Like many of their counterparts across the nation, Pennsylvania politicians are considering the expansion of gambling as a means of generating new tax revenues for increasing government expenditures. While the tax revenue benefits that would accrue to state government have been extensively discussed by gambling expansion proponents, the potential negative costs and consequences of expanded gambling in the Keystone State have not been fully assessed by many policymakers. This policy brief highlights some of this detrimental evidence that should cause policymakers to pause and be sure to carefully examine whether Pennsylvania should bet on gambling to solve its fiscal woes.
The experience of states that have already legalized slots and casinos reveals that the much anticipated revenue to fund even the most well-intentioned government programs is a mirage that never fully materializes. Instead of an effective “new economic development tool,” the introduction of gambling has produced a number of even more costly unintended consequences that appear to far outweigh any short-term benefits. For example:
- 24 out of 57 counties throughout the United States experienced job losses as a direct result of casino development. The most severely hit industry was manufacturing, a sector of Pennsylvania’s economy that has experienced perilous decline since 2001. Significant job losses also occurred in the agriculture and services industries due to the introduction of gambling.
- Problem and pathological gambling costs the U.S. economy close to $80 billion annually when considering personal bankruptcies, increased crime, and incarcerations—over $10 billion more than the estimated $70 million annually spent to combat drug abuse. The 1999 National Gambling Impact Study Commission estimated that 7.5 million of the 125 million Americans who gamble each year have a gambling problem, and another 15 million are “at risk” of developing a gambling problem.
- During the first three years of casino gambling Atlantic City, New Jersey went from 50th in the nation in per-capita crime to first. Overall, from 1977 to 1990, the city’s crime rate rose by 230%. This crime rate increase was more than 25 times the single digit growth rate of 9% reported for the remainder of New Jersey and has required the city to increase its police department’s budget by 300%.
With the stakes so high for Pennsylvania’s economic future, Pennsylvania policymakers should fully examine all the evidence before rolling the dice on any type of gambling expansion. This report is intended to shed some much needed light on the potential short and long-term costs and consequences of expanding gambling in the Keystone State.
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The Commonwealth Foundation is an independet, non-profit public policy research and educational institute based in Harrisburg, Pa.