Thursday, February 13, 2003
Copyright © Las Vegas Review-Journal

Problem gambling's social costs high, report says

Click on the image for an enlargement. Graphic by Mike Johnson.

Problem gambling among Southern Nevadans has a social cost conservatively pegged at between $300 million to $450 million a year, a new report being released this week says.

"It's a high cost for recreation," said Keith Schwer, director of the University of Nevada, Las Vegas' Center for Business and Economic Research and co-author of the report.

The cost also is about equal to the total estimated gaming taxes paid by casino operators in Southern Nevada, he said.

The estimates include only Southern Nevadans, not compulsive gamblers visiting from other states.

"We've often thought gamblers were visitors coming here, so they weren't our social problem. They came from Kansas, so they were a problem and cost for Kansas. This (compulsive gambling problem), however, is just local residents (in Southern Nevada)," Schwer said.

The actual cost could be fairly estimated as high as $900 million a year "had very conservative assumptions not been made in preparing the report," said Las Vegas professor and casino gambling expert Bill Thompson, a co-author of the study.

Copies of the report will be available Friday.

Schwer and Thompson, together with co-author Daryl Nakamuro, a student at UNLV, said the most important finding was that the social cost of problem gambling among Southern Nevadans is "significant."

"Critics can fudge around with the numbers, but even if they cut it in half -- and we cut it by 43 percent -- it's huge," Schwer said.

Although the benefits of the gaming industry are "widely touted, they do not reveal the full picture. In particular, the cost side to the gambling equation is often debated, but seldom measured," the report said.

Estimates of the number of pathological gamblers in Southern Nevada ranged from 20,000 to almost 40,000.

The research showed the annual social cost of each pathological gambler in treatment programs is $19,085.

Other studies, however, have found the per-person cost of problem gambling among compulsive gamblers not in treatment programs is only 43 percent as high as the cost from people getting care at inpatient treatment centers.

Schwer and Thompson therefore adjusted their estimates downward conservatively because survey research data is not available covering individuals not in care programs.

The highest annual single cost per individual in treatment programs involves bankruptcy debt losses and civil court costs of $10,000.

The employment costs in terms of missed work, productivity losses, forced terminations and unemployment compensation is more than $6,000 per compulsive gambler.

The criminal justice cost (theft, arrests, trials, incarceration and probation) is almost $2,500. The cost of treatment and social services is $500.

"The industry has danced and stalled and avoided. We believe there is a cost, and it probably offsets anything they're giving the community in economic development or taxes," said Tom Grey, executive director of the National Coalition Against Legalized Gambling.

"That's the government's and the casinos' dirty little secret. They have claimed they create benefits without costs," he said.

Industry spokesmen said they could not comment specifically on the report because they had not seen the results of the study.

However, MGM Mirage spokesman Alan Feldman said that he would like to see researchers at UNLV follow the same "rigorous standards as the rest of the academic community. There is an established procedure for peer review, and it's not to discuss results before review," he said.

"I want UNLV to be the gold standard for this kind of research, and this approach undermines that," Feldman said.

Park Place Entertainment spokesman Robert Stewart said his company considers problem gambling a very serious issue for the gaming industry.

"We believe the vast majority of customers enjoy gambling as an alternative form of entertainment and gamble responsibly," he said.

"For those who have a problem with gambling, it's a different story. Even at 2 percent or 5 percent of the population, it's a problem we have to take seriously," Stewart said.

Harrah's Entertainment Inc. spokesman David Strow said it is worth reviewing other studies to understand the dimensions of the problem.

"The National Gambling Impact Study Commission concluded the annual cost of problem gambling is $5 billion to $6 billion nationwide," he said.

"However, the comparison to the cost of other forms of abuse is instructive. For example, the cost of drug abuse was $110 billion and alcohol was $166 billion," Strow said.

Bill Bible, president of the Nevada Resort Association, said problem gambling is an issue the industry continues to take seriously.

However, he said many problem gamblers also have alcohol and drug problems.

He said it is important to separate out the causes of the social costs incurred, and that he will review the report when it is available.

At UNLV, study co-author Thompson said: "To critics from the industry, we say go out and do your own study. This is just a first step, and we're confident they'd find the costs are (actually) higher than our estimates."

The data on which the new study of problem gambling in Southern Nevada was based was collected over a two-month period last summer from participants in Gamblers Anonymous treatment programs.

Schwer and Thompson said one problem with the data is that "the most serious compulsive gamblers are most likely to exhibit a self-denial that will cause avoidance of treatment."

Therefore, while individuals who are in such treatment programs may have more serious problems than the average compulsive gambler, the most severely addicted gamblers who impose the highest social costs on the community were omitted from the data.

The report also excludes the costs of family dysfunction, divorce, children being without families, suicide and attempted suicide. That also could be a serious omission because the suicide rates among compulsive gamblers are the highest of any addicted group and six times the rates among alcoholics.

The study was done independently by faculty and staff at UNLV because of professional interest and personal concern in the issue.

It was based on methodology used to develop similar reports in Connecticut, Louisiana, Illinois, South Carolina and Wisconsin.

The Wisconsin study also was used in developing the report of the National Gambling Impact Commission, Thompson said. The methodology was refashioned to fit the gaming industry in Las Vegas, adding grocery stores, which had not been included elsewhere, but cutting out horse racing.