Introduction
According to the American Gambling Association, most American voters believe casinos help strengthen their communities and improve local economies.
– Lim and Zhang. Growth and Change.
For each country, economic development is one of the most important areas of activity. Thus, the state applies various measures to improve this indicator. One of the most extraordinary tools for economic development is the casino industry. The casino is a place where chance plays the main role and people can both win all the money and lose. Thus, this industry can have a significant impact on economic development. However, not everyone adheres to this point of view, believing that gambling should be banned.
Therefore, many American states do not prohibit the opening of gambling establishments. One of the root causes of this action is the attitude towards casinos as a way of developing and strengthening the country’s economy. Among their positive aspects, one can also highlight the promotion of employment growth, tax revenues and the growth of retail sales growth. A fairly large number of studies show that the fear of losing a significant financial component from gambling establishments and the positive attitude of the majority of society to this occupation also contribute to the preservation of such establishments in the country.
The online gambling industry has received a special difference. Its popularity is associated with the widespread closure of offline institutions. Moreover, on online platforms, people are provided with more services that will motivate them to make large financial expenditures. Thus, this process also contributes to the growth of the income of the founders of such casinos and thereby the payment of large taxes.
Thus, it makes sense for the government to show more interest in this area of society. Providing large businesses with more opportunities will contribute to providing more places for the population to work and increase the number of deductions to the state budget at the expense of taxes. Moreover, the closure of gambling establishments may significantly reduce the influx of tourists who are particularly interested in casinos in cities such as Las Vegas. It is also worth noting that the appearance of casinos contributes to the development of urban infrastructure.
In addition to the usual gambling establishments, online money-making platforms have gained great popularity. Despite the fact that the profit they bring is not so much more significant, it is noted that as they develop, it may increase. This is facilitated by the fact of the easy availability of gambling data. The introduction of legal solutions for this type of casino is of critical importance. This is due to the complexity of controlling not only the gambling industry, but also the complexity of conducting online activities.
Methodology
Not all research requires the collection of new data. Sometimes researchers use existing data sources, such as research and data collected by others. Data most widely used by researchers is gathered by government agencies such as the U.S. Census Bureau, State Agencies and local units of governments. For purposes of this preliminary research assignment, an extensive review of the existing literature was conducted using academic journals. This approach saves time and money and was endorsed in class. Based on research findings, others may wish to extend my work by using some of the other research methods commonly used by social scientists such as surveys and interviews.
Literature Review
The literature search was conducted with the help of digital academic platforms that allow open access to scientific works: Google Scholar, Web of Science, or Semantic Scholar. In particular, inclusion criteria were used to find a paper implying academic novelty, relevance to a research question, and writing in English. Above all, however, it was interesting to identify the development of the problem among the academic community. Figure 1 below shows that research on the topics of “casino” and “gambling” in print has steadily increased over the past two hundred years.
On the other hand, the academic community has also shown a high level of interest in exploring this causal relationship. More specifically, reference to Figure 2 shows critical trends: over the past four decades, the number of published papers and citations to them has grown exponentially. This suggests that the scholarly community is turning out to be interested in studying the economic effects of casinos, among other things. In addition, the multiplicity of papers submitted may be due to the increasing diversity of opinion. In other words, not all academics may be unanimous in their conclusions, and consideration of such works will provide the necessary criticality of the current research work.
For this scientific work, several sources based on evidence have been studied. The first article of the authors Geisler and Nichols is called “Riverboat Casino Gambling Impacts.” This source provides information about how the casino has affected the financial condition and employment of residents of states such as Illinois, Indiana, Iowa, Louisiana, Mississippi and Missouri (Geisler and Nichols 101). This source is valuable because it provides data because the gambling industry has affected neighboring states. To do this, the method of estimating differences in differences and the spatial model of the Turbine were applied. The main results obtained by the authors are the provision of evidence that the real income in the districts where casinos have become more widespread. Moreover, this industry has contributed to the provision of jobs to the population, thereby reducing the unemployment rate. In addition, in the states where there is a special level of competition between gambling establishments, which also contributes to reducing unemployment and low income of people. Therefore, this source supports the hypothesis that the casino industry contributes to the growth of the country’s economy.
The next source that also supports the positive effect of the gaming industry on economic development. The authors also show how the legalization of casinos contributes to the growth of incomes of the population and provides people with jobs. The main methods of collecting data were the implementation of panel information from the level of indicators of one district to the level of another and an approach with an instrumental variable to calculate the “potential endogeneity of the casino variable” (Lim and Zhang 410). In addition, the authors resort to estimating spatial error. This method is used to account for indicators that could have been missed during other studies. The results of scientific work show that the casino has an impact on the growth of the company’s income, but it cannot be called significant. The spatial error estimation method has shown that the gaming sphere continues to develop and has a favorable influence on the provision of jobs to people.
However, the academic community is also characterized by alternative views showing no connection of investment in the gaming growth in the country and per capita income rise. In particular, Walker and Jackson discuss that the relatively common view of this causal relationship turns out to be ineffective when tested with the Granger econometric method (597). It is worth clarifying that this method generally allows determining whether one factor is the cause of another or, roughly speaking, whether it can be used to predict it. Using this model for longitudinal data collected over fourteen years has clearly demonstrated that there is no causal relationship between state gambling development and economic growth for a particular state.
It is fair to admit that the authors of this study do not draw a clear line between the variables. In fact, Walker and Jackson even suggested that the creation of gaming places in a state may be primarily connected with the intensification of economic growth, but that this effect rapidly wanes over time (604). The state-by-state analysis showed that the long-term prospects for both municipalities and the state as a whole were lacking. In other words, no positive relationship was found in this study.
Results
Therefore, the hypothesis about the positive effect of casino on economic development was partially proven. This research paper investigated the connection between the opening or development of gambling establishments and economic rise of the country. A literature review was used as a critical methodological tool, and a careful examination of three scholarly works yielded intriguing results. However, it is paramount to say that the academic community as a whole was not characterized by consensus: while some authors discussed the positive economic effects of casinos, others affirmed their practical absence. The paragraphs described below discuss the general findings that emerged from the analysis of the papers.
First, one of the most apparent effects of a casino is the improvement of the region’s unemployment agenda. Like any business that requires human resources to support operational processes, casinos employ staff. This creates an environment in which casinos increase employment rates among the local population. In turn, lower unemployment rates inevitably lead to a host of consequential effects. These include the intensification of overall economic growth by increasing the country’s GDP. In addition, increased employment among the population should have a favorable impact on the socio-economic agenda. Thirdly, it is not difficult to draw a parallel between reduction of unemployment and improvement of criminal culture in the environment: when people find themselves employed, fewer crimes should occur due to reduction of social tensions.
Additionally, it should be said that opening a casino enterprise can have a high appeal to job seekers due to the recreational function of the industry. As a result, a large number of people from different locales may have a desire to work in a casino, which increases the differentiation of labor and creates a wide availability of labor. It is evident that casino jobs may require specific skills and abilities in the workforce. This will either lead to more people seeking to migrate to economic zones where casinos are built or to a desire for local people to learn, which in turn will increase the intellectual capacity of the region.
Second, an equally important result of investing in a casino is to increase the tax base of the region. It is worth remembering that tax revenues from businesses and individuals are the basis of the regional budget, which means that the more taxes paid into the treasury — provided there is a balance with the needs and interests of taxpayers — the more economically developed the region is. In this sense, casinos are an excellent example of this strategy since customers voluntarily visit such establishments, and thus, one might approximate, voluntarily invest in the municipal budget. In turn, the tax rates of many states can be refined, which means that in addition to the body of the payment, there is an added interest that is fully invested in the region’s economy.
The effects of an increased tax base are hard to overestimate: When the authorities of a municipality or even an entire country increase the amount of taxes coming into the states, it ensures growth. In particular, more money is used to develop the urban environment, improving urban accessibility and infrastructure development. This includes government efforts to develop the educational environment. With this in mind, it can be extrapolated with some conviction that investing in casino development in a region leads in the long run to improvements in the economy and social aspects of that region.
In this scenario, however, it is worth understanding that this economic cycle is not infinite. While urban or state development is a beneficial and socially encouraged practice, taxes cannot increase indefinitely. When a casino increases the cost of admission tickets or raises fares, it can have a negative effect on attendance because the public is not prepared to increase their own spending on casinos continually. To put it another way, increasing the tax base can have a destructive effect on the economy when fiscal management proves to be excessive. Otherwise, it has been shown that a sufficient increase in tax revenues has a favorable effect on the socio-economic development of the region.
Thirdly, the formation of the casino contributes to the increase in retail sales of the country. This issue is of the greatest interest among scientific papers on the topic under study. The country’s economy benefits from this indicator since the higher the level of trade, the higher the level of taxes paid. The main factor influencing this indicator is the discrepancy between the treatment of the regional population and residents of other states. Hence, only with an increased number of the former, the gambling industry can bear only negative consequences, that is, sales may be low and not bring significant tax payments. Moreover, attracting only the population of the state in which the casino operates can cause a substitution effect. In this case, people may prefer to visit another public places, to the detriment of gambling establishments.
That is why the tourist area has such value for casinos and economic development. These visitors are willing to spend a lot more money to maintain a state of euphoria and interest. Under such conditions, the sales and profits of gambling establishments will contribute to the replenishment of the state budget. Moreover, a financial advantage can be gained not only in the case of visitor rates, but also spend on various tourist attributes and hotel accommodation.
A study of literary sources often mentions the slightly different influence of two types of casinos: online and offline. Therefore, the reason for the popularity and consolidation of offline casino positions is a large number of tourists visiting this institution. For example, Los Vegas is an excellent example of a city that has become famous due to gambling and brings large profits and tax deductions to the country’s budget. Moreover, a large number of casinos opened in the city contribute to an increase in the working population. So, if the actions of these places are beyond the limit, a large number may remain vacant, which negatively affects the economy.
On the other hand, many countries categorically treat the opening of such institutions as casinos. This is often caused by religious views that prohibit this activity because of its sinfulness. All Arab countries and the People’s Republic of China can be cited as a vivid example of this attitude. Another argument in support of gambling industry as an incentive for economic development is the improvement of the infrastructure of cities in which these settlements are allowed. This fact contributes to the increasing spread of the idea that casinos have more positive sides and should be opened in other countries.
Despite the positive characteristics, gambling also has negative sides. Therefore, in many sources, it is noted that the dependence and debts caused by this industry contribute to the growth of crime and the loss of control by the state. Many people, due to lack of funds, turn to illegal activities to get money. However, it is also noted that this phenomenon occurs more often with the prohibition of this activity and the development of underground business. Thus, the trend towards the legalization of gambling can affect the reduction of crime. Nevertheless, it is worth adding that in order to carry out this process more effectively, it is necessary to develop and apply various legal acts regulating the company’s activities.
Therefore, less developed counties of the country that cannot provide a proper number of gambling establishments may experience a reduction not only in financial indicators, but also a shortage of working meth. However, many such districts are taking various measures to improve the situation. Hence, various advertisements are used to attract attention to the casino as a local attraction of a particular city. Thus, despite the existence of such problems as the growth of crime, the gambling industry in the United States of America will still develop. Of great importance for this fact is the establishment of legal restrictions by the government. This action may initially confuse and slow down the operation of the casino, but when they are rebuilt, their activities can become even more effective.
Conclusion
Despite the essence that there is no definite opinion on gambling, and it is still characterized by inaccuracy, concrete conclusions cannot be drawn yet. Therefore, it can be concluded that the hypothesis put forward in this paper that the gambling can be an effective tool for the economic expansion of the country is partially confirmed. This is due to the fact that this industry contributes to the growth of employment, retail trade and taxes. The negative aspects of this phenomenon are the growth of psychological addictions and debts on the part of players. The main factor in whether casinos will remain and retain their popularity is the level of interest in them. However, with the increasing availability of online casinos, this trend has full scope to take root in society. That is why the state, and the appropriate authorities should carefully monitor the trends in the development of the gambling industry and introduce the necessary legal regulations.
Works Cited
Geisler, Karl, and Mark Nichols. “Riverboat Casino Gambling Impacts on Employment and Income in Host and Surrounding Counties.” The Annals of Regional Science, vol. 56, no. 1, 2015, pp. 102-123.
Lim, Siew Hoon, and Lei Zhang. “Does Casino Development Have a Positive Effect on Economic Growth?” Growth and Change, vol. 48, no. 3, 2017, pp. 409-434.
Walker, Douglas and John D. Jackson. “Do Casinos Cause Economic Growth?” American Journal of Economics and Sociology, vol. 66, no. 3, 2016, pp. 593-607.