REPORTS WARNS CITIES: GAMING BRINGS COSTS

The promise of jobs and burgeoning tax revenues have enticed many cities to clamor for legalized gambling.

But not everyone is joining the bandwagon.

Robert Goodman, an adjunct professor of regional planning at the University of Massachusetts at Amherst, told the Southeast Missourian Friday that states and cities considering authorizing gambling ought to first consider the costs associated with the venture.

On Thursday, Goodman released his two-year study of the economic impact of casinos.

The study found that while casinos create jobs and boost tax revenues, they also siphon off customers from other businesses.

The study also concluded that casinos fuel crime and gambling addictions, distort property values and require costly new government bureaucracies to regulate them.

"An area that's relatively stable economically ought to think very hard about the fragility of its existing economy before it decides to go into gambling," said Goodman. "It could have a severe impact on the community's economy."

The University of Massachusetts report said the more gambling is legalized, the more people become addicted to the dice, cards and colorful machines. High school- and college-age youths are particularly susceptible to gambling addictions.

The study comes as states throughout the nation are in the midst of a resurgence in legalized gambling. In Missouri, voters will choose April 5 whether to authorize riverboat gambling in the state.

In 1992, voters approved legalized riverboat gambling in Missouri, but the Missouri Supreme Court has since ruled that aspects of that law unconstitutional.

The Constitutional amendment on the April ballot would again authorize riverboat casinos. Some two dozen Missouri cities already are seeking casino licenses.

Goodman said the second state-wide vote is a good opportunity for voters to take a second, harder look at riverboat gambling.

He reported that experts contend that once a state becomes hooked on the tax revenue from casinos, it is difficult to control gambling's political influence. Goodman said he was inspired to do the study because of an overall lack of data regarding gambling's economic impact on an area.

The report, which was funded by the Aspen Institute and the Ford Foundation, said that by 1992, money from legal gambling in the United States totaled $30 billion -- more than $100 for every man, woman and child. Between 1982 and 1990, the money spent on legal gambling grew at almost twice the rate of Americans' personal incomes.

And with the spread of gambling to new markets -- Mississippi, Missouri, Illinois, Iowa, Indiana and Minnesota -- the money isn't being spent only in Nevada and New Jersey. In Minnesota, for example, people spend more on gambling than they do buying clothing and shoes, the report said.

But the drawbacks are many. In Minnesota, money spent on restaurants within a 30-mile radius of casinos with food service fell by up to 50 percent. And in the four years after casinos came to Atlantic City, the number of retail businesses in that town dropped by a third.

But Goodman said the potential tax revenue from casinos can be an overpowering lure, particularly for depressed areas.

"If you're going to throw them a rope, they're not going to look at what's holding the rope," he said. "They're going to grab it."

The report notes several trends among cities with legalized gambling, including:

-- In the process of going into the gambling business, governments have shifted from being gambling regulators to being the leading promoters of gambling in this country. The net effect has been an increase in the number of people who gamble.

-- One of the most significant consequences of the expansion of legalized gambling is that it's a very difficult decision to unmake.

A politician who led the battle to legalize gambling in Atlantic City said, "Casino gambling is not a `try it and see' experiment," reported Goodman. "Once the casino opens and the dice begin to role, gambling creates an instant constituency. People depend on it for jobs. Governments depend on it for revenues."

-- While the gambling industry has indeed created many jobs in gambling enterprises and related businesses, by diverting consumer dollars into gambling, it also has led to a decline in jobs and in revenues from other businesses.

The shifting of large amounts of consumer spending to gambling has "cannibalized" other businesses, Goodman said.

"Those businesses associated with the entertainment industry are the first hit -- restaurants, bars and movie theaters," he added. "Then, the clothing sales, car sales, furniture sales begin to lag.

"Money for gambling is usually diverted from people's discretionary expenditures," he added. "Not only are dollars diverted from other products and services, but governments often also lose sales taxes which would have been spent on those products and services."

Margo Vignola, an entertainment analyst at Solomon Brothers, called gambling a "zero-sum game" in the report.

"The riverboats don't necessarily stimulate demand for entertainment," said Vignola. "They replace something else." Money spent on a slot machine, she said, is money not spent on other entertainment.

Goodman said the key to avoiding the "cannibalization" of existing businesses is for the casinos to attract tourists from outside the region -- something that's less likely as the industry becomes more competitive nationwide.

"Only new spending associated with a gambling venture, like spending by tourists who come into a region to gamble or new jobs, actually brings new money into the local economy," Goodman said.

(Some information for this article was provided by the Associated Press.)