Addiction is only part of gaming’s heavy social cost

Susan Gluss

Sunday, October 24, 2004

“They built casinos on the backs of guys like me.” So begins the remorseful tale of Frank, a 53-year-old college-educated health care professional in the South Bay who has tossed away $500,000 in a lifetime of betting. And he’s right: The gambling industry earns from 60 to 80 percent of its profits from the 10 percent of players who are heavy bettors.

“When you gamble, you lose,” Frank says, and the odds back that up. But it doesn’t stop the insidious obsession. Frank gambled away the rent, mortgage, car payments and two marriages. He lives hand-to-mouth, paycheck to paycheck. He says he’s hit the bottom of the barrel.

And this is gambling’s promise? Granted, only 3 to 5 percent of players become problem gamblers who can’t stop, or pathological gamblers who lie, cheat or steal to keep playing. But we all pay the social and financial consequences. Dearly.

One of the leading analysts in the field, economist Earl Grinols, author of “Gambling in America: Costs and Benefits,” studied the rates of crime, bankruptcies, lost workdays, domestic violence, illness, divorces and more, in counties with — and without — casinos. Even using conservative estimates, he found that social costs of gambling outweigh benefits 3 to 1. A net loss.

Just one pathological gambler costs society about $11,000, says Grinols. He estimates the annual cost of gambling to the U.S. economy at between $40 billion and $50 billion, nearly half the cost of drug abuse. The bottom line: Gambling takes far more than it gives.

Entire communities can suffer. Although casinos create a host of new jobs at first, those gains are typically offset by layoffs and poor sales in area businesses. Restaurants lose customers to the casino’s bars and cafes. Dollars spent by townsfolk on, say, refrigerators, cars, or clothes disappear into a slot machine vacuum.

Gambling mecca Atlantic City is a tale of two cities: one of wealthy casinos staffed mostly by an outside workforce, and the other a city of boarded-up buildings, pawn shops and a largely unemployed minority community.

In Missouri, gambling tax revenue topped $242 million in 2002 — a seeming windfall. But a group opposed to gambling, Casino Watch, says the state lost more than double that amount — a whopping $572 million — in gambling-related business failures, crime, unemployment, social service costs and more.

This is gambling’s real story. As the wagers spread, so do the damages.

In Auburn (Placer County), a husband writes of the financial devastation his family faced after the nearby Thunder Valley casino opened. Initially, he and his wife thought it would be just another entertainment spot. But they quickly became addicted. In a letter to the casino and to the anti-gambling group, Stand Up for California, he says his wife gambled for more than 18 hours at a time as many as three times a week.

She sneaked money out of their accounts and begged and borrowed large amounts of cash from friends to keep playing, hoping she’d win it all back. “Now that compulsive gambling has hit home,” he writes, “it is obvious to me that many people … are hurting badly from this addiction.

“I feel as though I have been robbed and taken advantage of by your casino,” he continues, and asks that it be permanently closed.

Proponents say pathological and problem gamblers would exist anyway, with or without legal betting. But South Carolina tells a different story. Slot machines were banned there by court order in July 2000. At the time, the state had 32 active Gamblers Anonymous groups, with about 40 members each. Just six months after the ban, two-thirds of the groups had disbanded. Membership fell dramatically in the rest, to as few as one or two. And the calls to help lines in Myrtle Beach dropped from 200 a month to zero.

Why, opponents ask, encourage a pastime that can destroy people’s lives? “Patrons of Disney World don’t lose their life’s savings in a visit. But casino high-rollers do,” says Grinols. “Moviegoers don’t typically consider suicide on the drive home. But desperate gamblers take swan dives off casino roofs.”

According to the Department of Justice, Americans wager nearly $50 billion a year — more than they spend on movies, sporting events, theme parks, cruise ships and the recording business combined.

The gaming industry has stashed away a pot of gold and is gaining ground through political donations and lobbying. Gambling flacks laud the pacts Gov. Arnold Schwarzenegger is cutting with Indian tribes, for 15 to 25 percent of casino profits. But Grinols says that figure doesn’t even come close to covering gambling’s costs. At a minimum, he says, states need 50 percent of casino profits to cover the social wreckage.

This article appeared on page E – 1 of the San Francisco Chronicle