August 2006 – When it comes to gambling, people can argue all day long about morality, stewardship and whether or not it’s possible for a person to beat the odds and win consistently. Adding to the debate is the subject of crime. A landmark study found that crime increases in counties where casinos locate.
Economists David B. Mustard of the University of Georgia and Earl L. Grinols of Baylor University examined crime data from each county in the U.S. between 1977 to 1996, comparing statistics from those counties which had casinos and those that did not. FBI figures for seven crime categories were surveyed: aggravated assault, rape, robbery, murder, larceny, burglary and auto theft.
So what did the numbers suggest? “Crime rates were stable prior to opening [a casino], were slightly lower in the year of casino introduction, returned to approximately average levels for the next two or three years, and increased thereafter,” Grinols and Mustard said.
The most dramatic rise, for example, came in the category of robberies. By the fifth year of a casino’s existence, the economists said, the number of robberies in a county with a casino had risen 136%.
The researchers explained that the “lag time” – or delay – before the onset of this casino-related increase in crime was probably due to a number of factors. For one thing, casinos appeared to initially decrease crime in their host counties, because casinos often hired numerous local, low-skilled workers, some of whom might otherwise be tempted to dabble in criminal enterprises.
Moreover, many localities use the opening of a nearby casino to increase the number of law enforcement personnel, even though Grinols and Mustard said this was typically a one-time boost in police presence.
Such initial community benefits eventually disappear, the economists said, and are overwhelmed by the negative impact of casinos. For example, gambling critics argue that any short-term economic benefit from local hiring is more than offset by the fact that casinos drain the local economy long-term.
In terms of crime, Grinols and Mustard said the casinos are often criticized “for attracting unsavory clients, and for leading to prostitution and illegal gambling-related activities.”
However, Grinols and Mustard focused their theory of why casinos ultimately increase crime in host counties on the casinos’ main customer: the people who live nearby. (One study found that in Illinois more than 92% of casino customers came from within a 75-mile radius.)
For those who live in the vicinity of a casino, it usually takes time for problem and pathological gamblers to develop an addiction and then to get themselves to the place where they must turn to crime “to fund their losses,” they said.
That people with gambling problems would turn to crime is not surprising. One study from Maryland, the economists noted, found that “62% of the Gamblers Anonymous group studied committed illegal acts because of their gambling.” Another survey of problem gamblers revealed that 56% “admitted to stealing to finance their gambling. The average amount stolen was $60,700.”
Grinols and Mustard also found that the increase in crime in the casino’s host county did not simply come from surrounding counties – which would have meant that casinos do not actually increase crime, but merely draw it from somewhere else.
“Counties that neighbor casino counties did not experience compensating crime reductions, indicating that crime was being created in casino counties, rather than simply being shifted from one area to another,” the researchers said.
So for how much crime is a casino typically responsible? The economists said that, according to their research, “The estimates suggest that after five years, 8.6% of the observed property crime and 12.6% of the violent crime in casino counties are due to casinos.”
According to Grinols and Mustard, “research suggests that on a national basis casino gambling generates externality costs [that is, social costs in the community] in the range of $40 billion annually, and crime is one of the biggest components of these social costs.”
Overall, they insisted, “Even using conservative estimates of costs and generous estimates of benefits, we still find the costs exceed the benefits.”
The research results appeared in the February 2006 issue of The Review of Economics and Statistics.