The benefits of casino gambling are supposed to be various and substantial. Yes, there is the immediate impact of taxing the slot machines. Governments can spend that money. And they do. But then there is also the spillover. The "vitality" that the casinos bring to places where they operate.
A prefect example of this is at ailing racetracks. Put in the casinos, the argument goes, and you can generate more money for purses. Which will draw more competitive racing. Which will draw more race fans. And besides, you will draw in thousands of people already predisposed to gamble, thus creating a perfect storm of racing and wagering and vitality. Presto! You've just saved the racing industry!
But does it work? Check this out:
Eleven years after Delaware allowed slot machines at its racetracks, the purses horses compete for are higher than ever and the races more competitive. The grandstand at Delaware Park is spotless, the restaurants are new and the parking (for a mere $3) is valet.
But hardly anyone is there to watch the horses, much less bet on them.
The cheers of the crowd as the horses came down the home stretch one afternoon last week were not quite loud enough to drown out the soft hum of the air conditioners that kept slot machine players cool in the casino attached to the grandstand. Fewer than a hundred people were sprinkled among thousands of empty seats at the track.
Maryland racing officials insist that they need slots at the state's tracks to revitalize their industry, which they say is suffering from competition from Delaware, West Virginia and Pennsylvania, where expanded gambling subsidizes purses and attracts the best horses. But the experience of those states shows that slots have done nothing to attract more people to horse racing.
"There's no correlation," said George Sidiroplois, the West Virginia Racing Commission chairman. "It's inverse, in fact."
Does this say anything about a casino's potential to attract people to a city's museums and sandwich shops and other offerings?
Let's hope not.
You hope not, but I think you know the effect will be pretty much the same. People have a limited amount of discretionary income, and if they spend it on one thing, like gambling on horses, they can't spend it on another, like gambling on slot machines. The example also suggests that the number of gamblers is finite, and adding a new type of gambling may do nothing to increase revenues.
Posted by: Jonathan Potts | June 24, 2007 at 09:50 AM
The Baltimore Sun article did not mention economic impact of anything else other than horse racing handle. No mention was made to the fact that slot machines or not, attendance at horse tracks has dropped. You can not say that slots have helped to decrease attendance. As you mentioned, slots increase purses, which brings more horses, and should bring more people. Even if the people don't show up, the increased purses and horses have a ridiculously large economic impact. In Maryland it is over $1 Billion a year. I'll get off my soapbox now!
By the way.....Great blog!
Posted by: Baloo | June 24, 2007 at 09:51 AM
OK, I read the article further and it seems that the profits from slots may exceed the pre-slots profits from racing. But that's why I would have preferred to see slots confined to race tracks, where gambling is just competing with more gambling, not with restaurants, theaters, galleries, etc.
Posted by: Jonathan Potts | June 24, 2007 at 09:53 AM