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On May 26th, 1978, a grand social experiment began in Atlantic City, New Jersey. The first legal American casino not located in Nevada opened, less than two years after New Jersey voters approved a referendum to allow gambling in the battered resort community.

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The politicians supporting casino gambling promoted it as a way to boost the economy and create jobs. Moralists argued that casinos would erode the country’s moral fiber. But the jobs argument won out, and by the 1990s, casinos were seemingly everywhere, from Native American reservations to riverboats. Nearly every American is now within a few hours’ drive of a casino.

Critics note that casino gambling has not delivered on its economic promises. Robert Goodman, who has been director of the U.S. Gambling Research Institute, notes that casino gambling increased largely because state officials wanted to collect tax revenues off gambling. The result was a boon in casino gambling. But Goodman argues that the concept was based on a false hope. The original gambling mecca, Las Vegas, was an isolated locale that became a tourist destination. Its imitators, including Atlantic City, relied on locals and day hoppers, who play at the casinos and then go home, contributing few outside tourist dollars to their localities. In Atlantic City, a third of that town’s local businesses closed within four years of the casino openings. As in other casino locales, local restaurants found they could not compete with the cheap grub offered by casinos intent on luring gamblers.

Atlantic City boardwalk
Atlantic City’s boardwalk (via Flickr/Luke H. Gordon)

Increased employment failed to materialize. Within fifteen years of the arrival of casino gambling, unemployment in Atlantic City was more than two times the New Jersey average. Legalized casinos resulted in a now-familiar pattern: the impact on local businesses has often been a bust, and the profits from the gaming houses tend to go to outside resort corporate behemoths, not mom-and-pop stores.

The data backs this up; economists who have studied the impact of casino gambling see either modest benefits or regression. More jobs are created by casinos, but not better jobs.

A study of how residents in counties with casinos view quality-of-life issues indicated that non-gamblers saw the casinos as a cause of increased crime and other social ills. Gamblers, predictably enough, saw no problem. The researchers indicated that casino gambling in its entirety has little positive or negative impact on communities.

Casino critics argue that the promise that casino gambling would create economic opportunity, fill the coffers of local governments, and revive cities at virtually no cost, has proven to be an unfulfilled fantasy. Still, the industry continues to grow. Once established, casinos don’t go away, largely because opening new casinos creates interest groups that will defend their presence. As Goodman notes, “The public official who will stand up and say close that casino and put those 4,000 people out of work is somebody I haven’t met.”


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The Wilson Quarterly (1976-), Vol. 19, No. 4 (Autumn, 1995), pp. 24-32
Wilson Quarterly
The American Journal of Economics and Sociology, Vol. 66, No. 3, Perspectives on Gambling: Lotteries, Wagers, and Casinos (Jul., 2007), pp. 593-608
American Journal of Economics and Sociology, Inc.
Social Indicators Record, Vol. 77, No. 3 (Jul., 2006), pp. 369-394