Aug 16, 2011
Mayor Emanuel is promising to spend his new $140 million a year from the Chicago casino he expects on wonderful things that we’ll all love. While casinos will create some jobs, he tells the Tribune, “the real job growth and economic growth will come from investment” of the city’s take.
It may not be that simple. Consider the costs.
Every new slot machine at a Chicago casino will destroy one job each year, by taking money out of the consumer economy, according to John Warren Kindt, business professor at the University of Illinois at Champaign Urbana. Four thousand slots could mean forty thousand lost jobs over a decade.
Each slot machine, conservatively, takes in $100,000 a year. With the multiplier effect on consumer spending, that means that 4,000 planned slot machines in Chicago will remove $1.2 billion from the consumer economy each year, Kindt said.
That’s a loss of $120 million in sales tax, just for starters, to set against the $140 million in city profits. Not to mention a heavy blow to a struggling economy.
There are years of academic research showing that gambling destablizes local economies, he said; much of it is reviewed in the four-volume, 3,000-page U.S. International Gambling Series which Kindt edited. (Tell your library to get it.)
“The economic argument is totally disingenuous,” Kindt said. The state’s proposed gambling expansion “will absolutely hurt the economy.”
The expansion is “all about slot machines,” he said. Up to 90 percent of gambling profits come from slot machines.
“Slot machines don’t create jobs,” Kindt said. “You just dust them off and collect the money.”
And costs to government go up as gambling addiction rises (doubling within casino feeder markets), bankruptcies climb (18 to 42 percent higher in area around casinos, Kindt said) and crime rates go up (about 10 percent a year). That means costs to government of $3 for every $1 in gambling revenue.
So it may not be time yet to start counting chickens. Governor Quinn has yet to sign the bill; and if he does, the win-to-loss ratio may be less favorable than the politicians project.
Kindt recalls promises 20 years ago that casinos in Illinois would solve the state’s budget problems forever. Now, Illinois and two other states with large gambling industries (California and Nevada) lead the nation in budget shortfalls. He’s convinced that “the accumulated taxpayer costs that accompany gambling facilities” are a major factor in Illinois’ budget crisis.
If that’s true, then more of the same wouldn’t be the solution.