Library Index » Social Issues & Debate Topics » Casinos: The Effects of Casinos - National Public Opinion, The Effects Of Native American Tribal Casinos, The Lack Of Balanced Data

Casinos: The Effects of Casinos - Bankruptcy

gambling rate communities missouri

A gambling problem and bankruptcy are like baseball and hot dogs.

—James Houston, a compulsive gambler

Establishing a definitive link between gambling habits and bankruptcy is difficult. A study published in 2001 by SMR Research Corporation of Hackettstown, New Jersey, attributed 14.2% of U.S. bankruptcy filings to gambling problems. The researchers compared bankruptcy filing rates during 2000 for more than three thousand counties. They found that the 244 counties in which casinos operated had a bankruptcy rate that was 13.5% higher than those counties without a casino. The president of the AGA disputed the report's findings, pointing out that other factors had not been considered—mainly liberal bankruptcy laws and the ease with which credit cards can be obtained.

Examination of personal bankruptcy filings for 2002 shows that the five states with the highest number of filings per 100,000 population were Missouri, Indiana, Nevada, Utah, and Oklahoma. There were no casinos operating in Utah in 2002. The other four states did have casino gambling.

According to the Council on Compulsive Gambling of New Jersey, Inc., the bankruptcy rate in Atlantic City more than doubled between 1994 and 2000, increasing from 5.28 to 11.68 per 1,000 adult population. During the same time period, the bankruptcy rate for the rest of the state rose from 3.83 to 5.99 per 1,000 adult population.

Researchers at the University of Nevada at Reno compared the bankruptcy rates in eight towns without casino gambling with those in areas that initiated casino gambling during the 1990s, namely Alton, Illinois; Peoria, Illinois; East Peoria, Illinois; Sioux City, Iowa; St. Joseph County, Missouri; St. Louis, Missouri; St. Louis County, Missouri; and Biloxi, Mississippi.

The study, sponsored by the National Institute of Justice, chose the control communities to mirror the casino communities as closely as possible in terms of demographics and social and economic factors. Results indicated that there was a statistically significant increase in the bankruptcy rate in five of the eight communities with casino gambling. The communities in which casinos had operated the longest tended to show the largest increase. However, the bankruptcy rate in one of the communities—Biloxi, Mississippi—actually decreased significantly. The decrease was attributed to the unique nature of the casino industry in that town—namely, that casinos had greatly enhanced tourism there. This positive effect had economic benefits that outweighed any financial problems that local residents might have incurred due to overindulgence at the casinos.

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