Studies

Measuring Industry Externalities: The Curious Case of Casinos and Crime

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The predatory gambling business dismisses crime increases which parallel the introduction of casinos as being the simple result of increased population. This landmark study by economists Earl Grinols and David Mustard exhaustively reviews the reality of casinos and crime. Most gambling studies are done very soon after the opening of casinos and are funded by gambling interests. This independent academic review is far more extensive in its research, and illustrates the escalating occurrence of crime as local gambling impact “matures.” The study shows that casinos increased crime after a lag of 3 to 4 years. It also shows, by studying the crime rates in counties that border casino host counties, that the data suggests casinos create crime, and not merely move it from one area to another. Neighbor county data indicates that casino crime spills over into border areas rather than is moved from them.

Measuring Industry Externalities – The Curious Case of Casinos and Crime

LesMeasuring Industry Externalities: The Curious Case of Casinos and Crime
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Exploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?

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Predatory gambling in Australia has matured faster than that in America, providing valuable lessons on addiction. Mark Dickerson, a noted academic from the University of Western Sydney, shared his work at McGill University in Montreal, Canada. Essentially, Dickerson proves conclusively that the only truly “responsible” gamblers are professional gamblers. Gambling is designed, marketed and packaged to carry customers beyond the point of reason and control. Dickerson believes there are methods the gambling operators could employ to ameliorate these dangers. But operators are unlikely to voluntarily jeopardize revenues from its victims. The study provides remarkable insight into how predatory gambling works and what it does to its customers. The second report below was also written by Professor Dickerson and it deals with similar issues as the study above. In the second report he notes the difficulty of identifying problem gamblers and suggests ways the operators could reduce harm.

Limits of Responsible Gambling

Reframing Responsible Gambling

LesExploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?
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Lottery Revenue Comes Largely From People Already Receiving Government Support

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Studies of lottery spending, including this study from the Federal Reserve Bank of St. Louis in 2008, show lottery revenue comes largely from Social Security, unemployment and other forms of government support. Government, in other words, is paying government — with an enormous amount of money being siphoned off by gambling interests. It also reflects a key reason why predatory gambling worsens state budget deficits over time and taxpayers end up footing the bill.

St Louis Federal Reserve Lottery Study 2008

LesLottery Revenue Comes Largely From People Already Receiving Government Support
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Citizens Are Not Adapting to Availability of Predatory Gambling But They Are Adapting to Losing More Money Than Ever Before

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Some researchers funded by predatory gambling interests attempt to argue that after the introduction of extreme forms of gambling into a community addiction rates will spike but then, over a period of years, addiction rates will decline once people “adapt” to its availability. It is called the “social adaptation theory.” Here is a memo showing why this theory is misplaced and how the only thing people are adapting to is losing more money than ever before.

Rates of Addiction Increase Because of Predatory Gambling

LesCitizens Are Not Adapting to Availability of Predatory Gambling But They Are Adapting to Losing More Money Than Ever Before
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Women Embezzlers Increasing Across Nation

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In Minnesota, five of the six most prolific alleged embezzlers last year were women, according to the 2011 Marquet Report on Embezzlement. The U.S. Sentencing Commission says that embezzlement is the only offense nationwide where women outnumber men. The Boston-based Marquet Report, which analyzes prominent embezzlement cases with losses of more than $100,000, found that women made up 64 percent of the alleged perpetrators nationwide. Motive and opportunity are the main reasons to why women are embezzling, and in 2011, 22 percent of embezzlement cases were directly motivated by gambling.

Women Embezzlers Increasing Across Nation

CkirbyWomen Embezzlers Increasing Across Nation
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Proximity to Casinos is Major Factor in Gambling Addiction

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One of four published papers resulting from the largest national study to date, this presentation unequivocally demonstrates the damage created by having casinos nearby. Data collected by Dr. John Welte and others shows: (1) A casino within 10 miles of home is associated with a 90% increase in the odds of being a pathological or problem gambler; (2) For every increase of one standard deviation in neighborhood disadvantage the odds of being a pathological or problem gambler increase by 69%; and (3) For every additional form of legal gambling in his or her state, the respondent’s odds of having gambled in the past year increase by 17%.

Casino Proximity Study: The Relationship of Ecological and Geographic Factors to Gambling Behavior and Pathology

LesProximity to Casinos is Major Factor in Gambling Addiction
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Video Lottery and Treatment for Pathological Gambling: A Natural Experiment in South Dakota

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This paper explores the fact that when video lottery machines were turned off in South Dakota, the inquiries about gambling and the number of individuals receiving treatment for problem gambling diminished abruptly. When the machines were turned back on, there was a prompt increase in both of these categories.

These changes occurred despite the fact that alternative forms of legal gambling were available (i.e., scratch tickets, Indian Reservation casino gambling, and multi-state lotteries). This suggests that video lottery gambling machines presents a unique risk for the development of problems severe enough to prompt treatment. These data suggest little substitution of other forms of gambling occurred when video lottery gambling was not available.

Video Lottery and Treatment for Pathological Gambling – A Natural Experiment in South Dakota

CkirbyVideo Lottery and Treatment for Pathological Gambling: A Natural Experiment in South Dakota
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Study shows citizens reduce their spending on key household items when they play the lottery

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This paper by Univ. of Maryland Professor Economics Melissa Kearney reveals that household lottery spending is financed primarily by a reduction in non-gambling expenditures, not by a reduction in expenditures on other forms of gambling. The introduction of a state lottery is associated with an average decline of $46 per month, or 2.4 percent, in household non-gambling expenditures. Low-income households reduce non-gambling household expenditures by 2.5 percent on average, 3.1 percent when the state lottery includes instant games.

State Lotteries and Consumer Behavior

LesStudy shows citizens reduce their spending on key household items when they play the lottery
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Predatory Gambling Has More of a History of Corruption Than Any Other Business

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In the wake of the October 2010 indictments of four State Senators, Gary Palmer of the Alabama Policy Institute wrote about the historical connection between the legalization of gambling and government corruption. He quotes former U.S. Senator Paul Simon of Illinois who declared predatory gambling “…has more of a history of corruption than any other industry.”

Alabama Policy Institute – Elections or Indictments

CkirbyPredatory Gambling Has More of a History of Corruption Than Any Other Business
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Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling

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In this paper, Harrigan and Dixon examine how the same slot machine games with different payback percentages may affect the player’s behavior. Interestingly, slot machines with higher payback percentages (offering a perceived air of fairness for the player: 98% vs. a lower payback of 85%), were more likely to impose the most risk for ensuing gambling problems. In their findings, they argue for the regulations of lower payback percentages (85%), as the higher ones appear to be far more addictive.

Government Sanctioned ‘‘Tight’’ and ‘‘Loose’’ Slot Machines- How Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling

LesHaving Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling
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