As a slots license selection commission evaluates bids for slots licenses in Maryland, a new study has found that facilities that provide both racing and casino activities create low-paying jobs that depress salaries in surrounding areas.
The study by Ball State University examined West Virginia's so-called racinos - horse or dog racing facilities with casino games - during a 26-year period and found that counties with such gambling operations saw a one-time employment gain of 1.1 percent, while the average salary in the area fell by as much as 2.9 percent because of the prevalence of low-paying jobs.
Although only one of four bids under consideration in Maryland is a racetrack operator, the study's author suggests casino-only operations also could lead to similar outcomes.
Two bidders, however, disputed the study's findings, noting that their projects would create good-paying jobs with benefits that would not otherwise exist.
The study, appearing in the latest issue of The Journal of Economics, found that the average salary of racino employees is less than $14,000 a year.
Donald C. Fry, chairman of the slots panel, said the group will consider business and market conditions, economic development and location when awarding a slots license.
"Certainly, we want to see that economic impact and [that] new jobs are created," Fry said. Licenses could be awarded this fall and the first slots parlor could be open 16 to 18 months later, he said.
Michael Hicks, the study's author and director of Ball State's Center for Business and Economic Research, said policymakers should carefully scrutinize the economic implications of expanding gambling as more states consider such a move to shore up their coffers.
Maryland voters approved last year a referendum to legalize slots, with proceeds to help save the struggling horse racing industry and fund public higher education.
"The economic [benefits] to a region that gambling supporters seem to suggest is not really borne out of the data; data on racinos or any other type of gambling facilities," he said, noting he does not object to gambling. "There isn't a huge economic boost because they're offering employment for lower-paid workers."
But James Karmel, an associate professor of history at Harford Community College and a consultant for the Maryland Gaming Association, said other studies have shown higher compensation for casino workers.
