If revenue-hungry lawmakers expand casino gambling in Illinois, will that create jobs -- and yield bazillions of dollars in new revenue for the state? Here's the cautionary headline above an analysis of that question in Monday's Wall Street Journal: "Bad Odds -- As more states look to win the economic jackpot with casinos, evidence suggests they are playing a losing hand."
The gist of the Journal's look at economic research and hard-won experience is that casinos are a zero-sum game: Local gamblers tend not to provide enough business to create substantial economic returns. Success depends on the ability of casinos in one state to attract tourists from elsewhere. That's tougher now that 12 states permit casinos (and Kansas is preparing to be the 13th).
The casino market may not yet be saturated. But any legislator who promises vast new revenues from expanded gambling ought to level with taxpayers: He or she doesn't know the extent to which new casinos would cannibalize the existing ones -- redistributing current customers without attracting new gamblers from afar.
If there's a compelling exception to this view of casino gambling as a zero-sum game, it's Chicago. This page for several years has advocated putting the state's 10th casino in the city. A downtown casino would likely keep more Chicago gamblers on this side of the Indiana state line. It also would draw outside money by offering new entertainment to conventioneers and tourists who already flock to Chicago.
That's less likely in the many suburban communities that hope legislators will approve as many as four new casinos for the Chicago area. Adding more suburban casinos would invite cannibalization. Nor would a big expansion in the number of casinos necessarily mean growth in economic well-being for the state.
The Journal's analysis notes that in 2006, commercial casinos employed 366,000 people and paid $5.2 billion in gaming taxes.
But casinos often take business from other entertainment venues -- theaters, sports bars, restaurants and so on. Earl Grinols, a former senior economist on the president's Council of Economic Advisers who teaches at Baylor University, contends that, on average, casinos make no net tax contributions, according to the Journal: Yes, they pay taxes, but they also depress the tax amounts that other businesses pay. Similarly, the effect on jobs could be negative, because modern casinos -- replete with slots and video-poker machines -- need fewer employees per customer than the businesses they tend to replace.
That means legislators (or governors) with big spending plans need to explain that greatly expanding gambling wouldn't guarantee that total tax revenues will increase proportionally.
If gamblers are ably served by existing Illinois casinos, plus many more in abutting states, then the promise of expanded gambling rests on the iffy prospect of attracting hordes of new players to this state's tables, screens and slots.
Maybe the Journal's analysis is too downbeat. Maybe several more casinos could pay for all the education and health spending that Gov. Rod Blagojevich and some legislators envision.
But we'd hate to wager the weight of new obligations for Illinois, and its taxpayers, on a promise that flimsy. The far more acceptable risk is to relocate the 10th license to Chicago, let existing boats add gaming positions as their local markets dictate -- and not expect a bigger expansion of gambling to supply all the revenue that Illinois lawmakers want to spend.
The gist of the Journal's look at economic research and hard-won experience is that casinos are a zero-sum game: Local gamblers tend not to provide enough business to create substantial economic returns. Success depends on the ability of casinos in one state to attract tourists from elsewhere. That's tougher now that 12 states permit casinos (and Kansas is preparing to be the 13th).
The casino market may not yet be saturated. But any legislator who promises vast new revenues from expanded gambling ought to level with taxpayers: He or she doesn't know the extent to which new casinos would cannibalize the existing ones -- redistributing current customers without attracting new gamblers from afar.
If there's a compelling exception to this view of casino gambling as a zero-sum game, it's Chicago. This page for several years has advocated putting the state's 10th casino in the city. A downtown casino would likely keep more Chicago gamblers on this side of the Indiana state line. It also would draw outside money by offering new entertainment to conventioneers and tourists who already flock to Chicago.
That's less likely in the many suburban communities that hope legislators will approve as many as four new casinos for the Chicago area. Adding more suburban casinos would invite cannibalization. Nor would a big expansion in the number of casinos necessarily mean growth in economic well-being for the state.
The Journal's analysis notes that in 2006, commercial casinos employed 366,000 people and paid $5.2 billion in gaming taxes.
But casinos often take business from other entertainment venues -- theaters, sports bars, restaurants and so on. Earl Grinols, a former senior economist on the president's Council of Economic Advisers who teaches at Baylor University, contends that, on average, casinos make no net tax contributions, according to the Journal: Yes, they pay taxes, but they also depress the tax amounts that other businesses pay. Similarly, the effect on jobs could be negative, because modern casinos -- replete with slots and video-poker machines -- need fewer employees per customer than the businesses they tend to replace.
That means legislators (or governors) with big spending plans need to explain that greatly expanding gambling wouldn't guarantee that total tax revenues will increase proportionally.
If gamblers are ably served by existing Illinois casinos, plus many more in abutting states, then the promise of expanded gambling rests on the iffy prospect of attracting hordes of new players to this state's tables, screens and slots.
Maybe the Journal's analysis is too downbeat. Maybe several more casinos could pay for all the education and health spending that Gov. Rod Blagojevich and some legislators envision.
But we'd hate to wager the weight of new obligations for Illinois, and its taxpayers, on a promise that flimsy. The far more acceptable risk is to relocate the 10th license to Chicago, let existing boats add gaming positions as their local markets dictate -- and not expect a bigger expansion of gambling to supply all the revenue that Illinois lawmakers want to spend.
No comments:
Post a Comment