Casinos hurt local businesses across the U.S. during the Great Recession. Retail sales growth rates were two to three times lower in casino areas than in noncasino areas from 2007 to 2012, according to my recent analysis of U.S. Census Bureau data across 39 states.
Casinos make economic downturns worse for local businesses, not better.
So, if you agree that "Times Square was hit hardest by the pandemic and slowest to recover; it needs an economic boost," as the Coalition for a Better Times Square claims, the last thing you would want to encourage for Times Square is an economy-draining casino.
Nonetheless, the coalition seems to believe that millions of people will visit a Times Square casino and shower the city with new money. Really? Why would anyone travel to New York City to gamble? Apart from Las Vegas, most U.S. casinos draw the bulk of their revenues from their local populations, and so would New York City. The dollars the casino promoters are after are already largely in the city’s economy.
Yes, some gambling dollars will be diverted from nearby casinos. But the true goal of casino interests is to put one within walking/transit distance of the consumer spending of one of the highest density populations in the U.S.
Opening casinos in Detroit did not stem the flow of gambling dollars to nearby Windsor, Canada. Instead, it more than doubled the overall gambling losses in the area, according to University of Nevada, Las Vegas professor William Thompson. Expect a similar result in New York City.
The Coalition for a Better Times Square mentions a traffic consultant study to support its claims. But there's no link to the study in its press release nor does it appear on their website. That should raise red flags.
I have read many questionable for-profit casino impact reports during my research. For example, a KPMG report in 1995 chose to interview just seven out of thousands of Windsor-area retailers to imply in the beginning of the report, starting on Page 4, that a casino there had boosted local retail sales. But later in the report, on Page 43, it explains, "Five of the seven retailers interviewed report a slight increase in customer traffic, but attribute this increase to the general recovery of the economy rather than to Casino Windsor patrons or employees."
The academic community has appropriately dismissed casino consultant reports with deep skepticism. Policymakers and the public would well-serve their communities by doing likewise.
Gambling proponents have a vested interest to tout economic development claims, however shaky. Such claims sideline objections from local business leaders who will bear the biggest negative economic impacts and also provide cover for politicians seeking to line their own pockets.
Such claims also outshout opponents legitimately concerned about the high costs that accompany gambling, such as addiction, bankruptcy, corruption and crime. These social costs of casinos are three times higher than casino benefits, according to Baylor University economist Earl Grinols, yet most pro-gambling studies brush them aside.
Two other voices have recently weighed in on the possibility of a New York City casino. Former New York City Police Commissioner William Bratton, a Caesars Entertainment consultant, suggests that a casino will reduce crime. He is poorly informed. The University of Illinois Law Review notes that at least 8.6% of property crime and 12.6% of violent crime in counties with casinos would not be there without them.
Neil Barsky, the founder of The Marshall Project, writes that a casino will "help its most needy citizens." Replace "help" with the more honest "create" to feel how cringeworthy that notion is. Casinos make money because rapid-bet slot machines, the source of roughly 75% of casino revenues, are highly addictive. Addicts provide roughly half of slot machine revenues. You do not help the needy by supporting an activity that deliberately exploits vulnerable people – and adds them and their loved ones to the numbers of the needy.
Despite self-interested pro-casino claims to the contrary, casinos have not been shown to bring economic development. My study across 15 years of data found no evidence of a casino-related boost in local retail sales growth across 39 states from 2002 to 2017.
And jobs? Casinos actually hurt local job growth across that period. My study found that local economies with casinos experienced a slower rate of employment growth from 2002 to 2017 than local economies without casinos.
Casinos do hire people. But more jobs are lost nearby because of the casino, leaving the casino's favorite claim of promoting "jobs" as just an empty promise.
Yes, building a casino in New York City could create a few temporary construction jobs. But when the construction jobs end, what's left would not be an amenity; it would be an addiction-driven slot machine hall pushing up city costs for addiction, bankruptcy, corruption and crime while reducing local jobs in the long run.
Serious New York policymakers who are considering the long-term impacts of casino proposals should recognize that economic development and jobs will not be among them – and that social costs will dwarf the benefits claimed by pro-casino public relations campaigns.
Jonathan Krutz is emeritus professor of the College of Business and Economics of Boise State University and a volunteer board member of the Stop Predatory Gambling Foundation.