Reston Spring

Reston Spring
Reston Spring

Sunday, January 7, 2024

"The impact of casino proximity on northeast urban communities: A literature review," Paulette J. Olgivie, Humanities and Social Sciences Communications, 9, Article 36, 2022,

The following is an extract from the abstract of a paper in Humanities and Social Sciences Communications published in 2022.

The purpose of this article is to present a comprehensive review of casino proximity and northeast urban casinos and host communities to the discussion on the construct, casino proximity and the impact on northeast urban casino communities by explaining the implications to those communities through extensive literature review. The review found that 

(i) urban casinos are typically placed in low socio-economic communities with some existing gambling culture, 

(ii) socio-economic improvement are promised to existing disadvantaged communities prior to the adoption of casinos, but modest economic benefits realized in urban casino neighborhoods are unsustainable, and 

(iii) increased accessibility and availability of urban casinos due to proximity could increase casino participation, which in turn could potentially increase gambling-related problems. Results of this literature review also indicated that gambling-related problems from proximity to casinos could produce negative socio-economic outcomes for host communities. 

Key stakeholders (including legislators, community workers, social services professionals, scholar-practitioners, and the casino-gambling industry) could benefit from this review given the increase in urban casino in major metro areas, and the potential impact those casinos can have on host and neighboring communities.

Tuesday, January 2, 2024

Economic Impact of Casinos on Home Prices: Literature Survey and Issue Analysis

The following is a major excerpt of the introduction and summary of a major research paper prepared by the National Association of Realtors (NAR) regarding the economic impact of casinos on home prices. The highlights throughout this post are by Reston 20/20.

The baseline conclusion is that adding casinos to a community generally lower the value of homes.

  • The decline in home property values is most pronounced in the area immediately around the casino.
  • The decline in home values is more pronounced in high-density areas--such as along the Silver Line in Tysons and Reston.  Depressed, rural areas actually often experience home value increases from the introduction of a casino.
  • With most of its patronage coming from locals, a casino largely just takes retail business (plus lost wagers) from local businesses and residents.
The bottom line is that the introduction of a casino in Reston or Tysons will likely reduce real estate values nearby resulting in less property tax revenue and requiring higher property tax rates county-wide.

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Economic Impact of Casinos on Home Prices

Literature Survey and Issue Analysis

NAR Research

 

Introduction and Summary

This paper summarizes the key issues associated with casino gambling, focusing primarily on the impacts of casinos on home values. In general, externalities of congestion and other social costs appear to have a negative impact on home values in the immediate area of a casino. The other impacts from the introduction of casino gambling to a community generally vary, depending on population, urban/rural location, and mix of patrons. The literature on the economic impacts of casinos is voluminous; there continues to be substantial disagreement on the measurement of costs, benefits, and impacts from gaming.

The impact of any specific casino proposal appears to be strongly driven by site-specific conditions. Accordingly, this paper outlines a number of important issues for consideration in evaluating the impact of a casino on housing and the community. The paper has been prepared in conjunction with the REALTOR® Association of Pioneer Valley and makes reference to the proposed casino for Springfield, Massachusetts. The conclusions are preliminary given ongoing disagreements concerning costs and benefits but do outline important issues for consideration in analyzing the desirability of a casino proposal.

As is the case with other types of commercial or industrial properties, the siting of a casino produces externalities producing positive and negative impacts on residential property values.  Las Vegas is reported as a clear case of destination casinos—a situation where casinos have brought long-term prosperity to an area. Some other cases of casinos with a lesser degree of success as destination casinos are reported in the gambling literature. However, the impact of casinos on the surrounding communities in many cases has been evaluated as minimal or negative--particularly when infrastructure and social costs are considered.

Casinos are likely to have negative impacts on nearby home values. Commercial properties—such as casinos, shopping centers, and infrastructure projects-- can produce both positive and negative externalities. The positive externalities such as enhanced amenities and benefits need to be evaluated in relation to the negative externalities such as increased congestion, traffic, noise, etc. The overall impacts are site specific, generally negative near the casino.

 • A casino drawing most of its patrons from outside the local area can have positive impacts on government tax revenues and the local economy. The key issue is whether a casino is similar to a restaurant (attracting money from the surrounding area by serving local patrons) or a factory (bringing in money from outside the local area by exporting products—in this case gaming services as a destination casino).

• In the case of Springfield, Massachusetts, a significantly level of sustained patronage as a destination casino appears unlikely given the saturation of gaming venues in the New England and New York region (e.g., Foxwoods, Mohegan Sun, Twin River Casinos, Newport Grand Jai Alai, casino cruise ships, race tracks, possible additional casinos in New Hampshire and Connecticut, and a variety of other gambling opportunities).

Indian casinos in very rural areas are frequently cited as generating significant local economic benefits, largely due to the depressed nature of the local economy. This has not generally been the case for urban casinos.

Distances between casinos appear to be important. Casinos that are close to each other tend to split the available business, reducing profitability. There are a significant number of casinos relatively close to Springfield.

Casinos generate jobs, but many of the jobs created by the introduction of a casino are reported to be minimal wage/low paying opportunities, with a few experienced gaming professionals filling the management positions.

Major social costs are frequently mentioned as associated with casinos—e.g., increased bankruptcies, crime, traffic, and congestion among others. These costs are frequently excluded from cost/benefit evaluations due to measurement problems. The inclusion of the social costs along with possibly other negative externalities reduces the net level of economic benefits from a casino or may even turn them negative.

The impact on home values appears to be unambiguously negative. In the case of Springfield a casino would appear to have a significant negative externalities/nuisance value. The impact of negative externalities can be very significant, ranging in the neighborhood of 4 to 10 percent as outlined in the report and Appendix.

The gambling industry is substantial in size. According to Mallach, in 2008 casinos were operated by 233 Indian tribes in 28 states generating nearly $26 billion in gross gambling revenues, based on information from the National Indian Gaming Association. In addition, 445 commercial casinos and 44 “racinos” (racetrack-based casinos) in 20 different states generated another $39 billion in gambling revenues, according to information from the American Gaming Association 2009.

All gambling is local, and the gambling literature cites a wide variety of economic outcomes and impacts from gambling that appear to vary from jurisdiction to jurisdiction depending on local and site-specific conditions. However, in general the impact of casinos on residential home prices in the vicinity of a casino appears to be negative. The impact on home prices needs to be factored into the evaluation of the impact of the establishment of a casino along with the potential positive impacts—job creation, higher local incomes, and the potential negative impacts—such as social costs and possible increases in crime—in arriving at an overall evaluation of the economic impacts of a proposed casino.

We estimate that assessed home values will most likely be negatively impacted by $64 to $128 million from the introduction of a casino into Springfield, although there are many variables that could shift the price impact to be either more or less severe. In addition, pathological gambling could result in social costs of $8.4 million per year, possibly significantly higher. Additional foreclosures could produce costs of $5 million per year. Finally, there would probably be a negative impact on local retail businesses as local consumer expenditures were diverted to some degree to casino gaming, and a need for additional government expenditures to provide needed public services (police, fire, medical, etc.).

 . . . .

The Impact of a Casino on Home Prices in the Vicinity of the Casino is Generally Negative.

Site-specific studies show the negative impact of casinos on home prices. The studies work with a variety of databases, using several types of approaches including input/output models and econometric analyses.

Henderson, Nevada: Clauretie et. al. analyzed the effects that the location of casinos has had on residential property values in Henderson, Nevada, a town located approximately ten miles from the Las Vegas “strip”.  The town has a variety of gaming establishments of various sizes located close to residential areas, varying from taverns with a few slot machines to large casinos with live table games. The patrons of the suburban casinos are generally area residents rather than tourists. Many of the gaming facilities are located in close proximity to residential developments. The authors used home price transaction information to estimate the effect that casinos have had on residential home values.

• A price/distance regression analysis examined the impact on home values from the siting of a casino, allowing for variables such as distance from the casino, and physical and neighborhood characteristics.

The study found that casinos were a nuisance that negatively impacted nearby residential properties within one mile. In the case of large casinos, the value of each home fell by 4.6%.5 In illustrating the impact of a casino, the authors estimated that with 400 residential properties located within a mile of a proposed casino with an average value of $200,000, a large casino would have a possible negative aggregate impact of $3.7 million, exclusive of any other costs or benefits typically cited in conjunction with the siting of a casino. They noted that the “lights, noise, and traffic that accompany casino operations” were a negative associated with casino operations. For a somewhat larger city, such as Springfield, the immediate negative impact would probably be larger.

Indian Casinos, Nationwide: Baxandall and Sacerdote6 used a database covering 365 Indian casinos located in 156 different counties in 26 separate states to examine the county-level impacts of an Indian-owned casino. One problem with the study was that the level of analysis was at the county rather than the Census tract level, so they obtained mixed conclusions. Median home prices in counties with casinos were approximately 2 percent higher than those in non-casino counties. However, this effect appears to have been bifurcated by county size. Casinos appear to have brought increased prosperity to low-population, rural counties, resulting in home price increases—probably due to rising incomes in depressed areas. However, in comparisons among high-population/urban counties with and without casinos, the authors found no difference in home price changes. Recognizing the level of negative ambience around a casino, this would seem to imply a negative price impact of a casino on nearby properties.

Indiana Riverboat Casinos: Landers presented regression estimates of changes in housing values around Indiana’s ten riverboat casinos.7 The data used covered the time period 1990 to 2000, with comparisons focused on the differences between census tracts with and without casinos. He concluded that casinos had a negative impact on the annual growth rates in housing values during the 1990s in the range of .5 to 2.1 percent. Even under circumstances of an extremely tight housing supply, the negative price impacts of casinos were not eliminated.

Nationwide Analysis: Michael Wenz performed an econometric analysis of the net impact of casinos on residential property values, using data on 358 casinos operating in 28 states, excluding Nevada.  The study was subject to several limitations, which raise questions about the accuracy of the conclusions. First, the home price variable was based on respondents’ estimates of how much the property would sell for if it were for sale; whether a homeowner can accurately estimate the market is debatable. Second, Wenz noted that there is substantial heterogeneity across casinos, markets, and local economies, indicating that some of the estimates may have been due to market differences.

According to Wenz, there was a positive 2 percent effect on house values for homes in the area of a casino, and positive spillover effects to neighboring in-state regions. He noted that “A particularly important finding for policy makers is that the benefits associated with a casino depend inversely on population density. Casinos are more likely to create net benefits in areas where population density is low.”

In the case of low density areas, it appears based on the Wenz study that gambling has brought prosperity, rising incomes, and possibly higher home prices. Wenz has noted the inapplicability of the conclusion to urban areas.  Accordingly, the Wenz study seems more relevant to the impacts on incomes in rural areas (gaming appears to have a positive impact where not a lot else is happening and day trippers are bringing some money) rather than the impact of gaming on home prices.

Foxwoods Resort Casino: Carsteensen et.al. reported that the Foxwoods Resort Casino has had a positive impact on property values. 9 The analysis of the impact of the Foxwoods Resort Casino in Connecticut on property values in adjacent towns (Ledyard, North Stonington, Preston) was determined by comparing the housing price trends in the towns with the trend in a broader geographic area (Hartford Labor Market Area--LMA). In comparing growth rates in home prices over the time period 1990-1999 for properties sold in the three towns adjacent to Foxwoods in comparison to growth rates in the Hartford LMA, the properties adjacent to Foxwoods experienced a sales price growth rate that averaged 0.57% annually, compared to a negative 1.16% annual growth rate for the Hartford LMA during the same time period. The use of area level rather than census tract level data shows the impact of a casino on incomes more than on housing prices.

Foxwoods is frequently cited as a major success story for the introduction of gaming operations in a rural area. It appears that as local employment and incomes increased, so did home values. However, the impact on home values prices was for the area; the analysis does not measure the impact on home prices based on location relative to the casino.  The Foxwoods luster has now dimmed. Slot machine play has been off 12 percent year over year, and the casino management warned of impending layoffs in March 2013. The focus has been on debt restructuring and reorganization. Foxwoods appears to have suffered from a slow economy, an increase in the number of available casinos, and financial problems.

Windsor, Ontario in the 1990s was an economically depressed area: a city of 200,000 people with population growth below the Canadian average and an unemployment rate 3 percent above average. Chadwick Jeffery examined home price behavior resulting from the announcement of the proposed development of a casino.  Prices fell for approximately one year near the proposed casino site after announcement of the proposed development, presumably people selling out and moving away due to potential location of the casino. This is illustrative of the potential negative impact on home values from a casino. Subsequently, prices began to rise a year after the determination of the casino site, apparently with a view towards commercialization of the properties.

Las Vegas: As a destination site, Las Vegas has been noted as a gambling success. Christopher Miller examined the impact of casinos on home prices in Las Vegas.  He concludes that home prices and incomes are correlated, with an upward trend. What he appears to have demonstrated is that gambling produces major advantages for the Las Vegas economy: There is a relationship between consumer payrolls and employment, home prices, home sales.

Detroit (Retail Property): Wiley and Walker 13 performed a regression analysis to analyze the effects of casinos on retail property values in the Detroit urban area. They reported that casinos had a significantly positive influence on retail property values. The effect was stronger within a 5-mile radius of the casinos, suggesting that casinos had a complementary, rather than substitution, effect on other businesses. Bringing a casino to Detroit brought some increase in spending power to a very depressed area. In some cases, a casino facilitates growth in the retail sector, and in other cases pulls money out of retail and into the casino.

Conclusions: In depressed rural areas a casino may help the economy by bringing in some money from day trippers. However, in general casinos appear to have a negative impact on home prices in the vicinity of the casino. The effect of casinos on commercial property is mixed: in two cases—Detroit and Windsor—were positive. However, there are references in the literature to decreased levels of retail spending from what it would otherwise have been when the casino patrons are predominantly local. In such cases, a casino could have a negative impact on local retail operations and property values.

Obviously, Las Vegas could be cited as a commercial property success. Other studies have suggested that the degree to which casinos have a favorable overall impact on commercial property is dependent on the patron mix. If a casino draws heavily from local areas, buying power may be siphoned from local establishments to the casino. However, if the bulk of patrons are from outside the local area, then additional buying power drawn to the region may flow over to other commercial businesses. Given the growth of casino locations, the probability of bringing dollars into the region on a consistent and extended basis seems to have declined. For example, Foxwoods—previously cited as a major success—has had financial difficulties.

 


Monday, January 1, 2024

More Crime and More Taxes Are Coming to Reston with a Casino

As Reston Patch has reported on several occasions in recent months, our very own Comstock Properties is pressing the State legislature to allow the construction of a gambling casino along the Silver Line that runs through Reston.  From Comstock’s perspective, it’s a moneymaker, but for Reston it offers only more criminal activity and some lower paying jobs. 

State Senator David Marsden (D) of Burke has been leading the legislative charge, including his introduction and then withdrawal of a proposal to build a casino outside the beltway near a station along the Silver Line. That leaves Tysons and Reston as targets.  He told Reston Patch he plans to introduce an expanded casino bill in the next legislative session to include a performance space and conference center at Tysons, but with a quick stroke of a pen that could become Reston. 

Heaven knows Comstock is putting a lot of money into a casino coming to its property around Reston Station at Wiehle Avenue.  So far, it has hired six lobbyists through its hospitality subsidiary and  created “Building a Remarkable Virginia” PAC that has contributed more than $500,000 to Virgina state political candidates (including $109K to Marsden and Sen. Surovell, another local casino proponent).  Virtually all the money is from Comstock executives or others closely associated with Comstock. 

What no one has done in the Virginia legislature is look at the social impacts of opening of a casino—with or without a hotel and conference center—anywhere in the state, including Reston.  And it is not an easy task.

A literature search shows that there have been over 100,000 studies of the various impacts of casino gambling on communities and beyond.  Most are economic analyses, only a few look at societal effects. Some are huge meta-analyses—studies of studies--while others are very narrow and usually esoteric.  Some are time-specific while others are longitudinal.  The main issue is that most are prepared by both professional advocates of gambling, including gambling associations, and others who virulently oppose gambling, mostly on religious grounds.  In between is a variety of academic research that is more generally balanced in its assessments. 

In looking at the criminal effects of gambling casinos on communities and surrounding areas, one study appears to stand out:  Casinos, Crime, and Community Costs, written by two distinguished professors and published in 2004.[i][1]  As the abstract states: 

We examine the relationship between casinos and crime using county-level data for the United States between 1977 and 1996. Casinos were nonexistent outside Nevada before 1978, and expanded to many other states during our sample period. Most factors that reduce crime occur before or shortly after a casino opens, whereas those that increase crime, including problem and pathological gambling, occur over time. The results suggest that the effect on crime is low shortly after a casino opens, and grows over time. Roughly 8% of crime in casino counties in 1996 was attributable to casinos, costing the average adult $75 per year.

It is comprehensive, systematic, longitudinal, and balanced.  About the only question it cannot address, is how much has changed since 1996.  There is no obvious reason why anything has changed to generate substantially different results in one direction or the other.

The clearest representation of the impact of a casino opening on crime rates is the graph below showing the change in the crime rate index from two years before to five years after the opening of a casino.  As the paper states, “Crime rates were stable prior to opening, slightly lower in the year of casino introduction, returned to approximately average levels for the next two or three years, and increased thereafter. By the fifth year after introduction, robbery, aggravated assaults, auto theft, burglary, larceny, rape, and murder were 136, 91, 78, 50, 38, 21, and 12 percent higher, respectively.

Crime Before & After Casino Opening: Casino Counties Omitting Florida in 1988, 1996

The report concludes that, “between 5.5 and 30 percent of the different crimes in casino counties can be attributed to casinos. This translates into a social crime cost associated with casinos of $75 per adult in 1996. This figure does not include other social costs related to casinos, such as crime in neighboring counties, direct regulatory costs, costs related to employment and lost productivity, social service, and welfare costs. Overall, 8.6 percent of property crime and 12.6 percent of violent crime in counties with casinos was due to the presence of the casino.”

This increase in crime rate translates into substantial increases in financial costs for Fairfax County.  Using the same method used in the source analysis and accounting for inflation ($1.00 in 1996 is $1.98 in 2023), Fairfax County’s adult population as inferred by the US Census for 2022, county costs—and our taxes—would need to increase by $130 million to cover the criminal costs generated by a casino, excluding other social costs.

Against this added cost, a 2019 consultant’s report to the state legislature’s Joint Legislative Audit and Review Commission forecasts a variety of tax revenue enhancements resulting from the presence of a casino in northern Virginia.  Here are its forecasts for 2028 where available as applied to Fairfax County:

Estimated Fairfax County Tax Revenues from a Casino ($ Millions)

Fairfax Share of State Casino Revenue Tax 2028 (6%)        $18.6 MM

County Property Tax Revenues                                             $13.0 MM

Indirect/Induced County Property Tax Revenues                  $  8.7 MM

Local Sales Tax (0%)                                                                      --0—__  

Total                                                                                        $40.3 MM

 

The clear implication of these financial calculations is that Fairfax County will be some $90 million in the hole per year because of the additional crime generated by allowing a casino to be built in the county.  And this does not examine any of the non-criminal tax costs on county operations of  the presence of a casino.[2] [ii] It also does not consider the indirect of effects on county revenues from those corporations and people who decide not to develop, build, buy, rent, shop, or play here because of a casino presence.  Instead of a revenue generator for the county, a casino would be a costly added tax burden.

At the same time as the tax burden becomes heavier, so would the risk of being a victim of crime.  Using FBI data for Fairfax County on violent and property crimes reported annually through the Incident Based Reporting (IBR) system, the authors foresee increased crime from the presence of a casino.  In Fairfax County, using FCPD 2022 IBR data (the latest available), that would mean some 3,500 additional incidents of felonious violent or property crime, an 8.9% increase in the county’s crime rate.  This at a time when the county can’t fill the police officer vacancies it has despite higher pay and bonuses.  And, if the casino is in Reston, a disproportionate share of that added crime would almost certainly be here, having a major impact on Restonians’ quality of life.   

Overall, the building of a casino in Reston, Tysons, or somewhere else in Fairfax County is not likely to generate any substantial long-term benefits and, in fact, will almost certainly see costly increases in crime and other disruptive community effects as well as tax increases to control and mitigate the casino’s adverse effect.  Still, politicians, starting with State Senator David Marsden and including members of Fairfax County’s own Board of Supervisors, ignore these consequences because of a shortsighted and wrongheaded view of increased tax revenues.

We, as residents of Reston, must make sure that all these politicians understand the negative consequences of a casino on our community and county. · In the short term, please let our county state legislators know what you think about a casino before their January 4, 2004, by sending an e-mail to LegislativeTeam@fairfaxcounty.gov.

  •      In the short term, please let our county state legislators know what you think about a casino before their January 4, 2004, by sending an e-mail to LegislativeTeam@fairfaxcounty.gov. 

         You may want to include our Board of Supervisors (ClerktotheBOS@fairfaxcounty.gov) as an addee on that e-mail to make sure they understand our concerns and objections. 

Stopping the construction of a casino in Reston is critical to sustaining our quality of life in the face of corporate greed and government overreach.  Your help is critical in this effort,


1. This report was first published in 2000 as a working paper and has been enhanced several times through 2009 at least.  The data are the same in all the versions, 1977-1996.  This post relies on the 2004 version. 

2. According to the study being used here, other research indicates crime costs generally represent about 40% of the total social costs of a casino.  That would mean the total social cost of a Fairfax County casino would be on the order of $325 million per year for Fairfax residents.