SalemNews.com, Salem, MA

January 15, 2014

Watson: Casinos are a bad deal for taxpayers

Brian T. Watson
The Salem News

---- — For the gambling industry, two upcoming events loom portentously. On Feb. 25, the citizens of Revere will vote on Mohegan Sun’s proposal to build a casino at Suffolk Downs. If they approve the project, it will join the competition for the eastern Massachusetts casino license.

The second event — to occur sometime in March — will be a ruling by the Massachusetts Supreme Judicial Court regarding the legality of a proposed ballot question that would allow all of the citizens of the state to vote in November this year for or against repeal of the law that permits casinos.

In November 2011, Gov. Deval Patrick signed legislation — written and approved by the House and Senate — that authorized the construction of one slots parlor and three casinos in designated regions across the state. If the ballot question is judged to be acceptable, it will represent the first time that voters statewide can effectively weigh in on the casino legislation.

The casino law puts a lot of money on the table, and gambling industry developers have been assiduously assembling land, plans and local approvals. So far, in addition to Revere, casinos are proposed for Everett, Springfield and New Bedford. Slots parlors are proposed for Leominster, Plainville and Raynham.

The state gambling commission, specially created in 2012 to regulate the selection and operation of those facilities, will in May select two winning casino proposals and award licenses to them. The third will be awarded some time after that. Only one slots location will be chosen.

It is my hope that the SJC will permit the repeal initiative and that voters will oppose the casino law. For the economics of casinos do not in the end favor the state. To the contrary, after some five, six, or seven years of operation — and forever after that — casinos impose costs on the state that become larger than the revenues they contribute.

Politicians who favor casinos, including Patrick, love to focus on the immediate gain to the state of the initial, one-time licensing fees, construction jobs, casino jobs and the state’s percentage of the gambling take.

But that’s not the whole story. The experiences of other states with casinos show that, for many reasons, the costs increase over the years, while revenues decline. Invariably, after a few years, casino owners renegotiate sweeter deals for themselves, with smaller revenue percentages for the state.

Other costs to the taxpayers expand over time. As the consequences of problem gambling start to kick in, the state is left to address them. The worst cases — addicted gamblers — lose their jobs, destroy their families, default on loans, bills and credit cards, and steal and commit crimes. Their actual financial burden on the taxpayers is significant. You and I pay for the extra costs that they place on financial institutions, insurance companies, the medical system, law enforcement agencies, the court system, social service agencies and the prison system.

In milder cases, where poor people simply gamble away their paychecks, society pays in subtler ways. First, there are the losses to the gamblers themselves. Their money won’t be used to support more constructive endeavors in their own lives that would have a much bigger economic multiplier effect for the growth and productivity of society as a whole.

Secondly, other members of their families then often need financial assistance and other help to compensate for the lack of family savings and resources simply to pursue normal, educated, productive lives.

All of these costs are obviously very difficult to quantify. But conservatively, if we end up with roughly 30,000 problem gamblers (or affected family members) after five or six years, each of whom requires an average of $10,000 every year in state services — ranging from brief counseling to full incarceration — that would total $300 million a year in costs, which is the estimated high end of what the casinos will give the state annually. And remember, the casinos constantly refresh the stock of victims.

Furthermore, like Wal-Mart and malls, casinos cannibalize the jobs and business enterprises around them. To a large extent, again over time, constructing a casino economy simply moves the existing money around. Instead of citizens spending in the region’s small restaurants, clubs and shops, they leave their dollars in the casino complex. Relying on casinos ultimately undermines true economic health and sustainability.

Again, the politicians who support casinos do not want us to think about what their cost-benefit ratio is six, eight, or ten years out.

There is irony here. Government initiatives often have some negative — but unintended — side effects. With casinos, however, the state puts itself in the business of deliberately designing damage to the people. The state will need many people to patronize the casinos, be credulous, irresponsible, dysfunctional, or even compulsive, so that they will lose large sums of money.

It is an ugly sight to see the government, with the aid of psychologist-designed slot machines, plan an ambush on its citizens — especially the ones who can least afford gambling. For the taxpayers, casinos are a money-loser. And for all of us as just plain people, they pull society collectively in the direction of dysfunction.

Brian T. Watson is a Salem News columnist. Contact him at btwatson20@gmail.com.