casinos

Economics Economics Questions
1

so my town is building a new casino, and a horse race track just added some slot-like gambling machines. all the newspaper can do is talk about all the jobs (both temporary construction and permanent casino employees) these projects create, and how much in taxes they will bring in. i personally don’t care for gambling, but at the same time don’t care if other people throw away their money doing so. i was thinking about writing a letter to the editor on the topic. something along the lines of:

"imagine going to a casino. you spend $250, and win nothing. $100 goes to various taxes. another $100 goes to the casino owners to pay employees, and for maintenance, etc. the last $50 goes to the pool to be won by others. so all that happened, was your $250 is now spread amongst more hands.

now imagine going to an apple store. you spend $250 on an ipod. $75 goes to various taxes. another $100 goes to apple and its employees. the remaining $75 goes towards building another ipod, to replace the one you took out of their stock. this last $75 is now in the hands of the owners of the raw materials needed to build that ipod. so in this case not only is your $250 now spread amongst more hands, the world has another ipod.

the more ipods produced, or tvs, cars, pianos, books, washing machines, whathaveyou, the better our standards of living. the only thing casinos produce is good times, which shouldn’t be ignored. although, neither should the opposite end of the spectrum, where gambling creates depression or losses of life savings, etc.

people should be free to do what they please with their hard-earned money, but let’s not get carried away with the supposed economic benefits of casinos, that produce nothing; and can only take money from hands that would otherwise be spending it on companies that do produce something, increasing our standards of living."

is my logic wrong here? what are your thoughts on casinos, and gambling in general?

2

They do produce something for those that enjoy their services. However I agree with you on the sillyness of it all. If the money from the Casino is siphoned off elsewhere on a larger scale, I am sure some providers of longer lasting services/products in that community will be pretty damn pissed once people there spend far less on it then before.

3

Gambling enables the lucky few to gain socio-economic power that they do not deserve. The individuals who gamble do not create any wealth, rather it is a redistribution of wealth, similiar to welfare, except this one is chance-based and the payoff is much higher.

4

So does any consumption of goods. In this case visiting and gambling with money at the casino.
I agree that it only has some low level entertainment value, no practical value and it may get individuals into trouble that may have an addiction problem. But the question would remain:

What ought one do about it?

5

The government has no right to pick winners or losers, or define “healthy” businesses vs. “frivolous or silly” businesses, and neither do you.

Only the market can decide that. If the casino stays in business that means there are enough consumers willing to keep them in business regardless of what you personally think of that … or any other industry for that matter.

It is just another variation of Marxist thinking to want to divide businesses into “productive” or “worthwhile” vs. frivolous or “produces nothing.” Who is the designated Emperor that will decide on these definitions?

There is no such thing as a business that produces nothing. ALL businesses provide a product that a willing consumer values more than his money. How do you know that the casino employee will not take his check and buy an I-Pad and contribute to your “best case secenario” of productive businesses? Or that the casiono owners do not use some of their research to find ways to please more customers, maybe by adding better restaurants or childrens playgrounds or exercise rooms? Who are you to decree that I-Pad research is somehow more holy or worthy than casino research?

Should stockholders vote to disinvest their stock in lucrative casinos because they are somehow umworthy and rather invest in the highly competitive computer industry for lower profit? Then when they make less money on their stock what happens, they buy less I-Pads?.

6

you sound defensive. i clearly stated in my op i don’t care what people do with their honestly earned money. i’m not here to discuss the morality of gambling (i consider it amoral). i’m here to discuss the economics of it. you claim it’s good because the casino employee will take his check to buy an ipad. what if a social security payee uses his check to buy an ipad? does that make the taxing process efficient? as i stated, casinos only produce happiness in willing customers. they produce nothing tangible or of objective value. it’s simply an inefficient means of distributing money, and is focused on - mostly - poor, ignorant, unintelligent people hoping to “strike it rich”.

7

Two responses:

You say for this argument you don’t care what people do with their money. Clearly you care - if only to the extent that you have some inner belief that money spent on something "tangible’ or of “objective value” is somehow of more importance than other money or pursuits. - In a free market society-it is utterly irrelevant if you under your circumstances believe a transaction to be worthy or not. It only matters if the buyer and the seller feel that they both got value - defined by them and them only -as long as no coercion enters the picture! (like taxes taken by force).

Second point. You think I said that it is “good” because he will buy an I-pad. That’s not what I said. I said it is impossible to classify as “good” or “bad” based on the original transaction. You have no way of measuring where it goes after that. So even if you want to assign some moral value to it , which I don’t, you don’t know if more casino money ends up being “productive” vs. other money like charity money or waiters tips or a football players money. My point is you just cannot measure that … AND that for the study of economics it is irrelevant. That would be the study of something else, like ethics or psychology.

8

Said a different way: Consumers can only make their prefereces known by their actions. There is no person, or group of persons, or computer, or group of persons with computes can determine the enormously complex prefereces of another person. So by going to the casino and using their property, people are identifying this activity as being more preferred than some other activity.

The part of the casino I hate is this semi-private/semi-government situation where the casino gets a little monopoly provided government gets a kickback. The whole thing is rife for corruption and forces the casino to give worse payouts as it has to kick money back to the government. Now this is something that you should be mad at.

9

What if the $100 in tax revenue went into a college scholarship fund? Would that make slot macines more practical?