The Myths About Legalized Gambling

New casinos won't fix economic woes.


Illinois is on the verge of a major gambling expansion, and citizens are being pelted with competing claims. The advocates envision a gusher of jobs and tax revenues. The opponents brace for an epidemic of bankruptcies, crime, divorce, and suicide. Which side to believe? Neither.

Democratic Gov. Pat Quinn is now considering whether to sign or amend a measure authorizing five new casinos, including one in Chicago, and slot machines at racetracks as well as Chicago airports. The capacity of gambling establishments in Illinois would more than triple.

The motive for this sudden interest is economic. Chicago Mayor Rahm Emanuel expects up to 10,000 new jobs from opening a casino that will be owned by the city. Legislators eagerly anticipate a windfall of tax payments and licensing fees, which they can use to ease the state's painful budget crunch.

But all that glitters is not gold. More gambling opportunities may not mean more gambling proceeds, since the public appetite is on the wane. Illinois casinos have seen their revenue fall by a third over the past three years. Increasing the number of outlets could mean just dividing the take into smaller piles.

Is Chicago likely to reap big economic gains? Not in this lifetime. A new casino may attract more visitors and create new jobs serving drinks and dealing cards. But money lost at the blackjack table can't be spent on other types of recreation and entertainment. Jobs that spring up in gambling-related businesses may be lost in other sectors.

Casinos have been useful in reviving depressed areas, according to the 1999 National Gambling Impact Study Commission Report. That may have little relevance to Chicago, which is not exactly a declining Rust Belt relic.

The best hope is that the city will draw players who now venture to northwest Indiana, which has made itself a local gambling destination. But any gain here would come at the expense of the people in and around Gary, if that counts for anything.

We also need to account for diminishing returns: If you're thirsty, your first swallow of water is a lot more gratifying than your 11th. There are already nine casinos in Illinois, with another due to open next month. Even if the first few gambling halls make an economic difference, the extra benefit is bound to shrink with each new one.

As for tax collections, politicians shouldn't dream too big. "Gambling has been a fiscal winner for state governments, but the bonanza years may be ending," reports the Nelson A. Rockefeller Institute of Government in New York, suggesting that most states will "have to look elsewhere to solve this year's budget problems." A short-term help, maybe, but not a long-term solution.

If legal wagering doesn't lead to El Dorado, the mythical land of gold, it also doesn't descend into the inferno. Groups like Stop Predatory Gambling depict casinos and racetracks as demonic agents spreading social disaster. They aren't.

Crime? It tends to rise in a city when casinos arrive—but only because there are more people around. "Typically, when tourists are considered in the crime rate, any effect of casinos on crime diminishes or disappears," notes Douglas M. Walker, an economist at the College of Charleston.

Suicide and family breakup? Nevada has the fifth-highest suicide rate in the country—but New Jersey, longtime gambling mecca of the Northeast, has the lowest. A 2004 study in the Journal of Gambling Studies looked at places after they introduced casinos and found "no widespread, statistically significant increases in either suicide or divorce."

Visits to casinos may cause a small increase in personal bankruptcies, according to a study by Thomas Garrett of the Federal Reserve Bank of St. Louis and Mark Nichols of the University of Nevada at Reno. But that's not grounds for grave concern in this instance. Given the numerous establishments already available to Illinoisans, they may not hit the tables any more often once they have more casinos.

In the end, permitting more gambling is a good thing because it accommodates the desires of ordinary people. Millions of Americans happily patronize casinos and racetracks each year, and there is no good reason for governments to stand in their way.

But anyone who expects a major impact, good or bad, from the proposed expansion is going to be surprised. This measure is not the equivalent of betting the house. It's dollar-ante poker.


NEXT: Clean Your Plate

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  1. As if governments have the authority to regulate gambling. But I guess that hasn’t stopped them.

    1. Interestingly governments have long restricted gambling among consenting adults. Even more interesting is that laws prohibiting inter-state lottery sales via the mails go way back (so do selling obscenity in the mails, I wonder, were these under the Inter-state commerce power, because if so these were examples of a long practice of understanding the clause as something very different than ‘removing state impediments’!).

      It’s absurd, though. Opposition of state restrictions of drugs, gambling and euthanasia is what drew me to libertarian places like Reason in the first place.

      1. Yeah, governments did it in the past, so it’s okay to do it now.

        Maybe we should allow the NSF to gas Jews, too. After all, governments have long skull-fucked component ethnic groups within their own populations.

        1. Ah, but I’m not arguing that is is right because it has long been done, I’m arguing let’s drop this nonsense about this being some incredibly novel and recent socialist reading of the clause.

          1. Point me to a single fucking comment on this website by any constitutionalist/libertarian (anarcho-pacifists can fucking die) that states it’s a recent invention.

            1. Ok, but let’s have some stakes. If I do, you will post as Res Dumbass Publica.


      2. A little digging, and yes, it appears that the Federal Anti-Lottery Act was indeed passed way back (1890) and invoked the IC Clause to PROHIBIT inter-state lottery sales (how’s that fit into the “remove impediments” meme, seeing as how it set absolute impediments?). Interestingly enough, a federal court struck it down under the IC Clause in Pic-A-State, Pa. v. Pennsylvania, but in 1996.

        So let’s have no more of this nonsense about how understandings of the IC clause other than as the power of the feds to remove state impediments are some recent, radical understanding.

        1. Looks the federal Comstock law prohibiting interstate commerce in obscenity is an even earlier version of this understanding (1873).

          So, the idea that the IC commerce clause grants the feds something far greater than simply removing state impediments has actually been the understanding for a longer part of our history than any other!

          And ironically two of the earliest uses of that understanding were towards conservative goals! Maybe this is why conservatives are so apeshit about the IC commerce clause, it’s guilt driven, a form of penitence.

          1. “If something is done wrong long enough, it becomes right. When it suits me.”

          2. Same with gun control, income taxes, Satanic eminent domain laws, legally reinforced racism, among hundreds of others. So it’s been the understanding for most our history of rights/constitutional law, right? Yep. Therefore, it’s right.

            Do you see the gaping, galactically massive holes in that shitty excuse for logic and reason you’ve got tumbling around in that head of yours?

            1. MNG|6.6.11 @ 8:22AM|#
              Ah, but I’m not arguing that is is right because it has long been done,

              Reading comprehension, how does it work?

              1. Just cause you say you’re not arguing that =/= that you, in fact, aren’t arduing that.

                You do this alot, Minge. Please stop.

        2. The lottery act had more to do with Stopping the Louisiana Lottery, which was a crime racket that emerged after the Civil War.

    2. Well, an undercover cop might investigate you if you play low-stakes poker with your friends… and you also might get a bullet in the chest from a cop if you’re unarmed.

  2. Somebody tell Quinn to take a trip to AC and see what’s going on there. Casinos now get a tax break from the state. They were supposed to provide enough revenue to end the state’s income tax. My how things change.

    1. Income taxes make moral people cry.

      1. Yeah, but not so much when the are told, and tricked into believing, that the money from the income tax is going to be used to “fix” the failing school districts. 35 years later NJ still has an income tax, and the schools are still failing and we now give tax breaks to a monstrosity like the Revel Casino. They would have been better off turning it into public housing. And, the City of AC is still a fucking shithole like Camden and Newark. Plus, the local Rep., Frank LoBiondo gets lots of federal money for beach replenishment, mostly for the casinos…and Margate, where he owns a house on the beach. Did I mention LoBiondo’s family made their fortune running booze during Prohibition?

        I could go on for days.

        1. It’s the northeast. New Jersey, Mass-of-two-shits, New York — it’s all the same crap. It’s pretty fucking sad that New York and California pretty much compose the image of America the rest of the world knows. No wonder so many people hate our fucking guts.

          1. The NE used to be the “foundry” of the country, from Stetson hats to Campbell’s Soup. Now, I don’t know what the fuck it is.

            1. Decaying quasi-European shit. And its negatives aren’t separated, either — totalitarian politics caused the decay, and it’s fucking disgusting and heartbreaking.

              Remember Detroit? Even New York? the greatest cities in history have been ravaged by these ball-gobblers, and there’s nothing we can do about it. I feel so freaking helpless and furious.

              1. Res, speak up, talk, send links to the disaster videos on You Tube…
                i had no idea about Detroit until the Mark Steyn brou-ha-ha…
                talk about Demo-Krat policies writ large, that place would be called a disaster area if a tornado had gone through instead of the unions and the “gimme” policies…

  3. How could giving the government more access to revenue be a good thing?

  4. OT:

    Of the 50 state capitols in the country, what’s your favorite?

    Mine’s probably Texas

    1. Of the Capitol buildings, I prefer Wisconsin over Texas, and I probably prefer Virginia over either of them.

      1. I’ve also got a soft spot for South Carolina’s — it’s big and elegant, but also doesn’t look like a convoluted and overbuilt super-mansion. North Dakota’s just blows.

          1. I’ve always loved Iowa’s. It’s up on a hill about 10 blocks from the downtown area, and it overlooks the DM River.


            1. Yeah, that’s definitely in the top 5.

      2. Utah’s Capitol is a truly elegant granite Greek temple style building sited on top of a hill with spectacular views of the Salt Lake valley.

    2. New Mexico. It is a giant stone Hogan. And it fits in incredibly well. A conventional capitol would have been an out of place disaster in Santa Fe. But the hogan works great.

      Anyone can build a big dome. But it takes balls and imagination to build this.…..e-capitol/

      1. Texas should renovate its capitol to be bigger than the federal one. Lmao.

      2. I was really disappointed after I clicked on that link. I was hoping for a giant concrete *Hulk* Hogan, which would clearly be the best state capitol possible.

    3. My vote goes for Alabama having the worst capital building with Montgomery being America’s most depressing state capital.…..180166171/

      1. Um, North Dakota anyone? An off-center apartment building behind what looks like a football field?…..ilding.jpg

        1. Yeah, it’s pretty disappointing — South Dakota’s is pretty nice, though

        2. Damn. I stand corrected. That looks like something out of Communist Russia.

    4. Texas is not a capitol. hth

  5. The Alabama State Capitol is actually pretty good, but it’s like it’s in the wrong place — there’s too much unbecoming shit built around it.

    And New Mexico gets points just for being so unique, and it looks pretty cool. Nice find.

  6. Gambling is a tax on stupid.

    1. Better a voluntary tax on the stupid than an involuntary tax on the productive.

      1. True.

  7. I cast my vote for Tallahassee, Florida. The capitol building is a tall skyscraper with the house and senate domes on each side. A giant cock and balls to represent the screwing over of the commonweal.

    1. Yeah, Florida’s very New Jersey-esque in its litany of shit-brained laws and regulations. And I object to the state flag being smaller than the republican flag — they should be of identical size.

      1. On the other hand, Florida firearms law is much, much, much better than the Garden State’s.

        1. Yeah, and it still isn’t anywhere near good enough, which just demonstrates how apeshit insane NJ is.

    2. At least they had the decency to yidishn it.

      1. Holy shit, the Canadian Parliament is one ugly mother-trucking building. I’ll take North Dakota’s Capitol over that thing any day

        1. But I guess I just don’t like Gothic

  8. I grew in a small Louisiana town, when gambling was legalized there and they opened a casino everything was great for a while. Now its just an eyesore were the homeless go to get arrested for begging.

  9. By that logic, why ever open a new restaurant or movie theater? After all, money spent at the new place is money that won’t be spent at existing restaurants. Idiotic.

  10. Gambling has been shown to be a regressive tax. So this lays bare the government’s true intentions: keep spending and lobbyists happy. Fuck the Poor. Just walk through any Indian Casino and it doesn’t take long to figure out that the players are spending food money. But they can go to the state for more handouts. I guess this another way to print money for the fictional economy.

    That said, I am for legalizing all gambling and taking control out of the state’s hands. Let bad decisions be private, not state sponsored.

  11. This makes a whole lot of sense dude. Wow.

  12. As usual government thinking is all inverted, casinos will thrive when the economy is doing well and people have spare capital (the Austrian school definition).

  13. But, but, look at how gambling has completely helped rejuvenate Detroit! And especially the riverfront! Just like “they” said it would.

    Whether or not the gambling halls bring in the expected revenue or not, the point of fact is that the shit-eating, motherfucking, all-encompassing state and local governments will gobble up every “new” cent of taxes generated, plus more, and be standing there with a tin cup within 5 years asking for MOAR.

    It is the nature of gummints. Fuck ’em.

    PS See Also: Ohio. They can’t even get the fucking things built. Stupid motherfucking one-toothed buckeye fucks…

    /foaming-at-the-mouth rant

    1. Ohio’s probably by far the best of the high-population states

      New OT, guys:

      Of the states in this country with a population above 2 and a half million, what’s the freest in general?

      1. There are 35 states and 1 territory with 2.5 million+. Here’s your top 10:

        1. California
        2. Texas
        3. New York
        4. Florida
        5. Illinois
        6. Pennsylvania
        7. Ohio
        8. Michigan
        9. Georgia
        10. North Carolina

        Among those 10, probably Texas. It’s not free of socon and police dickery, but there’s no perfect answer.

        1. It really depends. I’m a gun enthusiast and I don’t do drugs, so Virginia is a really nice place for me. Tennessee would be another place I’d like to live.

          If marijuanua decrim or gay rights are more important to you than the things that are important to me then you probably wouldn’t like VA or TN.

          There is no free state. There are states which are more free then others when it comes to certain facets of liberty. Best you can do is decide which state’s laws most closely align with your lifestyle.

          1. Good point.

  14. At the moment, legal gambling would help a state. This is b/c money now flows out of the state into zones where gambling is available, e.g. people vacationing in Nevada or people wagering on-line. Hence, in the short term, it’s a good move for the state.

    In the medium term, once most/all states legalize gambling, the tax-revenue benefit evaporates. Money will begin to flow out of the hands of irrational/stupid/unlucky people. In general, this is good — the nation benefits as more money in concentrated in the hands of intelligent consumers. But, in a bloated, inefficent, welfare state, it’s bad since our govt picks up the tab for losers’ expenses. In 15-17 years, legal gambling might be revenue negative if you include entitlements and welfare costs.

    The best move is to legalize gambling for its short-term benefit and to begin reducing all govt welfare to escape the medium-term liability.

    As for the long-term … I don’t make predictions beyond the event horizon marked by the singularity (2045).

  15. Why make the Mob go to the gambling, when you can bring the gambling to the Mob? Makes perfect sense to me.

  16. The casino that opens next month is in the town next to mine literally two blocks from my house. When offered a cut of the proceeds from the casino my city told Des Plaines (where the casino is) to take their money and jam it because they don’t want any of that dirty money.

    And we also can’t have bars, TV’s in restaurants over a certain size, live music, video games in restaurants or outdoor signs that display scrolling text.

  17. Good writing new point. I like the style of the author. Negozi Hogan
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  18. Gambling carries a negative connotation. Who is proud to say they live in Detroit, Atlantic City or Las Vegas?

    Chicago has a diverse economy and is not dependant on one industry. Tourism is still a major industry and they have decreased their marketing over the years. Chicago spends 11-18 million on marketing for conventions, whereas Vegas and Florida are closer to 100 million. Chicago used to be the leader in conventions, until unions inflated their fees.

    This is a huge mistake by Chicago, Huge. They are trying to get the money that is driving 45 minutes to Inidana and it is not worth it. They could see better results with increased convention marketing. Chicago negotiated with the convention unions, so they can get a lot of that revenue back.

  19. Petition: Legalize Gambling

    I started a petition at the White House petition site. Possibly someone would like to sign it.

    Here is the url and the text:
    We petition the Obama administration to:Legalize Gambling.

    The administration should take all steps it can on its own to remove legal penalties for gambling. The administration should work with Congress to repeal all laws penalizing gambling. Any presidential orders, directives, etc. penalizing gambling should be revoked. Laws, directives, etc. penalizing credit card companies and other similar companies for engaging in transactions involving gambling should be repealed or revoked. The administration should take whatever measures it can to encourage state and local governments to remove laws penalizing gambling. The administration should act to withdraw the United States from any treaties that penalize gambling.

    If you like the idea please share the petition, tweet it, plurk, etc.

    The White House

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