jobs in other industries in state. While critics posit that such simplistic models cannot report give a complete picture of the economic impacts of casinos. Methodology In order to satisfactorily answer the research questions raised, the method chosen for the proposed study is case study approach. To answer the research questions adequately requires multiple units of analysis, and multiple units of analysis necessitates multiple data sources and thus requires different procedures, data sources and data collection techniques.
Thus, it is believed that a case study approach will adequately serve the purpose of this study. With the case study approach, a community that has one or two thriving casinos will be chosen as the case study. A time frame is established that covers an equal period in time before the casino was established in the community and after the casino has been established. This will be done in order to minimize problems with validity of data. Within this time frame established the various questions raised will be examined.
That is, tourism to the community will be examined before and after the establishment of the casino, over the same period in time, rates of personal bankruptcy filings, traveling to neighboring communities casinos to gamble and the volume of crimes in the community will be examined over the same period in time. On sampling technique, gamblers will be intercepted in non gaming areas of the casino building; interested participants will be presented with questionnaire instruments, while those who are from neighboring communities will be contacted on phone for follow up survey.
The interception will take place at the specific times of the day and specific days of the week or weekend over a period of four-five months. During these times, participant will be randomly selected from the total pool of gamblers available. The response from this survey will be analyzed and result will be presented in a lucid and organized manner. Conclusion Casinos have undoubtedly become a strong component of not only the entertainment industry in America, but also an important source of revenue for states and counties.
There is no denying the fact that primarily, casinos create jobs and help improve the cash flow in a community. However, the secondary impacts on local economies have been a source of great debates. No single literature has been able to adequately address the complete picture, although several authors have carried out studies on the topic, sentiments tend to have polarized academic efforts on casinos. Promoters and proponents of casinos have sponsored several studies that see no evil in casinos, while critics have pointed out the various negative economic and social impacts often ignored by such positive results.
However, one fact that is obvious is the fundamental argument that no human endeavor is perfect. Therefore, further objective studies are required on the topic to shed more light on the mid term and long term positive and negative impacts of the rapid development of casino in the American society. References Eadington, William (1994). The Legalization of Casinos: Policy Objectives, Regulatory Alternatives and Cost/Benefit Considerations. Journal of Travel Research, 34, 3:3-8 Eadington, William (1995). Economic Development and the Introduction of Casinos: Myth and realities.
Journal of Economic Development Review, 13:4, 51-54 Eadington, R. William (1998). Contributions of Casino-Style Gambling to Local Economies. Annals of the American Academy of Political and Social Science, 556:53-65. Eadington, R. William (1999). The Economics of Casino Gambling. The Journal of Economic Perspectives, 13, 3:173-192. Gazel, Ricardo (1998). The Economic Impacts of Casino Gambling at the State and Local Levels. Annals of the American Academy of Political and Social Science, 556:66- 84. Goss, Ernie and Morse, A. Edward (2005).
The Impact of Casino Gambling On Individual Bankruptcy Rates from 1990 to 2002. Working Paper: 2005_04, Department of Economics, Creighton University. Hammer, Thomas P (1995). Economic Impact of the New Jersey Casino Industry. Rowan College, NJ: The Management Institute. National Gambling Impact Study Commission (1998).
The Regional Economic Impacts of Casino Gambling: Assessment of the Literature and Establishment of a Research Agenda. Moufakkir, Omar and Donald F. Holecek (2002). Impacts Of Detroits Casinos On The Local Community. Unpublished Dissertation, Michigan State University, East Lansing, MI.