Although it creates no output, gambling does nevertheless absorb time and resources.
entertainment dollars spent on a movie, for example, largely generate more movies, and
When pursued beyond the limits of recreation, where the main purpose after all is to
"kill" time, gambling subtracts from the national income. The second economic
disadvantage of gambling is the fact that it tends to promote inequality and instability of
incomes." PAUL A. SAMUELSON, ECONOMICS 245 (10th ed.). Furthermore, Professor
Samuelson observed that "[j]ust as Malthus saw the law of diminishing returns as
underlying his theory of population, so is the 'law of diminishing marginal utility' used
by many economists to condemn professional gambling." Id. at 425.
.............The concern of the legalized gambling interests over "market saturation" is
largely a non-issue. From the governmental perspective, focusing on this issue misdirects
the economic debate, because fears of market saturation are predicated upon the
unwarranted assumption that legalized gambling operations constitute regional economic
development--which they do not. In reality, legalized gambling operations consist
primarily of a transfer of wealth from the many to the few--accompanied by the creation
of new socio-economic negatives. It is well-established that the societal and economic
costs to the taxpayers are $3 for every $1 in benefits.
.............These issues should first be examined from the strategic governmental
perspective. In this context, the inherently parasitic manner in which legalized gambling
activities must apparently collect consumer dollars to survive is frequently described as
"cannibalism" of the pre-existing economy--including the pre-existing tourist industry.
According to the skeptics of legalized gambling activities, this industry-specific
phenomenon means that in comparison with most other industries, legalized gambling
activities must a fortiori not only grow as rapidly as possible, but also grow as
expansively as possible. John W. Kindt, Legalized Gambling Activities: The Issues
Involving Market Saturation, 15 N. ILL. U.L. REV. 271-306 (1995). See also John W.
Kindt, The Negative Impacts of Legalized Gambling On Businesses 4 U. MIAMI BUS. L.J.
93-124 (1994) (lead article).
.............In California and Nevada: Subsidy, Monopoly, and Competitive Effects of
Legalized Gambling, the California Governor's Office of Planning and Research
highlighted in December of 1992 "the enormous subsidy that Californians provide to
Nevada through their gambling patronage" and concluded that "Nevada derives an
enormous competitive advantage from its monopoly on legal gambling." The report
summarized that "[g]ambling by Californians pumps nearly $3.8 billion per year into
Nevada, and probably adds about $8.8 billion--and 196,000 jobs--to the Nevada
economy, counting the secondary employment it generates" and that this was "a direct
transfer of income and wealth form California to Nevada every year." Thus, the Nevada
economy appears to constitute a classic example of a legalized gambling economy
"parasitically" draining or "cannibalizing" another economy (primarily Southern
California). CAL. GOVERNOR'S OFF. PLAN & RESEARCH, CALIFORNIA AND NEVADA:
SUBSIDY, MONOPOLY, AND COMPETITIVE EFFECTS OF LEGALIZED GAMBLING ES-1 (Dec.
.............The gambling interests argue that the dollars they take in are "entertainment
dollars" or "recreational dollars." This observation is valid with regard to approximately
35% of the "gambling dollars," but it is invalid with regard to the remaining 65%.
Opponents of legalized gambling argue that there are also differences because the
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