ECONOMIC IMPACTS OF SLOT MACHINES FOR THE ERIE COUNTY AREA
-
Upload
kirby-fletcher -
Category
Documents
-
view
30 -
download
0
description
Transcript of ECONOMIC IMPACTS OF SLOT MACHINES FOR THE ERIE COUNTY AREA
ECONOMIC IMPACTS OF SLOTMACHINES FOR THE ERIE
COUNTY AREAWilliam N. (Bauschard) ThompsonProfessor of Public Administration
University of Nevada, Las Vegas [email protected]
702-895-3319Pennsylvania State University, Erie
Erie, PennsylvaniaAugust 23, 2005
Top Line:Annual Economic loss of $104,929,356
Bottom Line
ECONOMIC IMPACTS OF SLOTMACHINES FOR THE ERIE COUNTY
AREA• 1. It is About Trees. NOT!• 2. A Frank Sinatra Story• 3. Stonehenge, Rocket Science, Brain Surgery, Bath Tubs • 4. Las Vegas is Economically Successful
• a. Inputs: History, Synergy• b. Outputs: Eyes on the Prize
• 5. No Such Luck: South Dakota• 6. Will the Erie Bathtub Hold Water? • 7. The Mathematics
• a. How Much Money?• b. Whose Money? Where Do They Live?• c. Where the Money Goes: Taxes, Labor and Expenses, Profits • d. Externalities: Crime/Compulsives
• Bottom Line: A Negative Number • Annual Economic Loss: -$104,929,356
GAMBLING ECONOMICS IN A BATHTUB
WHERE THE MONEY COMES FROM AND WHERE THE MONEY GOES
1-2. Source of Gambling Funds; 3. Profits to outside owners; 4. Profits reinvested in casino location; 5.. Jobs; 6. Purchase of supplies; 7. Taxes; 8. The social cost of pathological gambling; 9. The costs of gambling-related crime, 10. The dirt ring-we don't see it if the water level is rising
From: William N. Thompson, Gambling in America: An Encyclopedia of History, Issues, and Society, Santa Barbara: ABC-Clio, 2001
8.
WILL THE ERIE BATHTUB HOLD WATER?
• How much money?
• Gambling (only) revenues
4000 machines @75,000 = $300,000,000
• Five Million Visits@ $60 Per Visit
WHERE THE MONEY COMES FROM:
• *Base population Adult
• Erie County 280,000 196,000
• Crawford/Warren 133,000 93,000
• Ashtabula 103,000 72,000
• Chautauqua 138,000 97,000
• TOTAL 654,000 458,000
WHERE THE MONEY COMES FROM:
• Casino Visits: 6 for base= 2,748,000
1 for surrounding area= 2,252,000
• Play per visit: $60
• Revenue Source
Base Area 458T x 6 x 60=$164,880,000 Surrounding 2,252 x 60 =$135,880,000
WHERE THE MONEY COMES FROM:
• TOTAL 5 mil visits x 60= $300,000,000
• LOCAL DIRECT Discount 10% replacing current gambling =
$148,392,000 (49.7%)
• EFFECTIVE NEW MONEY= $151,608,000 (50.3%)
WHERE THE MONEY GOES
• Expenditures Stays/Area Leaves/Area• Tax-State 34% $0 $102,000,000• Local Tax 17% $51,000,000 $0• Labor 16.8% $34,632,000 $15,768,000• Machines 6.7% $0 $20,000,000• Other Supl 5% $7,500,000 $7,500,000• Building 4% $12,000,000 $0• Admin/adv 4% 8,000,000 4,000,000
• TOTAL EXP 87.8% $113,132,000 $150,268,000
WHERE THE MONEY GOES• Total Expenses 263,400,000 (87.8%)• Profits 36,600,000 (12.2%) LEAVES
Stays Leaves• Distrib 100% $113,132,000 $186,868,000
(37.7%) (62.3%)
• Local Money IN $148,392,000 (49.7%)• Money RETAINED Local $113,132,000 (37.7%)
• LOCAL LOSS (-$35,260,000)
• New Money OUT/IN $151,608,000 (50.3%)• Money LEAVING $186,868,000
• LOSS TO OUTSIDE +$35,260,000
LABOR EXPENSE (NOTE)
• (Explanation Labor 16.8% 50,400,000) 1200 jobs salary 30,000, fringes (include social security 12,000)minus 5,040,000 social securityminus 3,600,000 1/2 of fringe 20%minus 1,728,000 96% of 5% state taxminus 5,400,000 15% federal taxMINUS 15,768,000
• STAYS 34,632,000 LEAVES 15,768,000
EXTERNALITIES
• The Proposed Slot Machines represent a DIRECT economic loss of
• $35,260,000 to a local area of Erie County and four surrounding counties.
• But It’s Worse--There are Indirect Losses Too
EXTERNALITIES• Social Costs*• Crime @$17x 458T= $7,786,000 (Casino related crime costs local
residents $17 per year)• -----------------------• Pathological (.006--x 458T=2748 x $10,053)
=$27,625,644• Problem (.007--x 458T=3206 X 4926)
=$15,792,756• ------------------------• TOTAL............$51,204,400• (Econ.Loss 33.6% = $17,204,678; Govt.Loss 7.2% = $3,686,717)• *A "Social" Cost represents a loss that a gambler imposes on an unwilling
(non-gambling) fellow citizen. Some of the loss becomes a loss to governments, and some of the loss (33.6% of the social cost) becomes a loss for the entire society.
DIRECT AND INDIRECT ECONOMIC LOSS
• -35,260,000• -17,204,678• LOSS to ECONOMY DIRECT $52,464,678• But It’s Worse, Isn't it? Proponents LOVE to talk about
the multiplier effect of dollars as they spin around in the economy.
• Guess what? The economic loss represents money THAT WOULD HAVE SPUN AROUND if it would have remained in the Erie Area. A conservative multiplier of 2 tells us that by having a slot machine casino (again considering only the gambling revenue) in the Erie Area represents an annual economic loss of $104,929,356
• Economic Impact Loss -$104,929,356