Gambling in Business - Research Paper Example

? Macro & Micro economics, Research Paper Topic: Gambling EXECUTIVE SUMMARY Global giant, the gambling industry consists of various sectors.These are mainly casino resorts and other convenience gaming spots. Both of them differ in a way that there are opportunities of jobs as it includes hotels, shopping malls and other recreational activities. Whereas, the convenience gaming spots offer very little of gaming options and such opportunities and, therefore, are of no significant economic benefits. With gambling, there is huge amount of money involved, both in terms of cost as well as benefit. These costs and benefits are associated to the population drawn in this field. But the surrounding population, which is not actively involved in gambling also, suffers from its impact, positive as well as negative. The business of gambling has been a major contender of policy makers’ dialogue since long. But unfortunately, the lack of research, especially eminent research has been hindering any positive conclusions. Furthermore, contentious and biased suggestions and studies made in this field are disabling people to determine the bang of gambling in true essence. INTRODUCTION Many countries, especially the ones suffering from economic adversity consider that gambling can be a universal remedy and magic potion to their economic and social problems. Countries having high rate of unemployment deem gambling business as a glorious opportunity of their economic revival. This includes gambling enterprises, lottery tickets and especially destination resorts. In addition, federal, local and state governments receive large amounts of money out of this business in terms taxes and receipt of lottery tickets. However, there are huge costs associated in this business along with these benefits. There exist two opponent schools of thought regarding the gambling business. The one in favor of this field regard it as a source of recreation and quick income to the people. They divide gambling in two distinct categories: Leisure gambling and Lottery gaming. According to this group, people do leisure gambling in order to add relief and entertainment to their hectic lives. This is like other recreational activities such as listening to music, playing chess or golf, etc. Whereas, Lottery gaming is done with a longing of winning large prizes. The opponent group believes that gambling or lotteries, in any way, are based on miscalculations and elusive anticipations. According to this group, the lottery player or gambler always is a victim of these illusions and misconstructions. Famous economists say that customers/ people are the common target of this business. So, the effect of gambling on economy depends upon its actual impact on people individually and communities in general. Unquestionably, such sectors of business, like money-making casinos, hotels and destination resorts offer jobs with good remunerations; this include smart salary and fringe benefits such as health care, advance education and work related trainings. Moreover, the class entertainment is itself a qualitative economic and social benefit to people. These benefits monetarily support the hard beaten families and individuals but unfortunately, these benefits do not get there alone but along with a host of incontrovertible and momentous costs. Increasing number of people suffering from crisis of pathological gambling, time and again results in impoverishment, felony, suicide, separation, violence or maltreatment. Various recent studies and researches have tried to calculate these costs to society in general and individuals in particular, but no dollar amount can actually characterize what a mislaid or stray parent, life partner or kid means to the left over family. Furthermore, most of these costs are indirect and quantifying the costs of emotional impairs and its long lasting impact on families and their children is not possible. In many ways, the substantial impacts from problem gambling can be considered as comparable to the financial impacts of alcohol exploitation. In actuality, it is these unseen costs, i.e., the emotional costs of such fanatic behavior that is of far more concern as compared to the yearly economic costs of gamblers. In this report, we will consider the factors of economic benefits and costs related to the gambling business and its impacts on businesses, communities and people. LEGALIZED GAMBLING Legalized gaming has offered convincing positive economic advantages in countries or states where it has been introduced. These advantages include the following: Quite a large number of employees in various cities, tribes or states obtained new and improved jobs. Large number of employees has moved from one city or state to the other to the locations of large casinos and gaming zones. Employees quitted low waged jobs with fewer benefits in order to obtain handsome jobs at casinos with higher remunerations and growth opportunities. Employees were able to purchase homes and cars for themselves. Enhanced Health care reimbursements and retirement packages offered by casinos. Due to legalized gaming, improved and enhanced living facilities are provided for the promotion and development of their children. Due to building of new gambling sites, such as casinos, increased number of physical properties, resources and hence richness and prosperity has been brought to the local population. Furthermore, addition or up gradation of associated infrastructure, such as new roads, enhanced electrical and sewage systems, enormously adds to the amounts of revenues and other social and economical benefits to the people and society. Revenues and monetary benefits from gaming provide people with additional resources so that they can invest in various other businesses and industries etc. this will result in additional or increased profits to their states or cities. Improvement in value of property and assets of the geographical locations around the gambling venues. Improvement in the businesses of shopping centers, hotel business and food business, etc. Towering results in economic benefits of gambling business have been seen and verified especially in societies that are economically weak and shaken and are having very meager chances and opportunities of economic expansion. There has been an agreement in principle that legalized gambling offers the supervisory bodies with opportunity to set gambling businesses where income and economic growth is low, hence equipping the needy people and societies with financial boosts. This has, however, a pessimistic outcome of equipping the people having less economic resources and opportunities with the temptation of the gambling business. This can make the gambling business a competitor of other commercial and industrial businesses, where many people who can get jobs in other industries or organizations are turning towards the gaming business. Hence, this results in low net profits in these gambling areas. Furthermore, profits of other businesses (commercial and industrial) also face a decline in their profits due to arrival of a new rival competitor. GROSS DOMESTIC PRODUCT (GDP) The measure of macro economics that contributes most to it is the role to Gross Domestic Product (GDP). The contribution of different countries and regions in the gambling industry of the world is as depicted in table below: Region wise world casino gambling market (US$ millions) Regions 2006 2007 2008 2009 2010 2011 2012 United States 57,470 60,440 59,433 57,368 57,488 59,500 62,315 EMEA 20,783 20,894 19,959 17,567 16,307 16,175 16,250 Asia Pacific 13,687 17,714 21,379 22,898 34,280 47,042 58,124 Latin America 2,584 2,959 3,269 3,601 3,800 4,096 4,370 Canada 5,354 5,685 5,694 5,874 5,704 5,597 5,621 Total 99,878 107,692 109,734 107,308 117,579 132,410 146,680 Largest contributor as evident from the table above is the United States of America, with a rising competitor as Asia Pacific. The contribution of Asia Pacific has been increasing fiercely. This is further shown as the pie charts below: GOVERNMENT SERVICES The basic purpose of government existence is to provide support to their people, and so it is an ordinary expectation that the augmented and amplified government profits that are a result of gambling business in form of taxes levied and lottery ticket receipts, there would be an increased investment in the development of public services (e.g., health of people and their families, education of their children and social sanctuary). In fact, these and other associated benefits of general public are often publicized as actual reasons for development and expansion of gambling business by the governments nationwide. Furthermore, in many places some types of gambling (such as bingo, raffles, etc.) are arranged by certain renowned charitable organizations. The profit out of these charity games is utilized in betterment and/ or advancement of the community and people. DEVELOPMENT AND EMPLOYMENT As we know that major forms of physical gambling are: Poker, Casinos, Bingo, Slots and etc. contribution of the games by type is as follows: Estimated gambling revenues by game types: GAMES % CONTRIBUTION Poker 47 Casino 17 Bingo 8 Slots 27 Others 1 It was estimated that in populations near to new casinos and gaming stations, unemployment was surely to reduce by more than one-seventh with increase in per capita income of other associated businesses of casino construction, hotel business, etc. Although, no overall change in per person income was observed as a result of decline in restaurants, tourism businesses and bars. Furthermore, issues related to pathological gamblers puts deep socio-economic impact as well. Estimated Economic Impacts by Type of Gambler Characteristic Lifetime Gambling Behavior Non-gambler Low risk At risk Problem Gambler Pathological Gambler Any unemployment benefits (12 mo.) 4.6 4 10.9 10.9 15 Received welfare benefits (12 mo.) 1.9 1.3 2.7 7.3 4.6 Household income (12 mo.) $36,000 $47,000 $48,000 $45,000 $40,000 Household debt, current $22,000 $38,000 $37,000 $14,000 $48,000 Filed bankruptcy, ever 4.2 5.5 4.7 10.3 19.2 ECONOMIC AND CREDIT PROBLEMS A common perception found among various country regulators and community leaders is that debt will help to increase the business of legalized gambling. One of the problems of biggest apprehension is the equipment of credit in as well as around casinos; this may usually result in irresponsible and care free gambling and problem and/ or pathological gambler attitude. 50 – 60% of the cash staked by people in casinos is actually not brought to the casinos and gambling zones in physical. Casinos and gambling agencies invest huge amounts of money in billions of dollars as debt to their customers. This debt is actually in form of credit markers that can be borrowed by the casinos on spot without the need of cash availability. As a result, additional percentage of interests is charged by casinos to their customers. This percentage varies from 3 – 10% or more. Using credit cards and stakes allow customers to play as much as they want without worrying about the amount of money available with the actually and resultantly they incur heavy debts that cause them to arrange money later on by negative ways, hence implying further socio-economic issues. CONCLUSION Gambling, in principle, is a business that incurs profits as well as loss. Like any other business activity, this business also hosts opportunities in terms of social and economical benefits and jobs. But the real question is not whether it employs many people on job. It also does not ask if this business remunerates its workers well or not. Neither does it asks the percentage of tax revenues received from the business. But the actual issue is that whether or not the net incomes of this business are balanced by its expenditures and costs. BIBLIOGRAPHY 1. National Gambling Impact Study Commission Report: Gambling’s Impacts on People and Places 2. Global Gaming Outlook: The Casino and Online Gaming market to 2015 3. The social and economic impacts of gambling: final report, 2011 4. David Ramsey Steele, “Gambling is Productive and Rational,” 5. Legalized Gambling, For and Against, Evans and Hance, ed. Read More