Casinos have always been a symbol of glamour and riches. But do they actually foster economic growth? This research aims to figure this out by looking at their substitution effect using regression and Growth Curve Model analyses.
One of the main reasons why casinos are built is because they claim to reduce unemployment in the vicinity. However, this fact will depend on whether or not workers from existing local businesses would be snatched away by the new casino.
Revenue
Casino establishments generate income from a variety of sources. These sources include gaming which includes slot machines, table games, and sports betting. They also make money through non-gambling activities such as food and beverage sales, hotel room occupancy fees, merchandise sales, or tournament fees for non-gambling events.
State and local governments can earn much-needed funds from casino business; however, we must point out that these taxes don’t represent new money created. Taxes just shift existing income between groups. To some investors, equity portfolio managers, and students – this truth escapes them.
Costs
Operating expenses vary depending on factors like location, size, and games offered but these costs are pretty much the same across all casinos. For instance staffing costs is something that all casinos must pay for along with marketing and security costs too which increase as you increase your number of visitors per day/night (and thus also increase your risk). It’s also worth noting that utilities, insurance premiums and maintenance expenses add up quickly when running an establishment that is open 24 hours a day all year round.
Building a casino itself can cost millions to billions of dollars; The location then factors into how much revenue it’ll receive: Is it in a highly populated city or near tourist areas?
Other expenditures could include building a virtual website to represent your online business (with costs such as web hosting/customer support salaries) or marketing campaigns (pay-per-click advertising/social media).
Taxes
Taxes are expensive, especially for casinos. On top of property taxes, they will also have to pay payroll and sales taxes. And don’t forget about occupational taxes which corresponds with employee hours worked or wages paid (depending on the jurisdiction) as well as occupational license fees that must be renewed every year or quarter.
Yes, new casinos do generate tax revenue for local governments, but the impact it would have on employment levels and other factors should be fully understood before deciding whether or not to pursue one.
Casinos also pose a threat to state gambling revenues – by opening up a new casino in your state you could end up just taking gamblers away from existing casinos in neighboring states. This is why inflation-adjusted revenue only saw slight increases since when inflation adjustment started being applied to gambling revenue figures.
Casinos make money by having people stay on the grounds, eat and gamble. It stimulates other sectors such as hospitality and entertainment so it’s a win-win for all parties. Tax revenue supports local governments and infrastructure. This also brings in workers from outside of their region which helps reduce unemployment locally; although this may not be significant benefit in rural communities due to skilled labor shortages; therefore more likely casino workers would commute from nearby cities instead. Ultimately, success of a casino depends on careful planning and effective regulation.
