RealClearPolitics - The Myths About Legal Gambling

Illinois is on the verge of a major gambling expansion, and citizens are being pelted with competing claims. The advocates envision a gusher of jobs and tax revenues. The opponents brace for an epidemic of bankruptcies, crime, divorce and suicide. Which side to believe? Neither.

Democratic Gov. Pat Quinn is now considering whether to sign or amend a measure authorizing five new casinos, including one in Chicago, and slot machines at racetracks as well as Chicago airports. The capacity of gambling establishments in Illinois would more than triple.

The motive for this sudden interest is economic. Chicago Mayor Rahm Emanuel expects up to 10,000 new jobs from opening a casino that will be owned by the city. Legislators eagerly anticipate a windfall of tax payments and licensing fees, which they can use to ease the state's painful budget crunch.

But all that glitters is not gold. More gambling opportunities may not mean more gambling proceeds, since the public appetite is on the wane. Illinois casinos have seen their revenue fall by a third over the past three years. Increasing the number of outlets could mean just dividing the take into smaller piles.

Is Chicago likely to reap big economic gains? Not in this lifetime. A new casino may attract more visitors and create new jobs serving drinks and dealing cards. But money lost at the blackjack table can't be spent on other types of recreation and entertainment. Jobs that spring up in gambling-related businesses may be lost in other sectors.

Casinos have been useful in reviving depressed areas, according to the 1999 National Gambling Impact Study Commission Report. That may have little relevance to Chicago, which is not exactly a declining Rust Belt relic.

The best hope is that the city will draw players who now venture to northwest Indiana, which has made itself a local gambling destination. But any gain here would come at the expense of the people in and around Gary, if that counts for anything.

We also need to account for diminishing returns: If you're thirsty, your first swallow of water is a lot more gratifying than your 11th. There are already nine casinos in Illinois, with another due to open next month. Even if the first few gambling halls make an economic difference, the extra benefit is bound to shrink with each new one.

As for tax collections, politicians shouldn't dream too big. "Gambling has been a fiscal winner for state governments, but the bonanza years may be ending," reports the Nelson A. Rockefeller Institute of Government in New York, suggesting that most states will "have to look elsewhere to solve this year's budget problems." A short-term help, maybe, but not a long-term solution.

Source: http://www.realclearpolitics.com/articles/2011/06/05/the_myths_about_legal_gambling_110083.html

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