Do Casinos Create Economic Development?: A 15-Year National Analysis of Local Retail Sales and Employment Growth

Casino gambling has exploded across the United States over the past 30 years. Both the academic literature and gambling proponents agree that promises of economic development have driven casino policy decisions. While such claims are tempting to policy makers, the academic literature has been largely skeptical of both the methodologies and conclusions of the casino-sponsored research behind them. For such claims to be true, retail sales and employment must grow faster in local economies with casinos than in similar locations without them. Economic theory and academic research suggest that casinos do not attract new money to an area but instead cannibalize existing businesses, leaving the local economy, at best, no better off than before. This study provides a broad test of the economic development claim by measuring the substitution effect of casinos with regression and Growth Curve Model analyses. Census Bureau data allows comparison of growth rates of retail sales and employment between casino and non-casino micropolitan and metropolitan economic areas from 2002 to 2017. To isolate local casino economic impacts, the study excludes America’s four destination-casino states as well as six other states where EGMs (electronic gambling devices, aka slot machines, source of 70 to 88 percent of casino revenues) operate separately from casinos. The study finds little evidence that casinos boost retail sales growth; instead, in the 2007 to 2012 period that includes the Great Recession, retail sales in casino economies shrank at a rate two to three times greater than in non-casino economies. The Growth Curve Model also shows that employment grew at a slower rate in casino economies than in non-casino economies across the entire study period