Why I have Opposed Casinos in the Commonwealth
Rep. Daniel Bosley (D-North Adams)
Friday, May 25, 2007
I have opposed opening casinos in Massachusetts, not on moral grounds (anyone who has the successful lottery that we do has no moral out on this issue), but on the question of whether or not it makes good economic policy. After studying this for eleven years, I am absolutely certain that it makes no sense at all and in fact, hurts our economy in quite a few ways.
First, the question of "everyone is doing it, so why can't we recapture the money we lose to other states?" is a red herring. That was the reason given in Rhode Island when Rhode Island voted to place slots in Lincoln Park. Yet a University of Rhode Island study indicated that only a small percentage of gamblers came home to Rhode Island. Most of the money came from people who were already in the state, thereby merely shifting money already spent in the economy. Oh, and by the way, the slots have not saved the dog racing industry, but have made the owners much richer.
Second, our Lottery returned $952 million to cities and towns last year. The two best casinos in the US, in Connecticut returned about $400 million to Connecticut. How much more do people expect us to do? This is important for a couple of reasons.
First, the lottery is extremely important to cities and towns and we should stick with the Lottery and not go on to casinos where commercial operators and native tribes will get a lion?s share of our net gaming revenues. And second, we get about $.24 of every dollar wagered in the lottery that goes back to cities and towns. Slot machines pay off at an average of 93%.
That means that that they pay off at $.07 for every dollar wagered. If we were to tax at 50% (remember, Connecticut gets 25% of the net gaming revenues), that means that we would get 3.5 cents of every dollar in revenues. So for every dollar that the lottery loses to a casino, we must receive $6.80 in casino winnings. If the lottery loses 10%, or 95 million dollars from the introduction of casinos in Massachusetts, we have to lose $646 million in net revenues at casinos.
And, if we consider that this is 7% of then total money wagered, that means that we need to gamble $9.2 billion just to run in place! That alone far exceeds anyone's expectations. Will we lose 10% of the lottery revenues? We have studies suggesting we will lose up to 17%.
Third, if studies are right and Massachusetts's residents are spending 1.1 billion dollars in Connecticut, we must remember that we only recapture the net gaming revenues to the state. That means that we would recapture a little over $100 million. To do this we have to fund a gaming commission at $75-80 million (comparable to what other states spend), have to fund increased law enforcement at around the same cost, and have to pay for the social costs that we incur from increased gambling activity.
That is not a moral issue, but a dollar and cents issue because it increases our cost for social programs. There are other costs to concern us, but these alone far outweigh the recaptured revenue.Fourth, we know that most of the customers for a casino come from a 50-mile radius. They are spending money that they are already spending on other goods and services. This impacts our tourism industry, our food and beverage industries and our entertainment industries at a minimum. This is not new money but money already spent in a much more diverse way in our economy.
In 1977 there were over 225 bar, restaurants, and taverns in Atlantic City. Today there are less than 50 as the casinos have engulfed them. That happens everywhere. I would like to give you the statistics for Ledyard Connecticut, but for all intents and purposes, there is no longer a Ledyard.
The local people will tell you how difficult this is, and in fact, if casinos are such a good deal, why is Connecticut trying desperately to deny a third Indian casino? The fact is that New Jersey was supposed to fatten their state coffers with casinos and they had to shut down their government this year in a fiscal crisis. They have 17 casinos. Connecticut, New Jersey and Rhode Island all have casino gambling and all have higher taxes than Massachusetts. Under the ruse of property tax relief, Pennsylvania passed a bill to legalize slots two years ago and today their Governor is calling for a major increase in the sales tax rate.
These states pay higher taxes in part because they need to make up for the unmet revenue needs that were promised by the casinos. Paul Samuelson, the Nobel Prize winning Massachusetts economist has said that gambling is the worst form on economic activity that one can have. Money doesn't churn through the economy.
Fifth, No state has been able to control gambling once it is started within their borders. The Treasurer's vision of one casino is naïve. With one, you get at least two Indian casinos and then the race tracks will come looking for relief. Look at our lottery. What started out as a little green ticket once a week now fires off a keno game every four minutes! And with each expansion, the economy becomes more dependent on gambling revenues.
I don't care if people want to play games and wager their money. But as a state legislator, my first responsibility is to make sure that we aren't enacting policy that is detrimental to our state, or in my committee, our economy. We can do better than looking to gambling to balance our budget. This really is a sucker's bet.