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16 J.L. & Com. 49 (1996-1997)
Development or Dreamfield Delusions: Assessing Casino Gambling's Costs and Benefits

handle is hein.journals/jlac16 and id is 55 raw text is: DEVELOPMENT OR DREAMFIELD DELUSIONS?: ASSESSING CASINO GAMBLING'S COSTS AND BENEFITS E.L. Grinols and J.D. Omorov ABSTRACT The debate over expanding casino gambling includes policy ques- tions relating to the size of harmful externalities it causes and the size of the associated consumer, producer and tax benefits gained from placing casinos in new geographical areas. This paper evaluates the social costs of expanded casino gambling and finds that they are between $112-$338 annually per adult. The paper constructs and analyzes a measure of con- sumer benefits from closer proximity to casinos. Producer, consumer, and tax benefits are no greater than $56. Based on available data, therefore, casino gambling fails a cost-benefit test. The evidence suggests that the type of casinos that have opened in many states do not act as tourist at- tractions in most areas and therefore are not economic development tools in those cases. I. INTRODUCrION The frenzy of casino expansion in the U.S. and Canada in recent years bears many of the behavioral characteristics of a bubble to observ- ers who call gambling the modem endless field of dreams.' To others it is a promising tool for economic development. As an economic and social matter, however, gambling has always raised deep questions for the theoretician and for the policymaker. Adam Smith, for example, at- tributed the purchase of lottery tickets to mistaken beliefs about the chance of winning: That the chance of gain is naturally overvalued we may learn from the universal success of lotteries. The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it .... 1. I. Nelson Rose, Gambling and the Law: Endless Field of Dreams, in CASINO DEVELOPMENT, How WouLD CAsINos AFFEcr N w ENGLAND'S EcONOMY? 18 (Robert Tannenwald ed., Oct. 1995) (It is widely believed in the 1990s that anyone, including government can get rich quick. All one needs to do to grab a piece of the action is to own, operate, or tax some form of legal gambling .... This de- lusion is a typical symptom of a classic speculative bubble.).