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Economists Criticize
Economic Study Promoting Gambling
Penn State Gambling Study "Inaccurate and Misleading," Professors Say
Nationally recognized experts criticize PSU report as "an exercise in one-sided
advocacy masquerading as objective economic analysis"
HARRISBURG, PA-The Penn State report-whose conclusions underlie the proposals by
Gov. Ed Rendell, Sen. Robert Tomlinson (R-Bucks), and other state leaders to
install slot machines at Pennsylvania racetracks-"is an inaccurate and
misleading study that overestimated potential economic benefits and ignored
costs." This is the conclusion of a review conduced by two nationally recognized
experts in the field of gambling economics.
The review assesses the quality of the economic research upon which Governor
Rendell and members of the General Assembly have promoted their policy proposals
for gambling expansion in Pennsylvania. The critique was commissioned by The
Commonwealth Foundation, a statewide public policy research and educational
institute based in Harrisburg.
Professors Robert Goodman of Hampshire College in Amherst, Massachusetts and
Edward Feser of the University of North Carolina at Chapel Hill noted several
significant problems with the methodology and conclusions of "The Economic
Impact of Horse Racing on the Economy of Pennsylvania," the report released in
January 2001 by the Institute of State and Regional Affairs at Pennsylvania
State University, Harrisburg.
"To conclude, as the authors of the [Penn State] Study did, that introducing a
total of 6,000 slot machines at the state's four racetracks would yield a net
increase of $332 million in tax revenues, $236 million of which increase would
go to state and local governments, and generate 17,700 new jobs, without even
considering any of the relevant costs that would be incurred in the process is
an exercise in one-sided advocacy masquerading as objective economic analysis,"
writes Goodman and Feser.
According to the review, Goodman and Feser found that while the Penn State study
generally adopts an accepted economic analysis technique, the study
* "... fails to meet even the barest minimum ethical standards of transparency
in economic impact analysis."
* "... contains gross overestimation of certain positive impacts and is
misleading in its presentation."
* "... as written would not be taken seriously in any legitimate academic or
professional research venue."
* "... omitted any consideration whatsoever of the economic costs involved in
the introduction of slot machine gambling in Pennsylvania, and provided
forecasts only of economic benefits."
* "... is not a valid economic impact analysis," but rather "an ideological
argument in favor of introducing slot machine gambling ventures into
Pennsylvania."
Matthew J. Brouillette, president of The Commonwealth Foundation, said that the
problems with the Penn State study should cause Pennsylvania policymakers to
slow down their rush to expand gambling in Pennsylvania and consider a
moratorium until more reliable research on the topic is conducted.
"Surely, Pennsylvanians want their elected officials to enact public policy
based on accurate and objective research-particularly when it comes to policies
with the potential for such a profound economic and social impact on our state,"
said Brouillette. "Unfortunately, the premise upon which Governor Rendell and
other gambling proponents have built their proposals is flawed and should be
reconsidered."
# # #
The Commonwealth Foundation is a free-market public policy research and
educational institute based in Harrisburg, Pennsylvania. For more information,
please visit
www.CommonwealthFoundation.org.
The review, "The Economic Impacts of Introducing Slot Machines at Racetracks in
Pennsylvania: A Review of the Penn State Harrisburg Study," can be accessed at
www.CommonwealthFoundation.org/economy/pb03-03.pdf.
CONTACT: Matthew J. Brouillette, 717.671.1901
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