The true costs of expanded gambling

When Gov. Andrew Cuomo in 2012 proposed new commercial casinos, he said they would need regulation. Likely reasons? To (a) mitigate problem gambling, and (b) protect against cheating and organized crime.

Casino owners want regulation about asmuch as big banks do, which is to say they want the least possible.

Regulation hurts profits by constraining practices (e.g. payday loans) and limiting externalities. These costs of doing business are passed on to society at large.

A company no longer free to discharge waste into a river faces new costs; paying them may mean operators lose their business if competitors avoid similar restrictions and don’t raise their prices.

Casinos, which are in business soley to make a profit, hate to absorb fiscal burdens they have always externalized, like the socioeconomic costs of problem gambling.

The central statistic of casinos is this: Grinols and Omorow (J. Law and Commerce, Vol. 16, 1997) estimated that 50 percent of the gross revenues after winnings are paid out — about half the profit — comes from compulsive and problem gamblers. They represent about 4 percent of the adult population and comprise less than 10 percent of casino customers.

From this statistic stems the following ethical dilemma: If casinos steered all the pathological and problem gamblers in their sphere into lasting recovery and prevented the creation of any new ones, profits would drop by 50 percent.

How would that play on the bottom line? Not well at all.

What to do? Express concern about problem gambling with a facade of “prevention” methods structured to fail. Accede gracefully to toothless regulation.

Legislators weighing second passage of a bill meant to legalize new casinos in New York by amending the constitution through public referendum must ask themselves three questions:

1) Would those casinos work really hard to profit 50 percent less than many others do? That’s obvious: No. 2) Do I really believe New York state can and will properly regulate casinos if they don’t want it and the state shares in their profits? Another no. 3) Is it fair to New York state residents to commend to them, by a “yes” on second passage, a sham I don’t believe in? No. Readers, tell your Assembly member and your state senator to vote “no” on second passage. Stephen Q. Shafer

chairperson Coalition Against Gambling in New York