Weighing social costs: research on the consequences of casino gambling is inconclusive

Legalized gambling has been around for decades, but it's hard to find undisputed research on the social costs of casinos.

Dane County voters will decide Feb. 17 if they want the Ho-Chunk Nation to add casino gambling to DeJope Bingo Hall on Madison's Southeast Side.

During a whirlwind campaign, voters have heard experts disagree on how much a casino adds to social costs -- increased crime, debts, suicide, bankruptcies, divorce, demand for more public services.

Some answers may lie northwest of Madison, 50 miles away in Sauk County, where the Ho-Chunk Nation has offered gambling for more than a decade.

Sauk County officials say they've seen some obvious changes in their 55,000-population county since 1992, when the Ho-Chunk Casino opened in Lake Delton. But officials haven't kept track of the effects.

"We believe we have some significant social costs, but we cannot prove that," said Gene Wiegand, administrative coordinator for Sauk County.

He said Sauk County has tried to examine social costs and said it's "virtually impossible."

"Every time there's a domestic dispute we don't ask if it's because the person gambled away the rent money," Wiegand said.

Unlike Dane County and the city of Madison, which together will receive at least $7 million a year from the Ho-Chunk under an agreement with the tribe, Sauk County receives no guaranteed payment. The casino opened before intergovernmental agreements became common practice.

But the Ho-Chunk routinely make donations to the community, including more than $30 million to local charities and organizations in the last five years. In 2002, the tribe donated almost $200,000 to six fire and police departments.

Wade Blackdeer, vice president of the Ho-Chunk Nation, said the tribe has brought jobs and spurred other economic development in the Wisconsin Dells area.

He sees the same economic gain for Dane County.

"The community is going to benefit, other businesses are going to benefit," Blackdeer said. "To me, it's all positive."

Expanded gambling in Dane County follows a statewide gambling compact that was signed in April, allowing the Ho-Chunk to open a fourth casino, possibly in Madison.

In negotiating with the tribe last year, Dane County officials asked Sauk County leaders if the casino had brought social costs, said Dane County Executive Kathleen Falk, a casino booster.

"We were told they could not substantiate significant human services costs," Falk said. "In fact, Sauk County said the Ho-Chunk were good neighbors."

Ken Cady, director of the Sauk County Human Services department, said his department hasn't seen much increased demand. The department doesn't keep track of what led people to need human services, but they haven't heard much anecdotal evidence of casino-related problems.

In fact Cady said that with casino profits helping tribal members escape poverty, fewer tribal members need county services. Almost 500 of the tribe's 6,300 members live in Sauk County, while 244 live in Dane County.

Sauk County Sheriff Randy Stammen said his department gets more calls every year, but there's no proof the increase is connected to the casino.

"It's hard to separate out the impact of the casino," Stammen said. "It's going to create some problems, but it also is going to create some revenue."

The Ho-Chunk Nation -- which is Sauk County's largest employer -- built the House of Wellness, a medical clinic for tribal members and a public fitness center, when there were no health clubs in Wisconsin Dells.

Ho-Chunk lawyer Tom Springer said, "If claims about casinos are true, why aren't they (Sauk County) in an uproar right now?"

Milwaukee and Brown county district attorneys differ on how casinos have affected their communities. There have been no detailed reports for either county, which have had casinos for about a decade.

But Milwaukee County District Attorney E. Michael McCann says that he's seen a significant increase in theft and embezzlement since the Potawatomi Bingo Casino opened.

Meanwhile, Brown County District Attorney John Zakowski said he's not seen a dramatic increase in crime attributed to the Oneida Bingo and Casino in Green Bay.

In Madison, a casino at DeJope is expected to employ 600 people -- compared to the 70 jobs at the bingo hall -- and have a payroll of $17 million a year plus benefits.

There have been some attempts to quantify how gambling affects communities.

In 1999 after two years of study, the National Gambling Impact Study Commission issued a report, at the request of Congress. The report called for a moratorium or "pause" on expanded gambling until more research could be done.

"Regarding gambling, the available information on economic and social impact is spotty at best and usually inadequate for an informed discussion let alone decision," the study reports.

There's been little follow-up research, several gambling experts said.

Earl Grinols, a national gambling expert and professor of economics at Baylor University, wrote a soon-to-be-published book from Cambridge University Press, called "Gambling in America: Costs and Benefits."

"The effects are real; the damages are real," Grinols said.

He estimated that problem and pathological gamblers cost each person in society at least $219 a year.

"Casino gambling fails a cost-benefit test by a sizable margin," Grinols said.

Another recent study conducted by two University of Nevada at Reno professors and one from the University of Memphis, found that crime does not inevitably increase with a new casino. The 2003 study, called "Does the Presence of Casinos Increase Crime?" found that in some casino communities, crime rates increase significantly, while in others, the crime rate remained the same or decreased.

According to the federal report, the number of problem gamblers doubles when there's a casino within 50 miles. But local officials said they don't know if Dane County has already seen an increase in problem gamblers since the nearby Lake Delton casino opened.

David Ward, president of Madison-based NorthStar Economics, said Dane County is already saturated with gambling opportunities -- including the Lake Delton casino -- so additional social costs from a Dane County casino are unlikely. Ward conducted an economic impact study for the pro-casino group last month.

Grinols agreed that the measure of additional social costs should be reduced for places that have casinos within 50 miles.

William Thompson, a professor of public administration at the University of Nevada at Las Vegas conducted a study paid for by No Dane Casino last month. He concluded that social costs and money local residents would lose gambling would outweigh the roughly $52 million in economic gain that jobs and the purchase of local goods and services would bring.

Overall, Thompson predicted a net loss of about $150 million a year to the economy. He said social gamblers would cost the county $42 million a year and county residents would lose a net $33 million a year at the casino that might have been spent on other entertainment or services in the county.

Using an economic multiplier, which assume that money would have been spent twice in the county before it left the community, Thompson figures a loss of $150 million a year because of the casino.

Blackdeer said he doesn't understand why any community wouldn't welcome the casino.

"We do a lot of charitable things," Blackdeer said. "I feel a little bad that we have to justify our right. I've been able to see communities grow (thanks to gambling)."