Gambling and local economy
According to the American Gambling Association (AGA), most American voters believe casinos help strengthen their communities and improve local economies. But does casino development necessarily lead to economic growth? A large number of studies on this subject in the past three decades have reached mixed results. to analyzing the social and economic impacts of gambling, with one of the central issues being gambling revenue is derived in a local area (e.g., community hosting a casino), but the revenue. 5 goes to the state or federal government, there can be losses to local municipal governments if. Dec 18, · Add these two groups together – the smallest percentage of gamblers but the most problematic – and they will collectively spend almost $2 million a year in a local gaming facility. That’s money not going into the local economy. Well, okay, five percent of it will come back to us: the town will get about $93, from our problem gamblers.
How the Underground Economy Affects GDP
For example, the U. Recent empirical evidence from a study we did in Maryland tends to contradict this. But because these transactions go unreported, they distort the accuracy of key economic measurements, such as the gross domestic product GDP , which is calculated by totaling the following four components:. Partner Links. Your Money.
The underground economy refers to money earned from illicit activities like prostitution and the sale of illegal drugs. But it also broadly refers to any unreported income, such as undeclared tips or gambling winnings, or under-the-table payments made to laborers like house painters and construction workers, whose wages may go unreported to tax authorities. Unreported income paid to illegal aliens or migrant workers also contributes to the underground economy.
Due to its cloaked nature, it's difficult to gauge the true extent of the money that changes hands through the underground economy sometimes referred to as the shadow economy. But because these transactions go unreported, they distort the accuracy of key economic measurements, such as the gross domestic product GDP , which is calculated by totaling the following four components:.
Notice how the aforementioned metrics fail to take consider any transactions that occur within the underground economic system. This is significant because a nation's less-than-accurate GDP figure can adversely affect government policies that are influenced by GDP numbers.
For example, the U. If GDP numbers aren't technically accurate, such policy decisions can have a weaker impact, or negatively impact the economy. Taxation is another major governmental concern related to the underground economy. That money could go a long way in rebuilding infrastructure, funding schools, and supporting other worthy causes.
Doug Walker has served as a consultant for a variety of gaming-related organizations, including government and industry groups. The views expressed in this article are the author's, and do not necessarily represent the College of Charleston or the Division on Addiction.
During the past two decades, the US casino industry has expanded dramatically. According to the American Gaming Association, there are now nearly 1, commercial and tribal casinos in the country. Plans to expand casino gaming are typically controversial. Massachusetts presents one of the most interesting cases, with voters currently contemplating a measure to reverse casino legalization this coming Tuesday November 4. Each time casino legalization or expansion is considered, similar issues come up.
Casino proponents argue that casinos will create tax revenues, jobs, and can push average wages higher. So what does the research show? When it comes to the economic benefits of casinos, there have been several studies on economic growth, employment, and wages.
Perhaps the most comprehensive study on employment and wages was done at the US county level. There is also published evidence that casinos have a positive impact on state-level economic growth, though that evidence has not been consistent over time. Perhaps the most important political benefit of casinos is tax revenues. In Massachusetts, one of the motivations for casino legalization is that many Bay State residents gamble at casinos in Connecticut and Rhode Island.
If new casinos keep hundreds of millions of casino revenue in the state, that means additional tax revenue for the state. These people develop a variety of problems, including reduced employment productivity; financial problems, bad debts and bankruptcies; committing crimes to get money for gambling; and lying to friends and family. Interestingly, the spread of casinos across the country may not have caused a significant increase in the prevalence of problem gambling. Research has suggested that when casinos expand in an area, there is a short-term increase in the problem gambling rate, but that the rate levels off over time.
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