The contribution of the gambling industry to the US economy increased by 10%

US economy increased by 10% - thanks to gambling industry

According to the Oxford Economics study, the contribution of the gambling industry to the US economy increased by almost 10% - to $261 billion (£198 billion) - from the period of 2014 to 2017.

It is reported that the gambling industry has replenished federal, state and regional budgets for this period by $40.8 billion, of which about $8 billion were sent to the social security sphere. In general, consumer spending in the casino reached $89 billion during this period. In addition, about 1.8 million people were employed in the industry. According to Sarah Slane, senior vice president of the American Gambling Association (AGA) in public affairs, the tax deductions of the sector ensured the recruitment of about 700,000 teachers.

The study also included several states in which online games were allowed at the time of market research. This is Delaware, New Jersey, Nevada.

It should be noted that in accordance to the study the economy of US could grow even bigger if there was a proper regulation of online and land-based gambling business in the country, and better control over corruption among government bodies. Below you can find an excerpt from this study regarding corruption in casino licensing.

Casino licensing leads to corruption in US (Oxford Economics study of 2018)

For many years, when casino games and even lotteries were banned almost everywhere, the gambling business was mainly the domain of organized crime. Today, on the contrary, casinos are owned and operated by companies whose shares are freely traded on the open securities market. These companies are controlled by market discipline, and their policies are determined by decisions of ordinary shareholders in jeans, not the blackmail and intimidation by notorious people in dark suits.

Undoubtedly, the widespread legalization of gambling establishments has destroyed the influence of crime in this area, but whether government control played a key role in solving this problem is a rather controversial issue. This question is very important, since the representatives of the gambling industry really want to pay off the concern about the problem of fraud - which is quite natural. Casinos are afraid of losing the protection of the elite of society and therefore should be above all suspicions, because whispering rumors about maliciously programmed slot machines or stereotypical Hollywood gossip about a magnet under the roulette wheel can cause them great damage. However, instead of taking steps to reassure observers of their honesty, the usual reaction to these rumors is calls to tighten licensing and control procedures in the industry.

Difficult to Imagine

It is difficult to imagine a policy stupider than the introduction of a complete ban. By artificially raising the price of an entrance ticket to the gambling industry and licensing protects existing players in the industry from new competitors. Moreover, a license becomes a valuable commodity; therefore, officials who exercise control in this area are easily corrupt. In addition, licensing is a completely unnecessary procedure: casinos that value their reputation can always use the services of a third party, i.e. certification agencies.

The opportunities for corruption arising from the licensing process are clearly visible in the predicament recently faced by US Secretary of the Interior Bruce Babbit. In July 1995, the Department of Homeland refused to issue a casino license to three Chippewa tribes living in Wisconsin, although they had the recommendation of the Bureau of Indian Affairs. Witnesses testified that such a decision was made due to political bribes from other Indians who kept casinos outside Minneapolis, close to the site planned for the construction of a gambling establishment in Wisconsin. These rival Indians, of course, donated money to the Democratic Party and President Clinton's election campaign. Moreover, Babbit allegedly claimed in a conversation with a friend who was a representative of the Chippewa tribes that they were refused a license precisely because of these donations. The situation became even more awkward when competing Indians later donated another $ 300,000 or so to the National Committee of the Democratic Party.

Babbit’s Case

The US Attorney General found the evidence for alleged misconduct to be credible and enough to refer Babbit’s case to an independent prosecutor. Of course, whether the charges against Babbitt are confirmed or not depends on the court. However, in any case, the current procedural actions are unlikely to convince the public of the honesty of the casino owners. The licensing process, at least today, is perceived as a “dirty business” when the authorities on the principle of “you give to me - I will give to you” protect the casino from competition in return for financial support for political campaigns.

As already indicated, as a completely obvious alternative to this, the gambling business may choose control from private agencies. This is by no means a new idea. Other participants in the entertainment industry - writers, playwrights, cinematographers and restaurateurs - regularly submit their products for independent examination; after all, this is precisely the function of all the well-known and always despised “critics”. Similarly, the nonprofit company Underwriters Laboratories (UL), which is engaged in quality control, estimates more than 17 thousand types of products produced by more than 40 thousand manufacturers. In 1997 alone, about 80 thousand items were examined. In total, 14 billion kinds of goods with a quality mark from UL appear every year on the market. And all this is done at the expense of manufacturers.

Strong Arguments

Probably the strongest argument in favor of third-party casino certification is that some online gambling forums already use this method due to the lack of state licensing. An example is the Internet company Global Stock Games (GSG), which offers sweepstakes services: a player can bet on changing the price of 14 shares during daily trading on one of the 12 world exchanges. For each combination offered, a relatively small entry fee is charged ($ 5 for those who play on the US exchanges), and prize money is distributed daily among those who correctly guessed the course of events (the stock price went up, went down or remained unchanged) for 13 or 14 shares . The company invites independent controllers (the so-called “caretakers”), who ensure that prize money is paid in accordance with the rules. This site uses standard protocols for secure credit card payments. It is obvious that GSG and similar companies understand their customers' concerns about security issues and consider the costs of monitoring the quality of services as an essential element of their business.

The gambling conflict in US society has led to debates critical to all Americans. On the one hand, there is a point of view according to which in some situations people cannot be trusted to face the consequences of their own decisions and therefore they should not be responsible for their actions if something went wrong. As a result, public interests dictate that officials make decisions for them.