History of the GAO Report

The United States General Accounting Office (GAO) released a report on Gambling on April 27, 2000. This report was written at the request of Frank Wolf, a Congressman and gambling opponent from Virginia. Rep. Wolf requested that the GAO examine the June 1999 findings of the National Gambling Impact Study Commission (NGISC) on the economic and social effects of gambling on communities and families, and also to explore further the issues raised in the NGISC report through a case study in Atlantic City, NJ.

Scope and Methodology of the GAO Report

Scope: The GAO focused on four research areas:

1. the economic effects of gambling, particularly on employment, bankruptcy, and tax revenues and community investment;
2. the social effects of gambling;
3. the prevalence of pathological gambling, and
4. whether communities offer incentives to attract gambling establishments.

Methodology: In order to address these objectives, the GAO reviewed the NGISC’s research as well as the reports completed by the NGISC’s contractors. Importantly, the GAO "did not replicate its work in an effort to verify its conclusions [and[ did not attempt to independently verify the results or methodologies of any of the studies cited in NGISC’s report." In conducting the Atlantic City case study of this report, the GAO interviewed officials in 26 government agencies and community and private industry organizations and analyzed social and economic statistics using data from the FBI’s UCR and other federal agencies.

GAO Findings:

1) There is No Definitive Link between Gambling and Bankruptcy

In brief, neither the GAO or the NGISC "could find data to show a cause-effect relationship between gambling and bankruptcies." NORC’s 1998 analysis of data on 100 communities between 1980 and 1997 showed no significant change in per capita bankruptcy rates in communities where casinos were introduced.(21)

2) It is Difficult to Clearly Identify the Social Effects of Gambling

The GAO report listed a variety of reasons for being unable to clearly identify social effects of gambling. First, the "amount of high quality and relevant research on social effects is extremely limited." Second, tracking systems that collect data on family problems, crime and suicide generally do not discuss causes of these incidents, "so they cannot be linked to gambling." Third, data are sometimes available only at the county level, not for specific communities with gaming. Finally, "while studies have social increase in social costs of pathological gamblers, it is difficult to isolate whether gambling is the only factor causing these problems because pathological gamblers often have other behavior disorders."

3) Legalized Gambling, especially in casinos, has resulted in an increased number of jobs in communities and decreased the unemployment rate and unemployment insurance payments.

In 1996, the legalized gambling industry employed more than half a million people, with total salaries of more than $15 billion. The Casino industry paid $2.9 billion in federal, state and local taxes in 1995. NORC reported that communities with a casino within a 50 mile radium experiences a 1-percent decrease in the unemployment rate, a 17 percent decrease in per capita unemployment insurance payments and a 13 percent decrease in per capita income maintenance (welfare) costs.

4) Indian Gaming accounted for 15% of the 1998 Gambling Industry’s Gross Revenue.

The GAO calculated that "the majority of gross gamblign revenue resulted from casinos (41 percent) and lotteries (31 percent)." Tribal gaming accounted for 15 percent, pari-mutuels for 7 percent and Legal bookmaking for 6 percent.