Engines of Inequality and Social Illness

Barbara Dafoe Whitehead, New York Times Room for Debate (blog), 10/9/2013

The main reason regional casinos are created is not to provide wholesome entertainment or to spur economic growth. It is to get more money for the state. This is a deeply regressive form of government financing. The revenue comes disproportionately from lower-income people who live in the economically struggling host communities where the casinos are located. At a time when the leading candidate for mayor of New York City is vowing to reduce economic inequality, it's hard to see why other New York leaders would be calling for state government to increase inequality through this new form of economic predation.

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Subjects: Gambling, Casinos, New York

More by: Barbara Dafoe Whitehead

The patrons of the regional casinos proposed by Gov. Andrew Cuomo of New York, wouldn't be international jet-setters who play high-stakes games a few times a year. They'd be local low-rollers who pump money into slots several times a week or month – usually just after they get a paycheck.

The main reason regional casinos are created is not to provide wholesome entertainment or to spur economic growth. It is to get more money for the state. This is a deeply regressive form of government financing.

The revenue comes disproportionately from lower-income people who live in the economically struggling host communities where the casinos are located. At a time when the leading candidate for mayor of New York City is vowing to reduce economic inequality, it's hard to see why other New York leaders would be calling for state government to increase inequality through this new form of economic predation.

Host communities suffer economic costs as well. The opening of a new regional casino may offer a brief economic stimulus, but the stimulus fades over time, as the casino cannibalizes local restaurants, bars, entertainment venues and tourist attractions. Then too, casinos are granted a regional monopoly by the state and enjoy the advantages of light regulation, special exemptions and advertising promotions not available to other businesses. A casino also hurts property values in local housing markets. A recently released study by the National Association of Realtors found that the impact of a prospective casino on local housing markets is "unambiguously negative."

Finally, regional casinos do not contribute to sustained economic growth and investment in host communities. Industry and investor profits are extracted from the local market and contribute to long-term flow of dollars out of the community.

Moreover, casino expansion is a menace to public health. It spreads addiction. According to research independent of the gambling industry, problem gambling triples or even quadruples after the opening of a casino.

Supporters of casino expansion admit that it will increase gambling addiction, but they claim that the state would "mitigate" the damage by using some of the gambling revenue to provide unspecified forms of help to additional addicts. What they fail to acknowledge is that problem and pathological gamblers account for 35 to 55 percent of slot machine revenues, according to studies of casino gambling by Canadian and Australian provincial governments and by independent researchers in the United States.

Why should the state encourage addiction and then provide funds for those addicted? Imagine if the state aggressively promoted cigarette smoking and then justified it by providing a "mitigation fund" for lung cancer victims.

This article originally appeared here.

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