Not all gambling equal in terms of effects

William Eadington

Not all forms of gambling are equal in terms of economic benefits they generate and social costs they create, one the nation’s leading gambling experts said Saturday.

William Eadington, a University of Nevada, Reno economics professor, placed destination resorts, such as those on the Las Vegas Strip, at the top of the hierarchy for their ability to attract tourists and money while creating fewer social costs for their communities

At the bottom are Internet casinos and illegal gambling, which provide little, if any, capital investment but still create negative social costs, Eadington said during the second day of the Western Regional Conference on Problem Gambling Awareness at the Hilton Vancouver Washington.

In the middle are urban-suburban casinos, such as the MGM Grand Detroit, that present substantial capital investment — in the case of Detroit some $800 million — but cater largely to the local population, he said.

"Detroit is not the tourism capital of the world," said Eadington, director of his university’s Institute for the Study of Gambling and Commercial Gaming.

Eadington did not mention the Cowlitz Indian Tribe’s plans to build a $510 million casino complex near La Center during his remarks before almost 200 people Saturday morning, but the tribe’s project would fit squarely into that urban-suburban category.

These local casinos, which now make up two-thirds of the gambling market, generally are performing better during the current economic upheaval than Las Vegas resorts, Eadington said.

Several large casino companies took on huge amounts of debt to finance multibillion-dollar casino projects, such as the 67-acre CityCenter development in Las Vegas, only to see their stock prices plunge by 98 percent over a period of 18 months.

Eadington compared their experiences with the Greek myth of Icarus, who was able to fly using wings fashioned from feathers and wax but plunged into the sea after venturing too close to the sun.

"Their debt is playing the role of the sun in melting their wings and pushing them down," he said.

The recession is not only affecting large casino companies but their customers as well. Some gamblers are reacting to tough economic times like rational consumers, which translates into fewer casino visits and less spending per visit, he said.

But there also could be an increase in problem gamblers who dream of improving their financial lot by winning big or who want to escape from their problems, he said.

"My suspicion is the latter force is probably stronger than the former force, but that is only a hunch," he said.

Eadington said there are real societal problems associated with problem gambling, including bankruptcies, family disruption and some types of crime.

A portion of gambling revenues should be devoted to addressing these problems, ideally when projects are in the development stage, he said.

"It becomes very difficult to extract adequate resources later on," Eadington said.

Jeffrey Mize: 360-735-4542 or jeff.mize@columbian.com.