Transcript Iowa West Foundation

Do Casinos Contribute to the
Common Good?:
A Utilitarian Analysis
Andrew Gustafson
Creighton University
Omaha, Nebraska, USA
Long History of Opposition to
Gambling
Ethical Behavior of Casinos
• Typical Business Ethics Questions
– Customers: Service, Respect, Care
– Employees: Respect, Fairness, Compensation
– Environment: Sustainability
– Community: Philanthropy, Education
– Financial Disclosure
Ethical Culture
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Codes
Responsibility (Officer, Go-To person)
Training/ Real Discussions
Accountability: Tracking, Monitoring, Auditing
Enforcement, Follow-Through
Reassessment, Ongoing Reform
Philosophical Question:
Does Casino Culture Nurture Virtues?
• Justice: Proper concern for others
– Or do casinos promote self-centeredness?
• Prudence: Wisdom to judge appropriate act
– Or do casinos encourage rash short-term action?
• Temperance: Self-control and Moderation
– Or do casinos encourage excessive indulgence?
• Courage: Ability to face uncertainty,
intimidation
– Or do casinos encourage escapism?
Social Benefit/Utility/Greater Good
The Questions of This Presentation:
• Do Casinos, and what they are, promote the
common/greater good?
• Solutions: How can whatever harm they do be
alleviated/Offset?
UTILITARIANISM
John Stuart Mill
1. Greatest Happiness for the Many
• Mill’s social utilitarianism is concerned about
the welfare of the many, rather than just the
individual.
2.Long Term Benefit
• Social utilitarianism focuses on the long-term or cumulative
benefit, not merely the local, short-term, or immediate
benefit. A company which follows this social utilitarianism
will be concerned with fair treatment of employees, honest
habits with customers and suppliers, and just policies;
because acting with justice, fairness and honesty will, in the
end, produce the greatest happiness for the many—
through increased productivity, a strong reputation, and
customer loyalty all leading to a positive outcome.
3. Moral Education/Socialization
• Mill’s social utilitarianism relies on education
and the development of social ties to under
gird our moral motivation, so that we will act
according to the Greatest Happiness Principle.
This is the sort of corporate culture
construction which we achieve through
strategized ethical training and integrity
development.
4. Historical Trends
• Overall historic tendencies, not particular
exceptional particulars, guide the decision.
Mill’s utilitarianism is concerned not with
static results, but with dynamic trends.
• When Mill says “actions are right in proportion
as they tend to promote happiness, wrong as
they tend to produce the reverse of happiness”
he is looking for derivative rules of action
which only usually or more often than not
promote the benefit of the many.
Social Benefit/Utility/Greater Good
The Questions of This Presentation:
• 1. Greater Good for the Many
• 2. Long Term Benefits
• 3. Moral Education/Socialization towards
Higher Pleasures
• 4. Historial Trends
Apparent Greater-Good/Benefits of
Casinos:
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Economic Benefit
Jobs
New Businesses (auxillary support businesses)
Tax Revenue
Public Goods Projects
Entertainment
Four Brief Examples of Casino’s
Contribution
• 1. Vegas
• 2. Bethlehem Pennsylvania
• 3. Macau
• 4. Council Bluffs, Iowa
Las Vegas 1940
Las Vegas 2010
# 2 Macau
Macau vs Vegas
#3 Sands Corp in Pennsylvania
Old Bethlehem Steel Mills
Closed 1995
Sands Corp Casino Openned 2009
$743 million property
Small Scale Local Economic Enabling:
#4 Iowa West Foundation
Since its inception the Iowa West Foundation's
grant program (funded by Casinos) has
awarded over $200 million that has improved
the quality of life of thousands of citizens in
100 area communities in Western Iowa and
Eastern Nebraska.
Community Development &
Beautification
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• A high priority is given to community
development projects that encourage
neighborhood revitalization and create more
livable neighborhoods, as well as improving
downtowns and community main streets.
Mainstreet Beautification
Economic Development
• Retain or create family wage jobs that will
result in increased economic self sufficiency
for area families and residents. The
Foundation's primary economic development
role is to serve as a catalyst by building the
capacity of the public and the nonprofit
sectors to effectively plan and manage
economic development projects.
Education
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• The Foundation has an interest in new and innovative
programs that promote life-long learning, academic
performance and workforce preparation.
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• Early childhood educational programs and quality
daycare programs that address underserved age
groups and serve children from economically and
educationally disadvantaged families in
Pottawattamie County will be seriously considered.
Human and Social Needs
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• High priority on new and innovative programs
that strengthen families, address the needs of
underserved youth, provide services to senior
citizens, and help our citizens to reach their
potential. Examples of such programs include
proposals that address the following:
homeless/transitional housing needs; the high
incidence of teen pregnancy, the lack of
available prenatal care; and chemical
dependency issues, especially the increase in
the region of methamphetamine use.
Examples of Public Art
Jun Kaneko
Critics of Casinos
• 1. Grinol’s Gambling in America
• 2. Goss and Morse’s Governing Fortune
• Question: Do Harms outweigh Benefits?
Grinols’ Taxonomy of
Casino Negative Externalities
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1. Crime
2. Business/Employment Costs
3. Bankruptcy
4. Suicide
5. Illness
6. Social Service Costs
7. Direct Regulatory Costs
8. Family Costs
9. Abused Dollars
1. Crime
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Crimes Grinols associates with gambling
Organized Crime
Assault & Robbery
Rape & Murder
Larceny & Burglary
Auto theft
Fraud & Forgery
Tax evasion/fraud
Confidence games
Bookmaking
Pimping/prostitution
Selling drugs
Fencing stolen goods.
Grinols and Mustard in an earlier study estimated that approximately 8.6 percent
of property crimes and 12.6 percent of violent crimes in casino counties were due
to adding a casino.
Crime (Goss & Morse)
• 56 percent of those in gambling treatment had engaged in
stealing to finance gambling.
• A study by the U.S. Department of Justice which showed
that among sample arrestees in Las Vegas, Nevada and Des
Moines, Iowa, the percentage of problem or pathological
gamblers was three to five times higher than that of the
general population. (Goss, 81)
• The Mall of America had 7.7 more visitors than Las Vegas,
yet had a crime rate less than 1/15th that of Las Vegas. In
other words, casinos seem to attract crime in ways that
non-casino visitor attractors do not.
Response to Crime Critique
• Grinols admits, usually theft is not counted by economists
as a social cost in itself, but only insofar as it increases
social expenses of policing and prosecuting. The statistics
he provides regarding the increased expensing and
prosecuting costs incurred per pathological gambler do just
that, but it is questionable whether it is legitimate to
include all money or property stolen by pathological
gamblers as social costs of gambling. It very well may be
that pathological gamblers tend also to be drug addicts or
pathological thiefs—which may just as well lead to their
thieving fraudulent behavior--in other words, without more
data, there is no necessary connection to be drawn
between the gambling per se and theft or fraud.
2. Business and Employment Costs
• Grinols claims that gambling leads to business and lost
employment costs in the following two ways:
• a. “lost productivity on the job because of reduced
performance”
• b. “lost time and unemployment that includes sick days
off for gambling, extended lunch hours, leaving early
and returning late due to gambling, and firing because
of gambling problems such as employee
embezzlement.” (135)
• “Between 21 and 36 percent of problem gamblers in
treatment reported losing a job because of their
gambling”
Response to Workloss Critique:
• A. This is a significant fact—for problem gamblers. But
we know that problem gamblers make up a very small
percentage of the overall population, meaning that 2136% of a small fraction of the population saw their job
loss to be due to their gambling.
• B. Gambling is one among a wide variety of activities
which contribute to lost productivity at work. Personal
internet use at work and activities such as fantasy
football or office bets during the NCAA sweet sixteen
no doubt lead to even more lost productivity than
gambling by problem gamblers, overall.
3. Bankruptcy
• Grinols writes, “Bankruptcy imposes social costs by diverting resources to
lawsuits, legal costs, and bill collection costs. Never-paid debts of
gamblers are a social cost to the rest of society.” (139)
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• Iowa Study: “The 298 U.S. counties which have legalized gambling within
their borders had a 1996 bankruptcy filing rate 18 percent higher than the
filings in counties with no gambling, and the bankruptcy rate was 35
percent higher than the average in counties with five or more gambling
establishments”
• Garrett and Nicols also confirmed a connection between casinos and an
increase in bankruptcy in their 2005 research study. (Garrett, 2005)
• Goss and Morse in another 2005 study also found that bankruptcies in
casino counties are higher than non-casino counties over the long run.
(Goss, 2005)
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Response to Bankruptcy Critique
• There seems to be some real direct connection
between personal bankruptcies and gambling.
• While there seems to be no doubt that gambling
seems to coincide with increased bankruptcies,
without knowing the actual net costs of those
bankruptcies, it is difficult to know what the real
social costs involved are, or how to compare that
to the social benefits of casinos.
4. Suicide
• “Studies report that 15 to 24 percent of Gamblers
Anonymous gamblers and hospitalized pathological
gamblers have attempted suicide, rates that are five to
ten times the average for the general population.”
(141)
• He does provide some examples of people killing
themselves at Casinos as evidence that the casino
losses were in those cases the primary factors leading
to suicide. He concludes that “the full extent of the
influence [of gambling on suicides]…remains a
question for further research.” (143)
Response to Suicide Critique
• Of course this correlation could be due to
other factors, such as the possibility that
pathological gamblers possibly have other
personal issues as well, such as drug
addictions or other problems leading to
suicide attempts, as Grinols admits.
5. Illness
• Gambling has been linked to headaches,
depression, stress-related illnesses, anxiety,
moodiness, irritability, intestinal disorders,
cognitive distortions and cardiovascular
disorders.
Response to Illness Critique
• It should be pointed out that many things
such as marriage, medical school, lack of
proper exercise, and long hours at work have
also been linked to such illnesses. Grinols
himself admits that not enough research
exists to substantially show the unique costs
of gambling in terms of illnesses.
6. Social Service Costs
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Grinols points to cost of unemployment
caused by gambling for pathological gamblers,
including unemployment benefits and
foodstamps. He provides no data as to these
costs.
7. Direct Regulatory Costs
• “Gambling has been regulated by government
because it historically has been subject to
fraud and abuse.” (144)
• Grinols brings up one statistic—that a 1999
study in Louisiana found that the costs of
regulating gambling in the state were 50.02
million per year, which works out to $16.53
per person. Since the study is not cited, it was
difficult to verify.
Response to Regulatory Costs Critique
• Given that the regulating cost is accurate, it is
important also to realize that the Louisiana gambling
industry’s annual gross revenue in 2004 was nearly
$2.5 billion—fourth in the nation after Nevada, New
Jersey and Mississippi.
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• Of course we have regulations in place for the
insurance industry, financial sector, accounting firms,
and meatpacking among many other industries. SOX,
EPA regulations, OSHA, SEC regulations and a variety of
other regulations do cost society, no doubt.
8. Family Costs
• Included among the social costs of gambling
by Grinols are the costs of divorce, separation,
spousal abuse, and child neglect and abuse.
He cites data that in one study 53.5 percent of
pathological gamblers reported having been
divorced, compared with 18.2 percent of the
nongamblers being divorced. (145). He
immediately admits that there are other
causes to divorce of course.
9. Abused Dollars
Problem Gamblers
• It was estimated that in 2004 there were
approximately 5,726,797 problem and
pathological gamblers in the US. (Goss, 73)
• One study indicated that problem gamblers
provide much revenue: 60% of gaming
machines, 53% of horse racing, 22% of casino
table games, 22% of bingo and raffles and 19%
of lottery revenues came from problem
gamblers. (Robert Williams and Robert Wood, The Demographic Sources of Ontario Gaming
Revnue at 42 (Ontario Problem Gambling Research Center, June 23, 2004.)
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Pathological Gambling
According to the Diagnostic and
Statistical Manual of Mental Disorders
(1) preoccupied with gambling (e.g., preoccupied with reliving past gambling
experiences,handicapping or planning the next venture, or thinking of ways to get money with
which to gamble)
(2) needs to gamble with increasing amounts of money in order to achieve the desired
excitement
(3) has repeated unsuccessful efforts to control, cut back, or stop gambling
(4) is restless or irritable when attempting to cut down or stop gambling
(5) gambles as a way of escaping from problems or of relieving a dysphoric mood (e.g., feelings of
helplessness, guilt, anxiety, depression)
(6) “chasing" one’s losses)
(7) lie to conceal the extent of involvement with gambling
(8) has committed illegal acts such as forgery, fraud, theft, or embezzlement to finance gambling
(9) has jeopardized or lost a significant relationship, job, or educational or career opportunity
because of gambling
(10) relies on others to provide money to relieve a desperate financial situation caused by
gambling
(http://govinfo.library.unt.edu/ngisc/reports/appenb2.pdf)
Problem Gamblers are a Minority
• 1% US Population fit pathological parameters
• 2% Fit Problem Parameters
• “…the responsible gambler probably represents the
majority of the gambling population. They engage in an
activity that apparently gives them pleasure and seems
harmless enough. However, for the minority who lose
more than they can afford, creating convenient access to
gambling creates a significant potential for harm, not only
to themselves but also to others…the available data suggest
that this minority of the gambling population is providing a
significant portion of the revenue.” (Goss & Morse, 267)
Criticisms of Grinol
#1: Causal Connection?
• Grinol often cites a correlation between pathological gambling and
some particular social malady, but then immediately admits that
correlation does not mean that there is a causal connection. That
pathological gamblers are more likely to be divorced or have money
problems does not mean that their gambling is what caused these
problems.
• As Goss and Morse write, “What is not clear in each of thee
examples [of social costs of gambling] is the extent to which some
other dysfunctional behavior might also be a contributing, if not
intervening, cause of the event. Problem gamblers often share
other pathologies, such as alcoholism, that provide additional basis
for causation. A significant correlation appears between alcohol
abuse and gambling pathology.” (Goss, 75) One study shows that
those who average more than four drinks per day are five times as
likely as teetotalers to become problem or pathological gamblers.
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John Welter et al., Alcohol and Gambling Pathology among U.S. Adults: Prevalence, Demographic Patterns and Comorbidity, Journal of
the Study of Alcohol , (September, 20010), 710.
#2: Grinols: Prohibition Solution?
• A second difficulty with Grinols
arguments is that on his logic, we
would likely go back to prohibition.
It is likely that there are more people
who struggle with alcohol abuse than
with pathological gambling, and alcohol certainly causes
more deaths and probably many more social costs than
gambling. But if we intend to outlaw gambling because of
the negative effects of the few pathological gamblers on
society, then it seems that it would by the same reasoning
be reasonable to outlaw alcohol due to the negative effects
of alcohol abusers on society.
Prohibition is Unlikely:
• “Throughout history, Every society that has
allowed casinos to cater to local customers has
eventually outlawed gambling.” (Rose)
• “In jurisdictions with significant gambling
investments, the prospects of returning to a
regime of criminal proscription are remote. As in
the ancient myth, the contents of Pandora’s box
could not be returned once they had been
released into the world.” (Goss & Morse)
#3: Grinnols Ignores the Benefits
• A third difficulty with Grinols argument is that he really
does not adequately account for the benefits of gaming
revenues in some situations. Atlantic City is a worst case
scenario.
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gaming actually avoids some of the major criticisms of
Grinols, Goss and Morse—situations where gaming does
not cannibalize other jobs, and brings great economic
prosperity to an otherwise desolate economic landscape.
Las Vegas and Macau may both be huge exceptions to the
criticisms that gaming hurts more than it helps.
Goss and Morse:
Greater Good From Casinos?
• Goss and Morse in their book Governing
Fortune: Casino Gambling in America provide
a lot of legal and economic data.
Help for Tax Burden Relief? (No)
• Although tax collections from casinos have
gone up, benefits to the taxpayer seem
negligible. Casino-state taxpayers haven’t
experienced benefits in terms of taxes
measured against personal income, and
casinos seem to have no impact on property
taxes.
Smaller Rural Counties Benefit More
• What Goss and Morse did find was that
“counties with smaller and less dense
populations and lower per capita income tend
to benefit from casinos more than otherwise
situated counties” (Goss, 51)
Mixed Blessing:
Casinos = More Jobs, Lower Pay
• Goss and Morse state that “Our results
indicate that casinos tend to dampen income
growth but increase job opportunities in the
counties where they are located.” (Goss, 66)
This is likely explained by the fact that casino
jobs do not pay as well as other jobs in the
counties represented, so that while there are
more jobs in the county, a greater portion of
those jobs provide lower income than the
previous median income in the county.
Grinol Solutions to the Negative Effects
of Casinos?
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Limiting the size of jackpots
Limiting the length of play, access, or the rate of play.
Making casinos less arousing
Providing less variability in the games
Decreasing the inducements to play.
Problem with these suggestions: It seems that
suggesting these strategies for casinos is like suggesting
to Ambercrombie and Fitch that they only sell full
length Amish dresses to eleviate the sexualization of
women through their catologues.
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Morse/Goss Solution:
licensing of patrons of casinos.
• “Our legal and moral traditions recognize that
it is entirely appropriate to constrain behavior
that imposes costs on others without their
consent…A licensing requirement for gambling
patrons would not be inconsistent with
restrictions on other activities that potentially
impact the community.” (Morse, 260-1)
Candidates for exclusion/denial
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those receiving public assistance
those behind on child support payments
those who have filed for bankruptcy.
restrict according to income (as Singapore
recently proposed)--this seems to unfairly
restrict modest income earners from
gambling, and not take into account that high
income earners can still have problematic
gambling habits which harm society.
Conclusions:
• Greater Restrictions on Problem gamblers by the
industry would help alleviate concerns from
public and governments
• Much of the data often used is inconclusive
• Gambling does seem to have direct connections
to bankruptcy rates, and some social costs.
• Gaming in most cases brings some jobs but drives
down wages.
• Iowa West and Other such foundations can
provide useful public goods.
With Great Wealth, Comes Great
Responsibility
• “The family that perseveres in good works will surely
have an abundance of blessings.” -Chinese Proverb
• “Wealth is not to feed our egos, but to feed the hungry
and to help people help themselves.”-Andrew Carnegie
• A man of humanity is one who, in seeking to establish
himself, finds a foothold for others and who, desiring
attainment for himself, helps others to attain.
-Confucius