Gambling and the economy

No! Bahamian residents, citizens, permanent residents and work permit holders alike, SHOULD NOT be allowed to gamble in the Casino!

I can hear the outcry now – “What do you mean? You believe in continuing this unjust discrimination? Don’t you believe in Bahamians? Don’t you believe that Bahamians are sensible enough to make responsible choices about gambling?”

Of course I believe in Bahamians. Of course I believe that Bahamians are mature enough to make sensible choices for themselves. And yes, I appreciate that this view might be seen as discriminatory. In fact, while I don’t think that Bahamians should be able to gamble in the Casinos I do think they should be allowed to gamble in the webshops.

Let me explain. This is not about discrimination or mature sensible individual choices or even the rights of residents v non-residents. This is about the role of money in the economy, and i’m talking about the big-picture economy.

Money is useful in the economy when it is circulating. Business spin-offs are only created the money they get from their customers is put back into the economy (through salaries paid, services or goods paid for etc). Some businesses by their very nature recirculate money better than others. Toursim is an industry by its labour intensive nature, recirculates money well (I’m not going to talk about the tourism ownership issues here, that is a discussion for another time). In fact we can create a recirculation ratio: what proportion of each dollar that comes into a business that goes back out into the economy.

What about gambling. By it’s nature, gambling does not recirculate money efficiently. Huge sums of money come in, but a relatively small proportion goes back out in the form of salaries, winnings, services etc. Even in the casinos where there are many employees, their salaries are a  fraction of the daily intake. Electronic gaming has an even greater imbalance. Overhead costs of running an online gambling operation are negligible compared to the intake. The majority of the money that comes into the operation is pure profit. And that profit goes straight into the owners’ pockets. Essentially, money is going from someone who is likely to recirculate the money (the gambler), to someone who is unlikely to recirculate the money (the owner of the gambling operation). In short, with gambling, productive money becomes unproductive.

This situation is particularly harmful if the gaming owner is a non-national entity. Now the money moves from the gambler who is otherwise likely to recirculate it locally to the non-national gaming operation – that money leaves the economy. So not only is that money not circulated, but now it is removed from the economy altogether, leaving even less to be circulated.

This is why I am against residents of any sort gambling in the casinos, as long as they are foreign owned. It has the potential for harm to the local economy.

But what of the webshops. Despite all the philanthropy that the webshop owners have demonstrated – and they have spread the money around – their operations still take huge sums of money out of circulations, even moreso because their operations focus on online gaming which as pointed out earlier, drastically reduce the knock-on impact of this industry. So why do I advocate legalizing this type of gambling?

I believe people will gamble in this manner whether it is legal or not. If the business is illegal, the government has no opportunity to recapture any of this money through taxes and licenses etc. – more of it will go into the pocket of the webshop owners. Additionally, illegal enterprises are less likely and less able to recirculate money without attracting attention to themselves. Webshop owners are not free to start banks to lend money to patrons, or start legitimate business without having to endure questions about where the startup capital came from. The only way they have to recirculate large sums of money is through construction and donations to charty.

Of course, if people are going to gamble anyway, a lottery would be the most likely of all the forms of gambling to move that money back into the economy (but given all the recent govt scandals, I imagine that people have little faith that the monies collected would go where it supposed to go).

The long and short of it is this. Gambling is not good for the economy as a whole. If people are going to gamble, they should gamble in locally owned establishments which should be legal, taxed and regulated. Bahamian residents should not be allowed to gamble in foreign-owned casinos. Moreover foreign owned casinos should not be granted licenses for online gaming as that will take more of the tourist dollars that could be spent elsewhere in the economy out of local circulation.

Needless to say, I voted Yes (with an explanation).