November 29 2022 11:53 PM E-paper Subscribe Sign in My Account Sign out

‘A casino should come last on Jordan’s development agenda’

Casino
(Photo: Envato elements)
Casino

Yusuf Mansur

The writer is CEO of the Envision Consulting Group and former minister of state for economic affairs.

A debate emerged in 2007, and again more recently, in 2019, on whether Jordan should have a casino. The main argument of those in favor is that a casino would boost tourism revenues. Those against cite moral issues and social problems, such as addiction to gambling and its consequences.اضافة اعلان

To start, here are some statistics: there are 9,284 casinos in the world, 2,116 of which in the US and 3,785 in Europe. Some Arab countries, such as Egypt, Morocco, Tunisia, Algeria, Lebanon and Iraq, have casinos as well. In terms of the number of casinos per city, Las Vegas and Macau lead the world. The global gambling market was $287.43 billion in 2021. It is expected to grow to $458.93 billion in 2022.

Many of the Arab countries that have casinos allow them to be used only by people with foreign passports (tourists and visitors). Had Jordan allowed the establishment of a casino, it would done the same.

The wisdom of this prescript is to generate more funds from tourists. But do casinos increase tourism revenue? The answer is not straightforward. Some of the income realized by casinos from tourists could be simply a substitution of part of one expenditure venue for another. In other words, instead of tourists spending money on some item, they engage in gambling activity. Consequently, there would be no increased spending by tourists.

But, what if a tourist were to come to Jordan specifically for gambling? The impact would, of course, be an increase in tourism revenues.

Many Jordanians carry other passports and would thus be able to access casinos. Some would say if they are going to gamble their money away, they should be allowed to gamble at home.

Casinos do not create value. Hence, money spent at a casino is a transfer of money for nothing. It does not lead to increasing the real GDP. However, if the money is gambled outside the country by Jordanians, it would be leaked out of the economy, and thus, it is better to spend it at home. 

On the other hand, since the money is spent on a non-value-creating activity, it is diverting spending from activities that create real value, which cannot be good for the development of a country. In fact, this type of spending would be harmful.

Some also say that casinos make only $1 out of $30 gambled there, and a rational player would know when to stop. Actually, cheating can be rampant at casinos, and many casinos serve alcohol (mostly free of charge) to numb rationality and encourage recklessness. Some casinos make it difficult to know where the exit is so that one would stay longer. Others, like many of the Las Vegas casinos, keep it dark inside so that one would not know day from night.

Many also claim that casinos invite criminal organizations and activities. Some casinos are controlled by organized crime. In fact, in some cases, bringing the gambling industry such as casinos into a country means inviting with it all types of criminal behavior: prostitution, money laundering (casinos are considered a great setting for this criminal activity), and tax evasion (it is difficult to tax a gambling business and countries have come up with very creative procedures to tax them). After all, the legendary Jewish-American mobster Benjamin “Bugsy” Siegel was credited for developing the Las Vegas Strip.
Being a less developed economy, Jordan should focus its efforts on value-creating activities. Moreover, it should enhance product complexity, know how, competitiveness and smart economic growth.
Those in favor argue that casinos help create clusters of supporting and complementary activities, such as hotels, restaurants, shows, theatre, etc. This is true; however, before one completely buys into this argument, a legitimate question would be: could these activities not have emerged without the casinos? The answer is of course yes. Other initiatives could have done so. Any of Jordan’s tourist sites could have generated clusters of activities around them that maximize the return to Jordan from the tourism activity there.

Some believe that having casinos is the fastest way to stimulate tourism in a country. This would not apply to Jordan for two reasons: gambling encourages sin tourism, which is most likely not the type of tourism that Jordanians hope to attract; and the tourism market in Jordan is mature, hence all that is needed is to encourage value-adding activities.

Another argument for having casinos is that they would create jobs. This is a weak argument. Most staff for a casino would be sourced from outside their localities, since the casinos require skilled and highly skilled workers. The jobs that contribute to the local economy are low skill, and they would not be many. Moreover, low-skill jobs fail to spur competitiveness or development.

A new argument that emerged for having casinos is that online gambling is rampant and growing, can be accessed from virtually anywhere, and simply through one’s mobile phone.  According to world statistics, around 26 percent of the world population gamble, which means that approximately 1.6 billion people worldwide gamble, and 4.2 billion gamble at least once a year. So, having casinos enables regulating gambling and keeps some of the casino winnings inside the country.

On the other hand, based on empirical evidence, some believe that by making the gambling activity legal, gambling, as a social problem, would expand and its negative consequences would be exacerbated.

The point that is hardly ever brought into the debate is probably the most important. It relates to Jordan’s current stage of development. Being a less developed economy, Jordan should focus its efforts on value-creating activities. Moreover, it should enhance product complexity, know how, competitiveness and smart economic growth. Casinos do not enhance development — this is well established; thus, having a casino should come last on Jordan’s development agenda.


Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.


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