The gambling industry as a whole has developed into a considerable economic force. It’s responsible for substantial revenues in the tourism and hospitality industries, but its influence goes beyond traditional casinos, with online platforms accounting for a massive piece of gambling transactions. Join us as we dissect how gambling’s convoluted yet intriguing economic footprint affects the global economy, contributes to GDP in various nations, and creates jobs.
When Atlantic City began its operations, the intention was to boost tax revenue and help urban redevelopment. Initially, there was a positive impact on the regional economy, with the industry generating capital investment, high-paying jobs, and a consistent flow of tourism. Employment in the metropolitan area more than doubled in the decade following the first casino opening in 1978.
The ripple effect of the economic contributions is significant and far-reaching, benefiting a wide array of sectors and supporting a diverse range of small businesses.??
If we take the US as an example, we can see that casinos are responsible for generating a staggering $52 billion in revenues for small businesses in diverse industries such as real estate, finance, health care, STEM, manufacturing, and information technology. In terms of employment, they support approximately 350,000 jobs in small businesses.
These jobs are not limited to the industry alone; a substantial portion are in non-gambling sectors like local restaurants and shops. These businesses often see a marked increase in customer traffic and economic activity due to their proximity to gambling properties.
Furthermore, the contribution of casinos to small business employee wages is notable, with $13 billion being supported annually.
These platforms contribute significantly to government revenues through taxation and licensing fees, sustaining public services and infrastructure. Gambling ventures boost local economies and create numerous employment opportunities, from technology and software development to customer service roles. They also stimulate technological innovation as the competitive market drives advancements in digital security, user interface design, and gaming software. Lastly, regulated gambling markets aid in the fight against illegal gambling by improving consumer protection and promoting responsible gambling habits. Let’s go over these advantages in greater detail below.
Tax Revenue
The capability of the gambling business to generate tax revenue is a critical economic benefit, allowing increased government investment in essential services and infrastructure. Direct tax contributions include corporate taxes, gambling-specific taxes, and license fees.
Indirectly, it adds to sales and service tax income. Spending on hotels, restaurants, and other local services in known casino locations increases the government’s proceeds.
The tax revenue generated from the gambling industry is often earmarked for specific public welfare projects. Governments use tax income to finance education, healthcare, social services, and community development initiatives.
To understand the scope of these numbers, betting online resulted in $1.5 billion in sports betting tax revenue for 27 US jurisdictions in 2022. New York, Pennsylvania, and Illinois generated more than $100 million each.
When we look at the market share of online poker in the US, the numbers are just as impressive. In 2022, the poker market size was worth $86.2 billion and is expected to have a growth rate of around 13.5% between 2023 and 2030. Given the sheer magnitude of the market, we can say with certainty that online poker contributes heavily towards tax revenue, among other economic factors.
Job Creation
The jobs created by the industry also contribute to tax revenue. This contribution is substantial, given the industry’s role in employment across multiple sectors, including technology, hospitality, and customer service:
- Direct employment includes positions such as dealers, security personnel, managers, customer service representatives, and technical support staff. Online platforms also demand a range of IT professionals, from software developers to cybersecurity experts.
- Indirect employment expands opportunities in companies specializing in game design, online security, marketing, and advertising.
The industry also contributes to the workforce’s skill development. Many roles in the gambling sector, especially in online casinos, require specialized skills, prompting the need for comprehensive training programs. This skill development can benefit employees’ long-term career prospects, even outside the gambling industry.
Reduction in Crime
Legalization directly influences the reduction of illegal operations, which are often associated with other forms of crime. However, the effect of legalized gambling is a subject of ongoing research and debate. Although research indicates that legalization does not necessarily lead to a rise in crime, specific types of crime, such as theft or fraud, may increase in areas surrounding casinos, possibly due to addiction issues.
Tourism
Gambling attracts visitors from around the world and stimulates local economies. Locations like Las Vegas, Macau, and Monte Carlo are prime examples of how casinos can become central to a city’s identity.
Modern establishments are a vital part of integrated resorts, offering a combination of entertainment, hospitality, and retail services and appealing not just to gamblers but also to families and business travelers.
Casino venues also host events like poker tournaments, entertainment shows, and conventions. These events often garner international attention, creating a cycle of economic growth and development for the hosting regions.
Everlasting Imprint of The Gambling Industry on the Global Economy
With its complex web of economic, social, and cultural impacts, the gambling industry plays a multifaceted role in society. The economic impact of the industry on a global scale is far-reaching, with just as significant influence on national economies. Whether land-based or online, revenues generated contribute heavily towards the way countries build, employ, and ultimately, prosper.
It is needless to say with this industry growing at the pace it is, the role of regulatory bodies and legislation are responsible for keeping up to ensure that individuals, communities, and countries can thrive alongside the industry, without the risk of jeopardizing the safety and well-being of local and global communities.
July 10, 2023
