7/27/2019 Setting Up a Legalised Casino Good or Bad

http://slidepdf.com/reader/full/setting-up-a-legalised-casino-good-or-bad 1/4

Setting up a legalised casino: Good or bad?

October 23, 2013

 An issue that is highlighted in the newspapers now is about the Government planning

to allow a foreign businessman to set up a casino. The Opposition has criticised the

proposal although casinos were allowed to operate during the time of the UNP

governments as well.

Of course the argument against them is now couched in

terms of the moral dimension. Is gambling inherently immoral? Buddhist monks say

so. But we already have lotteries run by the Government.

The British colonial ruler banned cockfighting – a village sport popular in certain parts

of the country and hence gambling is not entirely absent from our ancient culture.

Villagers are known to take bets on future events like which party will win an election.

The gambling spirit seems to be inherent in mankind. Generally we all know that

gambling implies taking some sort of risk. In other words, people bet (usually money)

with the hope of winning something (usually money) without being aware of what the

outcome will be. Is it morally wrong?

Ongoing debate

There is a debate over whether or not gambling can be good for an economy. Paul

7/27/2019 Setting Up a Legalised Casino Good or Bad

http://slidepdf.com/reader/full/setting-up-a-legalised-casino-good-or-bad 2/4

Samuelson Nobel Laureate thought it is harmful to the economy. He said: “(Gambling)

involves simply sterile transfers of money or goods between individuals, creating no

new money or goods. Although it creates no output, gambling does nevertheless

absorb time and resources. Gambling subtracts from the national income.”

Other economists point out that this criticism could be applied to many entertainment

activities as well. These are products that don’t add to the ability of the economy to

produce more. But they still have value because they provide satisfaction, or utility (in

the economist’s jargon), to consumers. These economists are more concerned about

the costs of banning gambling instead. They point out that where there are illegal

casinos there are law enforcement costs and the incentives to lobby and bribe public

officials to allow illegal gambling to occur.

 A powerful economic development tool?

Some economists say gambling can be a powerful economic development tool.

Gambling is a thriving industry in America. Gambling generates billions of dollars of tax

revenue every year similar to the Ceylon Tobacco contributions to our own

Government revenue.

Las Vegas is a testament of the powerful ability of gambling to foster economic

development. Because of gambling, Las Vegas has shown impressive job growth,

developed into a major city with a low tax burden that has spawned significant private

and public sector investment. But Las Vegas also tends to have a wide variety of 

social ills associated with it, given the high out of state and tourist population. No

studies have examined whether those are really associated with gambling, or with the

transient population.

Economists also refer to Atlantic City. It used to be a slum by the sea, and now, it’s a

slum by the sea with casinos.

The basic criteria for economic development success is for a project to increase a

region’s net exports. Specifically, the amount of goods or services that are exported

needs to be increased or the amount that are imported decreased. This is the only way

that income can increase.

Projects can certainly be an overall economic success in terms of profit without doingeither of these, but those profits come at the expense of other businesses, say some

economists.

Positive or negative economic impact?

Various factors come to play in determining if gaming has a positive or negative

economic impact. The basic economic impacts include the construction of a casino

which leads to many jobs for construction employees and suppliers, employees to staff 

7/27/2019 Setting Up a Legalised Casino Good or Bad

http://slidepdf.com/reader/full/setting-up-a-legalised-casino-good-or-bad 3/4

the casino, and the suppliers for an ongoing casino. Multiplier effects then ripple

throughout the overall economy.

But just because a gambling project creates a lot of jobs and

a large facility is built it doesn’t mean the economic impacts

are positive. Non-economic impacts such as social costs are

usually intangible, difficult to measure, and on say those who

oppose casinos.

The benefit for a region however is if the transfers of money

are made from outside of the region. If tourists arrive in larger 

numbers because of the casinos then the economic effects

are positive.

Gambling is often legalised to promote economic

development of depressed areas. That was an important

motivation in Las Vegas, Atlantic City, New Jersey,

 A casino here will have to be patronised largely by foreigners

and this should draw more funds as well as more tourists.

 Any industry that draws money from outside is helpful and

has a case for it. There could be an influx of funds and even some investment from

abroad. The Australian businessman will have to bring in money to set up the casino

here and this will help us in our present foreign exchange crisis.

What is in dispute are the social costs and the extent to which the local residents will

be harmed. How many local residents will be attracted to such a casino and how will

they be affected? In my opinion not many and even they will be those who make easy

money through corruption and unproductive enterprises. Easy come easy go is a

saying with regard to money.

It will contribute to increased government revenue. Politicians and the public are

naturally attracted to an industry that is willing to pay 20 to 30% of its gross revenues

as taxes. Also, gambling is seen as a source of money that is easier to obtain because

it is not a tax on individuals.

Gambling has become a very accepted way for governments to raise funds such asthe running of lotteries. But it should not be viewed as a panacea for the fiscal woes of 

the state. Casino gaming is more appropriately viewed as an amenity that can be a

cornerstone in the local tourism/entertainment market.

Social costs

Social costs are the costs borne by society as a whole that result from the behaviour 

of the “problem gambler”. Any habit can and will be abused by some people, be they

7/27/2019 Setting Up a Legalised Casino Good or Bad

http://slidepdf.com/reader/full/setting-up-a-legalised-casino-good-or-bad 4/4

problem gamblers or problem drinkers. There will undoubtedly be some Sri Lankans

who will patronise the casino and there may be problem gamblers among them.

Social costs that result from gambling may include increased rates of suicide, car 

accidents and incidence of child abuse, divorces and depression. Other social costs

may involve employment costs, loss of work, bad debts, civil court costs, criminal

 justice costs, therapy and welfare. But what will be the magnitude of its incidence here

in our country? Maybe an insignificant incidence. We have to assess costs versus

benefits and take a decision rationally rather than emotionally.

Economist Frank J. Fahrenkopf Jr. who

carried out extensive research on casinos,

believes that commercial casinos are key

contributors to the economic wellbeing of the

communities that host them; their tax

revenues help to provide much-needed jobs

and benefits to thousands of Americans. To

further emphasise the legitimacy this industry, Fahrenkopf says he found “no link

between gambling and bankruptcy or gambling and crime”.