Eadington, Bill

English

Research Papers in Economics

OVERVIEW  OF THE ECONOMIC IMPACTS OF GAMBLING
SUMMARY  OF REMARKS
Bill Eadington
University of Nevada
In  1997, gaming  in the United States-in terms of
total revenue after prizes-was a $50 billion  industry.
Casinos  made  up  slightly  over  half of that  total  (26
billion), of which  6 billion was Indian gaming.
With the exception  of gaming  in the State of Ne-
vada and Atlantic City, New Jersey, the proliferation of
legalized  gambling  has  occurred  within  the last  10
years.  Gaming  was  prohibited in  all states,  with the
exception of Nevada, from  1931 to 1978 and then was
allowed only in Nevada and Atlantic City, New Jersey,
from  1978 to  1989.  Now,  more than  25  states allow
some type of casino-style  gambling.
A  variety of forms of gambling have been legal-
ized  since  1989  for a  variety  of economic  develop-
ment reasons.
First in Deadwood, South Dakota and then in three
mining towns in Colorado (Cripple Creek, Central City
and Blackhawk),  statewide  referendums  were  passed
to authorize small-scale casinos in the late-1980s.  The
primary justification for these casinos was to foster eco-
nomic development in an attempt to resuscitate dying
communities.  These four jurisdictions  were late-19th
Century mining towns which had languished through-
out the 20th Century.
There was also a wave of river boat casinos intro-
duced beginning in the late-1980s.  This venue of gam-
ing  began  in Iowa  in  1989  and followed  in Illinois,
Mississippi,  Louisiana,  Missouri  and Indiana.  The
general  belief that developed  for riverboats  was  that
the casinos in Nevada and New Jersey had the reputa-
tion  of being  mob-infested  and  sinful.  If you made
casinos  leave  land  and  sail,  you  would  protect  your
citizens from vice.
Gaming on Indian lands came as a result of a 1987
Supreme Court decision  and the enactment  of the In-
dian  Gaming Regulatory  Act  of  1988.  The location,
size and types of gaming allowed in Indian casinos are
strongly  influenced by the state in which the tribe re-
sides.  Indian casinos have been influenced by various
court  interpretations,  negotiated  compacts  between
state officials and tribal members and the proximity of
the  casinos  to population  centers.  For  example,  one
Indian casino  in Connecticut,  Foxwood's, is  the  larg-
est and most profitable casino in the world.  It has gross
gaming revenues  approaching  $1  billion/year.  This  is
primarily due to its local monopoly status and its prox-
imity to Boston and New York City.
It  is likely  that  the pressures  which  exist  in the
United  States to expand  gaming to  additional  venues
will continue.  Whether casino-style gambling is a good
idea  for economic  development  remains  to be  seen.
Most  of the justification  for the  legalization  of gam-
bling  has come  from the  attempt to exploit  economic
rewards.  As the  drive  continues to build more  gam-
bling franchises-a  highly  competitive  industry  fail-
ing to constrain  supply-the ultimate winners may be
the  consumers, not the casinos.
Rl

OVERVIEW OF THE ECONOMIC IMPACTS OF GAMBLING: SUMMARY OF REMARKS

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