Economics of Casinos: Is it still a recession-proof economy?

Special Edition

Introduction

An industry that supports public education, provides jobs to thousands, and helps the government with funds for development. It is the casinos that are perpetuating these benefits across many U.S. cities. Casinos means that they are a facility for certain types of gambling. Although many states in the U.S. haven’t legalized these facilities, many government officials are under the pressure to approve casinos. Casinos have been a very controversial topic to discuss, especially an affray between the liberals and conservative perspectives. The conservatives feel that the casinos inflict gambling as a social and religious violation. These clashes of beliefs have always been an intervening obstacle in the proliferation of casinos.

Cons

Casinos have gambled with many people’s lives. Many people who are in huge debt come to casinos as their last resort in order to pay their due amount. Gambling has been associated with higher suicide, anxiety, depression and murder trends, and has also increased personal bankruptcies due to the compulsive behavior of gamblers. These psychological ramifications have been major reasons why casinos are not located in every U.S. state. People who are tempted to win grand prizes are often tricked in losing their money. The roulette which determines the probability of someone being lucky has always been an effective strategy to coax the gambler’s decision to play for another game.

Pros

This economy of gambling has generated a whopping amount of $43.61 billion(approx.) in the United States in 2019 and most of that revenue is generated from the grand and exotic casinos at Nevada. It has become a business magnate for commercial and social entities. Casinos require a lot of security, instructional aids, and also the gaming staff. This results in employment of many which is perceived as an economic growth for all. It also has increased the tax revenue to state and local governments. This increased tax revenues have improved public education and given hope to bolster development in many cities. The picture below Top 13 U.S. states with casinos’ gross gaming revenue.

Image source: statista.com

Strategies of Casinos

Casinos always pay out odds lower than the odds of winning, which is how it makes casinos a sustainable economy and make it work for the long run. The slot machines at casinos have the least probability of winning a top prize. Chances ranging from 1 in 5,000 to a one in 34 million. Most casinos have used tactics such as providing free drinks, most casinos have designed their building so that a person would be hardly able to tell whether it is day or night outside, also there are no clocks installed at a casino. One of the most effective strategies of casinos is to make slot machines tickets instead of coins. This was one of the most effective since it lured players into putting the ticket in another machine and playing another game rather than making their way to the cashier cage to receive their money from the games they’ve played.

Why Casinos are recently proved that it is not a recession-proof economy

For a long time, Casinos have been considered recession-proof since casinos GGR(Gross Gambling Revenue) increased by 9.4% during the early 1990’s recession even though there was a 5.9% decrease in incomes due to recession.

But this was proven wrong when there was a 79% drop in the quarter 2 of year-over-year commercial casino gaming revenue. The president of AGA(American Gaming Association) and CEO, Bill Miller, said, “COVID-19 has undoubtedly posed the most difficult economic challenge the gaming industry has ever faced.”

“COVID-19 has undoubtedly posed the most difficult economic challenge the gaming industry has ever faced," said Bill Millner.

Although many casinos are reopening in the midst of COVID-19, many people are not ready.

Article Written by:- Chirag Agarwal

Special Edition

September 27, 2020

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