The Hidden Costs of Gambling

Social and Economic Problems Exact a High Toll

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By Father John Flynn, LC

ROME, DEC. 2, 2007 (Zenit.org).- The past decade saw an enormous increase in gambling opportunities in many countries. Protests by those concerned over the social impact were largely ignored by governments eager for easy revenue.

The first signs, albeit tentative, are appearing of an inversion in policy on extending gambling. The Canadian province of New Brunswick announced it is reducing the number of video lottery terminals, reported the Globe and Mail newspaper on Nov. 9.

The province's premier, Shawn Graham, said it was part of a plan to reduce the social costs of the terminals. The changes announced by authorities include halving the number of establishments permitted to have the terminals. In all, 650 of the 2,650 terminals will be phased out. The province also announced it will double to $1.5 million the money that goes to treating addiction and public education and awareness programs.

The announcement did, nevertheless, also include the go ahead for plans to establish a casino, designed to attract more tourist dollars.

A Globe and Mail editorial Nov. 26 commented that New Brunswick, along with other provinces, “is hooked on the money that gambling brings in.”

The editorial commented that the health department of the Nova Scotia province also drew attention to the problems created by addictive use of video lottery terminals. A 2005 report estimated that 70% of the province's total gambling revenue came from the terminals, and that half of all revenues from the terminals came from problem gamblers. Subsequently, Nova Scotia reduced the numbers of video lottery terminals.

Suicide risks

Just prior to the New Brunswick decision, a study was published linking problem gambling to increased suicide, reported the National Post newspaper Oct. 29. Pathological gamblers are almost four times more likely than the average Canadian to try to kill themselves, according to a study published by the Canadian Journal of Psychiatry, based on a nationwide survey of 36,000 citizens.

A month earlier, the same journal published a study documenting a 50% increase in emergency room visits for gambling-related psychiatric problems in Quebec, just as gaming took off in the late 1990s.

According to a report published July 20 by the CanWest News Service, net revenue from government-run lotteries, video lottery terminals and casinos rose to $13.3 billion in 2006 from $2.7 billion in 1992. The data comes from a recent Statistics Canada report. On average, Canadians spent $513 gambling in 2005. Men spend more than three times as much as women -- $1,396 compared to $434.

Britain's mixed signals

In England earlier this year the government’s plans to establish what was termed a super casino were canceled. First of all the House of Lords voted against the proposal, reported the Telegraph newspaper March 29. Then the new government led by Prime Minister Gordon Brown scrapped the whole idea of super casinos, the Telegraph reported July 12.

But new opportunities for gambling were announced in a subsequent overhaul of gambling laws. According to a Sept. 1 report by the BBC, the Gambling Act allows the creation of more regional casinos, and bigger slot machine payouts. The existing ban on TV and radio advertising of gambling opportunities will also be lifted.

In an attempt to appease critics, Chairman Peter Dean of the Gambling Commission explained that the act aims to tighten industry regulation and ensure the young and vulnerable are not exploited. For example, some 6,000 betting machines in shops where children could play with them unsupervised will be phased out by 2009.

According to an article published Sept. 29 in the Guardian newspaper, the sum of money lost by British gamblers will exceed 10 billion pounds ($20.56 billion) a year by 2008. This is a rise of 50% in only nine years.

According to a study published by the accounting firm PricewaterhouseCoopers, gambling revenue worldwide is set to hit $144 billion by 2011, the Associated Press reported June 21.

Revenue was already at $101.6 billion in 2006. In the United States it is expected to grow 6.7% a year to $79.6 billion from $57.5 billion. In the Asia Pacific region it is forecast to grow 15.7% annually to $30.3 billion from $14.6 billion, turning the area into the world's second largest casino market.

Massachusetts' proposal

Part of the increase in gambling in the United States will take place in Massachusetts, if Governor Deval Patrick has his way. The state leader proposed opening three casinos, arguing that the increased revenue would bring much-needed jobs, along with substantial funds for the government, the Boston Globe reported Sept. 18.

A final decision on the proposal remains to be taken by the state legislature. Meanwhile, there is strong opposition to the proposal. The Massachusetts Family Institute, an anti-gambling group, called the proposal a “short-sighted, dangerous approach to economic growth,” reported the Boston Globe.

“Disappointing and a cause for deep concern,” was how the Massachusetts Catholic Conference described the proposal in a Sept. 17 press release. “Government should promote the common good with the best interests of all citizens in mind,” the bishops urged. “It is not ‘good economic policy’ to increase the Commonwealth’s income at a cost that involves the personal well-being of its citizens.”

The validity of the economic arguments in favor of increased gambling are also being questioned. State governments often maintain that the revenue from gambling will provide funds for education, health and other vital needs. A study published Oct. 7 by the New York Times revealed, however, that most of the money raised by lotteries is used simply to sustain the games themselves.

One of the supposed beneficiaries of lotteries is education spending. In spite of this only a minimal amount of the education budget comes from lotteries, and the portion of lottery money going to state education programs is shrinking.

Costs and benefits

A June 11 article published by the Wall Street Journal also questioned the economic benefits of gambling. Twelve states now have operating commercial casinos, up from only two in 1987. The net effect of casinos is far from clear. Casinos often take revenue from other entertainment venues, and according to economists cited in the article the effect on jobs could actually be negative, because many modern casinos need fewer employees per customer than the businesses they tend to replace.

In addition, casino gambling brings with it significant costs. One of these is increased crime. The Wall Street Journal referred to a study published last year in the Review of Economics and Statistics, showing that about 8% of crime in counties with casinos is linked to gambling activity. Taking all the costs and benefits of casinos into account, the study concluded that introducing a casino actually results in a net cost to the local community.

In spite of such information, governments continue to fall prey to the lure of gambling dollars. A recent example is the Australian state of New South Wales, which recently announced an extension of Keno, a variant on lottery games.

The government is hopelessly addicted to gambling revenue, accused a Sept. 20 editorial in the Sydney Morning Herald newspaper following the move. Gambling in the state rose to $7 billion Australian dollars ($6.19 billon) a year, with more than 20% going to the state government.

“Ours is an age of addictions,” including gambling, commented Auxiliary Bishop Anthony Fisher of Sydney at the annual Mass of thanksgiving for staff and volunteers of the Matt Talbot Homeless Services.

He said at the Nov. 17 Mass held in the crypt of Sydney’s St Mary’s Cathedral, “We know the importance of our role in rousing our slumbering world which is in danger of losing its soul through addiction to consumerism, violence, ideology, self-indulgence.” A slumber too many governments are keen to prolong as they skim off revenue from gambling.