Tuesday, 5 February 2013

Why say 'No' to a Downtown Casino?

What do landfills, maximum security prisons, and casinos have in common? Most people don't want one in their backyard. A recent poll of 5,402 residents indicates that 56% of Hamiltonians are opposed to a downtown casino. Not an overwhelming majority, but it's a majority nonetheless.

As an engineer, I'm a fan of basing decisions on things like evidence, expert opinion, and sound reasoning. I encourage all concerned parties to examine the proposed Hamilton Downtown Casino under this light.

I don't have to do any significant research on what a casino will do to the city because so many others have already put gambling under the microscope. Perhaps the most convincing is the unbiased, exhaustive analysis and review by Williams, Rehm, and Stevens (click to download). The authors analyzed nearly 500 published studies on the social and economic impacts of gambling. Their conclusion?
...the overall impact of gambling in a particular jurisdiction in a specific time period can range from small to large, and from strongly positive to strongly negative. That being said, in most jurisdictions, in most time periods, the impacts of gambling tend to be mixed, with a range of mild positive economic impacts offset by a range of mild to moderate negative social impacts. (emphasis theirs)
In other words, a comprehensive analysis of the socioeconomic effects of gambling reveals that investing in gambling is sometimes a good thing and sometimes a bad thing. It's a gamble that typically results in only modest economic benefit that is outweighed by negative social impact.

The proposed downtown casino will allegedly create 1200 new jobs. How many new problem gamblers will lose their jobs? How many local businesses will go bankrupt? How many jobs will be lost at Flamboro Downs? I don't know, but I suspect that if you add up all the losses, it'd be more than 1200. Expert economist Earl Grinols of Baylor University says casinos are a wash at best when it comes to jobs.

Casino proposals are presented as a quick fix for economic problems. Proponents highlight projected revenue and job creation numbers while ignoring or downplaying the fact that casinos cost money and jobs for the surrounding local businesses. Casinos rarely deliver the kind of economic stimulus suggested in the original proposal. In fact, many casinos are in debt. Casinos don't actually create anything valuable; money just changes hands. Hence, a casino can only boost the local economy if it attracts more tourist dollars than what would've been spent without the casino. Nearly all casinos actually derive their revenue locally, either from local gamblers or from the redistribution of existing tourist dollars (from local businesses to the casino). Hamilton is unlikely to benefit from tourism the way Las Vegas or Atlantic City did. Frankly, Hamiltonians don't want that kind of growth anyway. Crime rates skyrocketed in both of those cities after all the casinos showed up. Gaudy new casinos wouldn't complement downtown Hamilton's historic structures either.

Many opponents will point to the negative social impacts of casinos, especially problem gambling. Casino proponents will try to downplay the issue with arguments like these:

A minority of problem gamblers shouldn't influence my freedom to gamble
You're also free to own a gun, but we don't let just anyone walk into a store and acquire one. Such a practice would be generally damaging to our society. In the same way, you are free to gamble, but that doesn't mean we should knowingly and willingly enable problem gambling; a burden on society. Do not ignore the fact that roughly 50% of gambling revenue comes from problem and pathological gamblers. They may be a minority of the population but they are the casino's best revenue source, not to mention a burden on everyone.

Gambling already exists (lotteries, bingo halls, etc.). A new casino won't change things.
This is an argument that looks sound superficially, but is actually very weak if you give it some thought. The fact that gambling already exists says nothing about whether or not gambling is contributing to current social costs. Brothels and opium dens also exist but that doesn't mean we should build more of them. A new casino probably would attract some gambling revenue from existing gambling. However, casino gaming is different from bingo halls and lotteries and will therefore also attract new gamblers (and enable new problem gamblers). Casinos are designed to prey on the problem gambler, designed with few or no windows and with all amenities within the facility. The argument that "gambling exists and it's not so bad" doesn't address concerns that a casino would make things worse.

Finally, don't be fooled by numbers that sound really big, like 1200 jobs, $200 million investment, and $10 million annual revenue for the city. The city's gross expenditures budget for 2013 is almost $1.9 billion dollars! $10 million dollars is less than 1% of the budget; not even a penny on the dollar. Based on recent data from Statistics Canada, Hamilton has a census metropolitan population of 721,000, a labour participation rate of 66.9%, and an unemployment rate of 7.9%. That amounts to 38,000 unemployed workers in Hamilton. Even if the number of new jobs casino proponents are talking about turns out to be true, it's still only 3% of Hamilton's unemployed labour force. When you scrutinize the numbers, it's clear that even the casino proponents don't think a casino will furnish significant economic stimulus for the city, they're just being deliberately misleading to garner support. These projected, very modest,  economic gains are hardly worth pursuing, especially when most Hamiltonians don't even want a casino to begin with. Hamilton can pass on these proposals and will get along just fine.

The evidence and overwhelming expert opinion says casinos are generally bad for cities. But you don't have to take my word for it. These folks wouldn't recommend a downtown casino either:



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