Next week, the city council in Lansing, Mich. is expected to vote on a proposal for a $245 million casino for the city’s downtown.
The proposal is just the latest in what’s starting to look like a casino-boom in the Midwest. Both Toledo and Cleveland have new casinos opening in May. The Detroit Free Press reported last week that there are no fewer than 22 casino proposals in Michigan right now. And Chicago mayor Rahm Emanuel is still holding out hope for Illinois leaders to approve gambling in his city.
At first glance, it’s easy to see why casino gambling is such a hot topic right now. Casinos bring hundreds of millions of dollars in new investment, including construction jobs and long-term jobs for dealers, waiters, cooks and others.
Also, research has shown that regions in economic stress are more likely to use gambling as an economic development tool. Here in the Midwest, there’s been plenty of economic stress.
But it’s not exactly a settled issue whether casino gambling actually creates economic development.
So why all the interest?
First, consider the research. Casino gambling can be a contentious issue, and, as with all contentious issues, there is a lot of conflicting information on both sides. But it seems clear that casinos can create economic development. Just look at Las Vegas.
But not every region that gets a casino turns into Las Vegas. Just look at Gary, Ind.
The Federal Reserve Bank of Boston took a look at this issue in 2006, as New England states were considering more casinos. The bank concluded:
In general, whether a casino will benefit or harm a local economy hinges on whether the casino is likely to attract tourists to the region … Casinos that cater to a local market generally do not bring outside money into the economy through the spending of their patrons. In fact, such casinos may have no net ancillary economic impacts. Residents patronizing such casinos may simply substitute gambling for other goods and services.
This is a huge point to consider. If everyone who spends money at a casino would have otherwise spent that money at a local restaurant or movie theater, then there’s no real economic benefit from the casino. It’s just moving entertainment spending – and jobs – from one place to another.
It’s the out-of-towners who make the difference.
So, to really get a sense of whether casinos can improve the Midwest economy, you have to consider not just how much money is being spent at the casinos, but where that money is coming from.
The answer, in many cases, is that the money is just coming from other Midwest cities.
When our own Dan Bobkoff looked into the plans for a new casino in Cleveland, he found that business leaders weren’t hoping to take tourists away from Las Vegas. They were hoping to keep their own residents from going to Detroit and Pittsburg.
And, as partner station WBEZ has reported, Chicago mayor Rahm Emanuel is very clear about why he wants a casino in the Windy City: to keep Chicagoans from spending their gambling dollars in Indiana.
“I can’t continue to afford Chicago to have gambling … in Hammond, Ind. and lose 20-25 million a month,” Emanuel said, according to WBEZ.
This helps explain why you hear mayors talk about casinos a lot more than governors. Thirty years ago, if people in Lansing wanted to gamble, they’d go to Las Vegas or Atlantic City. Now they can go to Detroit or Mt. Pleasant. Chicagoans can go to Indiana.
And it’s a lot more irritating for mayors to see that money going right next door, instead of all the way across the country. Casinos in more cities means more cities want casinos.
The mayors and city council members that are backing casino proposals in the Midwest aren’t really trying to build a tourist empire. They’re just sick of seeing money leave the city.
They’re trying to hold on to what they got.
It doesn’t make a difference if they make it or not.
They’ve got [their own residents] and that’s a lot [for economic development].
They’ll. Give. It. A. Shot.