How Casinos Impact Regional Economies: Is Gambling Legalization a Step to State Prosperity?

Over the last 20 years, casinos and other gambling-related activities have become one of the biggest industries in the United States. Lagging behind many other countries, it wasn’t until recently that states were able to go about legalizing online casinos and sports betting. For instance, Pennsylvania only legalized online casinos in 2017, but it remains to this day one of only six states to offer these services to its residents (source:

With PASPA repealed in 2019, more states have legalized gambling in multiple forms, all seeing the benefit that this can bring to the state as a whole. In fact, many of them see it as an active move to promote economic growth, especially those who have seen the positive effects in neighbors who have already legalized gambling.

Impressively, there was more than $370 billion spent on gambling in the US back in 2000 when online gambling wasn’t available. Since then, this has grown. But, while states use economic development to sell the gambling idea to citizens, it’s unclear whether it does actually improve the state’s economy.

Boosting employment

This is one of the biggest reasons both casinos and state governments use to allow and legalize casinos and sportsbooks. However, while the assumption is that the arrival of a new casino will mean workers from the surrounding area get jobs, this doesn’t work when it’s an online casino. Many online casinos will actually offshore their work, employing cheaper staff with the same skills from countries that have a lower pay rate.

Additionally, without a thorough check, it’s not clear if a land-based casino actually does increase employment in an area. Many of the jobs such as croupiers, accounting, or security, actually require specialist skills, which is not available in the general workforce of a new area. Typically, the promise of employment comes from using an unskilled labor workforce to build the casino, but after that, there are no jobs.

Increasing the tax revenue

Almost all states have tax-adjusted any casino revenue coming in and subsequently use these taxes to fund state and county programs. Depending on the state, there are widely varying tax requirements. Missouri is 18% while Indiana is 20%, for instance. As such, states often tout this as beneficial. But who really benefits? And, let’s not forget that this is not new money entering the state or society, but simply a transfer of funds between groups. That being said, the increase in taxes is often very beneficial to the general populace. Typically, state governments use these taxes to fund schools or other educational programs. Additionally, funds are also used to boost economic development and even used to supplement general state funds. As such, the wider population stands to benefit.

Retail sales rise

Finally, there is also the issue of whether the presence of casinos in any form actually hurts local retailers and their sales. There aren’t too many studies on this yet. However, we can assume that if the majority of the money coming into a casino is from locals, then retail sales will drop and revenue here will be negatively impacted. If locals substitute going out for dinner or watching a movie in the cinema for playing at a casino, the overall economy will suffer. On top of this, as evidenced in a KS casino expansion, casinos will also take more revenue by offering dining and entertainment as well. 

It’s really only balanced out if there are many tourists visiting who will partake in all activities, plus they’re bringing in new money anyway. However, if there are large numbers of tourists, such as those found going to Las Vegas, then casinos can seriously boost the economy. With large numbers of tourists, not only the casinos benefit, but general retail stores and restaurants too.

Regardless whether gambling and casinos boost economic growth, it’s here to stay.