Do Casinos Contribute to the Common Good?: A Utilitarian Analysis

1. Do Casinos Contribute to the Common Good?: A Utilitarian Analysis Andrew Gustafson Creighton University Omaha, Nebraska, USA

2. Long History of Opposition to Gambling

3. Ethical Behavior of Casinos • Typical Business Ethics Questions • Customers: Service, Respect, Care • Employees: Respect, Fairness, Compensation • Environment: Sustainability • Community: Philanthropy, Education • Financial Disclosure

4. Ethical Culture • Codes • Responsibility (Officer, Go-To person) • Training/ Real Discussions • Accountability: Tracking, Monitoring, Auditing • Enforcement, Follow-Through • Reassessment, Ongoing Reform

5. 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?

6. 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?

7. UTILITARIANISMJohn Stuart Mill

8. 1. Greatest Happiness for the Many • Mill’s social utilitarianism is concerned about the welfare of the many, rather than just the individual.

9. 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.

10. 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.

11. 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.

12. Social Benefit/Utility/Greater GoodThe Questions of This Presentation: • 1. Greater Good for the Many • 2. Long Term Benefits • 3. Moral Education/Socialization towards Higher Pleasures • 4. Historial Trends

13. Apparent Greater-Good/Benefits of Casinos: • Economic Benefit • Jobs • New Businesses (auxillary support businesses) • Tax Revenue • Public Goods Projects • Entertainment

14. Four Brief Examples of Casino’s Contribution • 1. Vegas • 2. Bethlehem Pennsylvania • 3. Macau • 4. Council Bluffs, Iowa

15. Las Vegas 1940

16. Las Vegas 2010

17. # 2 Macau

19. Macau vs Vegas

20. #3 Sands Corp in Pennsylvania

21. Old Bethlehem Steel Mills

22. Closed 1995

23. Sands Corp Casino Openned 2009

24. $743 million property

25. 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.

27. Community Development & Beautification • 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.

28. Mainstreet Beautification

29. 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.

30. Education • The Foundation has an interest in new and innovative programs that promote life-long learning, academic performance and workforce preparation. • 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.

31. Human and Social Needs • 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.

32. Examples of Public Art

34. Jun Kaneko

36. Critics of Casinos • 1. Grinol’s Gambling in America • 2. Goss and Morse’s Governing Fortune • Question: Do Harms outweigh Benefits?

37. Grinols’ Taxonomy of Casino Negative Externalities • 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

38. 1. Crime 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.

39. 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.

40. 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.

41. 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”

42. 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 21-36% 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.

43. 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) • 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)

44. 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.

45. 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)

46. 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.

47. 5. Illness • Gambling has been linked to headaches, depression, stress-related illnesses, anxiety, moodiness, irritability, intestinal disorders, cognitive distortions and cardiovascular disorders.

48. 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.

49. 6. Social Service Costs • 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.

50. 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.