Expert: Gambling fails cost-benefit analysis

TALLAHASSEE (FBW) – Casino-style gambling under consideration by the Florida Legislature to balance the state budget actually creates more governmental costs than tax benefits an expert in gambling economics told a House panel March 27.

Drawing on studies across the United States and Canada, Earl Grinols, distinguished professor of economics at Baylor University, told the Select Committee on Seminole Indian Compact Review social costs to the government resulting from casino gambling is three dollars for every dollar generated by the activity.

Grinols, who noted that his research is independent – not funded either by pro- or anti-gambling organizations, testified before the panel at the invitation of Rep. Bill Galvano (R-Bradenton), chairman of the Select Committee.

“If gambling had no social costs your committee wouldn’t need to exist. It’s just another industry. It’s entertainment, so let people entertain themselves. But it does affect more than just the gamblers themselves,” said Grinols, author of Gambling in America: Costs and Benefits.

“The bottom line is the social costs are greater than a 3 to 1 balance. So, casino gambling simply doesn’t pass the cost-benefit test,” he said.

Grinols, who has offered expert testimony to state legislatures and served as a senior economist with the Council of Economic Advisors under President Ronald Reagan, said a Canadian study found that nearly half of revenue generated at casinos are from problem and pathological gamblers.

Contrary to claims of some advocates, a significant percentage of gamblers – as high as 70 percent – are “convenience” gamblers residing within 35 miles of the facility, rather than tourist or destination gamblers.

“So you’re getting the money from locals and you’re getting it from the wrong locals and that’s just an inescapable fact at casino-level gambling,” he said.

Grinols cited examples of the consequences of gambling, noting newspaper articles about victims of suicides, embezzlement, bankruptcy and other social ills resulting from persons entrapped by gambling.

“These are very real costs, they’re not something people are imagining,” he said.

Grinols presented a long list of crimes, pathologies and social problems in which Nevada – home to gambling mecca Las Vegas – is first or among the leaders in the nation, including first in suicide – double the national average, divorce, gambling addictions, women killed by men, child abuse deaths and per capita bankruptcy.

While the national crime rate has generally declined in recent years, even during a expansion of casino gambling, Grinols said his research has found that the crime rate of counties with casinos has decreased considerably less than those counties without casinos, and the impact of casinos on crime typically takes three years to start being manifested in the statistics.

Grinols rejected gambling advocates’ claim that crime associated with gambling is related to the fact that the activity simply draws large numbers of people.

His research compared crime at high tourist destinations not associated with gambling – Orlando; Branson, Missouri; and the Mall of America in Bloomington, Minnesota – to Las Vegas, a gambling tourist destination.

Las Vegas’ crime rate is 1,040 percent higher than Branson and 15.7 times higher than Bloomington, Grinols reported, although both destinations draw far more visitors than Las Vegas.

Grinols said a similar pattern is found when comparing crime rates at large tourist destinations in the National Park System to Las Vegas.

“So it’s not just a matter of number of visitors. It’s also a matter of who is visiting,” he said.

Grinols said that if casino gambling was adopted across the entire nation, the annual costs would be the equivalent to one economic recession every ten years.

“If you’re thinking of casinos as a method of gaining tax revenue, it’s a pretty poor choice,” Grinols concluded.

The Select Committee also heard public testimony about the dangers of casino gambling from Evelio Silvera, a Florida native who spent four years in Missouri leading a consumer watchdog group, Casino Watch.

Having recently moved back to Ocala, Silvera said he empathizes with the difficult task faced by legislators attempting to balance the budget, but insisted gambling will not solve the problem.

“You’re not the first state, the first group of legislators that has come to a crossroad and had to decide whether or not the expansion of gambling was the manner in which they were going to shore up their shortfalls,” Silvera said.

He said in the last five years California, Iowa, Nebraska, Kansas and Missouri have expanded gambling seeking to balance state budget while actually increasing budget deficits.

Silvera noted even the Seminole Tribe has admitted their casinos are seeking to keep Floridians from traveling to gambling destinations outside of the state, underscoring Grinols’ testimony that the casinos will rely upon locals for their business.

“Floridians will have to lose for the state to take a small portion of that,” he noted.