The US Congressional National Gambling Impact Study Commission (NGISC): Findings Applied to Taiwan’s Proposal to Create a Gambler’s Paradise to Close the Budget Gap
Timothy A. Kelly, Ph.D., NGISC Executive Director September 15, 2009
• The Commission was a bipartisan, research-based effort to analyze the economic and social costs and benefits of legalized gambling. The report, based on $2.5M of original research, stands as the most comprehensive and authoritative gambling study to date.
• The Commission Report to Congress and the President called for a moratorium on gambling expansion until legislators can complete a full and objective cost-benefit analysis. Otherwise, they are not doing their due diligence, and the actual costs (economic, social, political & criminal) may well outweigh the projected benefits (tax revenue & jobs) (p. 1-7, 1-8, 7-29). Such a study has not been done In Taiwan, legislators have not done their due diligence, and they are thus gambling with Taiwan’s future without understanding the consequences.
• On Benefits–Tax Revenue & Jobs:
o Taxable income will likely be less than projected, especially from international gamblers, due to the close proximity of Macau. Most of the profits will go to non-Taiwanese owners.
o Jobs will likely be fewer than projected. Furthermore, the quality of most casino-related jobs is limited (little upward mobility).
• On Economic Costs: o Most of the revenue captured in a casino comes from people who would have otherwise spent that money in their home community on entertainment, food, clothes, etc. Thus the taxes generated by a casino represent a shift away from local business and towards the gambling industry (not“new money”). Local businesses may fail, the casino may grow, yet the net tax increase will be small.
o Significant funds are needed to set up new government agencies to oversee and regulate the legal activities, and to attempt to control the illegal activities associated with gambling.
o Significant funds will be needed in response to the predictable surge in gambling addiction including treatment, incarceration costs, and losses due to “white collar crime” to cover gambling debts.
• On Social Costs:
o Gambling addicts (“pathological gamblers”) “engage in destructive behaviors: they commit crimes, they run up large debts, they damage relationships with family and friends, and they kill themselves” (p. 4-1).
o Casinos change the environment of the community in which they are located to match that of the gambling industry, focused primarily on adult pleasures. The attempt to create a “family friendly” Las Vegas failed, and reverted to the “anything goes” environment of a gambler’s paradise.
• On Political Costs:
o Once gambling enters an area, “the community undergoes many changes. Local government becomes a dependent partner in the business of gambling” (p. 7-18). This is because the gambling industry contributes to elections, to legislators’ favorite programs, and is a potential source for corruption.
o In the US, a steady stream of local officials, mayors, and even governors (IL, LA) have been convicted for being “on the take” from the gambling industry.
• On Criminal Costs:
o White collar crime will surge as pathological gamblers scramble to cover gambling debts (p.4-1).
o Money laundering is a constant potential, given the volume and flow of cash (p. 3-1). o It is difficult if not impossible to keep organized crime out of the gambling industry. In the US, it took many years to wrestle direct ownership and operation of the casinos out of the hands of organized crime (p. 3-1). Even now, the Commission heard that organized crime is still involved in some aspects of the industry, such as unionized support services.
o A report from Maryland’s Attorney General concluded that casinos bring a substantial increase in crime.“There would be more violent crime, more juvenile crime, more drug-and-alcohol related crime, more domestic violence and child abuse, and more organized crime. Casinos would bring us exactly what we do not need–a lot more of all kinds of crime” (p. 7-13).
Timothy A. Kelly, Ph.D., NGISC Executive Director September 15, 2009
• The Commission was a bipartisan, research-based effort to analyze the economic and social costs and benefits of legalized gambling. The report, based on $2.5M of original research, stands as the most comprehensive and authoritative gambling study to date.
• The Commission Report to Congress and the President called for a moratorium on gambling expansion until legislators can complete a full and objective cost-benefit analysis. Otherwise, they are not doing their due diligence, and the actual costs (economic, social, political & criminal) may well outweigh the projected benefits (tax revenue & jobs) (p. 1-7, 1-8, 7-29). Such a study has not been done In Taiwan, legislators have not done their due diligence, and they are thus gambling with Taiwan’s future without understanding the consequences.
• On Benefits–Tax Revenue & Jobs:
o Taxable income will likely be less than projected, especially from international gamblers, due to the close proximity of Macau. Most of the profits will go to non-Taiwanese owners.
o Jobs will likely be fewer than projected. Furthermore, the quality of most casino-related jobs is limited (little upward mobility).
• On Economic Costs: o Most of the revenue captured in a casino comes from people who would have otherwise spent that money in their home community on entertainment, food, clothes, etc. Thus the taxes generated by a casino represent a shift away from local business and towards the gambling industry (not“new money”). Local businesses may fail, the casino may grow, yet the net tax increase will be small.
o Significant funds are needed to set up new government agencies to oversee and regulate the legal activities, and to attempt to control the illegal activities associated with gambling.
o Significant funds will be needed in response to the predictable surge in gambling addiction including treatment, incarceration costs, and losses due to “white collar crime” to cover gambling debts.
• On Social Costs:
o Gambling addicts (“pathological gamblers”) “engage in destructive behaviors: they commit crimes, they run up large debts, they damage relationships with family and friends, and they kill themselves” (p. 4-1).
o Casinos change the environment of the community in which they are located to match that of the gambling industry, focused primarily on adult pleasures. The attempt to create a “family friendly” Las Vegas failed, and reverted to the “anything goes” environment of a gambler’s paradise.
• On Political Costs:
o Once gambling enters an area, “the community undergoes many changes. Local government becomes a dependent partner in the business of gambling” (p. 7-18). This is because the gambling industry contributes to elections, to legislators’ favorite programs, and is a potential source for corruption.
o In the US, a steady stream of local officials, mayors, and even governors (IL, LA) have been convicted for being “on the take” from the gambling industry.
• On Criminal Costs:
o White collar crime will surge as pathological gamblers scramble to cover gambling debts (p.4-1).
o Money laundering is a constant potential, given the volume and flow of cash (p. 3-1). o It is difficult if not impossible to keep organized crime out of the gambling industry. In the US, it took many years to wrestle direct ownership and operation of the casinos out of the hands of organized crime (p. 3-1). Even now, the Commission heard that organized crime is still involved in some aspects of the industry, such as unionized support services.
o A report from Maryland’s Attorney General concluded that casinos bring a substantial increase in crime.“There would be more violent crime, more juvenile crime, more drug-and-alcohol related crime, more domestic violence and child abuse, and more organized crime. Casinos would bring us exactly what we do not need–a lot more of all kinds of crime” (p. 7-13).
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