, Salem, MA


January 23, 2014

Watson: Casinos erode local economies and tax state services

Last week, I wrote about the status of casino proposals in Massachusetts and three important upcoming decisions.

On Feb. 25, citizens of Revere will vote whether to support a casino at Suffolk Downs.

In May, the state gambling commission will select two winning casino proposals and award licenses to them. One slots parlor may be chosen sooner.

Sometime in the spring, the Supreme Judicial Court will issue a decision stating whether a November ballot question can proceed. If so, the binding question will ask voters their opinion on repealing the law that permits casinos.

It is my hope that the SJC will permit the repeal initiative and that voters will oppose the casino law. The economics of casinos do not in the end favor the taxpayers. Last week, I partially outlined how some social costs, and some negative financial impacts on the existing businesses in a casino’s “catchment” area, combine over time to exceed the revenues going to the state.

The consequences of a casino’s effect on neighboring, area enterprises — slowly driving them out of business — have not received enough attention. The St. Louis Federal Reserve Bank has studied this issue. In five counties out of six that it examined, where new casinos were built in the Midwest and the South, retail employment was diminished significantly — roughly 25 to 50 percent. Many existing restaurants and shops shrank or closed.

Usually, casinos don’t enlarge the local or regional economies; they just rearrange them. And even that’s only in the first, best years when casino fees and payments to the state are at their highest.

Mayor Joseph Curtatone of Somerville, who supports the proposed repeal of the casino law, has spoken out clearly about the longer-term dynamics of casinos. Unlike the mayors of Everett, Revere and Boston (Menino), who advocated strongly for casinos, Curtatone cautions that the economics of a gambling hall don’t bring sustainable revenues, growth or synergies to a city or region.

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