The casinos are projected to siphon an additional $1 billion dollars out of the Massachusetts economy every year. This isn’t money that is currently being gambled by residents. It’s money that residents are currently spending at nearby businesses. That $1 billion dollars is the equivalent of an additional 1,000,000 Massachusetts gamblers losing $1,000 a year to the new casinos. That’s roughly 1 in 5 Massachusetts adults who will stop spending that money elsewhere, and start spending it at the casinos.
Now ask yourself these two revealing questions:
1. Where is that $1 billion dollars a year being spent now?
2. What happens to those businesses and their employees, once it no longer is?
On November 4th, Vote YES to Repeal the Casino Law
Vote YES on #3
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The successful casinos that will bring an economic boom to all parts of Massachusetts are going to be built next to the Unicorn Ranches, Leprechaun Retirement Villages, and Sasquatch Nature Preserves. Don’t dare question this or the Billion Dollars. Have Faith. Blind Faith in a Sea Of Joy.
The figure is optimistic because these casinos will likely struggle – the market is already saturated and shrinking.
However, a lot of money will be spent in them and the vast majority of that money is money that had been previously spent in the community, recycled by the local employees and small business owners who lived and worked in those communities.
Community businesses operate completely different from casinos. One encourages economic growth by creating a multiplier effect as money is recycled between members of the community, while the other is a giant vacuum that leads straight to international billionaires who don’t give a damn about this state or any of the communities in it – except in how they can best suck communities dry and the people living in them.
I think your analysis is a little too simplistic.
Claiming that this is money “taken out” of the economy is tantamount to a conservative claiming that a tax is also “taken out” of the economy – when in fact it is just money shifted around.
First off, the casino profit margin is about 10% (and less if they’re not profitable during a downturn). That means that of the $1 billion spent in casinos, about $900m will go back into the local economy. So yes, the money comes from somewhere, but this is more of a movement of money in the state than anything.
If some of that $1bn comes from money that is currently being spent outside the region (for example, on vacations to Florida, or even on buying stocks in Apple), and that totals more than $100m, then the economic impact of the region is a positive, not a negative. We already know that people travel to Foxwoods to gamble – a lot of that money is going to stay in the state.
If Springfield gets more tourism than it currently does (the Basketball Hall of Fame isn’t enough to get people to stay here overnight) – things like more conferences, more people stopping here while driving between two other destinations, then that is additional money put into the local economy.
Next, the precise location of where the money goes is important, at least to a city like Springfield. Springfield is one of the poorest cities in the state, with one of the highest unemployment rates (as I estimated yesterday, over 22%). Let me illustrate with an example with made-up numbers and reasonable assumptions (and please, feel free to tell me if you think my assumptions are dead wrong).
Let’s say that the following money is spent by residents at the CT casinos:
Springfield: $1m per year
Springfield Region: $10m per year
Greater Region (i.e. nearby, but outside the local economy): $20m per year
That is $11m leaving the regional economy and $1m leaving the Springfield economy and going to CT.
Now with a Springfield casino, let’s assume a 50% increase in Springfield casino spending (due to it being easier to reach), a 25% increase in Springfield Region spending, and let’s assume that Springfield can capture 25% of the Greater Region casino dollars (like from Hartford, Vermont, Berkshires, Worcester, etc.)
So this is what would be spent locally by those above groups:
Springfield: $1.5m per year
Springfield Region: $12.5m per year
Greater Region: $5m per year
That is $19m. Take off $1.9m for the casino profit, and you’re left with $17.1m that is now here.
Springfield now has a net increase of $16.6m ($17.1m minus the the $0.5m more it is spending. The Springfield Region has a net increase of $14.85m. ($17.1 – $2.5 – those two numbers are obviously not additive).
There is a good opportunity for Springfield residents to get that money because these jobs are not high-tech professional jobs (which mostly are held by non-Springfield residents). They are lower-wage jobs – jobs that can be held by people who don’t have college degrees and/or advanced skills.
When Springfield residents now have money, that helps the city’s economy because they spend it in the city in which they live – the city which many regional residents currently will not even enter because they are afraid of it.
That last point is very key. A casino is going to have to attract its business from outside the city residents, so it is going to work with the city to improve its image. It is going to live or die by the city’s reputation, so it is going to be a large player in improving that reputation.
That means you’re not going to get some hotel worker at the Marriott telling you “don’t go outside the hotel”. You hopefully won’t have the news media overemphasizing crime (as it is right now, an urban “shots fired” incident merits 2 online news articles, someone being injured in an assault gets 3 online news articles, someone being murdered in an altercation gets 2-3 online news articles, and when the worst happens – a random person being murdered (which happens infrequently), that is good for at least 10 online news articles.
You know, I didn’t come into this as a booster – I did vote against the casino, and I am still going to vote against the casino – but if the casino is built, I don’t think it is going to be as bad as everyone says it will be, and I think there is some potential for a positive effect. I also know that if it doesn’t pass, and if the state does nothing to help Springfield’s economy, then this region is going to continue to suffer a slow and agonizing decline.
John Tehan says
You’re suggesting that the casinos gross profit margin will be just $100 million annually? Then how does the state expect to reap between $300 million and $400 million in taxes? The $1 billion figure is gross revenue, not the amount gambled away in casinos – it is money that is removed from the economy.
The MA gaming site clearly states:
So from that $1bn, $250m will go direct to the state. Presumably $100m will go to the headquarters, perhaps a bit more to handle back-office expenses. The rest will be spent on local salaries and expenses. Yes, some will be spent on expenses that go out-of-state, such as replacing slot machines, but 3,000 employees are going to get a good chunk of that money.
It is false that the $1bn will “leave the Massachusetts economy” because the $1bn is gross gaming revenues. It is also false that the $1bn is on top of the money spent on out-of-state casinos – that projection is for total gross gaming revenue. A large chunk of that $1bn will be effectively repatriated. This study says that MA residents spent $554m in CT casinos in 2012, $624m in 2011, and $876m in 2006.
The industry’s figures have been laughed at and the study you cited have been widely debunked — and poked fun at — on BMG and elsewhere. When Patrick’s administration was first given a copy of versions of that study, it came with a post-it marked something akin to ‘highly dubious.’ Counting license plates during one of the biggest holiday weekends of the year does not an accurate study make in terms of projecting year-long revenue.
The Gaming Figure’s revenue is not only rosy, but also fails to account for the full hit the state lottery is likely to take. For every dollar the state lottery loses to casinos, the casinos would have to bring in more than 2 new bucks just to stay revenue neutral — and that ignores the fact that the state lottery funds are directly earmarked for local communities, whereas the new casino revenue will go into the general budget. Local communities will get hit hard by this — and be every more dependent on the state to fill in the gaps, which is something it’s not always so good at.
The job figures you cite are absurd and will never materialize. Never. And they don’t account for any of the jobs that will be lost among local businesses because of casinos — and many local stores will be forced to close or lay off staff because of the casinos, particularly given the tiny ROI most small restaurants, pubs and bars operate under.
If casinos were such a boon to jobs, communities and local economies, it would be obvious and we’d all be clamoring for them. Instead, casinos have a long track record of cannibalizing local economies, creating huge new costs to local economies, as well as social costs that do terrible damage to communities. Only someone blind to the reality clearly displayed across the country — or wearing rose-colored glasses from the gambling industry — could believe the nonsense coming out of this corrupt community-wrecking industry.
It doesn’t work like an income tax.
allows casinos to deduct many expenses . So, in the calculations that were all supplied by the gambling industry and not fact-checked with independent analysis, the 25% “take” for the state will be significantly less …….and despite the semantics of, “GGR” it is more of a tax on the net gambling revenues.
As others noted above, the Unicorn-Poppy Seed-Rainbow projections are only one side of the ledger sheet that do not deduct losses to local aid (which really sucks) and the split of the revenues to all the special interest groups that were hushed by a promise of a piece of the pie. For example Horse Racing welfare and hush money to community colleges and cultural council. Which and who btw, have not assurances of receiving the amounts of revenue that they were wooed into believing would be coming to them…..and of course, not before fy 2018 at this rate and with any luck…..and YES on 3 – never. Holy crud, that might just force our lawmakers to work on sustainable solutions.
Technically, the money is shifted out of the existing economy. It is shifted from local small businesses to corporate monopolies and billionaires with unfair advantages (alcoholic beverage service, comps, etc.) that are not allowed for any other class of business. So this is not only NOT free market economics it is disgustingly regressive, pro-income inequality policy formulated by Governor Patrick and the Dem. legislative leadership. Signed off by the Dem lemmings.
Repatriation numbers have also been wildly exaggerated with Steve Grossman in the recent primary campaign claiming MA residents are spending $1Billie out of state. As if that is true, today. Sure MAYBE pre-recession when Clyde Barrows the Poli-Sci – faux economist – stiff from UMass Dartmouth counted license plates in parking lots to formulate his 3 casino proposal that Deval/Rubin inhaled……..but that is not what is repatriated.
And that it certainly not what would be sent to the great and powerful oracles and stewards on Beacon Hill and the Mass Gaming Commission (aka Mass Gambling Circus.)
Because the market is already pretty saturated, the projections will turn out to be way, way optimistic. So in maybe 4-5 years time, there will come the request that the state tax share has to be reduced in order to “save” all of the $12/hour service jobs at the casinos.
Sheesh, have you ever even been to a casino? The entire operation is designed to get you inside and keep you there.
The MGM proposal is built to allow people to get outside. The hotel is most definitely connected to the casino floor, and most of the restaurants are as well, but there are a number of shops and restaurants which can only be reached by going outside, and all shops and restaurants have an outside entrance. It is designed as an outward facing casino. Additionally, any related events will be held outside the casino footprint at nearby Symphony Hall and the Mass Mutual Center, which gets people out.
I think the benefit of the casino will primarily be:
1) Jobs for Springfield residents.
2) Downtown housing for those employees – new units being built by MGM, and spurring demand for private redevelopment for people who will want to live near there.
3) A positive association with the Springfield downtown area. Instead of “that’s the place you go to get shot” (not true, but the perception due to there being nothing there), the negativity will be neutralized.
4) The revenue spent by the 3,000 employees within Springfield will help the city’s overall economy. It won’t take much to make things seem better, since it is so bad now.
5) Events and amenities for Springfield area residents. Since the casinos in CT opened up, we haven’t had more than a handful of concerts or shows in Springfield. They all go to the casinos. At one time the Mass Mutual center hosted Elvis, the Who, the Grateful Dead, Led Zeppelin, Aerosmith, Nirvana, the Red Hot Chili Peppers (the tour with Pearl Jam and Smashing Pumpkins), and tons more. We get NOTHING now because the casinos sign exclusivity deals in a 100 mile radius.
I also think that having the casino there will bring ancillary redevelopment. We are already seeing it, with several property owners investing in their buildings, new restaurants opening, and some being planned. I think that this will just be reshuffling, as restaurants now have a place to centralize at – but that is overall a good thing, creating a “district” which will have more vitality than a dozen restaurants spread over a several mile radius.
Reviews of Detroit’s casinos are not negative. They note that the casinos are the city’s largest taxpayers, and they are a major employer of Detroit African-Americans. Detroit’s problems were not caused by the casino, and to imply that they were is really disingenuous.
A study done on the Detroit casinos found that within a 5-mile radius, commercial property values increased, which the researchers took to mean that economic activity was not just confined to the casino, nor did the casino cannibalize the existing economic demand.
Given that the existing demand in the casino area is very low, I would expect that any increase is going to look like a massive improvement.
The vast majority of any tax is going to be directly spent on something that would go back into the economy — a teacher’s salary, a new road, scientific research, health care spending, etc.
Some casino revenue will be taxed, but it largely goes back to the few shareholders who own the company. The Wynns and Adelsons of the world. These are billionaires and millionaires.
Where does that money go? Mostly Into their bank accounts, where they don’t grow jobs.
One of the big reasons why the Bush tax cuts were so damaging to our economy is that it encouraged the very, very rich to take money out of the economy — instead of investing it back in their businesses.
That should give you a sense of why casinos in particular as so bad for our economy — they produce nothing, leech off those who can least afford it, hurt communities, all the while the profit gets locked up in the bank accounts of some of the richest people in the country and world, none of whom pay any kind of a normal tax rate.
Sheldon Adelson and Steve Wynn don’t have much incentive to continue investing money. They throw up a slot barn, get as many people in it as possible, give people as little reason to leave as possible, use shady business practices to get as many local players hooked as possible… and then rinse and repeat.
Casinos can only make hurt our economy in Massachusetts. Just like they were touted to bring new life back into Detroit, they same has been done with them in Springfield. It never materializes — and always makes things worse. Casinos suck. Literally.
Yes, money will flow to the small number of shareholders of MGM – but that is economically bad if that sum is larger than the new money that will be brought into Springfield and the region. That, of course, is the item that everyone is betting on.
Springfield can’t really lose because the city is poor and not much money is flowing out of it to CT casinos. Not much more will flow from Springfield residents into the Springfield casino. The bigger prize for Springfield is the regional money which will now flow into Springfield; the prize for the region is to capture dollars from outside the immediate economic region, money that isn’t coming into the Springfield region.
Tell that to the citizens of Niagara Falls. Honestly, this treatment of the citizens of Springfield by our elected officials is disturbing. “Oh well, it sucks so much in Springfield that it can’t get any worse no matter how bad a casino is” seems to be the message.
Reminds me of when former First Lady Barbara Bush toured the Katrina aid camp in the Houston Astrodome and said, “And so many of the people in the arena here, you know, were underprivileged anyway so this … this is working very well for them.”
thanks for debunking this broad brush claim being promoted by the anti-gaming group. There is so much misinformation being intentionally floated around on this ballot question, it was interesting to read something thoughtful and factual.