Feb 8, 2021

Economics of Casinos: Recession Proof?


An industry that supports public education, provides jobs to thousands, and helps the government with funds for development. Who would’ve thought that facilities relying on a small cut from the petty past-time activity--gambling--could be perpetuating the aforementioned benefits across the United States? In reality, it is the casinos that are providing these benefits.

Although many states in the U.S. haven’t legalized these facilities, many government officials are under the pressure to hand their stamp approval to these organizations. Casinos have been a very controversial topic of discussion, and are especially an affray between the liberals and the conservative perspectives. The conservatives feel that the casinos inflict gambling as a social and religious violation and the liberals are more open towards this type of business since it will increase economic freedom and will surge the number of tourists visiting their city for gambling. These clashes of beliefs have always been an obstacle in the proliferation of casinos. 


Casinos have gambled with many people’s lives. Many people who are in huge debt come to casinos as their last resort in order to pay off their dues. Gambling has been associated with higher suicide, anxiety, depression, and murder rates, and has also increased personal bankruptcies due to the compulsive behavior of gamblers. These psychological ramifications have been major reasons why casinos are not located in every U.S. state. People who are tempted to win grand prizes are often tricked into losing their money. The roulette which determines the probability of someone being lucky has always been an effective strategy to coax the gambler’s decision to play ’just one more game’. 


This economy of gambling has generated a whopping $43.61 billion (approximately) in the United States in 2019 and most of that revenue is generated from the exotic casinos of Nevada. It has become a magnet for commercial and social entities. Casinos require a lot of security, instructional aides, and gaming staff. This results in the employment of many which are perceived as economic growth for all. It has also increased the tax revenue for state and local governments. The increased tax revenue has improved public education and has increased hopes to bolster development in many cities. The picture below shows the Top 13 U.S. states with casinos’ gross gaming revenue.

Image Source: statista.com 

Strategies of Casinos

One of the casinos’ key strategies is in which the individual who is gambling has less probability of winning money from their casinos. This makes them stay sustainable and makes their business work for the long run.

Slot machines at casinos have a very low probability of winning the top prize. Chances range from 1 in 5,000 to 1 in 34 million. Most casinos have used tactics such as providing free drinks to make the environment friendly and comfortable, and have designed their buildings such that a person would hardly be able to tell whether it is day or night outside. There are no clocks installed at a casino. One of the most effective strategies of casinos is to make slot machine tickets instead of coins. It lured players into putting the ticket in another machine and playing another game rather than making their way to the cashier cage to receive their money from the games they’ve played.

Reasons why casinos aren’t recession-proof

For a long time, Casinos have been considered recession-proof since their GGR (Gross Gambling Revenue) increased by 9.4% during the early 1990s recession even though there was a 5.9% decrease in incomes due to recession.

But this was proven wrong when there was a 79% drop in quarter 2 of year-over-year commercial casino gaming revenue. The president of AGA (American Gaming Association) and CEO, Bill Miller, said, “COVID-19 has undoubtedly posed the most difficult economic challenge the gaming industry has ever faced.” Although many casinos are reopening in the midst of COVID-19, many people are still not ready to put their limited savings at stake.


Chirag Agarwal

I am a rising sophomore in high school and a writing enthusiast who is driven by curiosity to write about economics, inspiring people, and history.

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