By Kathryn Hashimoto
Of all the allegations that follow the casino debate in cities and towns throughout our nation, the single, most consistent accusation hurled by anti-casino opponents has been that casinos hurt the local restaurant industry. Having heard this oft-repeated charge time and again, and possessing little, if any, independent data to prove or refute existing anecdotal beliefs, I decided to undertake a study to gather the empirical evidence necessary to render a factual answer to what has now become a thorny political question: Do casinos help or hinder local restaurant growth?
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Having researched and written about the restaurant, hospitality and casino industries since the 1980s, I’ve consistently found a trove of newspaper articles suggesting casino development would have a devastating effect on local food and beverage operations.
None of these articles have ever cited any data based on comprehensive studies. Rather, those articles have usually centered on opinion and anecdotes, some of them possibly framed by opponents of the casino industry. A few articles went so far as to predict the disappearance of local restaurants altogether. If a casino were to come to town, economic doom-and-gloom were predicted – almost universally – by restaurant owners, local officials and the news media.
In order to reduce any bias in the information we gathered, we relied on data collected by the U.S. Bureau of the Census, as published in “County Business Patterns.” This data had two unique benefits:
The data covers a wider area than the city or town in which a casino operated, thus giving a truer picture of economic activity.
The data does not include restaurants located in casinos, thus ensuring the research would analyze only local non-casino restaurants.
Armed with this data, I then looked at three key indices: the number of establishments; the number of employees; and the total payroll. For consistency, the data gathered focused on periods five years before, and five years after, a casino opened within a given area. The data gathered were used to study 20 different gaming jurisdictions in the United States, including the Atlantic City, N.J., area; Mississippi’s Gulf Coast region; the Mississippi River riverfront cities stretching from Illinois, Iowa and Missouri south to Louisiana; and communities in Indiana, South Dakota, Colorado and southeastern Connecticut.
Despite all the different locales, one finding was surprisingly consistent: in jurisdictions from the seashore to the riverfront to rural areas, from the East to the West, from the North to the South, local restaurants tended to thrive after a casino opened nearby.
That’s right: more restaurants opened; more employees were hired; and restaurant payrolls increased.
Atlantic City has been offered, time and again, as an example of the devastation caused to local restaurants by casino development. But in the 17 years after gaming began in Atlantic County, the number of eating and drinking establishments in the area grew to 580, from 415, a 40-percent increase; the number of employees rose to 7,176, from 4,439, a 60-percent increase; and total restaurant payroll rose 26 percent.
But for those critics who would argue that Atlantic City is an isolated case, the data for other jurisdictions is similarly enlightening – and impressive.
In southeastern Connecticut, home to two of the world’s most successful casinos – Foxwoods Resort Casino and Mohegan Sun, which house more than a dozen upscale restaurants within their facilities, in supposed competition with the local restaurant industry – the data and evidence again underscore that casinos do not destroy the local
restaurants. They grow and strengthen after casinos open. Despite the nearby existence of the casinos, restaurants in surrounding areas increased to 506, from 472, a 7-percent growth in establishments; restaurant employment rose to 6,628, from 5,911, a 12-percent increase in local restaurant jobs; and local restaurant payrolls surged 26 percent, to $69 million from $55 million.
Clearly, when scientific methods are applied to the question of casino impact on a local restaurant industry, the results convincingly refute conventional wisdom.
Casinos draw visitors to regions they might otherwise neglect, thereby giving local restaurants an increase in potential customer exposure. Casinos also employ thousands of people who, in turn, patronize local, non-casino, restaurants. As such, the data show, undeniably, that the number of restaurants, employment and payroll grow after casinos open.
Kathryn Hashimoto is an associate professor at the Lester E. Kabacoff School of Hotel, Restaurant and Tourism Administration at the University of New Orleans. This piece is part of ongoing stream of unfunded, academic research, including two other articles published in Gaming Law Review and presentations at national conferences on tourism and hospitality.
