Preface to the 2006 reprint
In November 2006, an initiative will be placed on Ohio's ballot called the Learn and Earn Amendment. The measure will allow slot machines to be installed at seven racetracks around Ohio, and three casinos to be constructed, two in Cleveland and one in Cincinnati. The ballot language provides that 30 percent of the gaming profits be put into a personal scholarship account for every student in Ohio.
In 1996, a different constitutional initiative to legalize riverboat casino gaming in eight locations around Ohio was placed on the state's ballot. The measure, called Issue 1, was defeated by a margin of 62 percent to 38 percent.
William Thompson of the University of Nevada, Las Vegas, conducted an empirical study on the probable consequences of the eight riverboat casinos to be legalized by Issue 1. He used the "bathtub model" to explain casino gaming economics. If water comes into a tub at a faster rate than it leaves, the water level rises; if the water comes in at a slower rate than it leaves, the water level is lowered.
The same is true with local economies and casino gaming. A local or regional economy attracts money. A local or regional economy discards money. If as a result of the presence of a casino more money comes into an economy than leaves the economy, there is a positive monetary effect because of the casinos. The level of wealth in the economy rises. However, if more money leaves than comes in, then there is a negative impact from the presence of casino gambling.
In his 1996 study, Thompson found that the eight riverboat casinos would have brought a total of $384 million new dollars into Ohio. However, this would have been offset by $405 million leaving the state, for example through federal taxes and retained profits to out-of-state owners. In total, the casinos would have produced a net loss of $21 million. Thompson also analyzed social and other costs, which created an even larger net loss.
Thompson's insights into the economics of casino gaming in 1996 still has relevance to today's debate concerning the Learn and Earn Amendment, which proposes allowing three casinos instead of the eight casinos Issue 1 would have allowed. Though the numbers may be different today, the principles and the conclusions of Thompson's study remain the same.
Serious consideration of the issues raised in this report is essential unless the state wants to be railroaded and derailed from tracks that can lead Ohio to prosperous genuine economic growth.
A copy of the full report can be downloaded here: http://www.buckeyeinstitute.org/docs/Policy_Report_-_Economic_Analysis_of_Gambling_in_Ohio.pdf
William Thompson is a Professor of Public Administration at the University of Las Vegas, Nevada