In some countries legalised gambling is often subjected to intense and public analysis and debate before it is introduced. The reason for this is that the benefits from gambling are often either over or understated, depending on who is promoting the sector. In addition, there is disagreement over how experts measure and report impacts and perform cost-benefit analyses of the industry. In view of the intense discussions which often accompany the introduction of casinos in places where they have been most successful (e.g. Las Vegas, Atlantic City, Australia and New Zealand), it is surprising that virtually no discussion, outside moral debates, has accompanied the Jamaican government's announcement in 2008 that it will introduce large casinos in Jamaica as a means of boosting tax revenues and diversifying the tourism product.

The Jamaican government and casinos

Acknowledging that there is some disagreement with Government's proposal, Prime Minister Golding notes that gambling already exists in the country in the form of small casinos with slot machines and some tables. The new policy is intended to attract casino hotels. Casino licenses would be granted to establishments with no less than 1,000 rooms and US$1.5 billion in investments. Further, the casinos would be no more than 20 per cent of the total investment and subject to rigorous approval by government agencies.

Casino gambling in The Bahamas

According to the government of The Bahamas website on casino gambling, casinos contribute significantly to the economy. Casinos are a major employer of locals and contribute significant tax revenues, amounting in 2002 to almost US$22 million. The Atlantis Paradise Island Resort and Hotel is the second-largest employer in the country, after the government, with more than 5,500 employees. The casino staff comprises 1,100 of those employees and the casino generates more than US$100 million in annual winnings. In addition, casinos are an important attraction for the five million tourists who visit the country annually, with tourism accounting for 60 per cent of the nation's GDP.

Impact of casino gambling

Serious concerns about the impact of casino gambling are widespread. The impacts associated with casinos can be classified under three basic areas - social, economic and psychological. These impacts can be both positive and negative. The literature on the social and psychological aspects reveals mostly negative impacts, while that on the economy shows both negative and positive impacts.

Economic impact of gambling

Casino gambling is often promoted by the private sector and/or policy makers for three reasons - first, enjoyment and entertainment for people; second, securing ancillary economic benefits which include the provision of quick, often low-skilled employment, investment stimulation, tourism diversification and stimulation, redevelopment and development, urban revitalisation and improvement in the socio-economic status of underprivileged groups. Third, casinos provide additional revenue to the public sector, mainly from taxes earned from operations.

It has been convincingly argued, however, that casinos have emerged across the world, especially the developing world, when there is a "meeting between Western gambling corporations seeking to expand into new markets and local 'third world' states seeking outside investment for economic development".

It has been argued that while many casinos may generate jobs, they create neither greater value nor a greater stock of wealth for the society, which is a central feature of economic development. Far from creating wealth, they may create many negative externalities. These are greater in urban areas where local people are allowed to gamble. The net impact of gambling tends to be less positive for urban communities because gambling does not typically stimulate the local economy, but rather exports social costs such as crime and pathological gambling habits.

Of course, not all casino developments are equal. Cost-benefit analyses of casino gambling must take into consideration the different types of casinos, these being:

Resort Casinos (e.g. Las Vegas, The Bahamas, Australia)

Rural Casinos (e.g. Sun City South Africa, South Dakota)

Urban or suburban Casinos (most UK casinos, Detroit, Kansas City, etc)

Neighbourhood casinos (bars and taverns)

Of these, resort and rural casinos tend to have the greatest net benefits. The others tend to be associated with net-negative benefits for the community.

Social impact of gambling

A great deal has been written about the social impact of casino gambling on communities and families. First, some studies reveal that divorce rates among casino gamblers tend to be higher than for the rest of the population. Second, studies argue that there is a link between the rate of compulsive gambling and child neglect. Third, high rates of compulsive gambling have been associated with the prevalence of casinos in some communities, which in turn is linked to higher rates of family violence. Fourth, suicide rates are said to increase with the introduction of gambling. Fifth, casino gambling has been often linked to increased crime rates. Sixth, higher rates of gambling have been linked with poorer communities in the US and Australia. Poorer people are more likely to view gambling as a means of earning money, compared to well-off people who view it as a social activity. Seventh, casino gambling has been linked to a rise in adolescent gambling and an increase in pathological gambling.

Some critics of casino gambling suggest that the presence of casinos represents a "slippery slope" for social decay. That is, the presence of casinos, even in specific locations, away from vulnerable populations, may make it more acceptable for people to engage in other forms of gambling, ultimately leading to the substitution of gambling for productive work. The result of this could be more intense social problems for the society.

Gambling and sex

A prevalent theme which recurs in critiques of places like Las Vegas is the presence of a large and thriving sex industry. Sex is often seen as a means to attract gamblers, especially young men. This is especially true of Internet gambling which is becoming popular among youth. Research points out that "gambling disorders which tend to socially isolate at-risk youth may interfere with the development of real-life relationships that can have a protective effect on youth." Additionally, the introduction of casinos to communities tends to be accompanied by increases in sex work and sex-related activities.

According to one researcher, using sex to sell gambling often leads to the degradation of women and often "obscures the hard reality of gambling and makes risky behaviour attractive to a vulnerable segment of the population" .

Crime and casinos

Studies of the impact of casinos on crime have come up with contradictory findings. One study shows that in the post-casino years while some crimes increased (e.g. burglary, robbery and larceny), others decreased (murder, rape, aggravated assault and motor vehicle theft). While it is clear that casinos may be associated with increased crime in some jurisdictions, its link is at best tenuous in others. This leads to the conclusion that crime is likely to increase with the introduction of casinos only under certain conditions. Factors such as the locations and size of the casino, the type of community, the size of the at-risk population and the nature of the effectiveness of laws and law enforcement, all affect the relationship between crime and casino gambling.

Cost-benefit studies of casinos

Some studies have shown that the net costs of casinos tend to be more positive than negative. Others indicate more negative costs than positive benefits. However, it cannot be denied that there are some places where there have been net gains from casino gambling. Places like Las Vegas and some rural casinos in the US have had some success in deriving substantial net benefits from gambling. In the absence of cost-benefit studies for The Bahamas, it would also appear that the country benefits substantially from linking the industry to tourism, while keeping out locals.

Conclusion

Where casino gambling is associated with a large inflow of outsiders or tourists, the net benefits tend to exceed net costs. Such casinos are resort and rural types, similar to those of some Indian reservations in the US and in The Bahamas. It does appear that The Bahamas model is one that would make economic sense for a small economy like Jamaica. On the other hand, if casino gambling in Jamaica is open to the public, Government should design policies to address the social and psychological problems associated with gambling very early in the process.

Abridged version of Professor Ian Boxill's presentation at the University of the West Indies, Mona April 2009 Policy Conference on Casino Gambling.