Derek Wong

Legalized Gambling

3/28/01

A New Breed of Money

Hawaii is currently one of three states in the United States that does not have some form of gambling. Many proponents of gambling have given the public the impression that Hawaii’s economy will benefit. However, this paper will show that legalized gambling, specifically casino gambling, will hurt Hawaii’s already struggling financial situation. If gambling is legalized there will be no increase in state's economy because the taxpayers and the businesses around the casinos will be forced to pay.

There has been an onslaught of newspaper, television and radio advertisements from proponents of legalized gambling about how the revenue from legalized gambling will allow the state to increase its budget significantly and that we, the taxpayers, will get tax cuts. Some ads have gone so far as to state that legalized gambling will increase tourism and allow for free in-state college for local citizens due to the new casinos. People are led to believe that Hawaii can be turned into another Las Vegas where gambling revenue may make up to 85% of the yearly income.

It is important to realize that Las Vegas is a very unique city that is successfully capable of bringing in a substantial amount of revenue from the outside. There has not been any other that has come close to replicating the success of Las Vegas. Las Vegas’s location, the timing of the casinos being first built, and the local economy are the key factors to why Las Vegas has been able to attain its level of prosperity. Across the nation casinos are not as successful in that they fail to accomplish their goal of bringing in more money from outside the state. When the casinos fail, those who actually pay the price for them are the people living in that area.

Here are two facts showing how casinos are linked to bankruptcies:

The goal of casinos is to make money from outside the state. In the end though, the state and its people will lose money. In order to build casinos, someone must finance the construction of the infrastructures, most likely the initial cost will come from the state. To attract venture capitalists to finance the construction is not only difficult but costly as well. If the state does not have to pay for the construction, the state will need to pay at least a part of the maintenance as well as deal with the effects of legalized gambling.

The casinos advertise the promise of bringing in more money to the state and to the state’s people through the numerous advertisements. However this lie has been broken on almost all occasions in that casinos are not always successful and that they actually hurt the surrounding local businesses. The following are statistics showing how often casinos fail:

When the casinos are not successful then the people will not be capable of getting a return on their money. In short, people will lose their money. When people lose their money, the local economy will suffer. If the overall casino cost exceeds the profit made, then the people will lose money. When they lose money, then Hawaii’s economy will suffer.

We are fortunate to live in such a lush paradise, which the state government exploits through tourism. Proponents would like you to believe that like Las Vegas, a vast amount of people will flock to Hawaii to gamble. However, just because Hawaii has legalized gambling does not automatically mean an inflow of out-of-state gamblers is expected. In order for a casino to bring profit to the state, there must be many out-of-state gamblers that will bring in money to the state. If there is no substantial increase in tourism, then legalized gambling will fail. Let us take a look at several facts:

· The 1995 United States Survey of Gaming and Gambling gives further evidence that casinos are primarily a local draw. The survey found that among respondents with a casino in or near their community, 40 percent gambled in the past year, compared to only 17 percent of those who lived at least 100 miles from a casino. Further, among casino gamblers, 42 percent of those with a casino in or near their community gambled at least every three months, compared with only 17 percent of casino gamblers living 100 miles away from a casino.

According to gambling researcher William Thompson, a professor at the University of Nevada-Las Vegas, "(Casinos) have a negative impact on the community unless 50 percent of the gamblers come from out of state."

Proponents persuade the public that gambling will bring in more tourists. However, as stated before no new gambling locale has come close to imitating Las Vegas where an estimated 85 percent of profits come from out-of-state gamblers. Most gambling enterprises, unfortunately, make their profits from the pockets of the local citizenry, thus merely transferring wealth from the community to large casino companies, many of which are located out of state. Therefore even if the casinos are successful, their profits will not help the state's economy but finance the out of state owners.

We now know that large casinos are making a majority of the money and the individual citizens are not, but are local businesses making any profit from casinos? The gambling industry has convinced local business leaders that legalized gambling will bring promises of increased tourism and economic development. However, time and time again they have broken this promise. In actuality, businesses suffer because their dollars are drained from the economy, and they and their communities experience the economic fallout that typically accompanies legalized gambling. Without local businesses to help keep money circulating in the state, the state will soon suffer money shortages and economic problems. Here are a few examples of how businesses were affected by legalized gambling in nearby areas:

· A University of South Dakota study showed that retail and service businesses in South Dakota suffered a net loss of approximately $60 million in anticipated sales in the year following the introduction of gambling.
· More than 70 percent of businesses in Natchez, Mississippi, reported declining sales within a few months of the opening of that city’s first riverboat.

The trend is that there will be an increase in crime whenever there is legalized gambling. On many occasions people have the false hopes that gambling will provide a way for them pay off their debts or to multiple their income, but this is just a mere illusion. With extensive and continuous gambling comes addiction which is a breeding ground for crime. Just as people addicted to drugs will do anything to finance their habits, people who are pathological gamblers will turn to crime. Addiction is a powerful destructive force. The majority of addicts must turn to illegal ways to finance their habits. This includes, but not is limited to, stealing, embezzlement, larceny, and violent crimes. The facts will speak for themselves:

· In the first six years of casinos in Minnesota, the crime rate in counties with casinos increased more than twice as fast as in non-casino counties. According to an analysis by the Minneapolis Star Tribune, the median crime rate in casino counties rose 39 percent during that period as compared to an 18 percent increase in non-casino counties.

With so many negative consequences of gambling, how can we say that gambling will benefit Hawaii? The outlook of Hawaii’s future does look bright, but if gambling is legalized, that future will soon be plagued.