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Casinos and the Local Economy

As casinos grow in popularity, and the proposals to build new casinos tout their positive effects on the local economy, a broader analysis can shed light on the full economic impact of casinos. The most comprehensive review of the literature today is from Marionneau and Nikkinen(2020).[i]  After screening 313 studies, they review 44studies published between 1978 and 2018. The samples analyzed in these studies include thirteen states within the United States, nationwide data from the United States, Canada and France, and regional data from Canada, Australia, and Macau.

They distinguish between destination casinos and convenience casinos. Destination casinos would describe casinos that are placed in a tourist destination or built to be a tourist destination itself. The intended clientele includes patrons from outside the local area, and a trip to the casino could involve an overnight stay. Convenience casinos would describe casinos that are placed in an accessible area. The intended clientele includes patrons from the local community.

The conclusions regarding the economic impacts of casinos are summarized in their Table 2 reproduced below. The results are mixed, but a distinction between destination and convenience casinos becomes clear. Marionneau and Nikkinen write:

“In the current review, most sectors appeared to benefit from gambling in destination gambling locations. Previous research has also shown that even if changes occur in local spending, this is offset by a recapture effect, in which increased visitation compensates for any cannibalization. Gambling that caters to the local market may not have net positive economic impacts and will negatively affect local businesses.”

“The results also varied depending on types of location. As a rule, economic impacts tend to be more positive in small towns and rural areas, whereas the opposite is true of larger metropolitan markets. The results show that when impacts on other industries were positive, they were mainly concentrated in economically depressed areas or Native American or First Nations communities.”

[i] Marionneau,Virve and Janne Nikkinen. 2020. “Does Gambling Harm or Benefit OtherIndustries? A Systematic Review” Journal of Gambling Issues 44.