Legalized Gambling

2290 Words Jan 18th, 2006 10 Pages
Economic Impacts of Legalized Gambling

Class # & Title

Charles Conner
Baltimore, Maryland

December 6, 2005

Professor: Dr. Ira Sohn

The Economic Impacts of Legalized Gambling
The effect of gambling on the standard of living will be pronounced if the gambling activity is regressive, meaning that the rate of participation (as a percentage of income) declines as people earn higher incomes. In other words, if most gamblers are poor, then gambling is more likely to affect the standard of living among the poor. One study showed many forms of gambling to be regressive.

Impact on Surrounding Communities
Much of the economic research investigating the ancillary economic benefits of casinos has focused on
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1). Table 2 lists tribal contributions to state and local governments by state. As shown, there is tremendous variability across states. The two tribes that operate Mohegan Sun and Foxwoods in Connecticut alone account for over half of these payments. 10
Casinos might indirectly affect public revenue as well. Insofar as casinos generate additional business income, they might indirectly increase other forms of tax revenue. Insofar as they cannibalize sales from other businesses, they might decrease net tax revenue. Anders, Siegel, and Yacoub (1998) find that as a result of the introduction of two Indian casinos into Maricopa County, Arizona in 1993, employment and retail sales in the restaurant and bar sectors declined. Popp and Stehwien (2002) estimate a similar model to examine the effect of New Mexico 's 11 Indian casinos on gross state tax receipts using quarterly data from 1990 to 1997. They also find a negative effect of Indian casinos on state sales tax revenues--the introduction of a single Indian casino is found to be associated with a one percent decrease in county tax revenues, but the introduction of a second Indian casino in the county if found to reduce sales tax revenue by more than six percent. While suggestive, these analyses are limited in scope and their results do not necessarily generalize to the experiences of other states.
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