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How Casinos Work

The Dark Side of Casinos
The Trump Taj Mahal casino in Atlantic City, New Jersey.
The Trump Taj Mahal casino in Atlantic City, New Jersey.
Photo courtesy of Raul654

There are numerous opponents of casinos and a fair amount of evidence showing that they do cause economic harm to communities and individuals. Casino money also acts as a magnet for corruption, and for many years "casino owner" was synonymous with "Mafia boss."

As the casino business in Nevada expanded in the 1950s, owners sought funds to finance expansion and renovation in hopes of drawing even more Americans to the strip. Legitimate businessmen were reluctant to get involved in casinos, which had the taint of "vice" since they were illegal in every other state. Organized crime figures had plenty of cash from their drug dealing, extortion and other illegal rackets, and they had no problems with gambling's seamy image. Mafia money flowed steadily into Reno and Las Vegas, but the mobsters weren't content to simply provide the bankroll. They became personally involved, took sole or part ownership of some casinos, and even influenced the outcomes of some games with the threat of violence to casino personnel.

However, real estate investors and hotel chains had even more money than the gangsters, and soon realized how much they could make with casinos. Donald Trump has owned several casinos, and so has the Hilton hotel company. With such incredibly deep pockets, these companies bought out the mobsters and began running their casinos without mob interference. Federal crackdowns and the possibility of losing a gaming license at even the faintest hint of Mafia involvement means legitimate casino businesses keep the mob far away from their gambling cash cows.

Perhaps even more insidious is the damage done by compulsive gambling. Studies indicate that people who are addicted to gambling generate a disproportionate amount of profits for casinos: five percent of casino patrons are addicted, generating 25 percent of the casino's profits [Source: PBS]. Economic studies show that the net value of a casino to a community is actually negative [Source: UIUC News Bureau]. Critics contend that casinos primarily draw in local players, not out-of-town tourists, so casino revenue represents a shift in spending from other forms of local entertainment; and that the cost of treating problem gamblers and lost productivity from gambling addicts reverses whatever economic gains the casino may bring. In numerous communities where a casino has opened, calls to gambling addiction hotlines have increased by several percentage points in subsequent months and years.

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