Economic Perspective: Can Casinos Revive a Local Economy?
“Today’s program asks if casinos can revive a local economy. Mike, new legislation in Virginia may allow local communities to have a vote in authorizing casino gambling. Many see this as an economic development tool. Can casinos provide this?”
“Well, of course, when we talk about gambling most people think of Las Vegas, and indeed Las Vegas has been built on gambling, has thrived due to gambling. And so some people say, ‘Hey, we can take a version of that, and maybe put it in our community. Maybe our community is struggling, and we won’t be as big as Las Vegas, but that’s going to revive our economy.’ So I think that’s the hope.”
“Unfortunately there are a lot of factors here to consider that may make this a viable alternative for the economy or not. Obviously the economy questions: Will people come to gamble in your small town? For example, if this is going into a small town there are lots of opportunities for gambling, not just going to Las Vegas or Atlantic City, but online, on your phone et cetera.”
“So that’s one question, will new people come? You don’t just want to build this off your existing population because what happens generally is if someone is already a resident in your small town, and they’re going to spend money gambling, that means they’re not spending the money somewhere else. So the whole point here is to attract people from outside.”
“Another factor here are the social questions. Will the advent of gambling in your town mean more crime? Will it increase problems with folks who get addicted to gambling, et cetera? So lots of questions here that have to be addressed and answered. The existing economic research on this, especially looking at bringing casino gambling, again, into small towns, shows that overall in terms of the economy it has a positive impact in terms of spending and jobs, but it’s a very small impact. And sometimes you do see some of these other factors like crime and addiction also become increased problems.”
Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.