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Casino States See Lower GDP Growth, Job Growth, and Education Spending

I'm reading up on the Mid-American States Purchasing Economy Survey Report, a survey of supply managers in nine states conducted monthly by Dr. Ernie Goss and associates at Creighton University's Heider College of Business. Our local press like to blurb these survey results without much analysis. Stay tuned for my take on the latest data in a later post.

But as I read, I notice that Dr. Goss's December 17 blog post, which also heads his November survey report, cast doubt on the wisdom of betting your state fiscal health on casino gambling:

Between 2000 and 2012, despite assurances from elected and non-elected officials, states with commercial casinos versus states without commercial casinos experienced lower GDP growth, 54.8% versus 62.6%, and inferior job growth, 5.5% compared to 8.7%. Furthermore in 2012, states with commercial casinos shelled out 15.2% of GDP in the form of transfer and welfare payments. This was significantly higher than states without commercial casinos of 13.8%.

And did commercial casinos produce lower tax burdens? No! For the latest year, citizens of the 23 commercial casino states suffered a state and local tax burden as a percent of GDP of 8.6%, while the 28 states and DC with no commercial casinos experienced a lower 8.1% tax burden.

Commercial casino states did, however, spend more on education. In 2012, gambling states spent 5.6% of GDP on education which was above the 5.3% of GDP spent by non-casino states [Ernie Goss, "Commercial Casino Gambling: Hurts Economic Growth & Increases Welfare Spending," Economic Trends, 2014.12.17].

Alas, Dr. Goss doesn't cite his sources, so I can't immediately dig out the South Dakota numbers. I can note that South Dakota's GDP growth ranked ninth in the U.S. in 2013 and 18th for GDP growth from 2008 to 2012. Our state and local spending on education in 2012 was 4.6% of our GDP.

We should not conclude that casinos damage a state's economy or increase the tax burden. It could be states have opened up casino gambling in response to tough economic conditions. But the data do allow us to conclude that casino gambling does not by itself make a state's tax revenues and economy outperform those in states that resist the gambling bug.


  1. larry kurtz 2015.01.03

    Ernie didn't call tribes the 51st State in any of his stuff i tweeted the other day but it is gratifying that today both Madville and the Dakota Water Closet are reacting to my commentary.

  2. Lynn 2015.01.03

    As stated in an earlier thread I was indifferent when gambling was legalized here in South Dakota with a callous attitude that I now regret feeling that if people were dumb enough to pay a voluntary tax then let them.

    My attitude towards gambling especially video lottery has completely changed in that I really hope there is a renewed effort via ballot initiative to repeal it. With the industry here in SD being so entrenched I highly doubt a repeal would happen in the legislature especially with the lobbying that would be going on and our state's fiscal dependence.

    I have personally and repeatedly seen the damage that can occur due to gambling addiction from people who the working poor to those that have very good incomes for South Dakota yet live in poverty. Even those who are well educated and former community and business leaders have succumbed.

    Isn't gambling addiction one of the hardest addictions to break free of?

    Besides think about how those gambling dollars circulate within a community as compared to a conventional business that sells goods and real value adding services. It seems the few businesses that benefit from gambling are payday lenders and others like it.

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