Senator Robert "Bob" Deuell, M.D.
The Texas State Senate
District 2

For Immediate Release
May 13, 2005

***CAPITOL UPDATE***

EXAMINING GAMBLING AND GAMING
Part Two - Social Costs

(Austin) - As I stated in last week's article, there are still those who seek an expansion of gambling and gaming in Texas as a possible fix for our public school funding problems. And, as I also stated in last week's article, I remain firm in my opposition to any expansion of gaming interests in Texas. I believe that gambling revenues are too unstable, and that there are better ways to raise money for the state.

One major drawback are the increased social costs associated with gambling. Extensive research has been done on the subject and there are statistics and studies that show states can possibly be worse off financially when adopting gambling.

The University of Illinois Institute of Government and Public Affairs publication, "Policy Forum*" gives insight into some of the social costs associated with gambling and specifically increased crime. The following are excerpts from that publication. Please contact my office to receive a copy of the entire document.

"Evidence is converging to show that casino gambling causes significant increases in crime. Taken altogether, casinos impose crime and other costs - paid for by society, including those who do not gamble - that exceed their benefits and represent substantial burdens on nearby populations. Because casino gambling fails a cost-benefit test, policymakers should give serious consideration to options that include imposing taxes equal to the costs casinos impose, restricting casino expansion, or banning casino gambling altogether.

By tallying up the crimes of pathological and problem gamblers and the associated costs to society such as police, apprehension, adjudication, and incarceration costs, the average crime costs to society of an additional pathological or problem gambler (some studies lump the two groups together) can be determined. Recent research using this methodology found that an average problem gambler costs society $10,112 per year. Crime costs constituted $4,225, or 42 percent of these costs.

Combining crime costs with studies of the prevalence of pathological and problem gamblers provides crime cost figures for society as a whole. Using the numbers just reported implies annual crime costs per adult capita of $57.

Critics of casino gambling point to a number of social costs. In addition to the direct governmental costs of regulating casinos and providing social services occasioned by gambling, these include the costs of bankruptcy, illness, suicide, harm to families, lost economic output, and crime, among others.

Research to pinpoint the size of many of these costs is still in its beginning stages. This paper has described research directed to determining the costs to society of just seven Index I crimes tracked by the FBI: Larceny, burglary, auto theft, robbery, aggravated assault, rape, and murder. In areas with casinos the evidence points to costs of $63 per adult per year, but other studies that provided information on all of the social costs of casinos suggest that the total is over $100 per adult annually. Estimates implying costs of $135, $150 and more are common.

The social benefits of casinos are the increase in profits and taxes from casinos (casino profits and taxes less lost profits and taxes of other businesses due to casinos) plus the convenience value to consumers of having casinos nearby compared to having to travel greater distances to gamble. Research on the benefits suggests they are no larger than $40 per adult annually. Thus casino gambling fails a cost-benefit test by a substantial margin in terms of Index I crimes alone.

It is an open question whether casino gambling can be offered in a way that allows citizens who could gamble without harm to do so while at the same time preventing the creation of problem and pathological gamblers and the social costs already discussed. If casino gambling cannot be offered in ways that cause it to pass a cost-benefit test, then banning it (as was done until recently) is preferable on economic terms."

This is the second in a series on gambling and gaming in Texas. To contact Sen. Deuell about the legislative process, contact the Capitol Office at (512) 463-0102 or mail to Sen. Bob Deuell, Texas Senate, P.O. Box 12068, Austin, TX 78711. The website for the Texas Senate is www.Senate.state.tx.us. The e-mail address for Sen. Deuell is: bob.deuell@senate.state.tx.us.

* Volume 13, Number 2 by Earl L. Grinols

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