Economic impacts of gambling - Essay Example

To address this issue, gambling agencies and brokers have moved outside of the United States in order to provide an online service, which does not have to respond to the particular legal issues of any one region of the country. With the help of these online gambling websites, the industry has become a major commercial industry, with nearly $335 billion dollars in annual revenue (Leaders). Clearly, there is an economic effect of gambling within the United States; however, the nature and value of this effect is worth consideration.

According to Williams, Rehm and Stevens (2011), the research literature examining the effects of gambling on the economy is rich, with over 492 studies addressing the issue alone. Part of this large-scale interest in gambling by economists and other social scientists has to do with the policy decisions that come about constant debate about the worth of casinos and other gambling institutions. While most of these studies are not empirical and look only at the relationship between certain factors like problem gambling and gambling institution proximity, many of these studies do in fact examine the economic issues that arise when a gambling institution is established in a certain locale. . Gambling tends to benefit government revenue because governments tend to tax casinos more due to the nature of their business and for the fact that profit margins of gambling institutions tend to be higher than any other industry (Leaders).

Governments may also benefit from gambling in the sense that they are service provider, such as the case is with lotteries. The profit from these systems is often put into a program or service that receives public support. In Europe, gambling monopolies are held by the government and not private enterprise (Meyer-Arendt and Hartmann). Accordingly, there seems to be a consistency in the results of empirical studies finding that gambling institutions tend to increase the profits of the government at the same time it leads to profits for the industry.

Because governments use these profits from gambling, they provide additional public services that would not have been affordable from taxes alone. Governments, as one of the primary beneficiaries, either utilize the public services argument or earmark certain laws in order to maximize their own profit. Thus, gambling can have wide ranges of effects in terms of what the government believes is possible for their public services based on the profits extracted from the gambling industry (Anders).

On the other side of the coin, governments may decide to lower taxes instead of providing these public services, which will affect businesses and residents within the jurisdiction of that government (Rankine and Haigh). Any policy related to taxes will eventually affect individual decision-making and incentives. Based on the share of the profits that governments collect from gambling, which can be quite substantial, this effect on taxes