SalemNews.com, Salem, MA

January 23, 2014

Watson: Casinos erode local economies and tax state services

Brian T. Watson
The Salem News

---- — 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.

Curtatone, who has been in office for 10 years and who has studied the casino issue extensively, says that — especially in urban areas — gambling facilities siphon business and, thus, jobs from other enterprises. Mostly, casinos do not stimulate other businesses. Furthermore, the conditions and pay of the vast majority of the jobs inside casino complexes are not high.

The city of Somerville, which could easily have competed for a casino, has instead chosen to build a real economy, one based on the many interlocking, mutually reinforcing components of healthy and sustainable growth. Curtatone has worked hard to help build a community that combines the right combination of mixed uses — residential, retail, business, industry and educational. In addition, the city and the private sector have been smart in organizing those complementary uses around their very imageful public squares and supporting them with mass transit. And when the Green Line is extended as planned to Somerville and Medford, that will further bulwark the area’s economy.

Curtatone’s point is that there is no shortcut to building a healthy, meaningful, sustainable economy. It takes explicit goals, planning, targeted investment, steadiness and time. By contrast, a casino’s allure rests mostly on the large, initial payments to the host community. But that upfront jackpot is followed soon enough (maybe five to 10 years) by the costly by-products of casinos.

If casinos were truly the win-win proposition for us that their proponents argue, we would see that result clearly in the evidence. But with the exception of gambling in Nevada, which for a variety of reasons is a special case, casinos and slots parlors do not enhance the vitality of the local or state economy around them.

Perhaps the definitive example of this can be seen in Atlantic City. The introduction of casinos there killed small, local businesses and caused the flight of the middle class from surrounding residential neighborhoods. Drive through the casino precinct now and you’ll see plenty of bail bondsmen storefront offices.

Additionally, the casinos themselves haven’t performed as promised, thus reducing the promised payments to the state. One case should interest us especially. In December, a federal bankruptcy court approved the shutdown of the Atlantic Club Casino Hotel after it failed to generate satisfactory revenues.

The original developer of that casino? Steve Wynn, the man now proposing a casino in Everett. The Atlantic Club wasn’t sustainable, but here’s Wynn, selling us on the promise of gambling halls.

Why did our politicians embrace slot machines and write the casino law? For one, it’s easy to make the short-term case and much harder to quantify the long-term costs. And many pols hope not to be in their current offices eight or 10 years from now. Or maybe citizens won’t connect the dots in some indeterminate future when greatly diffused costs are distributed gradually in hard-to-see ways across the profusion of complicated programs, services, agencies and departments in the state budget.

Secondly, casino developers for years have waged a full-court lobbying press on our legislators. The lobby has unmatchable money and access, and no other day job. Eventually, they won.

Politicians are under constant pressure to expand the useful tasks that government can do. But that creates a constant search for more revenue. Casinos dangle a lot of money in front of everybody, but we’d be wise to look behind it.

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