Live-blogging the MassINC casino forum

Each of the panelists has just finished giving his opening pitch.  To summarize: Cahill’s fer; Bosley’s agin’, and McGowan’s in the middle, deferring to the politicians.  No surprise there. 

Moderator Michael Jonas just broadened the issue to the recommendations of the Transportation Finance Commission to hike the gas tax by nearly 50%, and asks about today’s Herald’s amusing front page, which says “Pick Your Poison,” and which features pictures of a slot machine and a toll booth.

Cahill says we need to be realistic about our revenue needs, and we shouldn’t place all the burden on the taxpayers by hiking taxes every time we need to repair a road.  He thinks that casinos are part of the solution, though not the whole solution.

Jonas, to Bosley: are we avoiding tough decisions?

Bosley: asks what RI, CT, NJ, and NY have in common.  They all have casinos, and they all have a higher tax burden.  False premise: you either have to do this, or that.  Says Gov is wrong about Atlantic City seeing economic growth since they put in casinos.  Casinos do eat up other forms of revenues.  It’s not the end of civilization, but it’s a change in civilization.  Yesterday I spent my whole day on the phone explaining that there is no quick fix – it’s hard work.  Casino debate sucks out all other oxygen out of the room for other economic issues.  No time for biotech bill and broadband if we’re spending all our time on casinos.  Why do we do well here, given high costs and high wages?  We’re creative and innovative, and we should encourage those industries.  Can’t get to those issues, because legislators and governors think too short term.  There are no quick fixes.  This is too good to be true, and certainly won’t give us the revenue the Gov says it will.

We should consider TFC’s recommendations.  Need to look at new ways to do things.  Need to encourage biotech industry here, and we don’t do it.  Every year we shift our policies.  Gov wants to close some loopholes and create others.  Shouldn’t focus on just one industry – we should focus on workforce development, education tools for all industries.  Need the long-term view.  That’s the steady growth that will let us do what we need to do.

McGowan’s up now, addressing the question whether we’re avoiding the “tough issues.”  Unfortunately, for some reason it’s very hard to understand what McGowan’s saying — maybe his mike is maladjusted.  I’ll do my best. 

McGowan says it’s an interesting question whether we want states to compete against each other for revenue.  Asks whether this is an efficient way of raising revenue, from an economic perspective – says it’s an interesting question.

Jonas: Patrick yesterday looped in biotech and education reform with the casino plan — said it’s all part of a large effort to promote economic vitality.

Bosley: it doesn’t add up.  I’m a liberal Dem – I love to spend money [said half in jest!].  But this doesn’t add up.  Bosley’s big point is that most casino revenue must be revenue that otherwise be spent elsewhere, since there can’t be a billion dollars sitting in people’s pockets waiting for a casino to show up.  So it’s just redirected, not new revenue.  In a state with so many cultural and tourism institutions, money will be redirected from them to casinos.  Plus, you can’t constrain the gambling industry – once it’s in, it will inevitably grow.  Can we control it, where no other state has been able to?

Cahill, asked about control and about redirecting money: says we can learn from what other states have done.  Gov has made clear that there are three geographically separate locations.  Also, this isn’t a panacea.  But if people want to spend their $ gambling, who are we to tell them that they can’t?  We should provide a pleasant upscale setting to do it.  It is new money, at least in part.  Culture and tourism only get you so far economically.  Gov is proposing an entertainment complex with gambling as a part of it.  And I don’t see anyone other than gambling interests looking to invest a billion dollars.  Gov and lege are talking about a billion dollar investment in biotech — that’s state money.  Where’s the money coming from?  Film industry — big tax breaks to get them here.  They’re making films, but where is the investment coming from?  This is part of diversifying our economy.  They can all fit, without one overwhelming the other.  In 1990s, we put all our eggs in the high-tech basket.  Big mistake.  This is part of a regional economic strategy.  We’ve got people to pay hundreds of millions of dollars in licensing fees to build entertainment centers that include restaurants, etc., in addition to the gambling floors.  If that’s the only way we can get them here, then it’s worth doing.  Plus, we’ve already got two Indian tribes pushing hard to build casinos, and state revenue from those casinos is much smaller.  Reality is if we do nothing, it will come anyway, and we won’t get the benefits.

McGowan: Unique point about Patrick’s proposal is that he’s stressing economic development, not just revenue.  Agree with Cahill that the key is how you use the revenue to get the economic development you want — don’t just take it as extra revenues.

Jonas: interesting that Gov proposal doesn’t address stress on cities and towns, so will this really help the property tax problem?  Is the credit just a short term fix until munis have to hike property taxes again?

Cahill, who has an op-ed this morning [I haven’t read it yet] on use of revenues: there’s a danger in trying to split the money up too many ways.  Majority of money to cities and towns from lottery goes to public safety, education, and infrastructure.  Believes in local control and the wisdom of local officials to spend money where it’s needed.  Didn’t like the fact that Middleborough plan ignored everyone but Middleborough.  That’s why the state needs to take control of the issue.  Best chance for this to pass in legislature is to commit revenues to cities and towns, but understand that Gov ran on property tax cut.  What makes the state work is the cities and towns, and we should try to get more revenue back to them.

Bosley: a couple hundred dollars in property tax credit isn’t worth it.  Overall point is that we’re rearranging money — there’s no new money.  On the film industry: that’s been very successful.  We will make money off it.  Difference between that and gambling: gambling is bad economic activity — doesn’t add anything.  But film is a value-added industry — you sell the product for more than you put in.  On Indian tribes: disagree strongly.  If we don’t back casinos, it’s much harder to get feds to take land into trust for tribes.  Plus, if we didn’t have slots, the tribal casinos would be much smaller scale.

Jonas: turning to social costs of gambling – addiction etc.  While only a tiny percentage of the population has gambling problems, estimates are that 2/3 of casino revenue comes from 20% of the players, and 1/3 to 1/2 may come from problem gamblers.  Is the inconvenient truth that the industry can’t afford to reform problem gamblers?

McGowan: those estimates are too high.  Vast majority of casino is slots.  80% of the space is slots.  There also the “whales” — high-roller baccarat players.  Doubt that we’ll be bringing in those guys.  Casino gambling tends to attract middle-class players.  My father goes to the casino, spends $75, and has a day of entertainment.  That’s not a bad thing. 

Cahill: It is a challen
ge.  I personally think the lottery creates more problems for addicts, because we’re right in front of people everywhere we go.  Casinos are more self-contained, in that there are fewer of them.  We tried this [banning it] with alcohol in the 1920s.  We can’t force people to live the kind of life we think they should live.  The solution is to make it available in a limited way.  Even if we don’t do this, people will gamble — they’ll fly to Las Vegas, or visit Atlantic City or Foxwoods.  Right now, we don’t have revenue that exists to solve the gambling addict problem.  There may be more of them here if we add casinos, but this problem has been with us for a long time.  This is an opportunity to generate revenue to deal with the addiction problems, and also promote economic development.  We don’t ban alcohol or cars, even though they both kill people.  My job is to look at how to pay for the services we provide, without taxing them into NH or elsewhere.  We’ve come a long way since the old Las Vegas or Atlantic City models — we’ve learned from their mistakes.  And I think the vast majority of people in this state want us to do this and do it right.  In the end, it will be a net benefit, instead of just continuing to be surrounded by it.

Bosley: we know there will be more cases of compulsive gambling – so why do that?  Also, 67-70% of the take is slots.  Those aren’t the wealthy players – those are lower- and middle-class folks who have less money.  Forget the moral argument — we’d be spending a lot of money to fix a problem that we ourselves created.

Jonas: one more question for Bosley — on the politics.  All eyes are on the House.

Bosley: I can’t speak for the Speaker, but my committee has been dealing with this since 1996.  We need to tear the Gov’s proposal apart, hold hearings — and we don’t have a bill from the Gov yet.  Historically, in the House, for each vote we take on gambling the opposition has grown.  There’s nothing new here, really — it’s always that we’ll use new money to pay for good things.  It’s failed every time.  There are people who don’t want casinos, but who want slots at the racetracks [NB: I heard Governor Patrick on WBUR this morning say quite definitively that he would veto slots at the racetracks. -ed.]  It’s going to take months to deliberate on this.

Q&A from the audience.

Sen. Sue Tucker: fact is that this industry depends on addiction.  Why not just promote smoking so that we can pay for public health?  State is promoting a product that harms people.  We already have the second-highest revenue from gambling of any state outside NV.  How much more can we really expect?  Question: in Merrimack Valley, my constituents can go to NH racetracks.  NH has resisted casinos, but if we put them in, they may do so too.  What is the dynamic with casinos on NH border?

McGowan: says that Tucker’s numbers are totally wrong — we can’t possibly have second-highest take from gambling.  [and then some unpleasantness erupted from the guy sitting next to Sen. Tucker — her aide?]

Cahill: reality is we compete all the time.  We’re trying to keep our researchers here with biotech investment.  That’s why film industry got tax breaks – because we’re competing with other states.  Difference here is we’re not giving anyone a tax break or committing state money (at least, we shouldn’t).  We should only be committing money from casino revenues.

Next Q: if bottom follows out of biotech industry, we’ll have those buildings and new infrastructure, and some other industry can come in.  If we don’t like the casino industry, we can’t get rid of it.  What do we do if it doesn’t work?

Cahill: I don’t know.  Bosley’s right – we need to debate this – no rush to judgment.  Things change over time, and I don’t have an answer for what happens in 20-30 years if this doesn’t work.  CT is a good example of how much more money is invested vs. 10 years ago.  There are no perfect solutions.  It’s a mistake to try to solve very problem perfectly.

Next Q, from a guy from Taunton: anecdotally, people of limited means spend more on gambling.  So is this taking money from my community for property tax relief in Lexington?

McGowan: maybe it is.  We don’t have the details of property tax relief yet.  Gambling is regressive tax.  Lottery is a very regressive tax — much worse than casinos.

Cahill: It is a form a revenue – a voluntary tax.  Our sales tax and income taxes are flat taxes.  Movements to make income tax more progressive have failed.  There is no perfect tax – people don’t want to pay taxes, but it’s the price of living in a civilized state.  We’re not looking to be the Las Vegas of the east – we’re just looking to compete, and add it to the mix.

Next Q, from Arlington: very concerned about immense energy use from casinos, and sprawl-inducing impact and cars driving to them.

Bosley: no mystery here.  If you want more revenue, have more people working.  Some industries are sustained growth – let’s put our emphasis on that.  Now, if you grow the economy, you’ll have more cars.  With casinos, you’re putting them all in one place.

Cahill: not a good idea to put these on T stops, because we don’t want to make it too easy to get there. 

Last Q, to Bosley: you say it’s just a money transfer.  But what about money being spent in other states, 10,000 construction jobs and thousands of permanent jobs with benefits, and the auction fees for licenses?

Bosley: the auction fee alone is a dangerous thing.  It’s a one-time revenue.  Can’t embed that in the budget.  Of course we lose money to other states – but some of our biggest lottery outlets are on other states’ border, so we make money there.  If you run the numbers on our recapturing every person who goes to CT, in my judgment it doesn’t make sense.  Jobs at Suffolk Downs would be important — but you can’t just take the jobs — wouldn’t put a nuclear plant in Boston Harbor, even though it would mean construction jobs.  Go to Greektown in Detroit, and see who gambles there, or in Windsor Ontario.  I don’t think it generates the kind of economic activity the building trades want.

And that’s it.  I’ll try to do a more coherent wrap-up later — my battery is about to expire!  Thanks to the Omni Parker House for their wireless network.