Pennsylvania recently released the ruling of a 2 year Grand Jury on fracking in the state. The ruling is fascinating reading with a sad rendering of the negative effects of fracking on the citizens of Pennsylvania. Of course there are differing views. I commend the States Attorney for taking on the study of what might seem to be a financial gain for the State. As with the proliferation of gambling in Illinois the negative effects were not studied before much damage was done.
Illinois received 1.4 billion in taxes from gambling losses during the last fiscal year. Let’s take a look at where the losses come from, the social cost from those monies, and take pause to wonder why responsible people would think that it was a good idea to cause pain for its’ citizens.
Using data from a 2006 California Problem Gambling Prevalence Study it seems that the State is preying on those with a sub-clinical gambling disorder or a full blown disorder. I am using the 2006 data because in the 2018 Minnesota Annual Study on Persons with a Gambling Disorder they use that study as a reference. They reference the study as using 16%-33% of gambling losses as coming from those with a gambling disorder. I looked at the California Study and found that in casinos the losses were derived from low-risk gamblers at 54.4%, from at-risk gamblers at 16.6%, and from pathological gamblers (2006 terminology) at 32%. So almost 50% of losses are derived from those with some level of gambling problems. Seems predatory to me.
Using the 16-33% that means that Illinois might derive what they call revenues (I call losses) to the tune of 224 million to 462 million. The numbers for casinos would probably be proportionally higher. Are the overall revenue/losses worth the pain, suffering, suicides to the State. Wait you say, would not the gamblers lose the money to illegal gambling or other states? My guess is that some would and some would not. My hope is that any study the State commissions will quantify that question.
Okay again, I have pretty much accepted that the State does not care about the lives of those suffering. The prevalence rate of those with a gambling disorder is usually quoted from 1-3% and 3-5% at risk. Grinols (mentioned earlier for his 2004 book on a cost/benefit analysis of gambling in America) wrote an article on The Hidden Social Costs of Gambling (2011). His empirical study reports that the impact on society of pathological gamblers is $9,383 a year. I hypothesize with inflation and the proliferation of predatory lending the number would be much higher. For the following exercise I am going to round up to $10,000.
Illinois is estimated to have 12.63 million people. If we use the lower range of 1% that would be 126.000 people with a gambling disorder. At $10,000 worth of social cost the State would benefit only $140 million from their take of $1.4 billion. At a 2% prevalence rate the State loses over a billion dollars in social costs. I am pretty sure we have never seen that as a projection, at least out in the open.
I hope the upcoming study will be honest, exhaustive, and actionable. My heart breaks for those who have experienced the pain from a gambling disorder as a gambler or part of a system with such a gambler. That includes those from the past, those living in the present, and those who don’t have gambling on their radar.