Impact of Gambling:

Economic Effects More Measurable Than Social Effects

GGD-00-78: Published: Apr 27, 2000. Publicly Released: Apr 27, 2000.

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Bernard L. Ungar
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Pursuant to a congressional request, GAO reviewed the National Gambling Impact Study Commission's (NGISC) case study on gambling, focusing on: (1) the economic effects of gambling, particularly on employment, bankruptcy, and tax revenues and community investment; (2) the social effects of gambling; (3) the prevalence of pathological gambling; and (4) whether communities offer incentives to attract gambling establishments.

GAO noted that: (1) according to NGISC, in 1996, the legalized gambling industry employed over a half million people, primarily in casinos and in the pari-mutuel industry; (2) NGISC did not report whether there was a cause-effect relationship between gambling and bankruptcy for the general population but found that a higher percentage of pathological gamblers had filed bankruptcy than others in the general population; (3) NGISC reported that the casino industry paid $2.9 billion in federal, state, and local taxes in 1995; (4) Atlantic City casinos paid about $319 million in gambling taxes to New Jersey and over $86 million in property taxes to Atlantic City in 1998, representing about 80 percent of total property taxes for the city's budget; (5) in 1998, the casinos also paid $41.7 million in school taxes and $25 million in county property taxes; (6) from 1985 through 1999, about $900 million of casino community reinvestment funds had been earmarked for community investment in Atlantic City, including housing, road improvements, and casino hotel room expansion projects; (7) neither NGISC nor GAO's Atlantic City case study was able to clearly identify the social effects of gambling for a variety of reasons; (8) while data on family problems, crime, and suicide are available, tracking systems generally do not collect data on the causes of these incidents, so they cannot be linked to gambling; (9) while studies have shown increases in social costs of pathological gamblers, it is difficult to isolate whether gambling is the only factor causing these problems because pathological gamblers often have other behavior disorders; (10) NGISC reported on three studies completed in 1997 and 1998 that estimated the percentage of U.S. adults classified as pathological gamblers ranged from 1.2 to 1.6 percent; (11) a NGISC contractor estimated that about 2.5 million adults are pathological gamblers and another 3 million adults should be considered problem gamblers; (12) NGISC did not address whether communities offered incentives to attract gambling establishments; (13) New Jersey and Atlantic City officials said casinos do not generally receive subsidies or tax incentives from the government, but New Jersey has allowed a portion of casino funds initially mandated for community investment to be used for casino hotel expansion and to purchase land for hotel expansion; and (14) other funds are being used to help construct a tunnel to connect downtown Atlantic City with another area used for casino hotels and residences.

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