By Christopher Lenois

Few industries ignite the public’s passion as much as gaming, alternatively referred to as gambling depending toward which position your own fire burns. In an economically underdeveloped state like Louisiana, where there are more gaming options than in any state other than Nevada, questions arise as to whether gaming generates enough revenue to make it worthwhile for the support of government and local businesses; are there deterring effects on economic development by other industries? And, of course, whether the well-publicized negative social factors actually play out on the general population.

While lottery tickets are available in local package stores, video poker machines are the standard gaming device for the river parishes. The machines are located in most bars and restaurants. The Finish Line, an off-track betting parlor in LaPlace, is the only River Parishes gaming establishment not exclusively consisting of video poker, and they provide more than 80 machines for their patrons. The machines have given rise to the still relatively new phenomenon of truck-stop casinos.

In St. Charles, St. James and St. John the Baptist parishes there are five such combination gas-station/mini-marts that have been expanded to include a restaurant, a bar and as many as 50 video poker machines. Ironically, these establishments have little to do with the commercial drivers stopping to rest and refuel, as an estimated 95 percent of the revenues come from local players.

Annual tax revenues from gaming make up 8-10 percent of the state’s budget, according to Dr. Tim Ryan, who is the Dean of the College of Business and an economics professor at the University of New Orleans.

In 1998, Ryan spearheaded a mammoth study about the economic and social impact of gaming in Louisiana conducted by college and university professors at across the state. (The study was completed prior to the opening of Harrah’s Casino in the New Orleans’ Central Business District.)

One result of the study determined that an impressive 40 percent of the $447 million collected in tax revenues was derived from video poker companies, indicating a nice boost to local economies.

“If I spend $500 in restaurants or theaters, I’m paying 8 percent or 9 percent sales tax. If I’m spending that same $500 on gambling, the sales tax is about 25-30 percent,” said Ryan.

The windfall is less impressive on the local level. Individual parishes who allow gaming divide a quarter of the total revenues amongst themselves, translating into about 1 percent of their budgets.

“It’s decent in that it goes into the General Fund,” says Jeff Clement, finance director for St. John Parish. A sentiment echoed by his counterparts in St. James and St. Charles parishes.

Certainly the extra $100,000-$400,000 alleviates pressure on a fund that lacks dedicated revenue sources, but the instability of the industry makes it a hard source to depend upon. St. John was the only parish to report a significant revenue increase from 2000 to 2001, and Clement attributed that to the fact that one of the truck stop casinos wasn’t built until the end of 2000. In St. James Parish, Finance Director A.J. Laiche actually estimated a 10 percent decrease in revenues from fiscal year 2000 to 2001.

The decline becomes more obvious when you compare the projected 2002 revenues for the video poker industry on the Louisiana State Police Gaming Division Web site, which run $100 million less than during the 1998 study. There are also about 1,000 less machines licensed between the two time periods.

“We were blinded by gambling in the 1990s. Up until then, it didn’t exist anywhere in this country except Las Vegas and Atlantic City. We unleashed a pent-up demand. No one reasonable should expect it to grow over a long period of time,” said Ryan, who attributes this to the fact that the average gambler eventually loses interest in games where he loses so often.

Though Ryan and his colleagues concluded that gaming produced a positive effect for the state of Louisiana by a 2:1 ratio of benefits to costs, he emphasized that a high concentration of those benefits were seen in the western part of the state, where the Lake Charles and Shreveport areas attract gaming-deprived Texas residents to their casinos.

The study defines the benefits of new dollars generated by the gaming industry to pay for the costs.

In addition to state and local tax revenues, benefits include jobs created and dollar impact on the local economy.

Again, the majority of the benefit was felt in the Shreveport-Bossier City and Lake Charles areas, where casinos created approximately 15,000 jobs. In contrast, video poker created 2,914 jobs across the state.

“I think without Shreveport and Lake Charles, we would have all concluded that the cost outweighed the benefits,” said Ryan.

Any impact on additional economic development is restricted to the western region of the state as well, since new dollars are introduced into the economy.

“It’s easy to see casinos in Lake Charles or Shreveport as a net gain because so many cars in the parking lot have Texas plates,” said Peter Ricchiuti, an economics professor at Tulane University’s school of business, and former asstistant treasurer for the state. “But on this side of the state with a mostly local population coming to the casinos, you’re just recycling money. And recycling money in an industry where consumer’s lose money results in a loss.”

Neither Ricchiuti or Ryan thought the presence of gaming deterred other industries from developing.. Ricchiuti pointed to the increased development of Nevada’s Clark County, where Las Vegas is located, as evidence to the contrary.

“It’s hard to find a part of the country that doesn’t have some kind of gambling,” said Ryan, citing state lotteries and Native-American reservation casinos. “You can’t argue that the existence of gambling is driving away other businesses, except maybe pro sports.”

Despite anticipating a continuing revenue decline, Ryan doesn’t expect the gaming industry to simply dry up.

“People would say we just need new forms of gambling. We will continue looking into legislation forever.”

Editor’s Note: This is the first installment of a three-part series examining the economic and social impact of gambling on the River Parishes.