Pawnshops credit casinos for business Increase in customer traffic reported near Michigan gambling facilities

DETROIT – Area pawnshop owners say business is on the rise since casinos debuted in this Michigan city, and an expert said the same would happen in Maine if a casino is built there.

Several pawnshop owners in the Detroit area report anywhere from a slight upswing to twice as much customer traffic.

“Our loan base has gotten larger with the help of the casinos,” Southfield diamond broker Lew Silver told The Detroit News for a Sunday story.

The National Pawnbrokers Association board member said his loans are up nearly 10 percent since Detroit’s three casinos opened in 1999. His forfeiture rate – the number of customers who lose collateral because they cannot repay loans – has seen a 20 percent increase.

Silver’s assessment is simple: “People are losing money and pawning more.”

In Maine, a $650 million casino that two Indian tribes want to build would bring about a proliferation of pawnshops, professor Earl Grinols of the University of Illinois, Champaign-Urbana told a task force in November.

Grinols, who has studied extensively the impact of casinos in other states, said he was neutral on the Maine proposal.

In Michigan, Greektown, MGM Grand Detroit, and Motor City casinos attract about 40,000 patrons daily and take in more than $1 billion a year, The News said.

Alan Harris, vice president of Federal Collateral Society in Detroit, said despite the increase in gambling-related pawns, gambling and overall pawn business hasn’t jumped as dramatically as “some people have expected.”

A study released early last year by the state Community Health Department found that the number of self-described compulsive gamblers statewide has remained relatively stable since the casino openings.

An estimated 11.4 percent of Detroit residents and 4.5 percent of Michigan adults viewed themselves as “lifetime compulsive gamblers,” the study said.

Harris said the pawnbroking business always has had gamblers as customers. Increased business at area shops is likely because the casinos have made gambling more convenient, he said.

At Al’s Jewelry & Loans in Detroit, owner Doug Swartz said business has about doubled since the casinos moved in. About 70 percent of Swartz’s customers are able to repay loans and reclaim their goods.

But that rate “used to be maybe 75 percent,” he said.

The trend is similar at Ron’s Pawn Shop & Auto Sales in Roseville, where typical collateral is jewelry, tools, electronics and musical instruments.