Independent Casino Study Takeaways

Central Atlanta Progress and the Atlanta Downtown Improvement District conducted an independent study to provide relevant fact-based data about the potential impacts of proposed casino gaming in Georgia (January 2017). The legislation, as currently proposed, does not consider many of the report’s key findings and recommendations. Following are key takeaways from the study, and the full study can be found here: http://www.atlantadowntown.com/_files/docs/orgia---cap_adid-final-report-1-2017---reduced.pdf.  

Key Takeaway 1

In the short run, casino gaming could generate positive economic impacts, however these have shown to not persist and there are many examples of initial projections and estimates not being met. In four of the case study cities (Cleveland, New Orleans, Pittsburgh, and Detroit), performance of the downtown casinos has been flat to modest, with casino revenues in two of the cities declining significantly over the analysis period, a time when general tourism was growing considerably. Casinos have promised to bring new jobs and increase tourism, redevelopment, and additional investment, but the ability for casinos to deliver on these benefits has shown mixed results.

Key Takeaway 2

Casinos draw a majority of visitors (and revenue) from local residents in their immediate area and the close-in regional market, not out-of-market tourists. For cities like Atlanta with existing tourism appeal, a casino might augment but is not likely to create a big increase in new tourism appeal. An in-state gaming facility would presumably capture leakage of Georgia’s gambling spending out-of-state, but it has not been proven that Georgia’s gamblers would strictly gamble in Georgia. 

Key Takeaway 3

Concerns around spending substitution are legitimate, but researchers have found mixed effects contingent on criteria such as size, location, and program of the casino. It is unclear how much of the estimated casino revenue would be “new” money or a diversion of other non-casino discretionary spending (from local shops, theaters, and restaurants). The greatest likely effect is on leisure and entertainment spending, therefore Atlanta and other cities in Georgia should carefully consider the potential impact of a casino entertainment and retail component on surrounding businesses. Tax revenue substitution can occur at the county or municipal level resulting in potential fiscal losses.

Key Takeaway 4

Costs – social, economic, and municipal – will be incurred by the local community. The best practices to mitigate them are regulation and legislation. The proposed legislation allocates between 1-3% of total state revenue to local host communities in Georgia, which is significantly lower than states such as Pennsylvania (7-14%), New York (10%), and Massachusetts (6.5%). The proposed legislation allocates $250,000 in the mitigation of “social costs” and is restricted only to problem gambling. As problem gambling affects around 1% of the population, that would be $2.43 for each of the approximately 103,000 Georgians that could need help. While research results on crime vary, it is estimated that in Atlanta crimes would be likely to increase by about 8% if a casino was built in the city.

Key Takeaway 5

There are several types of social impacts that need to be considered and planned for, including problem gambling, crime, bankruptcy, political corruption, and other quality of life issues. The extent of these impacts can vary due to several factors, including size and location of a casino, as well as mitigation efforts in place in the surrounding areas. Quality of life issues, such as homelessness, disorderly conduct, and human trafficking, are largely understudied in current published research. Therefore, funding for related mitigation efforts should be flexible and responsive to the impacts identified in the ongoing research to ease any problems created or exacerbated by the casinos.

Key Takeaway 6

Without negotiating specific objectives, communities are unlikely to see a positive impact from gaming. In the four case cities studied, the casinos created additional jobs in the hospitality sector, but did not increase employment in any other industry. Case study cities reported a modest impact on hotel room demand, but since most casino visitors come from a 2-hour radius, it is unclear how many additional room nights would be generated. As well, the casino resorts will most likely have a hotel component, so local hotels would see little increase in demand. Due to their nature as self-contained venues, casinos have not been a major catalyst to other development, therefore the proposed development should leverage, not recreate, the surrounding hospitality and leisure assets. While casinos can be effective for driving initial investment, specific objectives need to be explicitly identified and made a part of the negotiation at the local community level.

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