SugarHouse is expanding and more gaming halls are coming. They give back cash, but may also enable gambling addiction.

Billy Penn is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on economic mobility. Read more at brokeinphilly.org or follow at @brokeinphilly.

Updated: Nov. 4

Gambling has been legal in Pennsylvania long enough that Philly’s first gaming hall has rebranded. Opened in 2010 as SugarHouse, the waterfront destination now goes by Rivers Casino Philadelphia.

With the fresh title, which puts Rivers in line with sister properties in Pittsburgh, Illinois and Upstate N.Y., comes a $15 million investment into amenities at the Delaware Avenue spot, like a redesigned gaming floor and new food and drink venues. There’s also a newly legalized sportsbook — something that’s popping up all over town, including at the Live! Casino & Hotel going up at the South Philly sports complex.

So things are going well for casino operators in Philadelphia. But a decade into the experiment, how has gambling treated the city?

Experts say understanding the impact is complicated. On one hand, casinos often have disproportionate negative effects on people with low incomes, who make up a high percentage of the Philly population. But the Fishtown wager house also gives back to the community.

“This is a reasonably tough issue,” Victor Matheson, an economist who studies gambling at the College of the Holy Cross, told Billy Penn. “What casinos have been and have meant has radically changed over the years.”

In the years leading up to the SugarHouse launch, Philadelphians voiced plenty of complaints.

They complained it wasn’t the best use of waterfront space. They worried about the spread of gambling addiction. “Today, we’re launching our campaign to reclaim the riverfront, which is a campaign that will culminate in the bankruptcy of SugarHouse,” Zachary Hershman, a member of the group Casino-Free Philadelphia, told the Inquirer in 2010.

But the betting house does have benefits for the community. Per state law, it gives back a whopping 54% of its slot machine revenue and 16% of its table game revenue to local government — one of the highest rates in the country.

In September 2019, then-SugarHouse made more than $13 million on its slot machines alone. More than half of that gets pumped into the public good. In Philly, casino money offsets the wage tax. In the rest of Pennsylvania, it helps reduce property taxes.

Casinos also funnel cash into their immediate neighborhoods. Rivers pays for the Penn Treaty Special Services District, granting the org $1 million every year to pay for local projects.

“It’s the people who live in the neighborhood who get to decide what’s important to us, what are our priorities, how do we want to disperse this money throughout the community,” Wendy Hamilton, formerly SugarHouse’s general manager, told WHYY in 2010. “Our job is to write the check and it’s their job to spend it.”

A current Rivers spokesperson declined to comment for this story.

Tourism draw vs. casinos everywhere

Until recently, legalized gambling in the U.S. was restricted to a few states.

“In the old days, people had to travel far to casinos,” gaming expert Matheson said. “[Gamblers] could afford to get on an airplane and travel to Las Vegas. In today’s world that’s not the thing at all. Essentially everyone in the U.S. lives within an hour’s drive of a casino.”

With easy access comes more chance of gambling addiction. Casinos can drain funds from people who are already struggling — potentially adding to Philadelphia’s burden as the poorest big city in the country.

A 2014 study out of the University of Buffalo found that people who live in lower-income neighborhoods are twice as likely to have a gambling problem as people who live in wealthier areas.

“It’s highly regressive,” said Paul Boni, a Philly resident and board member of national organization Stop Predatory Gambling. “Half of the money goes to the state, and the other half goes to basically billionaires.”

There are countless bankruptcies that claim gambling addiction as the root cause, Matheson said. When folks spend money at a casino, they indisputably don’t spend that money at small, independently owned shops and restaurants.

And when almost everyone can place bets close to home — say, in a city soon to have two casinos — it basically nullifies the greatest potential benefit of a betting house for a local community: bringing in the big bucks from tourists.

“The primary way that an entertainment spot helps a community is if it can bring in people from outside the community to be in the community,” Matheson said. “Nowadays since everyone has their own casino, very few people are gambling in Pennsylvania casinos that are from outside Pennsylvania.”