Whenever it comes to defending casinos and pushing for more of them, the theme of “jobs” is invariably front and center. In New York, which recently legalized casinos, the main political action committee promoting casinos was called “New York Jobs Now” and Governor Cuomo’s favorite pro-casino argument was that they “promote job creation.” In Massachusetts, where voters this fall will decide whether to repeal the pro-casino law passed by the legislature in 2011, by far the loudest message coming from the casino lobby is jobs, jobs, jobs.
The argument is highly misleading. To see why, let’s start with Economics 101.
If I open a business that employs people, I’m “creating jobs,” but does that prove that I’m helping the economy? Of course not. Economics 101 teaches that the question is not “Do people work here?” but rather “Does this activity contribute to economic growth?” And current economic research clearly suggests that casinos do not help the economy.
The reason why isn’t hard to understand. What expands the economy is producing things of value, and casinos produce nothing of value. If I open a donut stand, I’m producing donuts. If I build a tire factory, I’m producing tires. The only thing a casino produces is people losing their money. The economic impact is similar to throwing your money onto the street so that someone else can pick it up – it’s redistributing wealth without creating it.
But it gets worse, because what casinos do isn’t neutral, either ethically or economically. Casinos prey upon people’s weaknesses in order to separate them from their money. Slot machines and other casino games are forms of fraud, similar to loan-sharking, false advertising, and price-gouging.
Economists have much to say about the economic impact of businesses that cheat and exploit people, and it’s the opposite of what the casino lobby says. If I start a loan-sharking business in your town, it’s true that I’m “creating jobs.” I’m also creating jobs if I open a brothel or turn an abandoned building into a crack house. But would any of this help the economy? Of course not. Such activities typically drag a community down, economically and in other ways. Bad ethics usually lead to bad economic outcomes.
Want the numbers? In Gambling in America: Costs and Benefits, generally viewed as the definitive study of the topic, Earl Grinols estimates that every dollar of economic gain from casinos is off-set by three dollars of economic loss. If you like that ratio, you may want to consider playing slot machines twice a week as a way to improve your personal finances.
Why do casino advocates center their public argument on “jobs, jobs, jobs” when the argument is so obviously misleading? There are three reasons.
The first is economic illiteracy. Many people, including many in public life, do not understand the difference between counting “new” jobs and assessing an activity’s overall economic impact.
Second, the argument gains undeserved ground because the economic gains from casinos flow to specific and well-organized groups – casino owners, casino employees, and state governments – while the losses, although greater than the gains, are much more widely diffused. Which wheel is more likely to squeak loudly and get the grease – the influential few who’ll gain a lot, or the general public who’ll pay through the nose over time?
Finally, I’ve learned from personal experience that casino lobbyists will say nearly anything to avoid discussing the actual reasons for casinos. That’s why even the act of publicly engaging their talking-points about “jobs” drives people like me nuts, because once the cameras are turned off and the public has been fed its pabulum, none of the inside players even remotely believe that “jobs” are what this debate is really about.
Rest assured that, in the real world, casino owners are not philanthropists seeking to provide you with employment. They are predators seeking to take your money in exchange for nothing by enticing you to played rigged games of chance in which they always win and you always lose.
It’s the same with the politicians who legalize and promote casinos. You can be confident that they aren’t doing it to spread economic sunshine. They’re doing it because they see in casinos a big sign made specifically for them that says “Free Money.” A few decades ago, when casinos were run by mobsters, they regularly gave suitcases filled with cash to the politicians who protected them. The same thing happens today, except that the pay-offs are legal and are called taxes. But the process is the same and so are the ethics. And “jobs” have almost nothing to do with any of it.
This article appeared originally in the Deseret News.