Simcity used to have additional money for casinos, but then crime also increased.
So maybe the -1 Happiness could be associated to increased crime?
Everyone deep down lusts for gambling, take a look at Israel for example. Gambling is outlawed because it's sinful in Jewish law, but it is still practices. On the other hand, Christian+Muslim Lebanon allows gambling and it's also practiced.
So the reason we're losing is because we're weak when it comes to sins? Who the hell cares?