GAMBLING BENEFITS

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GAMBLING BENEFITS COSTS
Earl L. Grinols New Hampshire,
17 November 2009
Independent research--not funded by gambling or
anti-gambling organizations.

• Cannibalization
• Benefits vs Costs
• Relevant Totals
• Crime

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Funded by locals, other businesses
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Revenues diverted

• New Mexico Taxation and Revenue Dept. study

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NM Taxation and Revenue Dept.
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NM Taxation and Revenue Dept.
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Crimes and Related
A 64-year-old mother of seven pleaded guilty
Tuesday to embezzling 298,000 from her
employerdriving it out of businessto feed her
slot machine habit. Laura A Iserloth, who lives
in Sheboygan County(Wisconsin) embezzled the
money from the Kettle Moraine Employees Credit
Union over a 10-year period. (Milwaukee Journal
Sentinel, 9 August 2000)
An insidious new kind of crime is taking hold,
radiating out across southern New England from
the two Indian casinos in eastern Connecticut.
It is embezzlement committed by desperate
gamblers, usually compulsive gamblers, who work
in positions of trust (Hartford Courant, 23
August 2000)
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Crimes and Related
Department of Children Families supervisor
Violet Jones pleaded guilty in September to
stealing the 1.54 million knowing she faced a
minimum of 10 years in prison. (South Florida
Sun-Sentinel, 21 November 2008)
Eve Osborne has a lot in common with Michelle
Paluga and Sandra Benner. All three are
convicted thieves two are in prison. They join
a growing national trend of women who steal,
cheat and rob to feed their gambling addiction.
(Cincinnati Enquirer, 23 November 2008)
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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Crimes and Related
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SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER SOCIAL COSTS PER PATHOLOGICAL GAMBLER
          MD FL WI CT SD LA US SC NV Adjusted
      Politzer et al. 1981 Exec. Office of Gov, 1994 Thompson et al. 1996 Thompson et al. 1998 SD Leg. Research Council, 1998-99 Ryan et al, 1999 Gerstein et al. 1999 Thompson, Quinn, 1999 Schwer et al. 2002 Row Avgs for Studies 1994-2002
CRIME CRIME CRIME CRIME CRIME    
  Apprehension Increased Police Costs Apprehension Increased Police Costs Apprehension Increased Police Costs Apprehension Increased Police Costs 31 48 1,325 40 76 60 263
  Adjudication (Criminal and Civil Justice Costs) Adjudication (Criminal and Civil Justice Costs) Adjudication (Criminal and Civil Justice Costs) Adjudication (Criminal and Civil Justice Costs) 4,248 860 667 36 493 312 54 404
  Incarceration and Supervision Incarceration and Supervision Incarceration and Supervision Incarceration and Supervision 6,719 22,182 528 597 506 525 296 203 3,548
BUSINESS AND EMPLOYMENT COSTS BUSINESS AND EMPLOYMENT COSTS BUSINESS AND EMPLOYMENT COSTS BUSINESS AND EMPLOYMENT COSTS BUSINESS AND EMPLOYMENT COSTS 26,764  
  Lost productivity on job Lost productivity on job Lost productivity on job Lost productivity on job 97 710 1,710 839
  Lost Time Unemployment Lost Time Unemployment Lost Time Unemployment Lost Time Unemployment 1,767 2,152 4,121 415 1,321 1,795 1,928
BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY 359 77 447 294
SUICIDE SUICIDE SUICIDE SUICIDE SUICIDE  
ILLNESS ILLNESS ILLNESS ILLNESS ILLNESS 907 907
SOCIAL SERVICE COSTS SOCIAL SERVICE COSTS SOCIAL SERVICE COSTS SOCIAL SERVICE COSTS SOCIAL SERVICE COSTS  
  Therapy/Treatment Costs Therapy/Treatment Costs Therapy/Treatment Costs Therapy/Treatment Costs 305 76 100 301 39 54 174 150
  Unemployment Other Soc. Svc. (Incl. Welfare Food Stamps) Unemployment Other Soc. Svc. (Incl. Welfare Food Stamps) Unemployment Other Soc. Svc. (Incl. Welfare Food Stamps) Unemployment Other Soc. Svc. (Incl. Welfare Food Stamps) 423 652 728 46 188 209 116 337
GOVERNMENT DIRECT REGULATORY COSTS GOVERNMENT DIRECT REGULATORY COSTS GOVERNMENT DIRECT REGULATORY COSTS GOVERNMENT DIRECT REGULATORY COSTS GOVERNMENT DIRECT REGULATORY COSTS  
FAMILY COSTS FAMILY COSTS FAMILY COSTS FAMILY COSTS FAMILY COSTS  
  Divorce, Separation Divorce, Separation Divorce, Separation Divorce, Separation 73 73
ABUSED DOLLARS ABUSED DOLLARS ABUSED DOLLARS ABUSED DOLLARS ABUSED DOLLARS 34,104   2,650 6,387 318 2,414   1,599 6,915 3,381
12,125
Values reported in 2009 .
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Benefits Versus Costs
Govt Soc. Svc.
Benefits (Upper bound)
Crime
Crime
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Costs Per Capita

• Crime Larceny, theft, loan fraud, rape,
  assault,, embezzlement, murder. (Apprehension,
  Adjudication, Incarceration, Rehabilitation).
  62
• Business and Employment Costs
  69
• Bankruptcy
  3
• Suicide ??
• Illness 10
• Soc. Svc. Welfare,unempl.comp. 23
• Govt Direct Regulatory Costs 16
• Family Costs Divorce, child abuse
  1
• Abused Dollars
  70
• TOTAL 254

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• Our state has become reliant on an industry that
  rather than a boon has actually been a drain on
  our resources.
• The people of this state were sold a bill of
  goods when the Legislature approved casinos and
  its time we cut our losses and cash out.
• Rep. John Bradley, Illinois 2005

The Productivity Commission seems to be saying
that we were all crazy to ever let these machines
into our communities. Nick Xenophon, Senator,
South Australia 22 October 2009
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• South Carolina slot machines were banned by
  court action beginning July 1, 2000. At that
  time the state had 32 active gamblers-anonymous
  groups with a typical meeting size of almost 40.
  Six months later, there were only 11 groups and
  the size had dropped to as few as one or two in
  many of those remaining. During the same time,
  the number of help-line calls in Horry County,
  South Carolina (Myrtle Beach) dropped from 200
  per month to zero.
• Gambling In America Costs and Benefits
• p. 186-87

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Gambling and Crime Consensus

• Virtually all studies of casino communities find
  that the raw number of reported crimes and
  arrests increase following the introduction of
  casinos. (Walker, Casinos and crime in the
  US, prepared for Handbook on the Economics of
  Crime (Edward Elgar) March 2009, p. 7.)
• Casino gambling will almost certainly increase
  the raw amount of crime, which will mean more
  work for police, more court sessions, and more
  filled jail cells. (Miller and Schwartz, 1998,
  Casino gambling and street crime, Annals of the
  American Academy of Political Social Science,
  556, 124-137. p. 131.)
• the increase occurred when we used either the
  unadjusted or adjusted population. GAO, Impact
  of Gambling, 2000, Total crime rate, table II.2,
  p. 36.

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Counties With Casinos, Index Crime 1977-1998
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Crime in counties with Am. Indian compacts
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Recent ResearchGambling Visitors vs National
Park Visitors

• After controlling for many other factors that
  influence crime, our county-level regressions
  consistently indicate that national park visitors
  have no effect on either property or violent
  crime. These results are true for a variety of
  different measures of park visitors, for
  different empirical specifications, and for
  different regression formats.
• Grinols and Mustard, How Do Visitors Affect
  Crime? Baylor University, University of
  Georgia, October 2009

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Q and A
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1,040 higher than Branson, 15.7 x Bloomington
crime rate
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Problem and Pathological Gamblers
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15 percent of Australian adults gamble
regularlyaround one in ten of this group would
be classified as problem gamblers, with around an
additional 15 percent experiencing moderate risks
(p. xli). The share of total spending accounted
for by problem gamblers (those rated as CPGI 8)
was 41 percent (p. 4.35) Australia Productivity
Commission October 2009
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Changing the Tax Rate Will Not Reverse Situation
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Misleading Industry-Supplied Studies
It would appear the opening of a casino reduced
the unemployment rate in that county in both the
year it was opened and in the following year.
(p. 4-3.)
Evans Econometrics A Study of the Economic
Impact of the Gaming Industry Through 2005
(Finance by International Game Technology)
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The Rest of the Story
Casino counties, in red, are indistinguishable
from the rest. Unemployment is not benefited.
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Nevada in Recent Years

• 1st in suicide, double national average.
• 1st in divorce.
• 1st in women killed by men.
• 1st in gambling addictions.
• 1st in child death by abuse 1978-88.
• 1st in deaths per vehicle mile driven, 1991.
• 1st in per capita bankruptcy rate 1998.
• Most dangerous place to live.
• Most bankruptcies per capita.
• Highest dropout rate for public high schools.
• Lowest percentage of graduates who go on to
  college.
• Second for worst credit scores, 2005.
• 3rd for children abused or neglected.
• 3rd in abortions.
• 4th in rape.
• 4th in out of wedlock births.
• 4th in alcohol related deaths.
• 5th for lawsuits.

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Shadow Research

• In 1998 X produced a rebuttal of Gross (1998)
  that provided no original research or empirical
  work. A few years later he wrote a rebuttal of
  Kindt (2001), which criticized the gambling
  industry and originally appeared as part of a
  symposium of 10 papers dealing with gambling in
  America. X was not a participant in the
  original symposium and none of the papers in the
  symposium cited any papers by X . His paper
  contained no new results or additional empirical
  work of his own. The same year the Las Vegas Sun
  reported, Earlier this month, the Nevada Resort
  Associationthe chief lobbying group for Nevada
  casinoscommissioned a rebuttal report by X ,
  who said the results of Thompsons study were
  unreliable because their analysis is seriously
  flawed' '' (Benston 2003). The referenced study
  is Schwer, Thompson, and Nakamuro, 2003 (later
  Thompson and Schwer 2003). In 2005 the Casino
  Association of Indiana hired X to write a
  rebuttal of the study by Policy Analytics 2005.
  Again, no original research or empirical work was
  conducted. In 2006 X was hired by the Taiwan
  Amazing Technology Co. Ltd, a manufacturer of
  gambling machines. A paper could not be found on
  the web to know if it contains original research
  or is promotional in nature. The following year
  in 2007 the American Gaming Association
  commissioned X to write a rebuttal of casino
  cost-benefit studies. No original empirical
  research was involved. Two months later X
  wrote his commentary on Grinols and Mustard
  (2006).