Using Casinos for Growth: The Benefits and Limits of Commercial Gambling as an Economic Development Strategy

The last three decades have seen explosive growth in the commercial gambling industry. Researchers have correspondingly studied the impacts of this industry as it emerged. This chapter draws together a number of key findings from the economics literature on casinos as the basis for informed regional development policy. The use of casino gambling as a tourism amenity is explained, followed by findings from the literature on social costs of casinos. These costs are contrasted by the literature on how casinos impact a number of important economic indicators including employment, income, and tax revenues. A number of geographic considerations of these benefits are then enumerated, including spatial limits. The chapter concludes with a short list of policy considerations for jurisdictions considering the legalization of commercial gambling as a basis for economic development.

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Notes

Grinols (2004) attempts a full benefit/cost analysis, but his analysis contains multiple critical flaws. See Walker (2007a) for a detailed critique.

This difference between VLTs and casinos is interesting, as it has been noted that “VLTs are actually video poker machines that have minor payout differences from the same devices in casinos” (Eadington 1996, p. 4). Humpherys and Soebbing (2014) acknowledge that it is possible their VLT regression model is mis-specified, but the difference in results may also stem from the locations where VLTs are placed (usually in bars), which differ substantially from stand-alone casinos.

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Authors and Affiliations

1. Department of Economics and Finance, College of Business, Idaho State University, 921 South 8th Ave., Stop 8020, Pocatello, ID, 83245, USA Karl R. Geisler

1. Karl R. Geisler