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CHAPTER FIVE: THE SOCIAL IMPACTS OF GAMBLING

5.1 Although a considerable amount of data - albeit of a variable quality - on the social impacts of gambling exists from an international perspective, the evidence base for the U.K., and particularly Scotland, is practically non-existent. In addition, as has been noted already, much of the available material is methodologically weak and open to interpretation. The social impacts of gambling, and especially casino gambling, are even less straightforward than economic impacts to quantify and, to date, many studies have produced inconclusive or contradictory results.

5.2 Individuals with gambling problems often experience a range of other problems, including drug and alcohol and mental health problems in what are termed 'co-morbid' relationships. For example, the Australian Productivity Committee reported that around one in five severe problem gamblers suffers from alcoholism or other dependencies. Other studies have found similarly elevated rates of conditions such as alcoholism, drug addiction, mental health problems, homelessness and criminal behaviour. Because of this, it can often be difficult to disentangle the effects of gambling from those of a range of other factors. While problem gambling may exacerbate other dependencies, these in turn may exacerbate problem gambling. A variety of social impacts have been associated with problem gambling, and these are reviewed here.

5.3 Different forms of gambling have different impacts and, from previous chapters, it should be noted that the most serious adverse impacts are associated with EGMs, betting and casino table games. The first section of this chapter discusses the impacts of gambling in a general sense, while the second section moves on to consider studies that have examined the specific impacts of the introduction of casinos.

Social and Personal Impacts

5.4 The Australian Productivity Commission found that between five and ten people are affected by every individual who is a problem gambler, including spouses, children and other family members, friends, co-workers and employers as well as those involved in financial relationships. The financial stress, lying and arguments that can develop around problem gamblers lead to significant pressure on families, with one in ten Australian problem gamblers saying that their behaviour had led to relationship breakdown, and one in ten of those in counselling admitting it had led to domestic violence. In Australia, problem gambling is estimated to be involved in some 1600 divorces annually.

5.5 Reduced familial stability and household income can also affect the children of problem gamblers, who may display behavioural problems and problems at school ( PC 7.1-7.33). Other studies have borne out these findings. For example, one found that the children of problem gamblers have a higher than normal involvement with addictive substances, more psycho-social problems, and more problems at school than others (Jacobs et al 1989). Wives of problem gamblers report higher than average rates of depression, verbal and physical abuse and suicide attempts (Lorenz and Jaffee 1988).

5.6 When individuals are preoccupied with ways in which to find the time and money to gamble, their work life tends to suffer, although the Australian evidence found the effects of this to be relatively slight. Although 50% of severe problem gamblers in counselling reported having lost time at work due to gambling, the majority with less severe problems reported seldom losing time at work, and only some 19% had done so.

5.7 Other studies have found that problem gamblers report higher than average incidences of job loss, and those who remain in work report lost productivity through lateness, non-attendance and preoccupation with gambling (Ladouceur et al 1994). Problem gamblers also tend to suffer greater ill-health than the general population, including conditions such as depressive moods, insomnia, anxiety, headaches and stomach problems, which may also contribute to absenteeism ( PC 1999; Gerstein et al 1999).

5.8 The Australian Productivity Commission found that around 60% of those with gambling problems indicated that they had suffered depression as a result of gambling, and around 9% had considered suicide. Suicidal ideation rose to 60% of problem gamblers in counselling.

5.9 Research has found that Las Vegas has the highest rate of suicide in America, for both residents and visitors (Phillips 1997). While the author of the study attributed the rates to casino gambling, other interpretations have pointed to the broader factors, such as the rapid growth of cities like Las Vegas, which leave many individuals isolated and without a sense of community, and the unrealistic expectations and prior problems of individuals who move there (Bhatt 1998). Another study of gamblers attending Gamblers Anonymous in the U.S revealed that 13% had attempted suicide, compared with 1.1% for the general population (Frank et al 1991).

5.10 As with many of the social and personal impacts involving gambling, causal relations can be difficult to establish here. For example, as the Productivity Commission point out, it may be the case that an individual is depressed, goes on a gambling binge with devastating financial consequences, and eventually considers suicide. Is gambling here the cause or an effect of initial depression? However, despite the complexities involved in disentangling the various contributory factors to such scenarios, the Commission concluded that the weight of evidence showed that gambling did have distinct effects, stating: "In summary, there can be little doubt that there are suicides linked to gambling - it probably lies somewhere between 35 and 60 a year" ( PC 1999: 7.23).

Financial Problems and Indebtedness

5.11 For obvious reasons problem gamblers are very likely to suffer financial problems. The British study of casino patrons found that 87% of the severe problem gamblers and 65% of the problem players had been forced to turn to others to relieve a desperate financial situation caused by gambling, whereas none of the social players had done this (Fisher 1996). Forty per cent of the severe and 52% of the problem gamblers had sold their possessions to pay gambling debts, compared with 2% of social gamblers. Forty six per cent of the severe and 25% of the problem gamblers had committed illegal acts to gamble and/or pay gambling debts, compared with only 1% of social gamblers. In the U.K., the average level of debt of problem gamblers receiving treatment from GamCare in 2003 was £28,000 ( GamCare Services Report 2003).

5.12 The NORC survey found that almost 20% of pathological gamblers had filed for bankruptcy, compared with rates of 5.5% for low risk gamblers and 4.2% for non-gamblers. A similar percentage - 22% - of Gamblers Anonymous members had declared bankruptcy ( NGISC 1999: 7-16).

5.13 During the 1990s, the state of Iowa introduced new forms of gambling, so providing the conditions for a 'natural experiment' on the impacts of the activity. The director of Consumer Credit Counselling testified to the Gambling Commission that, before the increase in gambling outlets, 2 to 3% of clients attributed their credit problems to gambling. After the expansion however, the number had increased to 15%. Furthermore, the Commission established that bankruptcies in Iowa increased at a rate significantly above the national average in the years following the introduction of casinos, and that 19% of these bankruptcies involved gambling-related debt. There appeared to be a geographic dimension to this trend, with nine of the 12 Iowa counties with the highest bankruptcy rates having gambling facilities in or directly adjacent to them ( NGISC 1999: 7-16).

5.14 The Productivity Commission noted that a crucial aspect of the impact of problem gambling is the extent to which it represents a large or small share of total income, and found the ratios of gambling expenditures to incomes very high among problem gambling households. Gambling losses averaged around 20% of household income for problem players, compared with only 1% for recreational players. ( PC 7.47). For three quarters of problem gamblers receiving counselling, expenditure exceeded 20% of income.

5.15 In addition, levels of debt for such individuals are high: the Commission found an average debt level of over AU$10,000 for all clients in counselling. However, some of these had no debt at all, and so for those who had any, the average figure was nearer AU$ 17,000. Other studies have found levels of gambling-related debt of AU$ 4,564 for women and AU$ 33,158 for men (Dickerson et al 1995). In the U.S., a study of a group of gamblers receiving treatment found an average level of debt of just under $40,000 (Lorenz et al 1999).

5.16 The Productivity Commission noted that American evidence appeared to show bankruptcy rates several times higher than Australian studies, and speculated that these results may be picking up on other, confounding variables. In Australia around 1.3% of bankruptcies were related to gambling, meaning that only 0.1% of problem gamblers are declared bankrupt in any one year. However, the Commission noted that it is a criminal offence to become bankrupt as a result of gambling in Australia, and so there would be strong incentives for individuals to conceal the cause of their financial problems in these cases. As such, these figures could well be an under-estimate.

Crime

5.17 While relationships between the impacts of different types of gambling on crime rates are difficult to establish, those between pathological gamblers themselves and crime appears more clear-cut. Many studies have found that pathological gamblers commit more crimes in order to finance their playing. As access to funds becomes limited, many resort to illegal activities to pay debts, appease bookmakers, maintain appearances, and of course, provide more money to gamble with (Leiseur 1987; NGISC 1999: 7-13).

5.18 The NORC study reported that pathological gamblers had higher arrest and imprisonment rates than non-pathological gamblers, with a third of pathological gamblers having ever been arrested, compared with only 10% of low risk and 4% of non-gamblers. In addition, 23% of pathological and 13% of problem gamblers had ever been imprisoned. The study also calculated the costs associated with these figures, and estimated that pathological and problem gamblers accounted for $1,000 in excess lifetime police costs each. The 32% of pathological gamblers who had been arrested had cost $10,000 each ( NGISC 1999: 7-14). A survey of four hundred members of Gamblers Anonymous found that 57% had stolen to finance their gambling. Together, they had stolen $30 million, or an average of £135,000 per individual (Leiseur 1987; NGISC 1999: 7-13).

5.19 The Australian Productivity Commission found that around 1 in 10 problem gamblers had committed a crime because of their gambling, and that up to two thirds of problem gamblers in counselling had done so. The offences tended to be non-violent property crimes, such as theft, embezzlement and misappropriation, and the majority did not result in legal action, with around 40% being charged and convicted ( PC 1999: 7.67).

5.20 Very little research into the associations between crime and gambling has been conducted in the U.K.. One study of criminal offences among a group of Gamblers Anonymous attendees (Brown 1987) found that the types of crime associated with compulsive gambling were income generating and property-related, covering fraud, forgery, embezzlement and petty theft, at rates that were considerably higher than those amongst the general population. A recent study of offenders on probation found that 4.5% were classed as problem gamblers (Ricketts et al 2000) although it is not clear from any of this research exactly what the patterns of associations are, or what the relationships between offending, gambling and other deviant behaviours might be.

The Social Impacts of Casinos

5.21 Research that has examined the specific impacts of casinos, rather than gambling in general, was outlined earlier (see paragraphs 4.30 to 4.58 and 4.78 to 4.95. In general, this research has found that the location of casinos within a fifty mile radius (or, in one study, a ten mile radius) of an individual's home roughly doubles rates of problem gambling. This relationship has been measured in prevalence studies, and is also borne out by indicators of problem gambling such as calls to helplines and access to treatment. (Gerstein et al, 1999; Welte et al 2004; Emerson and Laundegran 1996; Volberg 1995). This section now turns to discuss studies of the impact of the introduction of casinos on individuals and communities.

5.22 First, it should be emphasised again that casinos are not homogenous, but are distinguished by a range of factors, including, crucially size and geographical location, which can result in very different impacts.

5.23 To begin with, casinos can vary greatly in size, from small enterprises with limited facilities, to enormous destination casinos, offering an entire leisure experience. In addition, they are built in a range of locations, from densely populated urban metropolises like Melbourne and Detroit, to out of town complexes, such as Foxwoods, to relatively sparsely populated regions throughout parts of Canada and the U.S.

5.24 Large 'resort' casinos, which are often located away from population centres in 'site-specific' venues and incorporate a range of leisure facilities, can attract large numbers of tourists, while smaller casinos, which are often located in more urban or suburban environments generally offer fewer facilities and have less potential for attracting tourists.

5.25 As the social costs of casinos tend to be exported to the areas where the gamblers who play them live, 'resort' and rural casinos are associated with the lowest social costs relative to economic benefits. Urban and suburban casinos, however, tend to draw large numbers of local residents to them, and so social costs remain within the community.

5.26 This means that casinos can have very different types of impacts, depending on size, location and local market. Unfortunately, few studies take these factors into account, either when reporting their results, or when attempting comparisons with other research findings, which make definitive statements on the impacts of casinos difficult to make. As with Chapter Four, the following discussion is therefore of the impacts of casinos in a general sense, although details of the relevant factors as listed above are included when available.

Social and Personal Impacts

5.27 As part of their work for the Commission, NORC analysed social and economic changes in 100 communities in the U.S. that lay within a 50 mile radius of one or more casinos between 1980-1997. They concluded that the casino effect was not statistically significant for crime, bankruptcy or infant mortality (the latter of which was the closest measure of child welfare they could obtain). They were careful to point out that this did not necessarily mean that no casino-related crime, bankruptcy or mortality existed, only that any such effects were too small to show up in their statistics, or that, whatever problems casinos may have generated may have been countered, over the long term, by other effects ( NORC 1999: 70). Their casino sample also showed a statistically significant decrease in unemployment (-12%), in income maintenance (welfare) dollars (-13%), and in unemployment insurance (-17%) when compared with towns which did not have a casino within a 50 mile radius.

5.28 NORC also conducted case studies of community perceptions of the impact of increased access to casino gambling. They randomly selected their sites within the U.S., on the criteria that selected communities had populations of at least 10,000, and lay within a 50 mile radius of at least one large casino. They then interviewed prominent individuals within the community, asking for their views on the impacts of new casinos across a number of areas.

5.29 They found that all but one of the communities reported an increase in debt and/ or bankruptcies. Although much of this was attributed to gambling losses, other explanations were considered. These included the possibility that casinos offered the promise of jobs and financial stability for disadvantaged individuals, who could then move into the community, bringing their existing problems with them, to attempt to build a new life. If the only work available were part time and service positions, their problems could be exacerbated and could lead them, eventually, into financial distress and bankruptcy.

5.30 In this sense, many respondents reported that one of the concerns of the community was the large number of working poor ( NORC 1999: 77). Although such findings cannot be taken as a measure of the impacts of casinos, they do illuminate the divergence between perceptions of casinos, and in this case, statistical findings on their impacts.

5.31 However, other studies have found increased bankruptcy rates. One examined personal bankruptcy rates by comparing a group of eight casino communities with a control group of communities that had none (Nichols et al 1999). Of the casino communities, only one possessed a resort casino. They found that casino gambling was associated with statistically significant increase in bankruptcy in seven of the eight communities. The only community that did not show an increase, and actually showed a decrease, was the single resort style casino in the sample, suggesting that the size of the venue could be a significant determinant of impacts.

5.32 Other studies have reported associations between bankruptcy and casino gambling. For example, Barron et al (2002) carried out a large scale longitudinal study, covering over 3000 U.S. counties between 1993-1999. Bankruptcy rates were rising generally during this time, and the researchers controlled for this and estimated that the presence of casino gambling increased bankruptcy rates by 5.4%. Unfortunately, the analysis did not distinguish between casino sizes, so the impacts of different types of casinos could not be estimated.

5.33 While some researchers have suggested associations between gambling availability and rising divorce and suicide rates, the relation of the latter to casinos has been contested. A recent study of eight communities that introduced casinos between 1991 and 1994 found no statistically significant increase in either suicide or divorce. It found that divorce rates were lower in three casino counties, higher in one and not statistically significant in four. Suicide rates were not statistically different between casino counties and control communities (Nichols et al 2004).

Crime

5.34 The issue of crime is often uppermost in many people's minds when considering the introduction of a casino. A considerable body of research, mostly from the U.S., indicate that the relationships around the issue are not straightforward. Some argue that casinos increase crime, others that they reduce it, and still others that they have no impact either way. For example, it is argued that, if casinos increase problem gambling and problem gambling increases financial problems, then individuals who suffer from these financial problems will turn to crime as a way out of their problems, and also to fund their gambling. It has also been argued that the large sums of money in circulation around casinos may attract organised crime, money laundering and petty corruption.

5.35 On the other hand, it has been postulated that casinos could reduce crime. Unlike most other economic developments, casinos contribute to their own regulation: they employ extensive security, providing their own controlled environments and screening patrons against lists of known criminal offenders. In addition, it is argued that if casinos increase employment, then local residents will be more affluent and so less liable to turn to crime. As is the case with many of the impacts of casino gambling, findings from studies themselves are often contradictory, and do not give clear-cut answers.

5.36 In studies that show increases in crime rates near casinos, it can be hard to know whether gambling has promoted criminality or whether the increased visitors to an area simply increase the number of people who might potentially commit or fall victim to crime. In addition, areas with casinos tend to experience a growth in population ¹⁰, which in turn can have the effect of elevating overall crime figures. Extra law enforcement brought in to deal with higher numbers of visitors may result in more arrests - but this could be due to more concentrated policing, not necessarily more crime.

5.37 Yet another difficulty concerns the focus of research itself: some studies examine street crime, some include family crimes, and others concentrate on white collar crime.

5.38 It can be difficult to distinguish between the effects of gambling and the effects of tourism in general. For example, Nevada has one of the highest crime rates in the U.S., although whether this is because of its high levels of tourists or the fact that it has high levels of gambling has not been resolved. Gaming-industry literature and websites often point to an increase in crime following the opening of Disney World in Orlando, Florida as evidence that casinos per se do not foster crime- although large numbers of tourists do.

5.39 A comprehensive study on casino gambling in Wisconsin (Thompson et al 1996) found that the only type of crime that showed significant increases either in counties with casinos, or in counties adjacent to those with casinos, was burglary, which increased by 6.7%. There were no increases in violent crimes. Higher rates of burglary were attributed to the growth in hotel rooms, linked to tourism in rural parts of the state, which created new opportunities for the crime. Other studies have shown that non-gambling resort complexes can expect an increase in burglary of 300% over five years (Miller and Schwartz 1998).

5.40 Atlantic City is generally reported to have experienced increased crime rates that have risen faster than the state average. However, this increase has been attributed to a 'tourist effect' rather than a 'casino effect'. Professor Jay Albanese, Professor of Criminal Justice at Virginia Commonwealth University, noted that the increase in crime in Atlantic City was offset by the increased average daily population of the city, and calculated that being the victim of a serious property or violent crime actually decreased in the city after the introduction of casinos (Albanese 1985; 1993).

5.41 He also noted that most studies of the casino-crime connection have tended to focus on street crime. These however, are most often committed by young males, aged 16-24, while casino patrons are typically much older than that. These types of opportunistic crimes may or may not be committed by problem gamblers. It is just as likely however, that petty criminals, drawn to increased numbers of tourists, hotel rooms, etc, account for them.

5.42 White collar crimes such as embezzlement, forgery and fraud on the other hand, may increase among gamblers who run into financial difficulties. However, there is little agreement over to what extent the introduction of casinos is responsible for this. Such crimes have increased for example, in Mississippi, since the appearance of casinos. However, they have also increased in other states which do not have them. As Albanese notes, in all but a few cases, it is difficult to claim that casino gambling 'caused' an individual to commit these kinds of crime, or that they would not have done it anyway without the casino. As ever, more research is needed to tease out the relationships.

5.43 In their work for the NGISC, NORC analysed crime rates in communities within 50 miles of a casino between 1990 - 1997, and concluded that the casino effect was not statistically significant for crime, although as mentioned earlier, they pointed out that this did not necessarily mean that no casino-related crime existed, only that any its effects were too small to show up in their statistics, and/or may have been countered, over the long term, by other effects ( NORC 1999: 70).

5.44 A study of the ten largest casino markets in the U.S. found that arrest trends for embezzlement, forgery and fraud in nine out of the ten showed no consistent pattern. In fact, the study found that, in general, a greater number of jurisdictions reported more decreases than increases in arrests ( NGISC 1999). Another large-scale study of eight small to medium sized casino jurisdictions (population 22,000 - 400,000) also found uneven results. Although minor crimes, such as burglary were slightly more likely to increase, what the FBI describe as 'index crimes' - murder, rape, robbery, burglary, arson, larceny, aggravated assault, and motor vehicle theft - were not.

5.45 The only exception was Biloxi, the one jurisdiction in the study that had the largest concentration of casinos, and which was the largest tourist market. This also showed the largest increase in crime. The author concluded that it was likely that it was the increased numbers of visitors to the area that accounted for the higher crime rates there. Overall however, they concluded that 'casinos do not appear to have any general or dramatic effect on crime, especially in communities that do not have a high concentration of casinos' (Stitt 2001: ii).

5.46 One study however, examined changes in crime rates over a twenty year period, from 1977 to 1996, in which the number of counties with casinos in the U.S. increased from fourteen to nearly 170. It analysed FBI index crimes and found that increases in these were associated with casinos with a time lag of 3-4 years (Grinols and Mustard 2001). This study, and a later report by one of the same authors, attributed roughly 8% of crime in counties with casinos to those casinos (Grinols and Mustard 2001; 2006). They concluded that these crimes were committed by problem gamblers in order to pay off monetary debts, and that they typically reached a severe stage after a few years of a casino opening. It is these heightened crime rates that provide the major costs in Earl Grinols' calculations of the social costs of casinos, and which inform his conclusion that the social costs of casinos outweigh their economic benefits.

5.47 However, several methodological shortcomings with these studies have been noted. For example, it has been pointed out that they fail to take into account the effect of increased policing on crime rates. In many cases, casino counties introduced extra law enforcement, with the result that more arrests were made. Even if the number of crimes is constant, having more police on patrol increases the chances that any criminals are caught. In addition, it has also been noted that the authors' only examined casino crime rates for five years. However, their actual data showed that crime rates actually began to decline after this time (Walker 2006).

5.48 The likelihood that different types of casinos may have effects on different types of crime should also be noted.

5.49 An analysis by the Harvard Project on (Native American) Indian Economic Development found that the introduction of Indian casinos, many in poor rural communities, brought a 49% reduction in motor-vehicle thefts and a 39% reduction in robberies. They speculated that the added income, employment and general wealth that the casino brought to the community cancelled out any effects of crime that might be related to gambling itself. However, large and relatively urban casinos were associated with a 25% increase in motor-vehicle thefts. Another study of a range of types of Indian-owned casinos found that, within four years of opening a casino, violent crime had increased 9% and property crimes had increased by 4.4%, an increase accounted for by the upsurge in car thefts and theft from the person (Evans and Topoleski 2002).

5.50 Baxandall and Sacerdote (2005) analysed a large range of materials, including crime and population rates as well as data on 365 casinos across 26 states, to analyse the impacts of the introduction of Indian-owned casinos across the U.S. between 1990 and 2000. Overall, their results found no evidence of crime waves associated with new casinos. Although they reported a slight increase in reported crimes in counties that had casinos, they concluded that this was due to population increases in those states. Overall, while total crime rose, per capita crimes (the number of rimes per 1000 residents) actually declined by an average of 3 reported crimes per 1,000 people.

5.51 This study was one of the few to break down results down by casino location and size. Focusing on more densely populated areas - which are the ones most comparable to most of the proposed casino sites in Scotland - they found an average additional effect of 3 fewer crimes per 1,000 people, although this was not statistically significant. However, the per-capita crime rate in these more populated areas that also hosted large-capacity casinos (i.e. those hosting casinos with an average of 1,760 EGMs; somewhat larger than a regional casino in the Scottish context) dropped 9 crimes per 1,000 residents.

5.52 They concluded that casinos were not associated with general increases in crime rates, writing: 'The total number of crimes can be expected to increase with the introduction of casinos, but only because casinos are associated with population increases which are far larger than any possible decrease in the number of crimes per resident' (Baxandall and Sacerdote 2005: 15).

5.53 Obviously the issue of organised crime and money laundering are also matters of concern when considering the impacts of casinos. However, Albanese notes that the casino industry itself is as keen to keep out organised crime as local government and communities. These large, publicly held corporations' investment in public image and stock prices make it relatively easy for them to avoid organised crime infiltration. He notes that the main opportunities for such infiltration come from secondary businesses associated with casinos, such as cleaning, construction and entertainment, and that these need to be screened for any such links (Albanese 2003).

5.54 Although the existence, or extent, of money laundering in casinos is difficult to gauge formally, many individuals with personal experience of working in casinos in Australia and the U.S. testify that they are actually widely used by criminals as money laundering venues (O'Neil 2006: personal communication).

5.55 In conclusion, the impacts of casinos on crime are not clear cut. Different types of casinos may have different impacts, although there is insufficient evidence on this to draw firm conclusions. In addition, the effects of casinos on crime may be highly localized and concentrated on specific kinds of crime: although violent crime and most street crimes seem unaffected, more minor crimes such as burglary may increase. However, this may be an effect of an increased local or visitor population, increased policing, or a combination of all three.

5.56 Ultimately, the NGISC concluded that, although some studies suggested that a relationship between casino gambling and crime may exist, there was insufficient evidence to quantify or define what that relationship might be. It summed up its deliberations by stating: "Taken as a whole, the literature shows that communities with casinos are just as safe as communities that do not have casinos" ( NGISC 1999: 7-14).

Fear of Crime and Quality of Life

5.57 In considering the impacts of gambling on communities and individuals, it is important to take into account perceptions - or misconceptions - and attitudes, as these can affect general feelings of community well-being and security, and impact on overall quality of life.

5.58 A qualitative survey of community leaders by NORC found widespread perceptions that a range of ill-effects followed the legalisation of casino gambling, including indebtedness and problem gambling, as well as a wide range of crimes, such as youth offending, credit card theft and forgery, domestic violence, child neglect and alcohol and drug offences. Although, as we have seen, there is no evidence for much of these impacts, these findings illuminate the divergence between perceptions of casinos and, in this case, statistical findings on their impacts.

5.59 In terms of fear of crime, it can be noted that although some people may assume that casinos will increase the general crime rates in their communities, others may feel that the investment in previously run-down areas, especially in urban environments, may actually make casino neighbourhoods safer. In addition, many individuals may be less concerned about crimes that take place on casino premises, not only because the casinos pay for security, but also because residents are not threatened in their streets or homes.

5.60 This is what appears to have happened in four jurisdictions in Canada where casinos were introduced. Studies showed that the establishment of casinos actually had a positive effect on perceptions of crime. Fear of crime was reduced for local residents in the sites where new casinos were built, with more individuals claiming the area was 'a safe place to walk alone at night' after the construction of the casinos than before them. The percentage increase of those feeling safer ranged from 8% to 19%. (Nuffield and Hann 2003).

5.61 A large scale survey of the impacts of eight casinos on fear of crime and quality of life looked at residents 'social capital' i.e. their connection to their neighbourhood and community gauged through factors such as fear of crime, community well-being, trust in neighbours and government. For most people (70%), fear of crime remained the same, while for around a quarter, it increased. The greatest increase was associated with the one large casino-county in the study where crime had in fact increased the most.

5.62 In terms of quality of life, most people thought that casinos had had no effect one way or the other. However, the rest were fairly evenly divided between those who thought conditions had improved, in terms of increased standard of living, and those who thought they had not, in terms of increased crime. These differences were relatively small however, and the researchers simply noted that even after their introduction, a minority of opinions continued to be divided over casinos. They concluded that "contrary to assumptions, the introduction of casinos did not tear the fabric of the community apart" (Stitt 2001: vi).

5.63 It should be noted however, that casinos are likely to have different economic and social impacts on different sections of the community, and this variation, rather than more straightforward assessments of overall approval and disapproval, should be taken into account when evaluating impacts.

The Costs of Problem Gambling

5.64 Various researchers have attempted to measure the social costs associated with problem gambling, described as 'negative externalities', which include those associated with job loss, bankruptcy, divorce, ill health, arrest and incarceration, and increased uptake of unemployment and welfare benefits (Gerstein et al 1999). Despite the difficulties in quantifying such costs, to say nothing of less measurable factors such as depression and familial disruption, and several studies have attempted to assign monetary values to such negative externalities.

5.65 However, it should be noted that there are significant problems associated with this type of undertaking, and although many such studies have been undertaken, findings remain contested and inconclusive. In many cases, studies use different criteria for measurement, measure different things, and sometimes approach the subject with particular vested interests. Some of these problems were discussed briefly in Chapter One, and, as cost-benefit analyses are not the focus of this report, they will only be summarised here.

5.66 The economist Douglas Walker provides the most damning verdict on the exercise, stating that research is deficient in two crucial areas: it lacks "an appropriate standardised definition of social cost, and it lacks a methodology for measuring the value of these costs" (Walker 2003: 150). There is general agreement among experts in the field that wide variation exists in what researchers choose to include or ignore as a 'cost'; many measure things in different ways; and some do not attempt to measure certain intangible costs, such as, for example, depression and familial discord, at all (e.g. Eadington 2003, Walker 2003, Single 2003).

5.67 The result, according to Walker, is that "often costs and benefits are not properly identified so that things that should have been counted as costs or benefits were omitted and other things that should have been omitted were counted" (Walker 2003: 150).

5.68 However, some studies have nevertheless produced estimates for the social cost of gambling. They have tended to use one of two types of methodology. In one, the effect of a particular form of gambling, such as a casino, is estimated through calculating a number of variables, such as employment and crime rates. In the second, the costs generated by individual problem and pathological gamblers are calculated and combined with estimates of the prevalence of gambling problems in the general population in order to come to a figure of the total cost of gambling related problems. It is the latter that has been most widely used, and a number of studies have attempted to assign financial values to the negative externalities associated with gambling in this way (Grinols 1993; 2006; Lesieur 1998; Dickerson et al 1995; Thompson et al 1996). Within these, a massive diversity exists in results, with estimates of the average annual costs of a problem gambler ranging from $560 to $52,000, which can be interpreted either as demonstrating that the financial costs of problem gambling are relatively minor or that they are hugely significant (in PC 1999).

5.69 One of the largest of these analyses was conducted on behalf of the National Gambling Impact Study Commission (Gerstein et al 1999). By controlling for a variety of sociodemographic factors, the study was able to estimate the financial impacts of problem gambling on individuals, and to extrapolate from this to estimate the social costs to society as a whole. Taking into account the costs associated with such features as counselling, lost productivity, ill health, welfare payments and criminal prosecutions the researchers calculated that the annual cost of problem and pathological gambling to the U.S. was around $4 billion (Gerstein et al 1999).

5.70 Ultimately however, the Commission felt unable to compare these figures with estimates of the economic gains provided by gambling to produce an overall cost-benefit analysis of the impact of gambling on society in general. It argued that there were simply too many variables that could not be adequately quantified to make a definitive statement on the issue.

5.71 In the same year, the Australian Productivity Commission also, somewhat reluctantly, attempted a cost-benefit analysis of gambling. It argued that, overall economic transfers cancelled out net economic gains, meaning that any benefit of gambling should be counted in terms of social factors and consumer satisfaction, and offset with any problems it may create. At this point, however, it too reached a stumbling block. It argued that many of the costs of problem gambling were intangible (such as depression and distress) and many others were so intertwined with other factors that they were not possible to quantify in any meaningful sense.

5.72 Nevertheless, given that various estimates of such costs were being used in public debate, the Commission felt that it should make some attempt at the exercise. To this end, it estimated each social cost on a scale ranging from high to low, to produce a final social cost that ranged from $AU 1.8 billion to $AU 5.6 billion per annum. The figures are shown in the table below:

Source: Productivity Commission 1999: 32

5.73 Benefits were measured as the extra value that consumers derive from gambling above what it cost; i.e. consumer surplus. Based on this, the Commission used economic analysis to estimate the net benefits of gambling consumption (including tax revenue) as between $AU 4.4 billion to $AU 6.1 billion per annum. Taken together, this provided an overall outcome that ranged widely between a net social cost of $AU 1.8 billion to a net benefit of $AU 5.6 billion for 1997-98. The Commission noted that significant differences by gambling mode existed within this however, with lotteries showing a clear net benefit, and gaming machines the possibility of a net loss.

5.74 Such an estimate serves to show the practical difficulties of assigning financial values to the costs of problem gambling.

5.75 Recently in Britain, some analyses of the overall costs of problem gambling have been attempted. Two reports which received considerable attention were delivered by consultancy firms the Henley Centre (2004) and Hall Aitken (2006). Both reports were critical of the expansion of gambling, with the Henley Centre estimating that the new legislation would increase problem gambling by 38% and create 700,000 problem gamblers. The Hall Aitken study explicitly adopted the Henley Centre's methodology to arrive at similar figures for problem gambling in various regions, including Glasgow.

5. 76 However, the Henley Centre research, which was commissioned by the British Amusement Catering Trades Association ( BACTA), was criticised by an independent review from the Department for Culture, Media and Sport (Farrell 2004). This review highlighted methodological weaknesses (in terms of statistical modelling and sample sizes) which undermined the predictions of the report on both economic and social impact. The Henley Centre report was based on an attempt to predict the future based on current gambling trends - an extremely difficult undertaking at the best of times, and especially so in terms of a potentially volatile gambling market.

5.77 To calculate figures for problem gambling, the Henley Centre report used econometric analysis, as well as a small survey. While the survey was criticised in the DCMS report as being too small to generate significant findings, the former approach was criticised for failing to take a number of factors into account, including the regulatory regime that would be established to control problem gambling. Although the DCMS review found "little evidence of a significant bias in the report in interests of BACTA", it concluded that "the forecasts of problem gambling are open to serious question" (Farrell 2004, 14). Ultimately, it found that the findings of the study overall were not sufficiently robust to inform policy (Farrell 2004: 8).

5.78 The Hall Aitken report explicitly adopted the Henley Centre's methodology, and estimated that numbers of problem gamblers in Glasgow would increase to 25,392 by 2010, at a cost of £222,459,000. It concluded that the economic impacts of regional casinos would not be as beneficial as predicted, and would not produce significant numbers of extra jobs or regeneration for areas that introduced them. Many international studies have noted the exaggerated claims made for regeneration through casino development and, although this area is outwith the remit of the current report, it appears that Hall Aitken's assessment of the limited positive economic impact of casinos is broadly in line with much of the international evidence.

5.79 However, its calculations of the social costs are less accurate. The Hall Aitken report used the Henley figures to calculate the increase in the number of problem gamblers in various regions. So, it assumed that problem gambling would increase by 38% nationally, and combined this figure with the (highest) estimate of problem gambling provided by the British Prevalence Survey. It then mapped this onto the population within a fifty mile radius of Glasgow, to arrive at a figure of 25,392 problem gamblers.

5.80 These calculations are based on a number of assumptions, which are open to criticism. First, the foundation of the exercise - the Henley Centre estimate itself - has been criticised, as was outlined above.

5.81 Furthermore, the Report's attempt to calculate the number of problem gamblers in Scotland is probably inaccurate. Simply mapping the Prevalence Survey rate onto the local population is not enough, since a range of factors influence rates of problem gambling and are likely to vary by region. However the reports' authors did not consider factors which affect the distribution of problem gambling, such as socio-demographic status, but rather assumed that everyone is equally at risk. This is not the case, and the distribution of problem gambling depends on more than straightforward distance from a gambling venue, as we have seen. Nor do they consider factors which militate against the development of problem gambling, and which may reduce the numbers affected.

5.82 In addition, the calculations are based on the assumption that casinos account for all problem gambling, both nationally and in the region. Although levels of problem gambling associated with casinos are high, international evidence shows that other forms of gambling, such as race betting and electronic machines, are higher.

5.83 Finally, having come to this estimate of the number of problem gamblers in Glasgow, the report then attempts to estimate the costs associated with these numbers. At this point, it utilises data from work by Earl Grinols (1995), an economist who has also been criticised for his methodological approach which generally produces estimates of social costs that are considerably higher than those of other researchers. A recent study of the costs of problem gambling in Indiana (2006) utilised the same Grinols work that the Hall Aitken study relied on, and was strongly criticised for "relying heavily on the work of one researcher whose work is controversial and is in almost complete isolation from other relevant published work. As a result the [report] likely overestimates the costs of casinos in Indiana" (Walker 2006: 2) ¹¹.

5.84 Similar criticisms could be levelled at the Hall Aitken study, whose figures are based on estimates of both future numbers of problem gamblers as well as the costs they will incur, effectively involving an estimate of an estimate.

5.85 Finally, as we have seen, the international evidence which the report quotes is far less unequivocal than is implied: there are many studies which contradict the ones cited, and much disagreement over the interpretation and applicability of results.

5.86 Even when the total numbers of problem gamblers are known, as is the case in Australia and America, the reluctance of these countries' two major studies to assign financial values to the net costs of gambling sounds a cautionary note as to the speculative nature of attempts to quantify the costs and benefits of gambling.

5.87 The NRC concluded that:

"while gambling appears to have net economic benefits for economically depressed communities, the available data are insufficient to determine with accuracy the overall costs and benefits of legal gambling…. [P]ervasive methodological problems in almost all existing studies prevent firm conclusions about the social and economic effects of gambling on individuals, families, businesses and communities generally" ( NGISC 1999, 7-12).

5.88 None of this should be taken to imply that attempts to quantify or otherwise calculate the social costs of gambling should not be undertaken - indeed they should, and this is vital to furthering understanding as a matter of public interest. It simply means that to date, international attempts to do so have not been entirely successful, and have thrown up almost as many questions as they have answered.

Risk Factors, Social Deprivation and Impacts on Vulnerable Groups

5.89 The tendency of much research to focus on the rather narrow category of 'pathological' or compulsive gamblers means that studies of the wider effect of gambling on communities, and particularly socio-economically disadvantaged communities, have been relatively rare. However, when taken individually, many studies find that many of the indices of social deprivation, such as low income, unemployment, poor health, housing and educational qualifications are highly correlated with problem gambling.

5.90 There is considerable evidence that disadvantaged social groups are most likely to suffer the adverse consequences of increased gambling. Those who experience poverty, unemployment, dependence on welfare, homelessness, low levels of education and household income have higher rates of problem gambling than the general population (Volberg 1994; Cox et al 2000; Shaffer al 2002; Lepage 2000).

5.91 Within these groups, those who are male, single and/or under thirty five years of age are also more likely to be at risk from developing problems with their gambling. This is true despite the fact that these groups may not spend more on gambling in absolute term. They do however; spend a higher proportion of their income than wealthier players ( NRC 1999, Sproston et al 2000).

5.92 The results of the Prevalence Survey showed a significant correlation of problem gambling with household income, with those in the lowest income categories nearly three times as likely as the average to be defined as a problem gambler ¹². Those not in paid work and those in manual occupations were also significantly more likely to be problem gamblers (Sproston et al 2000).

5.93 A large amount of international research has found that problem gamblers tend to be concentrated among those lacking college education, and who have dropped out of high school (Shaffer et al 1994; Abbott et al 2004). In Britain too, several studies have demonstrated correlations between higher spending on gambling and lower levels of education (Coups et al 1998; Rogers and Webley 2001; Shepherd et al 1998; Fitzherbert et al 1996) ¹³.

5.94 Other factors relating to problem gambling are age and familial problem playing, so that the younger an individual begins gambling, and the higher the incidence of family members who experience problems, the more likely the development of problem behaviour.

5.95 In addition, problem gamblers are more likely than non-problem players to report heavy and/or problematic levels of consumption of drugs, alcohol and cigarettes. ( NRC 1999).

5.96 It has been noted by many researchers that drinking, gambling and smoking tend to 'go together' in a triad of complementary behaviour, with one reinforcing and perhaps increasing the other (e.g. Room 2005). A report commissioned by a major gambling industry company noted that 'smoking is a powerful reinforcement for the trance-inducing rituals associated with gambling', and that 'winning is associated with having a cigarette or having a drink' (as, it should be noted, is losing) (Harper 2003).

5.97 In Australia, smokers have been found to spend approximately twice as much as non-smokers on EGMs, and when the state of Victoria outlawed smoking in such venues, revenue from gambling initially plummeted by 30%. The size of the loss is probably attributable to the fact that the bulk of this revenue comes from problem gamblers, who are also likely to be smokers, and so would be hardest hit by the ban.

5.98 As the owners of gambling venues introduced various strategies to combat the ban (such as smoking zones), takings increased gradually. Nevertheless, the overall loss of revenue for the entire year was estimated to be around 12% (Harper 2003). In the Burswood casino in Perth, a no smoking policy introduced in 2001 had a significant impact on turnover ( SA Centre for Economic Studies 2005).

5.99 The correlation with smoking is particularly interesting in the light of new legislation that bans smoking in all public places in Scotland. This move could have interesting implications for gambling habits, and could possibly act to deter those individuals who would be at risk from developing problems from visiting casinos in the first place.

5.100 Analysing income relative to expenditure on gambling is perhaps the most useful way to gauge the relationship between gambling on socio-economic deprivation. Despite the emphasis on psychiatric criteria in the diagnostic screens, for many gamblers, 'problem' behaviour is defined in more straightforward economic terms, as playing that they can no longer afford.

5.101 The Productivity Commission noted that a crucial aspect of the impact of problem gambling is the extent to which it represents a large or small share of total income. It found the ratios of gambling expenditures to incomes very high among problem gambling households. Gambling losses averaged around 20% of household income for problem players, compared with only 1% for recreational players. ( PC 7.47). For three quarters of problem gamblers receiving counselling, expenditure exceeded 20% of income. In addition, levels of debt for such individuals are high: in Britain, it averages £28,000. Figures in Australia are around AU$ 17,000 and in the U.S. just under $40,000 (Gamcare 2003, PC 1999, Lorenz et al 1999).

5.102 A South African study found that the average player earned less than R2500 per month and spent more than 10% of their income on gambling. One in seven borrowed money to gamble, and one in four gambled with money normally used for household purposes. They concluded from this that, ultimately "gambling …exacerbates poverty" ( ESSET 2002)

5.103 In Britain, some recent studies of gambling on the National Lottery have found correlations between excessive expenditure, low income, and sometimes also problem gambling. One report found that although the highest income households spent most on the Lottery in absolute terms, it was the lowest earning households who spent the most relative to income.

5.104 While the proportion of households earning less than £200 per week spent 3.2% of their income on gambling, those earning more than £400 per week spent only 0.3% (Grun and McKeigue 2000). Other studies have found that increased spending on the National Lottery was associated with lower social class position as well as poorer social functioning and lower social support (Reid et al 1999; Fitzherbert et al 1996).

5.105 A relationship between the distribution of problem gambling and geographical distribution of social deprivation has been found in several studies. Research from Australia has found much higher concentrations of EGMs in low income areas, while American researchers have noted that lottery outlets are more common in poor neighbourhoods. (Clotfelter and Cook 1991; NGISC 1999).

5.106 In a survey of EGMs in Victoria, Australia, Livingstone (2001) found significant associations between density of machines and expenditure and indices of socio-economic deprivation. He found that the greater the socio-economic disadvantage of a municipality, the higher the number of machines, with residents of the most deprived area in the region spending almost double the state's average on them.

5.107 In one of the few U.S. studies to examine disadvantage and gambling behaviour, Welte et al. (2004) mapped expenditure and problem gambling onto neighbourhood characteristics and availability of gambling. They defined disadvantage as the percentage of persons below the federally-defined poverty line, the unemployment rate, the percentage of households headed by a female and the percentage of families on welfare. They then interviewed almost 3,000 households about their gambling on nearby casinos, racetracks and card rooms.

5.108 Results of this study showed that problem and pathological gambling were strongly associated with neighbourhood disadvantage: for every increase of one standard deviation in neighbourhood disadvantage, the odds of being a pathological gambler increased by 69% ¹⁴. In addition, a casino within ten miles of a respondent's home was found to be associated with a 90% increase in the odds of being a pathological or problem gambler. Rates of pathological or problem gambling were over twice as high among those who lived within ten miles of a casino in comparison with those who lived further away (7.2% vs. 3.1%).

5.109 These kinds of relationships have led many commentators to describe various forms of gambling as a regressive form of taxation, whereby those with the lowest incomes spend proportionally far more than those on higher incomes (Clotfelter and Cook 1991).

5.110 A few studies have shown that these relationships between socio-economic status, education and problem gambling in general also hold for the specific case of casino gambling. Although individuals on lower incomes and with lower levels of education are actually less likely to visit casinos, when they do they tend to experience more problems with their playing there.

5.111 Surveys of North America and Britain have found that casino patrons tend to be slightly better educated than the general population and more likely to hold white collar jobs. They also tend to be older: 30% of those between 51-65 had gambled in casinos in 2003, compared with only 25% of those under 50 (Sproston et al 1999; Baxandall and Sacerdote 2005).

5.112 However, other studies have found that, although lower income Americans gamble less often in casinos, when they do they bet more heavily. For example, a national survey in 1999-2000 created an index of socio-economic status that weighted measures of income, education and occupational status. It found that a third of people in the highest quintile group participated in past year casino gambling, compared to only 17% of those in the lowest quintile.

5.113 However, individuals in the lowest quintile group gambled twice as heavily in absolute terms as those in the highest group in absolute terms. It also found a similar relationship between blacks and Hispanics with whites: while the former played slightly less often, when they did, they gambled far more heavily (Welte et al 2002)

5.114 In Britain, the 1996 casino study suggested that two distinct demographic groups who experience problems with casino gambling: young, single unemployed males whose primary form or forms of gambling are outwith the casino but who, as it were, 'bring their problems in' with them when they visit, and an older group of retired males who were also single and more likely to be Chinese-Asian, and whose problematic behaviour was predominantly confined to casinos. Further, severe problem casino gamblers were also twice as likely to smoke as others, and twice as many had worried about their levels of alcohol consumption (Fisher 1996).

5.115 Little research has been conducted on the extent, or the ways in which, gambling and problem gambling exacerbates deprivation. However, it seems safe to assume that any activity that increases financial problems among these groups, who are already poor, can only have a negative effect on overall well-being.

Emerging Trends in Gambling Participation

5.116 International research is starting to show the emergence of new trends in the distribution of problem gambling throughout the population. The most striking of these is increases numbers of women reporting problems, which has been described as a 'feminisation' of problem gambling. This may be associated with the increased popularity of machine gambling, and the increased acceptability of female gambling in general.

5.117 Although prevalence is higher among males in countries such as Great Britain. and Sweden, in others, such as Australia, New Zealand and some parts of Canada and the United States, the differences are decreasing. The change appears to be associated with the growing availability and popularity of EGMs, which are played by equal numbers of males and females (Abbott, 2001; PC 1999; Volberg, 2003). It appears that as electronic machines become more widely available, the gender gap in the prevalence of problem gambling is closing. In summing up this trend, the Productivity Commission concluded:

"liberalisation of gaming machines led to a whole new group of female problem gamblers. It is hard to think of any other process which could explain the formation of this group, other than the availability of machines. The Commission considers this the most powerful evidence in favour of a connection between problem gambling and the availability of gaming machines" (1999: 8.22).

5.118 Another trend relates to the increasing numbers of relatively affluent people who appear to be developing problems with gambling. In the earliest surveys of problem gambling, the annual household income of problem players was significantly lower than non-problem players.

5.119 However, a number of more recent surveys seem to be pointing to something of an 'evening out', where the average income of problem players is not significantly different from that of non-problem players. It has been suggested that factors such as the increasing normalisation of gambling and the increasing availability of credit, have encouraged gambling among greater numbers of middle class people, who are developing difficulties with their behaviour (Rosecrance 1988).

5.120 It was noted in the previous section that ethnic minority groups appear to be at particular risk of developing gambling problems. In addition, recent migrants from countries where legal gambling is not widely available also appear to have higher rates of problems. For example, the Productivity Commission survey found higher rates of problem gambling among people who did not speak English at home, while a study of Nevada found that adults who had lived in the country for less than ten years had more problems than longer-term residents (Volberg 2002; PC 1999).

5.121 It has been suggested that these findings are consistent with the view that exposure to gambling contributes to the development of gambling problems, and also that this effect reduces over time; i.e. that over time exposed populations or sub-groups adapt (Abbott 2001; Abbott & Volberg 2000).

5.122 The numbers of ethnic minorities in the British Gambling Prevalence Survey were too low to draw conclusions about rates of participation or problematic play among ethnic minority groups, although the large scale casino study referred to frequently throughout this report found that Chinese-Asian gamblers were three times as likely as white regular casino visitors to have gambling problems (Fisher 1996).

5.123 Finally, other groups who have higher rates of problem gambling include casino employees, who have high levels of exposure (Shaffer et al 1999), and students. A meta-analysis of gambling among students found rates of gambling that were much higher than the general population, at 5.6% (Shaffer and Hall 2001). Youths are also particularly vulnerable to developing gambling problems, particularly those associated with machine betting, and many researchers have found much higher rates among them than in the general population. However, age restrictions in the U.K. prevent those under 18 from visiting casinos, and so the specific problems that can be associated with adolescents are not relevant for this report.

Conclusions

5.124 Research has found that proximity to casinos increases rates of problem gambling in the local population. Some studies have found that the location of a casino within 50 miles of an individual's home can double the prevalence of problem gambling, although other work also suggests that the provision of specialist problem gambling services and public health initiatives can militate against such increases.

5.125 Disadvantaged social groups who experience poverty, unemployment, dependence on welfare, homelessness, low levels of education and household income are most likely to suffer the adverse consequences of increased gambling. And, although those on lower incomes and with lower levels of education are less likely to visit casinos than the general population, when they do they tend to experience more problems with their playing.

5.126 Casinos do not appear to increase per capita crime, although total crime in a neighbourhood may increase. This seems to be an effect of population growth: casinos tend attract large numbers of visitors to an area, and casino-jurisdictions can also experience population growth, increasing the overall population who can commit of fall victim to crime. This effect appears to be concentrated on specific types of crime, such as burglary, and does not seem to affect violent crime and most street crimes.

5.127 Fear of crime does not appear to increase in communities that introduce casinos, and may actually decrease due to the presence of casinos' own security measures and the development of run-down areas. Some studies have found that casinos are associated with increased cases of bankruptcy, although it has been difficult to establish whether they were the cause of such impacts.

5.128 A large scale survey of the impacts of casinos on crime and quality of life reached the following assessment of their overall social effects:

"casinos do not affect all communities in a simple, similar or nonvariant fashion. The evidence suggests that casinos appear to be neither as good for a community as supporters contend, nor as negative as opponents argue" (Stitt 2001: ii).

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