Las Vegas is the infamous gambling capital of the US. However, gambling is not limited to Vegas as betting companies are scrambling to enter other lucrative markets such as Massachusetts. Meanwhile, gambling networks in Native reserves are expanding at unprecedented rates. Gambling is a contentious issue in the US with some groups advocating for its legalization while others are vehemently opposed to the industry. Consequently, one may ask, is gambling good for the US economy?
Revenue and Job Creation
A recent survey commissioned by the American Gambling Association found that the industry is a direct employer of 570,000 people and indirectly employs or impacts the finances of another 1.7 million individuals. It also creates almost 200,000 government jobs. The industry generated revenues amounting to $81 billion in 2013 with around 40% or 30 billion coming from Native reserves. Meanwhile, gambling companies paid $38 billion worth of taxes.
The report estimated that the industry contributes $102 billion directly to the economy through economic activities by workers. The overall economic impact is around $240 billion though this does not account for infrastructural investments such as casino construction. The researchers concluded that gambling creates more jobs than the airline industry.
Huge potential
Due to various federal and state restrictions, gambling is not as widespread in the US as it is in most developed economies. Therefore, there is huge scope for expansion of different forms of gambling. A recent report by Oxford University indicated that legalizing sports betting in the US would increase its contribution to the economy by $14 billion. This is exciting news for enterprising states as the Supreme Court decision in Murphy V. NCAA gave them the discretion to permit gambling in their territories.
Externalities of Gambling
Despite gambling making inroads in the legal battlefield, it still a long way from gaining popular support in the US. Conservatives still view it as an evil industry that destroys livelihoods and families. Their position is backed by research indicating that while gambling is beneficial to the economy, it has some negative externalities.
The evidence of economic benefits is overwhelming, as demonstrated by the thriving Native Indian territories that would be fully reliant on state and federal funding without revenue from gambling. The externalities include accelerated degradation of public infrastructure and amenities due to increased traffic and problem gambling. Pathological gambling causes bankruptcy and bad debts. There are also economic costs associated with dysfunctional families and lost productivity due to addiction.
Illegal Gambling
A significant percentage of the population participates in illicit gambling. For instance, Americans gambled almost $5 billion on Super Bowl 52, but only 3 percent of the money was spent on local gambling platforms. The rest was wagered on international betting sites.
Legalizing sports betting would avert the revenue leakage to foreign betting companies. It would boost government revenue and protect jobs that are being lost by bankrupt casinos. The Oxford report found that legalizing sports betting would create over 150, 000 jobs and contribute $14 billion to the economy. Moreover, mobile betting on sites like Unibet.com could add another $9 billion worth of revenue to the coffers because it is more convenient than going to casinos.
Bottom line
Gambling may be controversial, but it is clear that it is an activity that Americans love and has the potential boost the US economy. The existing gambling havens already contribute more to the economy than the airline industry. Legalizing and embracing the full scope of betting is likely to curb revenue leakage and create jobs.
Sources
Jackpot! Gambling’s impact on the US economy.
The Economic Benefits of Legalized Sports Betting in the U.S. Would Be Huge.
Pathological Gambling: A Critical Review. Chapter 5: Social and Economic Effects.
