The hidden costs of casinos

New York state voters recently bet that casinos would help revive the economically depressed Catskill Mountains resort area.

The upstate region of New York has struggled, in part because the state’s heavy tax burden drives businesses elsewhere. Now Gov. Andrew Cuomo hopes that casinos will bring new jobs to the region.

Although that might help in the short term, recent reports from the Institute for American Values point out the long-term costs. Casinos are not really an economic development tool. They hurt nearby non-gambling businesses in a region. Atlantic City casinos, for example, have not brought prosperity to the city, just to the casino ownership.

A hidden cost of to the casinos will be a corresponding increase in gambling addiction. Costs can be hard to measure, but addicted gamblers can do immense damage.

Julie Nowarczyk, for example, almost forced a Chicago company into bankruptcy with her habit. She stole more than $1.5 million over several years from her employer, ENR General Machining Co., to feed her addiction at the Indiana casinos in Lake County. As a bookkeeper, she wrote checks to herself from the company, keeping her scheme secret for four years.

The institute’s report noted that 40 to 70 percent of slot machine revenue comes from problem gamblers. Casinos can’t make it just with gamblers who play for fun. They need customers who are hooked on their games.

Slot machines also are more addictive than other forms of gambling. “Modern slot machines are highly addictive because they get into people’s heads as well as their wallets,” the institute study said. “For some heavy slot players, the goal is not winning money. It’s staying in the zone.” They play to what is called “extinction,” or running out of money.

The report also reveals an interesting history in New York of opposition to casinos and gambling, and not just from conservatives or Christians.

Institute President David Blankenhorn details how gambling opponents included everyone from Theodore Roosevelt and fellow Republican politician Charles Evans Hughes to New York City’s mayor during the Depression, Fiorello LaGuardia. A more recent casino opponent was liberal Democratic Gov. Mario Cuomo, Andrew’s father. The elder Cuomo didn’t agree with that strategy when he was governor, opposing a state constitutional amendment to legalize gambling.

Farther back in the Depression, Mayor LaGuardia was such a vigorous opponent of slot machines that he was pictured using a sledgehammer to smash them when they were taken in a police raid. He objected to slot machines on the grounds that they stole money from poor people.

He also wanted to break the corruption of the Tammany Hall political machine, which depended on revenues from illegal gambling operations with the slot machines.

“Throughout his career, LaGuardia was a tireless champion of the underdog—the poor, the exploited, and the weak and vulnerable,” Blankenhorn writes. “Which is precisely why LaGuardia so detested state-sponsored gambling.”

New Yorkers will now embark on a new gambling experiment. But Blankenhorn and his organization have offered an alternative from past New York history, once New Yorkers grow weary of slot machines and the damaging addiction that comes with them.