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March 8, 2014 / stacieshap

Casinos: Will Massachusetts Truly Land in the Black?

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The Good, the Bad, and the Predatory

After many years of contemplation and debate, in 2011, our legislators passed a law that allows for the expansion of gambling in Massachusetts. Up to 3 casinos and 1 slot parlor could be licensed throughout the state, pending approval by residents of the potential host communities.

Over the past couple of years, many towns have rejected casino proposals, but recently Springfield became the first to say YES. This was soon followed by a favorable vote in Revere.

The Good

  1. It is estimated that the three casinos and 1 slot parlor will create approximately 15, 000 jobs between the construction and the running of the properties.
  2. One time licensing fees are expected to generate $300 million for the state.
  3. A portion of the gambling revenues currently being spent in neighboring states will come back to Massachusetts.
  4. Once all establishments are operating, gross gaming revenue (ggr) is expected to reach $2 billion a year, 27% of which will be paid in taxes to the state, a gross gain of approximately $540 million. *

The Bad

  1. It is predicted that casinos will cause lottery revenues to go down around 10% – an estimated decrease of $100 million per year.
  2. With 4 casinos in the state, and others just over the border, it is possible that the market will saturate, and revenues will come in short of estimations.
  3. Many of the jobs created will not be permanent and many will pay below a true living wage.
  4. Casinos often hurt local businesses; out-of-town patrons seldom spend their money in nearby businesses, and limited recreation dollars currently being spent locally by residents will end up being divided between the local businesses and the casinos.
  5. Much like the lottery, casino gambling is a backdoor tax that disproportionately affects low-income earners.
  6. There are costly public health and safety issues that go hand in hand with casinos; local crime rates typically go up; and problem gambling and addiction can lead to a litany of destructive behaviors. The State will be setting aside 5% of the ggr funds to address these issues – an estimated $100 million per year.

* Net estimated gain (best case scenario) is $340 million: $540 mil – $200 mil (100 mil from loss in lottery revenues and 100 mil estimated cost of addressing public health issues)

The Predatory

The word “Predatory” means; the inclination or intention to injure or exploit others for personal gain or profit.

So…are casinos predatory???

The following are five reasons why you might answer yes to this question:

1.   The gaming industry is a complicated one. It’s not like other service industries where the consumer gives something up, usually money, and then receives something of equal value in return. This standard of fairness, supported by consumer protection laws, is called quid pro quo (something for something). This is a standard that is not applied to the gaming industry, because if it were, casinos would go out of business. It is literally the goal of the casino to take as much money as possible out of the hands of its patrons, while giving back as little as possible in return.

2.   Although many casino patrons consider gambling a source of entertainment, for others casinos are a source of false hope. And even though the average gambler is well aware that the odds always favor “the house”, desperation can be a pretty compelling adversary to reason.

3.   Once inside a casino, food is cheap, drinks are often free, ATM’s are conveniently located, there are no windows to see outside, and no clocks to indicate it’s time to go home. These are all aspects of a design purposely intended to keep customers in the casino longer and spending more money.

4.   According to Professor Earl Grinols, an educator who has studied the societal effects of gambling since the 1990’s – between 30-50% of casino revenues are derived from people with gambling problems and pathologies**. Casinos would have a tough time surviving without these people, which creates an incentive for casinos to encourage problem gamblers to continue playing. This is a serious conflict of interest between the wellbeing of the consumer, and the wellbeing of the casinos.

5.   Slot machines are on average responsible for 80% of a casino’s gross gaming revenues**. They are the preferred game of those with less financial means and the most addictive of all the gambling options. Studies have shown slot machines to have a drug-like effect on users who become addicted to the sights, the sounds, and the feeling of escape that they derive from playing.***

Are casinos worth it?

When I was a junior in college, I spent a semester at the University of Nevada, Las Vegas, and I loved it!  Back then I could tell you the odds on any casino game.  And although I still enjoy the entertainment aspect of casinos, knowing the downsides; the increase in crime, the destructive nature of addiction, and the fact that gambling will contribute to the regressiveness of an already unfair tax structure, it is difficult for me to see a true net value in the expansion of gambling in Massachusetts.

Casinos are an unnecessary risk at a time when there are better, safer, and fairer options for revenue raising in this State, for example, progressive tax reform. A progressive tax reform bill was proposed in 2012 and 201, that would have provided the state with a revenue boost of $2 billion annually.  To put this in perspective, the bill would have raised 4 to 5 times the amount of revenue that casinos will raise each year, best-case scenario, with absolutely no social costs to boot.

Casinos are not the answer to our economic woes in Massachusetts. Putting people to work rebuilding our infrastructure and investing in industries that serve the common good is where we should be focusing our efforts. I don’t support the expansion of casinos in Massachusetts and I look forward to the opportunity to vote on the repeal of the casino law in November.

Here’s what the gubernatorial candidates think about the Casino law:

Don Berwick is the only candidate who supports repealing the casino law. Don recently had a Town Forum event to discuss casinos.  Check out the youtube video I posted on the Casino page under Don Berwick.

Martha Coakley says casinos would not have been her first choice, but since they’re here, she wants to make sure they’re done right.  In her role as Attorney General, she had declared that it would be unconstitutional to repeal the casino law due to the land deals that have already been made, but her decision was later overruled by the SJC. Martha has not yet stated how she will vote on the matter of repeal.

Steve Grossman supported the legislation to expand gambling because of the opportunities for, what he believes will be, good paying jobs that also provide good benefits. With 250,000 people out of work, and a similar number underemployed, he believes this will serve the interests of the people in Massachusetts.  He would like to use the $300 million of revenue (gross gain minus lottery loss and health/safety funds) to invest in mental health services and education.  Steve intends to look at the data from other states to determine best practices to mitigate anticipated problems.

References:

*              Mass Tax Foundation Casino Proposal Analysis

**            Gambling Economics: Summary Facts – by Professor Earl Grinols

***            Natasha Dow Schüll cultural anthropologist and associate professor at MIT’s Program in Science, Technology, and Society GEL presentation on   Electronic Gambling

–               Study commissioned by the Greater Boston Chamber of Commerce
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–               New Gaming Bill Promises State Revenue, Jobs – article by Martha Bebinger

 

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