There is debate around whether gambling is good for state economies. While gambling does not create new goods or wealth, proponents argue that it provides utility to consumers. Gambling can foster economic development by providing jobs and tax revenue, as seen in Las Vegas. However, the social costs of problem gambling may offset economic benefits. Additionally, casinos owned by out-of-state interests may lead to wealth leaving the state. Overall, gambling has mixed economic impacts, though short-term job creation could offset long-term effects if revenue is reinvested locally.

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Gambling Economics
There have been ranging debates between the proponents and those opposed to gambling
as whether or not it can be good for a state’s economy. Normally, those opposed to gambling
usually relies on Nobel Laureate Paul Samuel statement that “gambling simply involves transfer
of money or goods between individuals but does create no money or goods” (Kearney, p.17).
From this statement, it means that whereas gambling absorbs time and resources, it is only used
for killing time of which is subtracted from national income. However, from proponents’ point of
view, such statements are usually understated. This is due to the fact that though gambling is a
type of product that does not add to the ability of the economy to produce more, they are
valuable because they provide satisfaction or utility that any economist would call for in meeting
the demands of consumers. Thus, gambling has various effects on economies of various states.
Gambling can be a very powerful economic development tool for states that legalize it.
This is evident in the state of Les Vegas, a testament of where gambling has been used as a
powerful tool to foster economic development. According to Walker (p.2), casino industry has
spur a lot of local and regional economic growth because it has provided high paying jobs which
have in turn resulted into high paying of taxes and fees to both local and state governments. In
cities such as Las Vegas, there has been an impressive job growth that has enabled the city to
develop into a major city with a low tax burden which is associated with many state and local
governments.
One of the case study that clearly establishes gambling as an essential tool for economic
development is the case of Mississippi and Louisiana. In these two states, the Katrina hurricane
completely devastated the Casino industry. This affected the state-level personal income.

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However as Walker (3) points out, when the casino industries in these two countries recovered, it
had short-term positive impact on the States’ economy. First, revitalization of casino industry led
to the amalgamation of capital and labor effects as more private and public investment done
resulted into more jobs. Secondly, such states including Las Vegas are associated with a growing
population of which many believe is as a result of the transient population who come to the state
because of the kind of social services it provides due to casino industry. It is substantial to pint
out that these populations are being drawn into the states due to casino industry. In essence,
casino industry attracts more tourists that in turns results into more revenue collection. The extra
income can thus be used for economic development of states as evident in the city of Las Vegas.
In the realm of economic development, the basic criteria in which a project can be
depicted as increasing a region’s net profit is when it results into overall income increase.
Positively, constructing a casino creates employment opportunities for many construction
employees and suppliers. Others who have benefited from the same include employees to staff
casinos and the ultimate suppliers to ongoing casinos. This has multiple effects that ripple to the
overall state economy. It should be noted that though casinos may lead to creation of new jobs,
these new jobs may not be for economy. The fact that gambling facilities do not create wealth
but rather transfer it makes the negative economic effect of casinos to be evident. This is because
the net benefit of casino development leads to more money being spent outside the state or
region.
One of the reasons why casinos have no influential economic impact of the state is
because it forms small portion of state’s revenue. In a survey conducted by U.S. Conference of
Mayors, it was found that lotteries compared to the overall tax only constitute almost 2.5 percent
of total taxes (Kearney, p.20). Consequently, only 40 percent of lottery revenues are usually

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available for state programs. Normally, the ability for the government or state to gain meaningful
funds and revenues from an industry is dependent on the profitability of the industry. From the
data provided, it means that Casino industry has not had any meaningful profits from which a
state can get sufficient funds to promote its economic development.
In whatever economic benefits casinos provide, they cause an enormous amount of social
costs. The costs normally offset any economic benefits associated with gambling. In the earlier
social cost analysis conducted by Thompson, Gazel, and Rickman in 1997, they estimated that
the annual social costs of gambling per pathological gambler were at US$9,469. The same was
estimated by Thompson and Schwer to cost US$19,711 in Las Vegas by the year 2005 (Walker,
p.9). These estimated social costs are usually based on the fact that since casinos will adequately
attract tourists who carry cash, it might be a catalyst for criminals to flock casinos. In addition,
people who develop problem gambling may incorporate illegal acts in order to get money for
gambling. This also has adverse effects on economic development.
On the other hand, gambling has negatively impacted on state’s economy especially by
making locally-owned business to go bankrupt simply because consumers have turned to casinos
that are owned by out-of-state interests. Golden (1) believes that there is no need for Toronto to
legitimize gambling for revenue generation because only one-third of total gambling revenues in
Canada go to government with more local businesses being closed. More significantly, two-
thirds of the total amount of money collected from gambling will be taken by out-of-state
investors. Since casino industry involves wealth transfer than creation, it means that such wealth
will be transferred out of the state of which will undermine some economic developments.

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In conclusion, gambling has both positive and negative impacts on state’s economy.
However, the short-term positive impact of gambling, if effectively enhanced, can be used to
offset the long-term negative economic effects. Gambling can adequately lead to creation of jobs
and generation of more revenue; especially where investment on casino industry is done by
regional investors that do not lead to transfer of wealth outside the region. Therefore, in
legitimizing gambling, the state must take into consideration the social costs that can result out of
the business which might in turn affect its economic influence.

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Works Cited
Golden, Anne. A casino in Toronto would do more harm than good, 2013. Web. Retrieved 13
May, 2013 from: http://fullcomment.nationalpost.com/2013/01/13/anne-golden-a-casino-
in-toronto-would-do-more-harm-than-good/
Kearney, Melissa. The economic winners and losers of legitimized gambling, 2006. Web.
Retrieved 13 May, 2013 from:
http://www.brookings.edu/~/media/files/rc/papers/2005/02fixtopicname_kearney/200502
kearney.pdf
Walker, Douglas. The economic effects of casino gambling: a perspective from the U.S., 2009.
Web. Retrieved 13 May, 2013 from:
http://walkerd.people.cofc.edu/pubs/Walker_Macao_ss.pdf

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Works Cited
Golden, Anne. A casino in Toronto would do more harm than good, 2013. Web. Retrieved 13
May, 2013 from: http://fullcomment.nationalpost.com/2013/01/13/anne-golden-a-casino-
in-toronto-would-do-more-harm-than-good/
Kearney, Melissa. The economic winners and losers of legitimized gambling, 2006. Web.
Retrieved 13 May, 2013 from:
http://www.brookings.edu/~/media/files/rc/papers/2005/02fixtopicname_kearney/200502
kearney.pdf
Walker, Douglas. The economic effects of casino gambling: a perspective from the U.S., 2009.
Web. Retrieved 13 May, 2013 from:
http://walkerd.people.cofc.edu/pubs/Walker_Macao_ss.pdf