Gambling is expanding in Pennsylvania.
Mini-casinos are being allowed in the commonwealth and local municipalities in the Susquehanna Valley have been voting on whether or not to allow a casino to come to the area. But will local economies improve if a casino opens?
Most studies show a positive economic impact when a casino opens in a specific area, however some studies do not. I would not pay much attention to either side. As somebody who has studied economic impact studies extensively, I can assure you that any there are many who will manipulate the numbers to show how great or terrible an entity will be for an economy. Let us instead use some economic logic to think through this issue.
We will start with a claim that bringing casinos to an area will have a negative economic impact. Claims like this one by PBS Frontline can be found on many anti-gambling websites:
“Two studies of the riverboat casinos in Illinois concluded that for every one job created by the riverboats, most of the surrounding communities probably lost one or more jobs”
While many other anti-gambling proponents make similar claims, it does not hold up to logical scrutiny. In order for a casino to actually have a negative economic impact, two things initially have to occur. One is that a casino would reduce the economic activity of at least some other local businesses. For instance, people who choose to go to a casino could have instead gone to a movie, out to dinner, to a high school theatre performance, or spent their money at other local places. Over time this would lead to a negative impact on local businesses.
But even if some local businesses are worse off, it is not a given that an area will lose jobs. For that to happen, the casino would have to send more of its revenue out of the local area than the other local businesses. Suppose people decide to go to a casino and spend $100 there instead of at a restaurant. The casino (and previously the restaurant) will enjoy some of that $100 as profits, with the rest going to workers, equipment, food, materials, etc. For casinos to have a negative impact, they would have to send more of their money out of the local area for these purchases. While it could happen, it is not obvious that it does.
Even if these two conditions happen to cause a slight negative impact on the economy, there could still be economic gains. Any time a casino persuades somebody to visit — and spend money in — an area when they otherwise would not, that results in a positive economic impact. Also, if a local casino means casino customers stay locally instead of traveling to casinos outside the area, that boosts the economy. For example, Pennsylvania’s economy got a boost when it opened casinos, when gamers who otherwise would travel to Atlantic City decided instead to stay and play within Pennsylvania.
Three auctions for satellite casino licenses have already gone to potential new mini-casinos in York, Westmoreland and Lawrence counties and a handful of licenses remain.
In any location, a new casino would likely put some positive and some negative pressure on the economy. Overall we should expect a small but positive impact for areas that open casinos.
Matthew Rousu is interim dean of the Sigmund Weis School of Business and professor of economics at Susquehanna University in Selinsgrove.