Casino gaming has expanded broadly in global markets since the 2nd half of the 20th century. Casino gambling is a popular entertainment form purported to affect the host economies positively. Casino industry affects the tax revenues and the labour market (Walker et al., 2007). Foreign and domestic investment in the gaming sector is a source of substantial revenue alongside having a positive spillover effect on areas related to casino and even the local community. Unfortunately, an overexpansion of commercial gambling may affect trade negatively, which may set back real income.
Casino gambling may enable its operators to diversify out of this risk. As casino is a highly profitable sector, operators invest retained profits in non-gaming areas to cash in on the created spillover effects (Li et al.,2010). This is a great aid for the gaming major economy as it can then be directed to a sustainable and more balanced growth path. Indeed, diversification has impacted positively on economic experiences in the main casinos sectors globally making them consistent. The global demand for gambling services can provide extra opportunities for expansion of casino resorts and equally, the development of new gaming markets. Some questions concerning the effects of casino development on economic growth include; how is a local economy affected by casino opening? How are community natives affected by opening and development of casinos? How is tourism related to casino development and economic growth?
Literature Review
The use of casino facilities as a tool for economic development is a basis for public discussions and arguments a result of the growing number of cities endorsing mega projects to increase economic growth. Just as gambling revenues doubled annually in the last decade of the 20th century as Grinols & Omorov cite, the costs accrued were equally high. There is growing literature examining entertainment, casino establishment. The issues examined range from moral and social concerns to pure profit driven motives. Mostly, academic attention is placed on American casinos, though it is a global phenomenon with a large deal of controversy. An examination of economic success based on economic development resulting from casinos in Nevada revealed rapid economic growth from the 1970s -1990s. Las Vegas is mentioned to be among the top fastest growth metropolis in the period towards the end of the 20th century. The growth, however, was not without opposition such as examination of the social and economic impacts of gambling on society from regulators and Christian groups (Orford et al., 2009).
Examinations of the impact of legalized gambling in the United States in a comprehensive study by Lambart, argue that there is a need to consider external factors. The external factors include the size and location of the market in the success or failure of casinos. The states examined included Illinois, Iowa, Indiana, Mississippi, and Louisiana. The findings were that, despite the logic that major urban centres as the ideal location for casinos, numerous casinos are in rural areas and smaller towns. As an un-American phenomenon, there is a global increase in mega casino projects. Examination of Australia's economic impact of opening large gaming venue for a broad range of stakeholders: industry, government and community by is informative (Breen et al., 2005). The analysis considers revenue generation, job creation, direct taxation and household disposable income. Macao's use of casinos as a strategy for economic development is a subject of international attention (Gu at al., 2011). The economic liberalization that caused proliferation of casinos has resulted in a great deal of economic growth. Some nations, even legalize casino just to attract tourists to gamble in an attempt to regulate the gambling industry.
The best economic benefit that casino gaming can contribute is that establishing/opening casino gambling could bring a substantial tax revenue for the government. Kang suggested that casino gambling may bring about beneficial opportunities for commercial activities and foster local economic developments. Some researchers even demonstrate that operations from casino gambling provide substantial economic benefits by increasing employment opportunities (Evans and Julie, 2002). A comparison of employment and resident's personal income within a 30 casino communities in America reveal that the two are correlated. Regions with economic achievements above the national average development experienced benefits from casino gambling operations. Additionally, casino operations generated economic benefits are more pronounced in rural areas where the effect is wage increase and greater business development. Furthermore, the establishment of casinos could indirectly enhance economic growth as it increases opportunities associated with leisure, recreation, and entertainment activities within casino sites. Alongside gaming opportunities, casinos offer other forms of entertainment such as bars, restaurants, pubs, and retail outlets. The related services industry is an auxiliary production compared to casino gambling. However, evidence indicates that much less is spent at other entertainment venues after casino opening. Only certain regions and businesses experience economic improvement result of casino gambling establishment. Also, the establishment of a casino in areas where the workforce is relatively unskilled may not create local employment opportunities if a skilled labour has to be imported.
Construction of casinos may also negatively affect revenues, sources and jobs in other industries or even destroy their development (Walker et al., 2009). Investigation of riverboat casinos in Illinois reveals that it did not generate the anticipated economic and tourism as gamblers did not stay long enough to take accommodation in the hotel rooms or eat at the local restaurants. Casinos may compel the local customers to spend at the casino facilities. A study indicates that during the first four years that casinos began in Atlantis City, retail business numbers declined and the number of restaurants down-sized by close to half. The effect anticipated to multiply economically has not moved much beyond the core industry. Sadly, a large number of the residents are still unemployed and poor. The services in the city continue to be substandard, and there are increased social problems such as prostitution and crime.
Most gambling researchers argue that gambling result in little or no economic growth. Their argument has a basis that gambling industry development leads to a decrease in other sectors. This argument has a grain of truth; casino expansion may come at the expense of other areas. The introduction of casinos shuffles spending among industries, so that income or employment from gambling is offset by losses and decreased jobs in existing industries. However, it is not so a convincing argument as casinos are more widespread now in the United States, and there is no evident devastation economically as predicted by such researchers. New spending associated with gambling like, tourists, casino associated spending or the new jobs, brings new money to the local economy (Croes, 2003).
There is an argument that emphasizes the importance of cash inflow to a region and its effects. The monetary flow argument ignores the non-monetary benefits of legalization of casinos. This argument ignores how casino business positively affects production on capital markets and labour (Walker et al., 2007). The effect of any company is whether it adds/diminishes the economic base of an area. The effect primarily relies on whether the business draws new money to the area which is then spent on goods and services in the area. If resulting from casino gambling more money flow in and out of the economy, this impacts positively on the economy. However, an economy can be affected negatively if more money leaves than what comes into the economy as a result of casino gambling.
Moreover, legalizing gambling fosters economic growth. Tourism can be considered an export as most consumers are not locals. A massive influx of tourist implies an increase in consumer. This is also applicable in some casino dependent economies like Macau and Nevada. Tourists gamble for entertainment and need accommodation as well as food. The tourism will then imply activities beneficial for the economy consequently from an increase in local income (Henderson, 2006). As casino gaming is a strategy for regional development in the United States, it continues to grow in popularity as states outside the US loosen their restrictions on gaming activities. Casino gaming is a strategy for the development of countries lagging economically. Casino gaming stimulates economic development and growth. However, casino growth may fail to stimulate earnings in the local government sector. Not all states are poised to benefit equally from casino development. Multi-casino counties benefit from casino development. Communities should realize that casino industry represents a gamble in economic development. Communities interested in casino development should accurately and realistically assess its prospects.
References
Breen, Helen, Jeremy Buultjens, and Nerilee Hing. "Evaluating implementation of a voluntary responsible gambling code in Queensland, Australia." (2005).
Croes, Robertico R. "Growth, development and tourism in a small economy: Evidence from Aruba." International Journal of Tourism Research 5.5 (2003): 315-330.
Evans, William N., and Julie H. Topoleski. The social and economic impact of Native American casinos. No. w9198. National Bureau of Economic Research, 2002.
Gu, Xinhua, and Pui Sun Tam. "Casino taxation in Macao: An economic perspective." Journal of Gambling Studies 27.4 (2011): 587-605.Henderson, J. (2006).
Henderson, Joan. "Betting on casino tourism in Asia: Singapore's integrated resorts." Tourism Review International 10.3 (2006): 169-179.
Hsu, Cathy HC. Casino industry in Asia Pacific: Development, operation, and impact. Routledge, 2006.
Li, Guoqiang, Xinhua Gu, and Ricardo Chi Sen Siu. "The impacts of gaming expansion on economic growth: A theoretical reconsideration." Journal of Gambling Studies 26.2 (2010): 269-285.
Orford, Jim, et al. "Negative public attitudes towards gambling: findings from the 2007 British Gambling Prevalence Survey using a new attitude scale."International Gambling Studies 9.1 (2009): 39-54..
Walker, Douglas M., and John D. Jackson. "Do casinos cause economic growth?." American Journal of Economics and Sociology 66.3 (2007): 593-607.
Walker, Douglas M., and John D. Jackson. "Katrina and the Gulf States casino industry." Journal of Business Valuation and Economic Loss Analysis 4.2 (2009).
