Gambling with Paradise

The Effect of Gambling on Low-Income Individuals, Families and Communities

February 2013

Executive Summary

While many states have looked to legalized gambling, lotteries and casinos to bolster their budgets, the effects of gambling on low-income and disadvantaged individuals have received inadequate consideration.

Empirical evidence from around the country demonstrates the disproportionate negative impacts that legalized gambling and lotteries have on low-income individuals.

Legalized gambling can exacerbate social problems, often at the expense of disadvantaged people.

The presence of casinos tends to increase problem or pathological gambling, particularly for residents of disadvantaged, low-income neighborhoods. Excessive gambling is associated with a variety of social problems, including job loss, substance abuse, crime, divorce, child abuse and neglect, domestic violence and homelessness—all of which worsen the plight of people in poverty. Moreover, casinos have also been shown to increase crime in the surrounding area. The state will need to compensate for these social ills by increasing policing, social services and establishing programs to deal with problem gambling.

Lotteries are highly regressive revenue sources.

Not only do low-income people fail to receive many benefits from gambling revenues, but they also bear the brunt of gambling’s economic harms. Gaming and lotteries function as a regressive “tax” on low-income people who ultimately pay higher percentages of their income toward the fees and taxes levied on gambling.

Lotteries are a major concern because they are readily accessible throughout the state and low-income people have consistently been shown to spend a larger share of their money on lottery tickets than do higher earners.

Legalized gambling will not solve state budget shortfalls.

Finally, legalized gambling and lotteries are unlikely to solve Hawaiʻi’s economic problems. Gambling is not a sustainable source of revenue and, in Hawaiʻi’s unique tourism economy, money spent on gambling is money not being spent on other forms of recreation and entertainment.

Based on other states’ models, even if the state were to realize economic gains, gambling revenue is unlikely to fund services for the poor. Promises of job creation are also overblown, given that most gaming-related work is in the service sector. Nationally, the average hourly wages for jobs in the casino industry are $11.30—not close to matching the $15.44 needed to meet the self-sufficiency standard for a single adult.

Moreover, as shown in Nevada, gambling offers no sure protection against a depressed economy.