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Daniels Fund Ethics Initiative University of New Mexico

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This material was developed by Harper Baird, Matt Yepez, and Ethan Fairey under the direction of O.C. Ferrell and Linda Ferrell. It is provided for the Daniels Fund Ethics Initiative at the University of New Mexico and is intended for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management. Users of this material are prohibited from claiming this material as their own, emailing it to others, or placing it on the Internet. Please call O.C. Ferrell at 505-277- 3468 for more information. (2011)

Debate

Is Gambling Harmful To Our Society?

ISSUE: Do the economic benefits gained from the gaming industry outweigh the damage that gambling inflicts on those who are addicted?

“Gambling” is the wagering of money or property on the outcome of a game or event that is largely random with

the intent to win more money or property. “Gaming” refers to the industry created by the activity of legal

gambling. Examples of gambling and gaming include lotteries, poker and other table games, slot machines, other

casino games, horse racing, and online gambling. In 2009, the global legal gambling market was worth over $335

billion, with lotteries and casinos generating most of that revenue. Proponents of gaming argue that the industry

generates much-needed revenue for state and local governments and provides psychological benefits. However,

critics claim that gaming is addictive, provides few societal benefits, and drains resources from society.

Gaming supporters argue that regulated and legal gambling provides both psychological and economic benefits.

Some psychologists claim that gambling brings out the “fortune-hunter” within us, creates opportunities to

exercise control, and helps people to release tension and stress. Others believe that going to a casino is a form of

entertainment, similar to attending a movie, show, or sporting event. According to a 2011 public opinion poll, 82

percent of Americans believe that casino gaming is acceptable for themselves or others.

Proponents also argue that gambling adds significant economic value to communities in the form of employment

opportunities and higher tax revenue. The American Gaming Association argues that gaming is “vital to the states

and communities where it operates, creating jobs and business opportunities for local businesses and providing

direct gaming tax revenues to stimulate struggling economies and help communities grow.” In 2010, casinos

generated over $34.6 billion in revenues and paid $7.59 billion in taxes to state and local governments. The tax

rate on gaming revenue varies from state to state, ranging from 6.75 percent in Nevada to 55 percent in

Pennsylvania. The tax revenues from gaming help states pay for projects like education, infrastructure, economic

development, and other state-funded services.

Gaming also helps many communities to create local jobs and grow their tourism industries. According to the

National Opinion Research Center (NORC) at the University of Chicago, welfare payments and unemployment rates

are 12 to 17 percent lower in the communities that are closest to casinos. Hotels, spas, golf courses, shopping

districts, restaurants, and other entertainment venues often develop or expand near successful casinos. The NORC

found that the hotel and lodging revenues in communities near casinos are 43 percent higher than in communities

without casinos.

However, critics of the gaming industry claim that gambling is harmful to individuals and society. Casinos and

lotteries are profit-driven businesses; they use sophisticated techniques to ensure that the “house” wins the

majority of the time. However, the gaming industry implies that “winning big” is more probable than it really is.

Thus, people with little money are often attracted to gambling because it gives them the feeling that they will hit

the jackpot.

The positive psychological effects of gambling can be addictive, especially for pathological gamblers. The American

Psychiatric Association defines pathological gambling as a clinical disorder characterized by a persistent and

recurring failure to resist gambling behavior that is harmful to the individual and concerned others. Studies suggest

that pathological gamblers make up about 1 percent of American adults. The social ills associated with problem

gamblers are widespread and often go beyond an addition to gambling. Problems with gambling can lead to

bankruptcy, crime, domestic abuse, and even suicide. A single bankruptcy could potentially impact 17 people. The

National Council on Problem Gambling estimates that gambling addictions cost the U.S. $6.7 billion annually, and

some experts believe that cost could be even higher.

Many critics don’t believe that state and local governments take responsibility for the social problems generated

by the gaming industry. Sam Skolnik, a former gambling addict and author of High Stakes: The Rising Cost of

America’s Gambling Addiction argues that although many states use some gambling revenues to treat and prevent

gambling additions, this may not be enough. He says, “Essentially, [legislators are] admitting that they know they

are creating a class of gamblers who become addicts. If you know what you’re doing creates problems, is this

appropriate policy?”

There are two sides to every issue:

1. Gambling produces positive psychological and economic benefits at a relatively low cost to society.

2. Gambling creates social problems that outweigh the benefits of job creation and tax revenues.

Sources: American Gaming Association, “Facts at Your Fingertips: U.S. Commercial Gaming Industry,” 2009,

http://www.americangaming.org/files/aga/uploads/docs/facts_at_your_fingertips_12022010.pdf (accessed August 9, 2009). “2011 State of the States: The AGA Survey of Casino Entertainment,” American Gaming Association, 2011,

http://www.americangaming.org/files/aga/uploads/docs/sos/aga-sos-2011.pdf (accessed August 10, 2011). Sheryl Nance-Nash, “The High Price of America’s Gambling Addiction,” DailyFinance, July 22, 2011, http://srph.it/pS4TNZ (accessed August 10,

2011). “You bet,” Economist, July 8, 2010, http://www.economist.com/node/16539402 (accessed August 8, 2011).