As voters will go to the polls to decide the fate of the casino legislation passed by the legislature and signed by Gov. Patrick, few of them will be considering the arguments often bandied about on BMG. Some here are opposed to casinos from a moral standpoint, gambling is a self-destructive activity that should be discouraged rather than encouraged. Others cite the persuasive case that the existing state sanctioned gambling enterprise-the lottery, essentially robs from poorer communities redistributing the revenues to wealthier ones. Others still (myself included) point out the case of bankruptcies, personal fortunes lost, and corruption at all levels of the regulatory regime set to govern the practice. These are all fine arguments-the problem is, as Striker and other casino advocates will counter-is that casinos will create jobs in communities that don’t have too many to go around. At the end of the day, the moral and even the broader policy arguments against casinos go out of the window when voters are facing the choice between creating jobs or not creating them in this climate. This is why the economic case against casinos has to be made.
Fortunately, that exact case is made on today’s Atlantic from an unexpected source, free market acolyte and former Bush speechwriter David Frum. Entitled, ‘A Good way to Wreck a Local Economy’, Frum lays out a compelling case against this predatory and increasingly failing industry.
First, demand is going way down:
Outside of Las Vegas—now home to only 20 percent of the nation’s casino industry—casino gambling has evolved into a downscale business. Affluent and educated people visit casinos less often than poorer people do for the same reasons that they smoke less and drink less and weigh less.
Unfortunately for the casino industry’s growth hopes, downscale America has less money to spend today than it did before 2007. Nor is downscale America sharing much in the post-2009 recovery. From a news report on the troubles of a recently opened Ohio casino:
Ameet Patel, general manager of the property, says the softness in casino revenue that he and other operators have seen has been driven by a key demographic: women older than 50 who used to bet $50 to $75 per visit. The weak recovery has squeezed their gambling budgets, and their trips to casinos are fewer, he says.
What’s true in Ohio applies nationwide. Casino revenues had still not recovered their 2007 peaks as of the spring of 2014, when again they went into reverse in most jurisdictions. Moody’s now projects that casino revenues will drop through the rest of 2014 and all of 2015, slicing industry earnings by as much as 7.5 percent.
And, many cities and states with far more desperate and less diversified economies than our fair Commonwealth, have been turning to this easy money panacea for far too long, creating a glut in the supply:
Weaker earnings are being divided among ever multiplying numbers of casinos. Baltimore’s casino will be the fourth to open in Maryland, with a fifth soon to rise down the Potomac from Washington, DC. Maryland’s casinos compete with a clutch of new casinos in Philadelphia and Delaware.
The casino market is nearing saturation, if it is not already saturated. Two casinos have closed in Mississippi this year. Four have closed or will soon close in Atlantic City, including the glitziest hotel on the boardwalk, Revel.
Casinos that do stay in business yield less to their towns and states. Revenues from Maryland’s first casino, in Perryville, at the northern tip of Chesapeake Bay, have already dropped 30 percent from their peak in 2008
The economics of the case so far are simply enough, the return on investment for subsidizing and sustaining this industry, yielding the promise revenues, creating the promised jobs, and creating the tax base the proponents promise-are all rather suspect. Instead, with a sharp drop, that is now viewed even by industry insiders as a permanent drop, in demand; paired with a significant glut in the supply, it’s no wonder we are seeing more and more casinos like Foxwoods enter bankruptcy or shut down entirely like the Atlantic City boardwalk and the infamous front page Mississippi mistake that is empty after just four years of operation.
Yet, from a standpoint of actually lifting up the gateway cities these casinos are supposed to save, casinos actually make the bad picture in these communities even worse.
Yet the truly bad news about casinos is not found in the tax receipts. It’s found in the casinos’ economic and social impact on the towns that welcome them.
No one should look to casinos to revive cities, “because that’s not what casinos do.” So explained the project manager for a new Wynn casino rising near Philadelphia.
The impact of casinos on neighboring property values is “unambiguously negative,” according to the economists at the National Association of Realtors. Casinos don’t encourage non-gaming businesses to open nearby, because the people who most often visit casinos do not wander out to visit other shops and businesses. A casino is not like a movie theater or a sports stadium, offering a time-limited amusement. It is designed to be an all-absorbing environment that does not release its customers until they have exhausted their money.
People who live close to a casino are twice as likely to become problem gamblers as people who live more than 10 miles away. As casinos have become more prevalent, so has problem gambling: in some states, the evidence suggests a tripling or even quadrupling of the number of problem gamblers.
Now we see the full picture. The jobs don’t materialize, neither does the tax base, which is actually depressed by declining property values. Local businesses nearby aren’t created, they close up. And we are left with few of the economic gains promised by boosters and now have to pick up the tab for the severe social costs of legalized gambling, and possibly, bailing out the industry when it inevitably declines. Let’s not put our tax payers on the hook for this boondoggle investment, let’s use the revenues set aside for casino subsidization to focus on a long term plan to fix our infrastructure, let us also make sure the gas tax is raised and indexed to accomplish that goal, and to vote this proposal down.
johntmay says
David Frum misses a three key points that support building casinos in Massachusetts.
1. With a casino closing or going bankrupt every few months in the USA, there are bargains to be had at the liquidation auctions being held. Our projected costs of building these White Elephants is now much lower than first estimated.
2. Massachusetts prides itself as a historical location and what better place to exhibit this dying phenomenon than here? We cab build a historically correct “Reno” right next to Old Sturbridge Village to show people how things used to be.
3. The money that casino lobbyists can pump into political campaigns will be lost if we do not allow casinos to be built in Massachusetts. This will be a serious loss of revenue to certain political campaigns that serve other interests as well, like children and widows. Think of the children!
harmonywho says
are mortgaging our communities and economic stability. Another reason to applaud–and work for–those candidates who are openly rejecting them.
I’m not at all plugged in to the Yes on 3 campaign… I hope they’re getting their ducks in a row, and I’ll make a donation if someone points me in the right direction.
sleeples says
http://repealthecasinodeal.com
I hope you can get involved/donate! It will be put to very good use.
I collected signatures for the repeal, and there is so much misinformation about casinos out there. The evidence against CASINOS=JOBS is plentiful, but it takes a ton of work to make sure everyone sees it. Its a very uphill battle, but once casual supporters considered how casinos would cost us local jobs, a lot of them were happy to sign the sheets!