Are casinos good for the economy?

People who live near casinos are going broke faster than people who don’t, a new study found.

The growth rate of personal bankruptcies in counties with casinos was more than double that of similar counties without them during the 1990s, according to the study by Creighton University.

On the other hand, the rate of business bankruptcies was significantly lower in counties with casinos, the study showed.

Here are the exact numbers:

The study compared roughly 250 counties across the country with commercial or tribal casinos with non-casino counties with similar demographics. It found the cumulative growth rate on personal bankruptcies in casino counties to be more than 100 percent higher than the non-casino counties between 1990 and 1999.

It also found business bankruptcy rates in casino counties to be 35.4 percent lower than non-casino counties.

Here is one brief summary. Here is the original research.

The more surprising and puzzling result is that business bankruptcy rates are lower when gambling is present, even after adjusting for the quality of the county’s economy. Note that tribal casinos are most frequent in poorer regions. These regions may have fewer local businesses altogether, and thus perhaps those casinos induce personal rather than business bankruptcy. The businesses are owned by outsiders in any case. And if they are chains, perhaps they go bankrupt at lower rates.

I’m all for legalizing (zoned) gambling. The real question is whether we should tax gambling at higher rates than other economic activities.

Addendum: Jeff Smith points my attention to the following NBER paper, of direct interest.


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