Betting Blind On Casinos In Massachusetts
Goodman
This past July, when I testified before the Massachusetts Gaming Commission, I suggested a moratorium on its casino-licensing process until it had ordered and reviewed a serious study of casinos' potential economic impacts. One commissioner said there had been plenty of studies and the panel dismissed the idea.
Yes, there have been studies, all of which have predicted lots of revenue and jobs. But all paid almost no attention to the real costs of getting casinos. This is bad accounting. Imagine if you were thinking about starting a business and all you did was project your income and you didn't seriously consider your expenses.
Most of the studies were done by consultants associated with the casino industry. A typical study, done for the Greater Boston Chamber of Commerce, predicted millions in new revenue and thousands of jobs, but then said additional analysis was needed to determine "the impacts of the casinos on local businesses and labor markets … and community-level impacts."
These impacts are crucial and a study should provide the details, including how much consumer spending will shift from local businesses to the casinos and how much Massachusetts residents and businesses will pay for the increase in problem gambling, such as costs for credit card and insurance fraud, bad checks, bankruptcies, unpaid debts and criminal justice.
The studies the commissioner referred to also said virtually nothing about how neighboring states are likely to respond to the building of casinos in Massachusetts. Politicians there are not going to sit idly by, but will initiate or expand their own casino operations. This is already being considered in New Hampshire, Rhode Island and New York.
One only has to look at recent casino experiences in Indiana, Michigan and Ohio to see what this will mean. As the casino markets in these neighboring states became saturated, casino revenues and jobs plummeted. In Indiana, revenues have fallen to their lowest level ever. And as new casinos opened in Ohio this year, Detroit casino revenues have declined. In Indiana, state budget forecasters have predicted even further reductions there.
Some casinos have already come full circle, from enterprises that were supposed to boost revenues and jobs to those that need to be rescued with state tax relief to stay in business. As casinos opened in nearby states, Atlantic City casinos lost more than a third of their revenues and laid off thousands. Last year, when a casino being built there faced bankruptcy, New Jersey stepped in to subsidize it with more than $250 million in tax credits. Legislators in Indiana are considering similar tax relief for its casinos.
There's a bet in some poker games called a "blind" that you're required to make even before you're dealt any cards. In essence, you're forced to gamble your money without the information you need to figure your chances of winning.
Massachusetts needs a serious impact study and not a blind bet. Without this, it's the state's taxpayers and businesses that will end up paying for that gamble.
Robert Goodman is the former director of the United States Gambling Study at the University of Massachusetts-Amherst and the author of "The Luck Business."
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