Expansion of Gaming Likely a Threat to CT

Q&A talks gaming with Clyde W. Barrow, director of the Center for Policy Analysis at the University of Massachusetts, Dartmouth. The center began studying casino gaming in 1995 when then Gov. William Well proposed a gambling site in New Bedford. By 2004, it became apparent that casino gaming would remain a perennial issue in most New England states, so the center established the New England Gaming Research Project to provide policymakers, public, and the media with independent and objective research on the economic, fiscal, social, and community impacts of gaming in the New England and Northeast regions.

Q: You’re participating in the inaugural New England Gaming Summit on Sept. 21-22. Gaming has been around for two decades in New England, why the renewed focus on it now? 

A: First, nearly every state in the Northeast is debating, or implementing, expanded gaming policies. In 2008, Maryland passed a referendum authorizing five “racinos” (casinos at racetracks), while Ohio passed a referendum in 2009 authorizing four urban casinos. Three of the four racinos in West Virginia have added table games over the last few years; Delaware’s three racinos added table games in last month, and Pennsylvania’s slot parlors have just added table games. New York now has seven racinos, including Empire City, which is the largest racino in the nation. Maine will vote on a November referendum that would authorize a small resort casino north of Portland, while Massachusetts, Rhode Island, and New Hampshire continue to debate various proposals for expanded gaming.

Second, as a consequence of these expanded gaming initiatives, industry executives and public officials are concerned about the long-term impact of increased regional competition on existing gaming facilities, while the Great Recession has raised questions about the long-term growth prospects of the industry. On this point, I think it is important to separate out the short-term impact of the Great Recession from the industry’s long-term trajectory. We think there is still up to $1.5 billion in unmet gaming demand across New England, particularly as the economy recovers. The focus on Massachusetts is simple: its residents account for 45 percent of New England’s population and about 48 percent of its disposable personal income.

Q: In a press release on Aug. 2, you urged Gov. Deval Patrick to sign into law gaming expansion legislation. You said not doing so would cost the commonwealth 25,000 jobs, nearly $2 billion in economic activity and $400 million in taxes. Any idea what the impact would be on gaming in the rest of New England under this expansion in terms of job loss and lost economic activity? 

A: If New England’s experience is consistent with the rest of the Northeast, expanded gaming in Massachusetts would actually increase the total size of the market. The addition of video lottery terminals (VLTs) in New York, table games in West Virginia, and slot parlors in Pennsylvania has actually generated overall growth in total gaming revenues in the Northeast. However, the increased competition has taken a toll on the Atlantic City and Connecticut casinos and both jurisdictions would experience more of the same if Massachusetts authorizes casino gaming.

We estimate that the two Connecticut casinos combined had about $2.7 billion in total revenues for 2009, while the two Rhode Island racinos had about $502 million in total revenues. Mohegan Sun draws 19 percent of its customers from Massachusetts, Foxwoods 36 percent, Twin River 48 percent, and Newport Grand 45 percent. Our behavioral research suggests that up to two-thirds of the casino patrons residing in Massachusetts would shift their spending to Massachusetts casinos in the first year of operations, and the percentages for Rhode Island would be much greater, because those facilities rely on convenience gamblers who are much more distance sensitive. Our estimate is that spending by Massachusetts residents supports about 5,500 casino jobs in Connecticut and 300-400 racino jobs in Rhode Island. In addition to the job losses, Connecticut would see its revenues from slots fall by $50 to $100 million, while Rhode Island’s VLT revenues could decline by up to $130 million.

Q: What is the overall impact from gaming in New England? Say the Puritans returned and took over. How many jobs would be lost? How much tax revenue would evaporate and how much would the economy suffer?

A: Casino gaming is a $3.2 billion industry in New England that directly employs about 19,000 people. In 2009, casino gaming generated $672 million in tax revenues for the New England states that have it.

Q: Wouldn’t the economic impact be lessened somewhat by the fact gamblers would spend their money elsewhere? Or would gaming money just go to illegal sources?

A: First, there are now 35 states, plus Puerto Rico, with Class III gaming. There is no shortage of outlets for individuals who want this form of entertainment. Consequently, saying that “gamblers would spend their money elsewhere” doesn’t mean they would necessarily put it into other sectors of the local economy. They would simply travel to another state where casino gambling is legal. Second, there would be an increase in illegal gambling, whether on the internet, underground poker games, unlicensed slot machines in bars and private clubs, and sports betting with book makers, which all goes on right now in Massachusetts. Let’s not forget that most state lotteries are a variation on the old ‘numbers game’ that was once an unlicensed illegal racket, although I’m sure most peoples’ grandfathers will never admit to playing the numbers.