eThesis - School of Business electronic theses

The thesis discusses the social and economic impacts associated with legalized gambling. The purpose of the study is to analyze what are the relevant impacts of gambling and how they are studied in academic literature. The main focus is in the examination of the potential social costs that derive from problem gambling and gambling related crime. Other social and economic impacts are analyzed as well in order to assess the overall impacts of legalized gambling.

The thesis is conducted as a literature review. It begins with discussion about problem gambling and the costs that problem gambling causes to society. Both methodological issues and empirical results are considered. Next the alleged linkage of legalized gambling and crime is discussed. The thesis continues with introducing other socioeconomic impacts of gambling: leisure activity / consumer surplus, personal bankruptcy, employment, attitudes / social capital and socioeconomic inequality. Also the economic impacts are reviewed before the overall impacts of gambling are evaluated.

The most notable downside of legalized gambling is the social impacts deriving from the addictive problem gambling. However, there is no consensus on what should be included in the social cost estimation and how large the costs of problem gambling are. Therefore, without a commonly agreed definition the results of various cost estimations are highly debatable. The results on whether legalized gambling is associated with higher crime rates are mixed. Mostly the research is focused on the impacts of casinos. The crime rates are found to increase or remain unchanged depending on how the population at risk is taken into consideration. Increased leisure activity is considered the most notable benefit although its monetary estimation is difficult. Most evidence suggests that gambling opportunities increase both personal bankruptcies and employment to a small extent. Gambling as a form of taxation is regressive as the gambling products are consumed proportionally more by the lower income households. Introduction of gambling opportunities is expected to change income patterns rather than increase overall wealth. Local benefits can be more significant especially when gambling manages to attract tourism. Additionally, gambling may provide increased government revenue when the taxes on gambling are high. Instead of reliable empirical assessments of the overall impacts of gambling there are guidelines what a thorough gambling impact study should include.