Abstract
In 1996, the passage of Proposal
E allowed the City of Detroit to develop up to three
land-based casinos. The first casinos, MGM Grand and
Motor City Casino opened in 1999. The purpose of this
paper was (1) to assess the economic impact of these
two casinos on the local economy, and (2) to detail
how these benefits were being calculated. Casino visitors
were randomly intercepted in the non-gaming areas of
the casino facilities and were asked about their trip
characteristics including trip expenditures and spending
on gambling. Conservative and comprehensive economic
impact estimates were calculated. Conservative estimates
include only non-local casino visitors whose primary
trip purpose was to visit a casino. Comprehensive estimates
include all non-local casino visitors. Two methods were
undertaken to estimate the economic impact. The first
involved step-by-step calculations. It offers the economic
impact generated by spending inside the casino and spending
outside the casino. The second employed the National
Park Service’s (NPS) Money Generation Model 2 (MGM2). This method offers a more comprehensive set of economic impact estimates related to outputs including sales, jobs, income, and value added effects. Results of the NPS MGM2 indicate that, conservatively, the two casinos generated &167 million in output/sales, about $61 million in personal income, $98 million in value added and 4000 jobs, annually. It is generally recognized that economic impact analysis is not an exact process. However, a transparent approach such as the one used in this study can permit other analysts to substitute their own assumptions to refine our estimates. In addition, the criteria -- relevance, coverage, efficiency, accuracy, and transferability-- proposed by Frechtling (1994) to judge methods of estimating travel’s economic impact that permit the objective evaluation of the quality of a model have been used as guidelines by this study.
Keywords: Tourism, economic impact, casino gaming, economic benefits, Detroit.
By Omar Moufakkir and Afke Moufakkir van der Woud, CHN, University of Professional Education, The Netherlands
