As more states back casinos, inequality rises

What once happened only in Vegas – casino gambling – is clearly no longer staying in Vegas. Since 1990, nearly half of American states have allowed casinos to open. And the trend keeps feeding itself. More states are now competing to lure gamblers from neighboring states and to rake in big revenues from casino profits.

People in the Northeast and mid-Atlantic states can now easily drive to a casino. New York may soon join Massachusetts in jumping on the trend. But a visitor to a casino won’t find the average American there. Casinos draw a disproportionate number of low-income workers, retirees, minorities, and disabled people, according to a new report by the nonprofit Institute for American Values.

And because almost all gamblers lose more than they win, and because today’s slot machines are designed to keep people playing, these states have become co-conspirators in today’s economic and social inequality.

“State sponsorship of casinos is a policy contributing to patterns of inequality in America,” according to the report, which was endorsed by 33 scholars and based on numerous studies in the United States and elsewhere.

Atlantic City’s high unemployment rate in 1978 – the excuse to open casinos there at the time – is still nearly the same. Casinos cannibalize surrounding businesses. They increase the number of compulsive gamblers within 50 miles of them. A study by Baylor University economist Earl Grinols found gambling creates $3 in social costs for every $1 it generates. The very term “gambling” has become so associated with problems that the industry tries to persuade journalists and others to use the word “gaming.”

The report points out that the leading funder of gambling research is the gambling industry, which only skews how state officials weigh the long-term disadvantages of casinos and other forms of gambling. The industry also tries to convince states that negative effects can be contained and managed, like a regulated brothel on the far side of town.

Independent research on gambling is rare in the US. Other countries, such as Britain and Australia, are far ahead in tracking gambling’s effects. Various studies, for example, show that 35 to 50 percent of casino revenues come from habitual or pathological gamblers, many of whom ruin their lives or the lives of loved ones. Do states really want to be a party to that? And pick up the social costs?

“Casinos are now popping up across the nation, near a shopping mall or a river dock near you, with the full support and sponsorship of the very state governments that only yesterday had outlawed them,” says the report.

In their rush to sponsor casinos, states rarely do enough homework or ask the right questions. The evidence for casinos adding to inequality is becoming clearer. But the report also asks if states can answer this important ethical question: Do casinos help erode the idea – one that is essential to democracy and a market economy – “that what happens to us depends more on what we do than on whether we are lucky?”

Humanity’s progress was not accomplished through a belief in chance. History is made by smart thinking, not dumb luck. States that give a nod to casinos are heading for the wrong side of history.