Are casinos good for the economy? Hard to say | Ottawa Citizen

If you want a definitive answer as to whether a casino is an economic generator*, you?re out of luck. There are loads of studies on both sides. Here?s one highly readable summary, though, that popped up near the top of my Google results as I trolled around to get a feel for the expert debate Monday afternoon, now that Mayor Jim Watson is backing the idea. It?s from California and it?s from 1997, and yet a lot of the theoretical questions it lays out seem like they?d be pertinent no matter what.

One significant caveat is that it talks a lot about how well things seemed to be working in Nevada ? a state that?s renowned for its gambling-based entertainment industries, and that otherwise would probably be indistinguishable from Arizona or Idaho. Lovely places with a lot to recommend them, but not, you know,?Nevada. Glamour, parties, Cristal bottles with sparklers in them, Sinatra, Dion, etc.

Things have gone to hell in Nevada lately. It takes a fair bit of disposable income to travel for the purpose of gambling, and since Americans have had less disposable income the last five or six years, they haven?t been going to Nevada to gamble. Unemployment there is over 11 per cent, way above the national average that it used to track pretty closely. That?s for a whole state economy that?s founded on gambling, but even so, it?s worth remembering that gambling isn?t exactly a stable industry.

Anyway, what the Roger Dunstan paper I linked to above says is that whether gambling is really an economic boon is highly contingent on circumstances. You won?t get a clear yes or no: the answer is always ?it depends.? Ontario?s gambling industry is almost entirely government-run and closely government-controlled and the underlying purpose is to make money for the government. By international standards ? certainly by North American standards ? that?s unusual and makes comparisons difficult. For one thing, when we look at the social costs of gambling, we have to weigh them against the benefits provided by the proceeds, which mostly don?t go into private hands but into the public treasury. It?s not that private companies make nearly all the money and we socialize nearly all the costs, which is the model in many places.

On a macro level, though, the question is in two parts:

1) Does a casino bring in money from other jurisdictions that otherwise would not come here?

Ottawans who go and lose at cards instead of spending money at the movies are probably not making any net difference to the economy. In that circumstance, a casino employs dealers and bouncers and managers, but at the cost of jobs in the movie-theatre business. A classic political problem with this is that the jobs that are created are highly visible, whereas jobs that disappear in other industries are nebulous and hard to define. You can have a photo-op at a casino, but not at the movie theatre that would have opened but didn?t.

The point is, you need to have people come from New York and Quebec to spend money in Ontario who would otherwise stay home or go somewhere else. Otherwise you?re moving money around but not creating any benefit in the end.

2) Does a casino keep money here that would otherwise go to other jurisdictions?

In other words, will Ottawans stay here and gamble instead of going elsewhere to do other things? Well, probably, yes. Ottawans obviously do go to the Lac-Leamy casino and spend money there instead of spending it here. I don?t know how many of them or how much they spend. They probably don?t often stay in hotels and make a week of it just a few kilometres from home, so it probably doesn?t attract a lot of Ottawans? spending beyond what happens in the casino itself, but the money is not zero.

This is the part of the argument Mayor Jim Watson relies on fairly heavily:

?Every Ottawa dollar spent at the Gatineau casino is a dollar lost for Ottawa taxpayers ? it is time that we repatriate that money and use it to create jobs here in Ottawa,? said Mayor Watson. ?With infrastructure challenges and federal job cuts in Ottawa, we cannot miss out on a tremendous opportunity like this.?

He includes some lines from a couple of business leaders that aren?t as obviously supported by demonstrable facts:

?An Ottawa gaming facility could bring tremendous economic benefits to existing Ottawa businesses,? said David Donaldson, Chair of the Ottawa Chamber of Commerce. ?Proceeding in this process will make potential investors confident that the City of Ottawa is willing to consider a proposal.?

?We know that a gaming facility can be a popular tourism attraction and demand generator,? said Noel Buckley, President and CEO of Ottawa Tourism. ?A gaming facility has the potential to allow the City and residents the opportunity to realize additional economic benefits while also providing new entertainment options for both leisure and convention visitors.?

Could be. Or, maybe not. I suspect we?ll find out.

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* This is just about the hard numbers, not any of the moral questions about whether we, through our government, ought to be in the vice business.

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Source: http://blogs.ottawacitizen.com/2012/09/24/are-casinos-good-for-the-economy-hard-to-say/

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