Do Casinos Contribute to the Common Good?: A Utilitarian Analysis

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Do Casinos Contribute to the Common Good? A
Utilitarian Analysis

• Andrew Gustafson
• Creighton University
• Omaha, Nebraska, USA

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Long History of Opposition to Gambling
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Ethical Behavior of Casinos

• Typical Business Ethics Questions
• Customers Service, Respect, Care
• Employees Respect, Fairness, Compensation
• Environment Sustainability
• Community Philanthropy, Education
• Financial Disclosure

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Ethical Culture

• Codes
• Responsibility (Officer, Go-To person)
• Training/ Real Discussions
• Accountability Tracking, Monitoring, Auditing
• Enforcement, Follow-Through
• Reassessment, Ongoing Reform

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Philosophical Question Does Casino Culture
Nurture Virtues?

• Justice Proper concern for others
• Or do casinos promote self-centeredness?
• Prudence Wisdom to judge appropriate act
• Or do casinos encourage rash short-term action?
• Temperance Self-control and Moderation
• Or do casinos encourage excessive indulgence?
• Courage Ability to face uncertainty,
  intimidation
• Or do casinos encourage escapism?

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Social Benefit/Utility/Greater Good

• The Questions of This Presentation
• Do Casinos, and what they are, promote the
  common/greater good?
• Solutions How can whatever harm they do be
  alleviated/Offset?

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UTILITARIANISMJohn Stuart Mill
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1. Greatest Happiness for the Many

• Mills social utilitarianism is concerned about
  the welfare of the many, rather than just the
  individual.

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2.Long Term Benefit

• Social utilitarianism focuses on the long-term or
  cumulative benefit, not merely the local,
  short-term, or immediate benefit. A company which
  follows this social utilitarianism will be
  concerned with fair treatment of employees,
  honest habits with customers and suppliers, and
  just policies because acting with justice,
  fairness and honesty will, in the end, produce
  the greatest happiness for the manythrough
  increased productivity, a strong reputation, and
  customer loyalty all leading to a positive
  outcome.

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3. Moral Education/Socialization

• Mills social utilitarianism relies on education
  and the development of social ties to under gird
  our moral motivation, so that we will act
  according to the Greatest Happiness Principle.
  This is the sort of corporate culture
  construction which we achieve through strategized
  ethical training and integrity development.

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4. Historical Trends

• Overall historic tendencies, not particular
  exceptional particulars, guide the decision.
  Mills utilitarianism is concerned not with
  static results, but with dynamic trends.
• When Mill says actions are right in proportion
  as they tend to promote happiness, wrong as they
  tend to produce the reverse of happiness he is
  looking for derivative rules of action which only
  usually or more often than not promote the
  benefit of the many.

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Social Benefit/Utility/Greater GoodThe Questions
of This Presentation

• 1. Greater Good for the Many
• 2. Long Term Benefits
• 3. Moral Education/Socialization towards Higher
  Pleasures
• 4. Historial Trends

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Apparent Greater-Good/Benefits of Casinos

• Economic Benefit
• Jobs
• New Businesses (auxillary support businesses)
• Tax Revenue
• Public Goods Projects
• Entertainment

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Four Brief Examples of Casinos Contribution

• 1. Vegas
• 2. Bethlehem Pennsylvania
• 3. Macau
• 4. Council Bluffs, Iowa

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Las Vegas 1940
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Las Vegas 2010
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2 Macau
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Macau vs Vegas
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3 Sands Corp in Pennsylvania
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Old Bethlehem Steel Mills
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Closed 1995
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Sands Corp Casino Openned 2009
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743 million property
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Small Scale Local Economic Enabling 4 Iowa West
Foundation

• Since its inception the Iowa West Foundation's
  grant program (funded by Casinos) has awarded
  over 200 million that has improved the quality
  of life of thousands of citizens in 100 area
  communities in Western Iowa and Eastern Nebraska.

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Community Development Beautification

•  
• A high priority is given to community development
  projects that encourage neighborhood
  revitalization and create more livable
  neighborhoods, as well as improving downtowns and
  community main streets.

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Mainstreet Beautification
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Economic Development

• Retain or create family wage jobs that will
  result in increased economic self sufficiency for
  area families and residents.  The Foundation's
  primary economic development role is to serve as
  a catalyst by building the capacity of the public
  and the nonprofit sectors to effectively plan and
  manage economic development projects.

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Education

•  
• The Foundation has an interest in new and
  innovative programs that promote life-long
  learning, academic performance and workforce
  preparation.
•  
• Early childhood educational programs and quality
  daycare programs that address underserved age
  groups and serve children from economically and
  educationally disadvantaged families in
  Pottawattamie County will be seriously
  considered.

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Human and Social Needs

•  
• High priority on new and innovative programs that
  strengthen families, address the needs of
  underserved youth, provide services to senior
  citizens, and help our citizens to reach their
  potential. Examples of such programs include
  proposals that address the following
  homeless/transitional housing needs the high
  incidence of teen pregnancy, the lack of
  available prenatal care and chemical dependency
  issues, especially the increase in the region of
  methamphetamine use.

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Examples of Public Art
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Jun Kaneko
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Critics of Casinos

• 1. Grinols Gambling in America
• 2. Goss and Morses Governing Fortune
• Question Do Harms outweigh Benefits?

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Grinols Taxonomy of Casino Negative
Externalities

• 1. Crime
• 2. Business/Employment Costs
• 3. Bankruptcy
• 4. Suicide
• 5. Illness
• 6. Social Service Costs
• 7. Direct Regulatory Costs
• 8. Family Costs
• 9. Abused Dollars

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1. Crime

• Crimes Grinols associates with gambling
• Organized Crime
• Assault Robbery
• Rape Murder
• Larceny Burglary
• Auto theft
• Fraud Forgery
• Tax evasion/fraud
• Confidence games
• Bookmaking
• Pimping/prostitution
• Selling drugs
• Fencing stolen goods.
• Grinols and Mustard in an earlier study estimated
  that approximately 8.6 percent of property crimes
  and 12.6 percent of violent crimes in casino
  counties were due to adding a casino.

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Crime (Goss Morse)

• 56 percent of those in gambling treatment had
  engaged in stealing to finance gambling.
• A study by the U.S. Department of Justice which
  showed that among sample arrestees in Las Vegas,
  Nevada and Des Moines, Iowa, the percentage of
  problem or pathological gamblers was three to
  five times higher than that of the general
  population. (Goss, 81)
• The Mall of America had 7.7 more visitors than
  Las Vegas, yet had a crime rate less than 1/15th
  that of Las Vegas. In other words, casinos seem
  to attract crime in ways that non-casino visitor
  attractors do not.

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Response to Crime Critique

• Grinols admits, usually theft is not counted by
  economists as a social cost in itself, but only
  insofar as it increases social expenses of
  policing and prosecuting. The statistics he
  provides regarding the increased expensing and
  prosecuting costs incurred per pathological
  gambler do just that, but it is questionable
  whether it is legitimate to include all money or
  property stolen by pathological gamblers as
  social costs of gambling. It very well may be
  that pathological gamblers tend also to be drug
  addicts or pathological thiefswhich may just as
  well lead to their thieving fraudulent
  behavior--in other words, without more data,
  there is no necessary connection to be drawn
  between the gambling per se and theft or fraud.

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2. Business and Employment Costs

• Grinols claims that gambling leads to business
  and lost employment costs in the following two
  ways
• a. lost productivity on the job because of
  reduced performance
• b. lost time and unemployment that includes sick
  days off for gambling, extended lunch hours,
  leaving early and returning late due to gambling,
  and firing because of gambling problems such as
  employee embezzlement. (135)
• Between 21 and 36 percent of problem gamblers in
  treatment reported losing a job because of their
  gambling

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Response to Workloss Critique

• A. This is a significant factfor problem
  gamblers. But we know that problem gamblers make
  up a very small percentage of the overall
  population, meaning that 21-36 of a small
  fraction of the population saw their job loss to
  be due to their gambling.
• B. Gambling is one among a wide variety of
  activities which contribute to lost productivity
  at work. Personal internet use at work and
  activities such as fantasy football or office
  bets during the NCAA sweet sixteen no doubt lead
  to even more lost productivity than gambling by
  problem gamblers, overall.

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3. Bankruptcy

• Grinols writes, Bankruptcy imposes social costs
  by diverting resources to lawsuits, legal costs,
  and bill collection costs. Never-paid debts of
  gamblers are a social cost to the rest of
  society. (139)
•  
• Iowa Study The 298 U.S. counties which have
  legalized gambling within their borders had a
  1996 bankruptcy filing rate 18 percent higher
  than the filings in counties with no gambling,
  and the bankruptcy rate was 35 percent higher
  than the average in counties with five or more
  gambling establishments
• Garrett and Nicols also confirmed a connection
  between casinos and an increase in bankruptcy in
  their 2005 research study. (Garrett, 2005)
• Goss and Morse in another 2005 study also found
  that bankruptcies in casino counties are higher
  than non-casino counties over the long run.
  (Goss, 2005)
•  

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Response to Bankruptcy Critique

• There seems to be some real direct connection
  between personal bankruptcies and gambling.
• While there seems to be no doubt that gambling
  seems to coincide with increased bankruptcies,
  without knowing the actual net costs of those
  bankruptcies, it is difficult to know what the
  real social costs involved are, or how to compare
  that to the social benefits of casinos.

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4. Suicide

• Studies report that 15 to 24 percent of Gamblers
  Anonymous gamblers and hospitalized pathological
  gamblers have attempted suicide, rates that are
  five to ten times the average for the general
  population. (141)
• He does provide some examples of people killing
  themselves at Casinos as evidence that the casino
  losses were in those cases the primary factors
  leading to suicide. He concludes that the full
  extent of the influence of gambling on
  suicidesremains a question for further
  research. (143)

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Response to Suicide Critique

• Of course this correlation could be due to other
  factors, such as the possibility that
  pathological gamblers possibly have other
  personal issues as well, such as drug addictions
  or other problems leading to suicide attempts, as
  Grinols admits.

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5. Illness

• Gambling has been linked to headaches,
  depression, stress-related illnesses, anxiety,
  moodiness, irritability, intestinal disorders,
  cognitive distortions and cardiovascular
  disorders.

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Response to Illness Critique

• It should be pointed out that many things such as
  marriage, medical school, lack of proper
  exercise, and long hours at work have also been
  linked to such illnesses. Grinols himself admits
  that not enough research exists to substantially
  show the unique costs of gambling in terms of
  illnesses.

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6. Social Service Costs

• Grinols points to cost of unemployment caused by
  gambling for pathological gamblers, including
  unemployment benefits and foodstamps. He
  provides no data as to these costs.

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7. Direct Regulatory Costs

• Gambling has been regulated by government
  because it historically has been subject to fraud
  and abuse. (144)
• Grinols brings up one statisticthat a 1999 study
  in Louisiana found that the costs of regulating
  gambling in the state were 50.02 million per
  year, which works out to 16.53 per person.
  Since the study is not cited, it was difficult to
  verify.

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Response to Regulatory Costs Critique

• Given that the regulating cost is accurate, it is
  important also to realize that the Louisiana
  gambling industrys annual gross revenue in 2004
  was nearly 2.5 billionfourth in the nation
  after Nevada, New Jersey and Mississippi.
•  
• Of course we have regulations in place for the
  insurance industry, financial sector, accounting
  firms, and meatpacking among many other
  industries. SOX, EPA regulations, OSHA, SEC
  regulations and a variety of other regulations do
  cost society, no doubt.

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8. Family Costs

• Included among the social costs of gambling by
  Grinols are the costs of divorce, separation,
  spousal abuse, and child neglect and abuse. He
  cites data that in one study 53.5 percent of
  pathological gamblers reported having been
  divorced, compared with 18.2 percent of the
  nongamblers being divorced. (145). He
  immediately admits that there are other causes to
  divorce of course.

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9. Abused Dollars
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Problem Gamblers

• It was estimated that in 2004 there were
  approximately 5,726,797 problem and pathological
  gamblers in the US. (Goss, 73)
• One study indicated that problem gamblers
  provide much revenue 60 of gaming machines, 53
  of horse racing, 22 of casino table games, 22
  of bingo and raffles and 19 of lottery revenues
  came from problem gamblers. (Robert Williams and
  Robert Wood, The Demographic Sources of Ontario
  Gaming Revnue at 42 (Ontario Problem Gambling
  Research Center, June 23, 2004.)

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Pathological GamblingAccording to the Diagnostic
and Statistical Manual of Mental Disorders

•  
• (1) preoccupied with gambling (e.g., preoccupied
  with reliving past gambling experiences,handicappi
  ng or planning the next venture, or thinking of
  ways to get money with which to gamble)
• (2) needs to gamble with increasing amounts of
  money in order to achieve the desired
• excitement
• (3) has repeated unsuccessful efforts to control,
  cut back, or stop gambling
• (4) is restless or irritable when attempting to
  cut down or stop gambling
• (5) gambles as a way of escaping from problems or
  of relieving a dysphoric mood (e.g., feelings of
  helplessness, guilt, anxiety, depression)
• (6) chasing" ones losses)
• (7) lie to conceal the extent of involvement with
  gambling
• (8) has committed illegal acts such as forgery,
  fraud, theft, or embezzlement to finance gambling
• (9) has jeopardized or lost a significant
  relationship, job, or educational or career
  opportunity because of gambling
• (10) relies on others to provide money to relieve
  a desperate financial situation caused by
• gambling
• (http//govinfo.library.unt.edu/ngisc/reports/appe
  nb2.pdf)
•  

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Problem Gamblers are a Minority

• 1 US Population fit pathological parameters
• 2 Fit Problem Parameters
• the responsible gambler probably represents the
  majority of the gambling population. They engage
  in an activity that apparently gives them
  pleasure and seems harmless enough. However, for
  the minority who lose more than they can afford,
  creating convenient access to gambling creates a
  significant potential for harm, not only to
  themselves but also to othersthe available data
  suggest that this minority of the gambling
  population is providing a significant portion of
  the revenue. (Goss Morse, 267)

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Criticisms of Grinol 1 Causal Connection?

• Grinol often cites a correlation between
  pathological gambling and some particular social
  malady, but then immediately admits that
  correlation does not mean that there is a causal
  connection. That pathological gamblers are more
  likely to be divorced or have money problems does
  not mean that their gambling is what caused these
  problems.
• As Goss and Morse write, What is not clear in
  each of thee examples of social costs of
  gambling is the extent to which some other
  dysfunctional behavior might also be a
  contributing, if not intervening, cause of the
  event. Problem gamblers often share other
  pathologies, such as alcoholism, that provide
  additional basis for causation. A significant
  correlation appears between alcohol abuse and
  gambling pathology. (Goss, 75) One study shows
  that those who average more than four drinks per
  day are five times as likely as teetotalers to
  become problem or pathological gamblers.
• John Welter et al., Alcohol and Gambling
  Pathology among U.S. Adults Prevalence,
  Demographic Patterns and Comorbidity, Journal of
  the Study of Alcohol , (September, 20010), 710.

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2 Grinols Prohibition Solution?

• A second difficulty with Grinols
• arguments is that on his logic, we
• would likely go back to prohibition.
• It is likely that there are more people
• who struggle with alcohol abuse than
• with pathological gambling, and alcohol
  certainly causes more deaths and probably many
  more social costs than gambling. But if we
  intend to outlaw gambling because of the negative
  effects of the few pathological gamblers on
  society, then it seems that it would by the same
  reasoning be reasonable to outlaw alcohol due to
  the negative effects of alcohol abusers on
  society.

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Prohibition is Unlikely

• Throughout history, Every society that has
  allowed casinos to cater to local customers has
  eventually outlawed gambling. (Rose)
• In jurisdictions with significant gambling
  investments, the prospects of returning to a
  regime of criminal proscription are remote. As
  in the ancient myth, the contents of Pandoras
  box could not be returned once they had been
  released into the world. (Goss Morse)

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3 Grinnols Ignores the Benefits

• A third difficulty with Grinols argument is that
  he really does not adequately account for the
  benefits of gaming revenues in some situations.
  Atlantic City is a worst case scenario.
•  
• It may be argued that there are particular
  scenarios where gaming actually avoids some of
  the major criticisms of Grinols, Goss and
  Morsesituations where gaming does not
  cannibalize other jobs, and brings great economic
  prosperity to an otherwise desolate economic
  landscape. Las Vegas and Macau may both be huge
  exceptions to the criticisms that gaming hurts
  more than it helps.

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Goss and Morse Greater Good From Casinos?

• Goss and Morse in their book Governing Fortune
  Casino Gambling in America provide a lot of legal
  and economic data.

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Help for Tax Burden Relief? (No)

•  
• Although tax collections from casinos have gone
  up, benefits to the taxpayer seem negligible.
  Casino-state taxpayers havent experienced
  benefits in terms of taxes measured against
  personal income, and casinos seem to have no
  impact on property taxes.

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Smaller Rural Counties Benefit More

• What Goss and Morse did find was that counties
  with smaller and less dense populations and lower
  per capita income tend to benefit from casinos
  more than otherwise situated counties (Goss, 51)

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Mixed BlessingCasinos More Jobs, Lower Pay

• Goss and Morse state that Our results indicate
  that casinos tend to dampen income growth but
  increase job opportunities in the counties where
  they are located. (Goss, 66) This is likely
  explained by the fact that casino jobs do not pay
  as well as other jobs in the counties
  represented, so that while there are more jobs in
  the county, a greater portion of those jobs
  provide lower income than the previous median
  income in the county.

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Grinol Solutions to the Negative Effects of
Casinos?

• Limiting the size of jackpots
• Limiting the length of play, access, or the rate
  of play.
• Making casinos less arousing
• Providing less variability in the games
• Decreasing the inducements to play.
• Problem with these suggestions It seems that
  suggesting these strategies for casinos is like
  suggesting to Ambercrombie and Fitch that they
  only sell full length Amish dresses to eleviate
  the sexualization of women through their
  catologues.
•  

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Morse/Goss Solutionlicensing of patrons of
casinos.

• Our legal and moral traditions recognize that it
  is entirely appropriate to constrain behavior
  that imposes costs on others without their
  consentA licensing requirement for gambling
  patrons would not be inconsistent with
  restrictions on other activities that potentially
  impact the community. (Morse, 260-1)

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Candidates for exclusion/denial

• those receiving public assistance
• those behind on child support payments
• those who have filed for bankruptcy.
• restrict according to income (as Singapore
  recently proposed)--this seems to unfairly
  restrict modest income earners from gambling, and
  not take into account that high income earners
  can still have problematic gambling habits which
  harm society.

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Conclusions

• Greater Restrictions on Problem gamblers by the
  industry would help alleviate concerns from
  public and governments
• Much of the data often used is inconclusive
• Gambling does seem to have direct connections to
  bankruptcy rates, and some social costs.
• Gaming in most cases brings some jobs but drives
  down wages.
• Iowa West and Other such foundations can provide
  useful public goods.

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With Great Wealth, Comes Great Responsibility

• The family that perseveres in good works will
  surely have an abundance of blessings. -Chinese
  Proverb
• Wealth is not to feed our egos, but to feed the
  hungry and to help people help themselves.-Andrew
  Carnegie
• A man of humanity is one who, in seeking to
  establish himself, finds a foothold for others
  and who, desiring attainment for himself, helps
  others to attain.
• -Confucius