Cost of Gambling - $1 Cost $3 - Flawed Study

Just about every organization or group that opposes gambling uses John Warren Kindt and Earl L. Grinols “the state can expect $3 in costs for each $1 in benefits” to push their anti-gambling cause. Opponents to gambling treat this as a basic fact without questioning its validity. I was curious to find out where this ratio came from and how it was derived. Turns out it is just an estimate. An estimate derived from flawed data and equations. It is, in fact, just another heavily biased view from opponents of gambling. Grinols and Kindt cite each other and even themselves as sources for their “studies” while introducing no new independent research or studies.

An example of how flawed Grinols and Kindt’s “studies” are is discussed by Douglas M. Walker, Ph.D. (Associate Professor of Economics at Georgia College) in his paper “Evaluating Crime Attributable to Casinos: An Analysis of Grinols and Mustard's 'Casinos, Crime, and Community Costs'" (May 3, 2007)

http://walker-research.gcsu.edu/J%20Pubs%20PDF/GMCrime5-07.pdf

In the abstract Walker states,” There are several serious problems with their analysis and the interpretation of their results. First, the crime rate used by Grinols and Mustard includes crimes committed by county visitors but excludes visitors in the population at risk measure because county visitor data are not available. The result is an overstatement of the crime rate in casino counties. Second, the results may suffer from a bias caused by counties self-selecting into the “casino county” category. Third, the dummy variables used to account for casinos do not allow the authors to isolate the crime effect caused by casinos. Finally, the authors make conclusions that are not supported by their data, analysis, and results.”

This, to me, is the most damaging to Grinols and Mustard’s crime rate study, which is what their 1:3 cost ratio is based on. It is the fact that they failed to include visitors as part of the population at risk. When you calculate crimes per population (which is what they base their costs to society on) but fail to include the visitors as part of the total population at risk then the crime rate obviously goes up, but it is a false number. Basically their study and the conclusions they make are based on believing that only the residents of communities with a casino are the ones that have crimes committed against them and that visitors and tourists come and go to the valley free of crime. Flawed to the hilt. What about the resident who commits a crime against a visitor? That is not even considered in their "study". They tweak the data so that the results fit their cause and this is only one example of many. There are many variables that should be accounted for when "attempting" to calculate crime rate (social costs) and the real truth is that without an accurate account of the number of visitors and tourists visiting the valley, not just the casino but the whole valley, then any conclusions made by anyone is purely speculative and should be treated as such.


Sources:
http://www.maine.com/editions/2006-05-15/images/20060531000107C.pdf
http://www.baltimoresun.com/news/local/bal-md.slots14nov14,0,2202951.story?coll=bal-local-headlines http://www.americangaming.org/Press/press_releases/press_detail.cfv?ID=143