Increased Crime and Legalizing Gambling Operations: The Impacts on the Socio-Economics of Business and Government

Abstract

Legalized gambling activities in various forms are being rapidly adopted by many states, but no state has a comprehensive developmental plan that includes the overall socio-economic costs of legalizing gambling. In this situation, states considering initiating or expanding legalized gambling activities must necessarily extrapolate from the best reports available that analyze those specialized costs associated with legalized gambling activities from a statewide perspective. Unlike most business activities, legalized gambling activities add three significant costs to government: (1) regulatory costs; (2) socio-economic costs occasioned by new compulsive gambling activities; and (3) costs to the criminal justice system. These three costs, and in particular. the increased costs to the criminal justice system, are reviewed from the strategic perspective of state governments. This article concludes that the flow of new tax revenues generated by increasing legalized gambling activities can theoretically stay ahead of increased costs to a given state's criminal justice system. but the increased costs overwhelm the benefits when all of the costs are considered.