Table of Contents

Introduction     1
Outline of the book     2
Casino gambling and economic growth     5
Introduction     5
Increased employment and wages     7
Capital inflow     8
Increased tax revenues     9
Import substitution     10
Increased “trade”     11
Increased transactions volume     12
Consumer surplus and variety benefits     14
Potential for immiserizing growth     15
Conclusion     16
Misconceptions about casinos and growth     19
Introduction     19
Industry cannibalization     20
The factory-restaurant dichotomy     23
The export base theory of growth     25
Money inflow (mercantilism)     28
Conclusion     32
Evidence on the growth effects of gambling     35
Introduction     35
The empirical question     35
Non-technical explanation of Granger causality     37
Granger causality with panel data     39
Synopsis of Granger’s procedure     40
Modifying the procedure for panel data     42=970 14$lStage 1     42=970 14$lStage2     43=970 14$lStage 3     44
Empirical results     45
Casino gambling     46
Greyhound racing     49
Lotteries     51
Isolated state lottery model     53
Summary and conclusion     55
Casino gambling and greyhound racing     55
Lotteries     56
Conclusion     56
Relationships among U.S. gambling industries     59
Introduction     59
Literature review     61
Data     64
Gambling volume variables     64
Adjacent-state variables     68
Demographic variables     70
Model and results     71
Discussion of results     74
Effects of cross-equation constraints     78
Policy issues     79
Tax revenue     81
Conclusion     82
The social costs of gambling     85
Introduction     85
Chapter outline     87
The economic definition of “social cost”     88
Modeling social costs     89
The definition applied     90
Theft as an illustration of social cost      91
Externalities and social costs     93
Alleged social costs of gambling     95
Legitimate social costs     97
Legal costs     97
Treatment costs     100
Psychic costs     100
Items improperly defined as social costs     101
Wealth transfers     102
Bad debts     103
Bailout costs     104
Government welfare expenditures     105
Modeling transfers     106
Industry cannibalization     108
Money outflow     109
Productivity losses     109
Theft     110
Conclusion     110
Miscellaneous social cost issues     113
Introduction     113
Problems estimating social cost values     114
Counterfactual scenario     115
Comorbidity     115
Pathological gambling and “rational addiction”     117
Surveys on gambling losses     119
Unidentified and unmeasured social costs     122
Restriction effects     122
Lobbying     125
Summary of political costs     129
Other perspectives on social costs     129
Cost of illness (COI) approach     130
Economic approach     131
Public health perspective     131
Revisiting the definition of “social cost”     132
The Australian Productivity Commission report     133
Adopting a single social cost methodology     135
Conclusion     136
Problems in gambling research     139
Introduction     139
Recognizing scopes of expertise     142
Calls for objectivity and transparency in research     144
General problems in the literature     145
Conflict of interest allegations     145
Dismissing research without refutation     146
Ignoring published work     148
Failure to analyze/criticize work cited     151
Specific examples of errors     151
Gambling as a wasteful activity     152
Why gambling is not a DUP activity     154
DUP and rent seeking     156
Casinos and crime     157
Grinols and Mustard (2006)     158
Gazel, Rickman, and Thompson (2001)     161
Grinols’ Gambling in America     162
Conclusion     164
Using research to inform policy     165
Introduction      165
Summary of economic issues     165
Benefits     166
Costs     167
General problems     168
Prevalence of pathological gambling     168
Foundations of gambling policy     170
Are cost-benefit analyses useful?     171
Property rights, freedom of choice, and government     172
Externalities “revisited     173
Conclusion     173
Primer on microeconomics     175
The production possibilities frontier     175
The indifference curve     179
Allocative efficiency     181
Supply, demand, and markets     183
Producer and consumer surplus     185
Summary     187
References     189
Index     205

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