Between the colonial period and the 19th century, gambling expanded from being an exclusive hobby to one including the working class and immigrants. During the Prohibition period, it provided key financial backing for criminal syndicates in traditionally neglected urban ethnic neighborhoods, making organized crime a “crooked ladder” of social mobility for the marginalized to access the American Dream. Throughout the second half of the century, illicit syndicates integrating gambling, prostitution, bootlegging, and robbery would come to dominate these communities through violence, politics, and enterprise. Organized crime syndicates created jobs, invested in legitimate enterprises, and provided support and funding to local politicians and law enforcement in exchange for political favors. From elite colonial and frontier circles to organized criminals, corrupt politicians, and corporations, the legacy of gambling in the United States is one of simultaneous opportunity and exploitation—raising the question of whether modern regulation protects vulnerable communities or capitalizes on addiction.
Throughout history, states have increasingly turned to commercialized gambling as a method of raising revenues, particularly during periods of economic hardship. Accordingly, the early 2000s saw a wave of deregulation sweep across the country, with major metropolitan cities seeing a significant rise in urban casinos. Increased accessibility to casinos combined with shifting social attitudes in favor of gambling spiked participation. Business magnates like Howard Hughes, who would later become Las Vegas’ largest private employer and landowner, ushered massive commercial development in hubs like Las Vegas and Atlantic City, bringing in unprecedented profits. By 1945, Reno, the first casino to actively target lower wage customers, surpassed a cumulative revenue of one billion dollars. What began as a seemingly harmless industry boom would come to transform not only local economies but the entire politics-gambling complex and the lives of millions of Americans.
The primary argument in favor of legalization was that gambling is inevitable, so deregulating it will weaken organized criminals, bring in tax revenue, and promote local economic development. However, studies measuring the effects of legalization have proven accessible gambling has concentrated benefits and diffuse costs across both economic and social metrics. High casino proximity in federal land is associated with higher poverty levels, higher incidences of prostitution, higher rates of problem gambling, and an increased number of visitors who are more prone to both committing and being victims of crime. Furthermore, there are few, if any, economic spillovers to local hotel and restaurant industries. Oftentimes casinos cannibalize revenue from substitute industries like recreation and entertainment. By legalizing gambling, states did not eradicate the morally questionable, predatory activities associated with the business but rather transferred them to a more institutionalized social and political stratum.
The rise in problem gambling—gambling behavior that consistently damages an individual’s daily life or their family’s—serves as a prime example of the diffuse costs associated with commercial gambling. The prevalence of pathological gambling nearly doubles within 50 miles of casinos, and there is a positive correlation between casino presence and suicide rates, with one in five problem gamblers attempting suicide. The issue reached such a massive scale that by the 1980s, the American Psychiatric Association classified it as a behavioral disorder. Arguments justifying commercializing the industry grossly overlook the very real and severe dangers of accessible gambling on individuals and their families. This is especially true when we consider that gambling opportunities are often disproportionately located in more disadvantaged areas.
Since legalization, casinos have innovated and implemented strategies that essentially make them psychological traps in order to expand their businesses and increase profits. The World Health Organization has recognized that electronic gambling machines pose higher uptake risks and greater associated effects of impaired control. This results in people prioritizing it over other life interests. Intimate, windowless spaces; a lack of clocks; cognitively rewarding audio-visual stimuli; appealing scents; and a maze-like playground design all contribute to putting players in a trance-like, escapist mental state. Additional cognitive tricks include slot machines targeting the near-miss effect by giving players four out of five symbols needed to win—which appeals to the brain’s dopamine receptors nearly as much as actually winning—as well as giving players the illusion of control by letting them roll the dice in craps or choose which cards to keep in video poker. The entire sensory experience in casinos is carefully curated to target someone’s psychological vulnerabilities, making them enticing to enter and difficult to leave.
Although regulations to protect gamblers from falling into addictive behaviors exist, they have been largely undermined by subsequent legislation and a prioritization of corporate interests. The 1989 landmark case GNOC Corp vs. Aboud empowered gamblers to appeal their debt if they could prove the casino had taken advantage of their intoxicated state. The law was upheld by the majority in Tose v. Greate Bay Hotel & Casino Inc, where Greate Bay failed to establish contributory negligence—a legal defense preventing gamblers from recovering damages if these are deemed self-inflicted—as a precedent, which would hold gamblers legally accountable for engaging in overly risky behavior while intoxicated. Realistically, lax regulations allow casinos to employ their own legal disclaimers, often excusing them from responsibility for gamblers’ behavior and essentially circumventing the precedent set by Aboud. The government’s practical failure to continually hold casinos accountable for protecting vulnerable gamblers is further exemplified by a lack of regulatory frameworks around the self-exclusion system. Under self-exclusion, problem gamblers sign a document admitting their problem and essentially banning themselves from casinos. However, each casino requires its own document—meaning problem gamblers can just move on to the next establishment. The documents are neither enforceable by law nor accessible enough to problem gamblers. Most importantly, they do nothing to guide individuals in recovery. Thus, a supposed attempt to protect problem gamblers has proven highly flawed because of the autonomy afforded to casinos and the corporations profiting from them.
Attempts to protect gambling addicts by implementing stricter regulations on the industry face an uneven playing field in the court of law. Most notably, lobbying is a key avenue through which regional courts free casinos of the responsibility of mitigating compulsive gambling. In 2024 alone, gambling corporations, spearheaded by the Gila River Indian Community, American Gaming Association, and MGM Resorts, spent over $37 million on lobbying to ease regulations. These efforts succeeded in numerous cases, successfully decreasing regulations and expanding gambling operations beyond what the initial conditions for legalization had envisioned. Casinos’ power in shaping local politics is evident in our own backyard, as Bally’s casino corporation lobbied the Rhode Island Senate to double their gambling credit limit from $50,000 to $100,000 in 2024.
In a 1976 landmark case for Native American sovereignty, the Supreme Court ruled that states cannot legally tax or regulate Native activities on their reservations. Subsequently, the Indian Gaming Regulatory Act (IGRA) set up the Indian gaming system, protecting and institutionalizing near-monopoly gambling as a source of economic development. Despite this, the industry lacks protections for Native benefits amidst wealthier corporations. Because corporations are the other dominant players in the industry, their interests collide, with corporations often challenging tribal rights to own federal land and efforts to expand business operations. Many powerful figures, notably President Donald Trump, have gone so far as to challenge the constitutionality of the IGRA.
Furthermore, the concentrated benefits and diffuse costs of casinos are still present—and arguably more intense—on reservation lands. The IGRA has undoubtedly driven development across Native communities, particularly in the form of increased infrastructure, school funding, Native inhabitants, and reduced unemployment. In fact, the IGRA is associated with a 12 percent increase in tribal population and a 26 percent increase in tribal employment. On the other hand, it is also correlated with increases in crime and bankruptcies in counties with or near a casino, and there is little transparency in terms of what exactly tribal administrators do with profits. More broadly, the reliance on a single industry makes tribal economies highly vulnerable to industry fluctuations, which was apparent during the Covid-19 pandemic, as revenues—critical in the absence of tax income—dropped by 19.5 percent, leading to devastating effects on communities. As a result, many tribal leaders have made the case for diversifying reservations’ revenue streams away from the challenging casino market.
By enfranchising gambling, the government was not just accepting the reality of the practice’s appeal and taking it from the hands of criminals: It was also making it legal for predators in the business to fuel an epidemic. Senator Sam Bell, a Democrat dissenter of Rhode Island’s legalization decision, argued that “we should not maximize profit when it comes to an addictive product.” The government needs to utilize a combination of policies to mitigate the harms that compound with new developments in the gambling industry. It needs to recognize gambling as a public health crisis and treat it as such. It needs to uphold the majority decision in GNOC Corp vs. Aboud by creating a strict set of standards to be met by casinos in their legal engagement with customers. It must also listen to Native Tribes’ calls for increased tribal agency independent of the gambling industry. With rising challenges, particularly those of online and sports gambling, come opportunities for the government to recognize its past errors and protect the public from this dangerous epidemic that capitalizes on people’s cognitive flaws.