? Re: Economic Value of Gambling

[KJS]

Hey all,

I am doing research on gambling in Thailand and have a question about economics, being pretty uneducated about the subject. Casinos are illegal here, but there is a movement afoot to legalize them, because Thais gamble like crazy in underground gambling dens and casinos right over their borders.

A senator from Bangkok wrote the following in an opinion piece in an English language daily:

"But economists know for a fact that gambling is an activity that has no economic value because it does not involve real production. Money generated by the gambling industry is merely a transfer of money from one person's pocket to another. No goods or services are produced and society derives no benefit from it."

1) Is this correct? Isn't providing jobs an economic benefit?

2) What other activities would fit this definition of "no economic value...not involving real production"? Would restaurants, or are they different because someone "produces" a meal? What about places like 7-11? They are merely "a transfer of money from one person's pocket to another," aren't they? What am I missing?

Its interesting to me, because tourism is Thailand's #1 industry, and my undereducated view says gambling is economically synonomous to selling rooms, meals, drinks, etc., which makes this place go round. But I am guessing he thinks there is a production value in these activities that does not equate to gambling. But why? I don't know.

Thanks,

KJS

[adios]

1) Is this correct? Isn't providing jobs an economic benefit?

Yep.

2) What other activities would fit this definition of "no economic value...not involving real production"? Would restaurants, or are they different because someone "produces" a meal? What about places like 7-11? They are merely "a transfer of money from one person's pocket to another," aren't they? What am I missing

The Senators argument is a BS argument. In an economic transaction between a buyer and seller both parties in theory benefit. It's that simple. If someone didn't benefit from going to a 7-11 why would they go to one? If someone didn't benefit from providing the goods and services that a 7-11 provides why would they ever provide the store for people to go to (at least they believe will benefit in the long run)? Likewise with gambling. The reason I go to gamble is because it brings me satisfaction, excitement, in short it has something called utility (an economic concept) for me. Without getting into a lot of detail, the downside of gambling for a society is that there may be what's called spillover effects where the economic costs of providing the means to gamble such as casinos are not fully borne by the casinos and society incurs at least some of the costs that go with compulsive gamblers for instance when the casinos should be bearing these costs entirely. A simple example of this concept is that say there are lax laws regarding pollution and an industry pollutes a lake while making a profit from what ever they're doing that causes the pollution. Sometime later taxpayers have their taxes raised in order to clean up the lake. The costs of the polluter were only partially incurred by them and the cost "spilled over" to the individual tax payers.

Gambling has no economic benefit? I don't think the residents of Nevada would agree with that nor should they.

[Mark Heide]

Answer 1: Yes it provides jobs. Someones got to empty the machines, deal the cards, and spin the wheel.

Answer 2: It falls into the category of entertainment. Like going to see a movie.

[Ray Zee]

it does provide economic benefit to the place it is held in. but it really does just transfer money. so if you bring outside guests, it helps the place as more money is spent in that location. however it hurts the places combined where the money came from as it drains it from that source.
but money transfer does help economies. the best help is production that can be exported from the area.