America’s largest casino company launched a TV and radio ad blitz last night aiming to stoke Texans’ FOMO—their fear of missing out.
“Every year,” one ad explains, “Texans spend billions of tourism and gambling dollars at casinos in Louisiana, Arkansas, Oklahoma, and New Mexico—billions that could be staying here.” Las Vegas Sands, the corporation funding the campaign, wants state lawmakers to put a measure legalizing casino gambling on the election ballot in November. The bill under consideration would permit construction of one hotel casino in each of the state’s four largest urban areas.
The Lone Star State does have some of the most restrictive gambling laws in the U.S. It has no casinos, save a few small tribal establishments. States with comparable regulations include Alaska, Utah, and Tennessee.
Those states nearly rival Texas in another regard: all have booming economies with standout rates of GDP growth in the last quarter of 2020. Texas, of course, tops them all with a 7.5 percent growth rate.
Perhaps, then, Texans shouldn’t wallow in FOMO at the urging of the gambling industry. Perhaps they’ve done well to reject many of the economic follies to which other states have succumbed. But they still might wonder, what harm would arise from casino gambling? Other states have unwittingly answered: plenty.
Estimates by the National Center for Responsible Gaming—an industry-founded group—indicate that between three million and four million Americans are pathological gamblers. Other estimates suggest the number of gambling addicts is as great as eight million (or three percent of American adults). The nonprofit National Council on Problem Gambling estimates that one-fifth of pathological gamblers attempt suicide. A full quarter of these gamblers file for bankruptcy at some point.
Casino operators feign sensitivity to the woes of problem gamblers, but the former invariably depend on the latter. Extensive research has determined that between 30 and 60 percent of casino revenues come from gambling addicts. Casinos have become adept at tracking their biggest spenders (i.e., their most extravagant losers), through loyalty cards and other technology, as well as enticing their repeat business through complimentary drinks, free gifts, limo service, and other perks.
Even the design of the casinos’ electronic gaming devices works to fuel gamblers’ addictions. Slot machines, for example, are sometimes programmed to frequently show “near misses,” with a jackpot symbol appearing just barely over or under the payline. This sparks an “almost-won” feeling that keeps the player engaged in trying again and again for an actual win. According to Atlantic writer John Rosengren, these machines are devised “explicitly to lull [users] into a trancelike state that the industry refers to as ‘continuous gaming productivity.’”
But, one may ask, don’t Texas’s restrictions merely drive problem gamblers to take their pathologies to Louisiana or Oklahoma? Actually, in many cases, no. The National Gambling Impact Study Commission determined that living within 50 miles of a casino doubles the probability someone will develop a gambling addiction. Fewer casinos mean fewer addicts.
So, then, the costs of expanded gambling are real. Meanwhile, ordinary citizens don’t receive much in return. In my home state of Pennsylvania, casinos were approved in 2004 under the pretense that slot revenues would provide substantial property tax relief. A 2020 comparison of average property tax burdens by state found that—14 casinos later—Pennsylvanians still endure the 11th highest average property tax bill. New Jersey introduced gambling in the 1970s as a means to avoid tax hikes and that, needless to say, didn’t work out. A 2016 SUNY-Rockefeller Institute of Government study of gaming revenues showed this outcome has befallen state after state.
As for gambling as an economic development boon, good luck enlisting any respected urban policy expert of any political stripe in the cause. The liberal planning guru Richard Florida calls downtown casino building “city-ruining of the highest order.” Center-right Harvard economist Edward Glaeser, who doesn’t object to new casinos in theory, sees “considerable downsides to gambling” and publicly opposed the building of a slots parlor in Worcester, MA.
These flashy commercial edifices don’t increase local prosperity because, in addition to worsening crime and family breakdown, they displace spending that would normally go toward non-gaming consumption. Casinos reshape the economy, but they don’t grow it.
Texas has had time to observe other states trying this idea. It will have no excuse for repeating their mistake.