Increases in the bankruptcy rate during the
past decade along with growth of the gaming industry have led
some critics of the industry to raise questions about a possible
link between the two.
Recent government studies, as well as national statistics, have
disproved their theories.
The U.S. Department of the Treasury investigated this issue
at the request of the U.S. Congress and released a report in
July 1999 finding 'no connection between state bankruptcy rates
and either the extent of or introduction of casino gambling.'
In preparing its analysis, the Treasury Department examined
existing literature on gambling and bankruptcy and conducted
new empirical research. According to the study: 'Much of the
earlier increase in the national bankruptcy rate has been attributed
to the changes in the bankruptcy law of 1978. Other economic
and social factors cited by researchers as contributing to more
recent increases include higher levels of debt relative to income,
increasing availability of consumer credit through general purpose
credit cards and the reduced social stigma of declaring bankruptcy.'
The National Opinion Research Center at the University of
Chicago (NORC) found similar results in a study completed
in 1999 for the National Gambling Impact Study Commission.
The NORC study reported that instances of bankruptcies were
no greater in communities with casinos than in communities
that don't have casinos.
It was claimed that the 298 U.S. counties which have legalized
gambling within their borders had a 1996 bankruptcy filing
rate 18% higher than the filings in counties with no gambling.
And that the bankruptcy rate was 35% higher than the average
in counties with five or more gambling establishments (SMR
Research). The National Gambling Impact Study Commission found:
"…the casino effect is not statistically significant
for…bankruptcy…" (NORC).
A 1996 USA Today survey of 522 bankruptcy filers found that
63 percent cited credit card bills and 50 percent cited job
loss or pay cuts as the main reason for bankruptcy. Only 2
percent cited gambling as a major factor.
National statistics and other facts also fly in the face
of critics' contentions suggesting a link between gambling
and bankruptcy:
The majority of states with the highest bankruptcy rates
are those with no casino gaming.
Of the top 10 states with the largest growth in bankruptcy
filings, only Mississippi has casino gaming, a state that
historically has been economically depressed - likely a higher
predictor of bankruptcy than a nearby casino.
Of the 24 counties in the United States with the highest bankruptcy
filing rates, none have casino gaming.
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