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Economist: casinos in places like Cedar Rapids, Jefferson can be “like a neutron bomb”

(Radio Iowa) – As more Iowa cities compete to land a new state casino license, an economist from Creighton University says gambling can be like a “neutron bomb”  that kills other businesses in the vicinity – while an Iowa State University economist says casinos like those sought in places like Cedar Rapids and Jefferson are “not a net gain” for the local economy.

ISU economist David Swenson says casinos along the state’s borders “make more sense economically” because they attract out of state visitors to spend and leave tax dollars inside the state.

“So the river-boundary casinos were a way to boost the state’s economy,” Swenson says. “Interior casinos significantly compete with all other forms of recreation and so what you end up with is a cannibalization or a shifting of entertainment locations and focuses.”

According to Swenson, the likelihood that interior casinos will draw visitors from out of state “is pretty low” as most patrons will come from a short distance away.

“But the passions for them, whether it’s Ottumwa or Fort Dodge or Cedar Rapids or now Jefferson, are extraordinary because these communities have so few ways to try to boost their economy,” Swenson says.

Creighton University economist Ernie Goss says casinos are entertainment, not economic development.

“And it’s a high tax industry,” Goss says. “You’re talking about instead of a seven percent sales tax, you’re talking about a 20-25 percent of tax on the net proceeds of a casino, so it drains the taxpayer and it drains…some of the other amusements, some of the alternatives — restaurants in the community — it can really be negative for them.”

In 2007 Goss co-authored a book titled “Governing Fortune: Casino Gambling in America” and he’s done several economic studies of the industry, including an analysis of bankruptcy rates in counties where casinos are located.

“The public seems to think that we need our own casino. It’s sort of like a nuclear weapon. I mean, we all want our own protection. We’re all vying for our own nuclear weapon,” Goss says. “In a lot of cases when you put a casino in some places — now I’m not talking about all casinos — it’s like a neutron bomb. It destroys a lot of what’s outside the casino.”

Goss and Swenson made their comments today during taping of the Iowa Press program that will be broadcast this evening on Iowa Public Television.