Will Beacon Hill Make an Informed Decision?

For starters, let’s take a look at the methodology. Patron-origin analysis is just a spiffy name for “counting license plates.” So, in this particular study, Clyde Barrow and a few assistants from his center and the University went all across New England to count the license plates at each slot parlor and casino. From there, they affix the proportion of license plates on the lots to the proportion of income the venues are making during those days, using that to come up with how much they think residents from different states spend at casinos, racinos and slot parlors across New England.

There are a lot of problems with Barrow’s methodology, including:

• Barrow does not try to figure out whether or not local costumers spend their money differently from those who drive long distances, or which demographics show up from each region and how they spend their money (ie on slots or shows).
• Barrow doesn’t take the economy into account in terms of changing consumer behavior. While he thinks gas prices may factor into why Rhode Island’s Twin Rivers got a larger influx of Massachusetts drivers, he doesn’t take into account the individuals who are trading their recent Las Vegas vacations and cruises for a weekend at Foxwoods, because that’s all they can afford this year.
• Barrow only spends 5 days out of the entire year to record the results, making that representative for the entire year
• Most importantly, the study not only took place over a paltry 5 days, but took place from the Friday to Tuesday of President’s Day weekend, when residents from Massachusetts are perhaps most likely to be able to take a short ‘drive-cation’ to Connecticut or Rhode Island.
• That also means the only weekday traffic that would be close to ordinary on a holiday weekend for Massachusetts residents going across state lines was their Tuesday, or only 1/5th of the days Barrow actually studied, which is not representative at all.

While Barrow may be right to say that 39% of the people in Foxwoods were from Massachusetts — on Patriot’s Day weekend — that doesn’t mean that Foxwoods earned anywhere close to 39% of their profits from those individuals on Patriot’s Day weekend, never mind the entire freaking year.

Why? How people spend their money at a casino is very important. The shows, spas, restaurants and all those other goodies are not even on the same realm of profitability as slot machines, which have an incredibly high return on investment. Slot machines account for 62.6% of the revenue at the two Connecticut casinos, but they probably account for a much higher percentage of casino’s actual profits. The other stuff is just to get more people there. The boxing matches, buffet, fine dining, concerts and basketball games are just glorified advertisements, and expensive ones at that.

In various other national studies, it’s been shown that casinos make the bulk of their money off a relatively small number of regular slot users. Harrah’s infamously makes 90% of their profits off the backs of 10% of their players, according to Wall Street Journal reporter Christina Brinkley. The bottom line is if Mohegan Sun were earning all these profits from Massachusetts residents — and that Massachusetts residents were spending all their money at the slot machines — why would Mohegan Sun be trying so hard to build a casino in Palmer, only to compete with themselves? The answer is they’re not. They’re trying to build the casinosexpressly to gain access to the potential of new slot gamblers within the 50 mile magic bubble national studies have shown doubles the amount of problem gambling, the people who will actually shell out most of their discretionary income at the slots, going to the casino once or more a week.

Of course, while those are the flaws in Barrow’s methodology, there are actually deeper flaws in what Barrow chose to study. In all the 63 pages of his report, there’s nothing on the potential costs to the state of Connecticut. Connecticut may gain a lot of tax revenue from their casinos, but Barrow is content to pretend that’s the extent of the calculation.

What do those casinos actually cost Connecticut? What do the local addicts cost the state, versus out of staters? Barrow doesn’t attempt to answer what schools would be expected to spend, getting new influxes of students from out-of-area workers. He doesn’t try to calculate the loss of business to the regional economy. He doesn’t try to come up with a number for how many hundreds of millions Massachusetts would have to spend regulating the industry, in legal expenses prosecuting slot-related crime, or in jailing those who commit crimes because of their gambling addiction or while under the influence of the free liquor at the casinos. That’s why when Barrow says, at the very beginning of his paper, that the Center for Policy Analysis does “not to pursue a predetermined research agenda,” it’s very hard to take Professor Barrow seriously.

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