Casinos, Crime and Community Costs

Earl L. Grinols
David B. Mustard, University of Georgia

This paper examines how casino openings affect crime rates. Since 1990, casino industry revenue has more than doubled, and in 1997 revenues accounted for more than $20 billion. In spite of recent casino growth and many important policy issues related to casinos, there is no consensus about their effect on crime. We discuss theoretical reasons why casinos may increase or decrease crime, and then estimate the effect empirically by using county-level data between 1977 and 1996. Unlike many studies, we do not focus on one location (most frequently Las Vegas, Atlantic City) or one crime, but instead examine every US county and all seven FBI Index I Offenses. Time series data, which are rarely used, allow us to study how effects change over time. We use time and county-level fixed effects to control for unobserved heterogeneity across time and locations. We argue that about 8% of crime in casino counties was attributable to casinos and that the average annual cost of increased crime due to casinos was $65 per adult per year. By studying neighboring counties, we also argue that crime was created and not merely moved from one location to another.

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Updated 05/20/2006