Studies: Casino gambling’s effect on communities mixed

David Strow

Tuesday, Oct. 10, 2000 | 12:07 p.m.

Many people associate legalized gaming with a long list of social evils -- high bankruptcy rates, increased crime, soaring suicide rates and the spread of gambling addiction.

A new series of studies suggests that, for some of these urban plagues, there's little connection to gambling. But nearly consistent increases in bankruptcies and some crimes, such as theft, has researchers saying more work needs to be done to explore a possible link with casinos.

A series of 13 papers, produced by professors from the University of Nevada-Reno and the University of Memphis, report on the effect of casinos on eight communities throughout the country where casino gambling has been introduced in the last 10 years.

The studies' authors were quick to caution that a connection between the casinos and the negative effects couldn't necessarily be drawn. And they also warned conclusions couldn't be drawn for Nevada communities, where legal gambling has existed for the last 70 years.

"Casino gambling is not as good as proponents claim, and it's not as bad as the opponents claim," said Mark Nichols, professor of economics at UNR. "It is not the panacea for all a community's ills, nor will it cause a community to go down the toilet."

The study focused on trends in eight new casino jurisdictions: Biloxi, Miss.; the city of St. Louis, the county of St. Louis and St. Joseph, Mo.; Alton, Peoria and East Peoria, Ill.; and Sioux City, Iowa. The studies were funded by a $250,000 grant from the U.S. Department of Justice's National Institute of Justice.

The most consistent trend among the cities occurred in personal bankruptcies. While comparable non-gaming cities showed an 11.5 percent increase in bankruptcies from 1989 to 1998, seven of the eight cities showed a larger increase. The largest increase came in Alton, where bankruptcies soared 50 percent.

The surprising exception was Biloxi, where gaming has taken the strongest hold. There, personal bankruptcies fell 13 percent.

"It's really tough to link that increase strictly to gambling," Nichols said Monday. "With seven of the eight showing a larger increase (than the rest of the nation), it does suggest there may be some truth to the idea that gambling does indeed increase bankruptcy, but Biloxi says it doesn't necessarily have to be so."

Biloxi may have bucked the trend because its casino industry draws heavily on tourists, allowing factors like job creation and tourist spending to outweigh gambling's negative effects, Nichols said. But the only way to find out for certain is to study bankruptcy filings for mentions of gambling.

"It does seem to be a pattern that at least raises questions," Nichols said.

Less consistency was found in a study of crime rates in the cities. Three of the cities -- Sioux City, Peoria and Biloxi -- saw increases in crime, while Alton, St. Louis city and St. Louis County saw crime fall.

Among all the markets, theft, family offenses and drug abuse saw consistent, statistically significant increases, while burglary declined.

"One issue that really needs to be addressed is, is this a casino effect or a tourism effect?" said Grant Stitt, chairman of UNR's Department of Criminal Justice. "You could open a Six Flags (amusement park) in Sheboygan, Wisc., and the crime rate in Sheboygan could go up because you have numbers of tourists coming into your community.

"Odds are the crime rate will go up, because when you bring tourists into a jurisdiction, they're on vacation, they have cash and they're really good potential victims. With tourists, you have new potential offenders. We don't know if it's due to casinos or tourists."

However, Stitt said, residents perceived that crime went up more than it actually did. More than 30 percent also believed the die-hard myth that organized crime is still entrenched in the casino industry, Stitt said.

"That (crime perceptions) in itself is a significant factor, because you have to deal with communities based on what people think," Stitt said. "They may not go to places they used to, because they're concerned about being victimized. We don't understand why people think that."

Another trend emerged in the perceived extent of problem gambling in the communities. When asked how many residents in their communities were addicted to gambling, the average response was 16 percent -- far higher than the below 5 percent rate indicated by scientific surveys.

About 19 percent of the respondents said they had at least one relative that suffered from problem gambling, while 32 percent said they had at least one friend with gambling problems.

Stitt doesn't believe problem gambling is necessarily that widespread in the study cities, since the survey relied on perceptions and opinions, rather than scientific surveys. Moreover, a handful of extremely high estimates helped push the average numbers higher.

"Those people who had either friends or relatives who had problem gambling perceived a larger rate in the community," Stitt said. "That's the close-to-home effect.

"Just because someone goes into a casino all the time doesn't mean it will cause a problem in their lives."

In two other social problems, divorce and suicide, the studies showed no evidence gambling necessarily causes increases in either. Only one city showed an increase in divorces compared to non-gaming cities, while four cities showed declines. Suicides rose significantly in two cities, decreased significantly in one case, and were statistically unchanged in the rest of the sample cities.

"When people say suicide and divorce goes up (with legalized gaming), from a statistical standpoint, our evidence does not suggest that at all," Nichols said.

Despite concerns about problems related to legalized gaming, the authors found that support for casinos remains strong in most cities. Fifty-nine percent of community leaders and public service employees surveyed favored legalized gaming, 65 percent believed the casinos enhanced their community's quality of life and 77 percent said casinos had a positive impact on their community. Support for casinos, however, varied widely by community; 94 percent of Biloxi leaders said casinos had a positive impact on their community's quality of life, as opposed to 43 percent of leaders in Sioux City.

"Some of these places were in pretty bad shape ... and casinos have definitely helped, in terms of economics," Stitt said. "In most cases, residents seem satisfied that this was a good idea. They see the positives outweighing the negatives.

"In these communities, you have to believe that the casinos have done more good than they've ever caused harm or problems."