Expanded Gambling in Massachusetts

On the surface it sounds great.  More jobs, more revenue, more freedoms for the citizens of Massachusetts.  On the surface it’s a no-brainer that the State Senate should approve expanded gambling in the Commonwealth.  It’s hard to argue with creating 14,000 permanent jobs and about $400 million in revenue as “The Innovation Group,” a gambling research firm estimates would result from 3 casinos.   Even taking that estimate with a grain of salt (they do represent a lot of big casinos) it is still an impressive figure.  And, with unemployment at a record high and tax revenues down, why wouldn’t you do anything to turn the tide.  However, as is so often the case, the more you dig, the less clear things become.  

Casinos are just not as profitable as they used to be.  The Rockefeller Institute of Government released a study last year which showed an 8.5% drop in revenue from casinos in 2009 versus the prior year.  They noted that “Expenditures on education and other programs will generally grow more rapidly than gambling revenue over time. Thus, new gambling operations that are intended to pay for normal increases in general state spending may add to, rather than ease, long-term budget imbalances.”  Uh oh.  Not so rosy anymore! 

But, to really analyze this decision in economic terms, we need to look at the social costs that casinos create and compare it to the revenue that a casino would bring in.  We’ll use the $400 million number from The Innovation Group and deduct the 8.5% that the Rockefeller Group found. This way we are using a measure from a group that pro-casino activists like and a measure from a group that anti-casino activists like.   That leaves us with about $355 million in annual revenue for the Commonwealth with the creation of 3 casinos.  Calculating social costs is a very new field and there is tons of disagreement over how to do it properly.  But, a recent study in NH gives us some idea of what those costs might look like.  This study, commissioned by Governor Lynch and carried out by the  nonprofit research organization “The New Hampshire Center for Policy Studies” found that, with one casino, the total revenue for NH would be about $220 million while the total social cost (combined between MA and NH) would be about $288 million.  And that was for ONE casino*. 

It is obvious that having more than one casino will increase the social costs to the Commonwealth, but by how much?  Well, in order for this endeavor to be a profitable one for Massachusetts, the social costs resulting from 3 casinos would have to be less that 1.23 times that of one casino if we use the $355 million number and less than 1.39 times that of one casino if we use the full $400 million figure.  Not hard to imagine that at all.  So what does that mean?  Well it means that the social costs resulting from the creation of these casinos would actually be more than the revenue generated.  A net loss for the Commonwealth.

Admittedly these are far from perfect calculations, but it certainly illustrates the dramatic risk is pushing forward with these plans.  At a time where our economy is, at best, fragile, this level of uncertainty and risk could be big trouble.  All one has to do is look at the sub-prime mortgage mess to recognize the significant and far-reaching consequences that come from guessing wrong. 

With revenue numbers far from a certainty, the other argument casino supporters have is job creation.  Creating jobs, even low wage jobs, is critically important and, if I really believed that building three casinos would make a difference here, I would be more inclined to support the effort.  However, study after study has shown that job creation is not a foregone conclusion when tied to new casinos.  In fact, a study done by the New York Times found that 27 of 57 municipalities had, in fact, experienced a net job loss.  That’s almost 50%!    

In light of this, and other studies, University of Illinois economist Earl Grinols observed:  “Partly in response to negative perceptions, many in the gambling industry have promoted the idea that gambling is an economic development tool, creating jobs for depressed regional economies and revitalizing lagging areas. Gambling experts and even gambling spokesmen frequently suggest that such arguments are exaggerated or false, but their cautions are often ignored by elected officials who face pressures to do what they can to aid their communities and therefore want to believe that gambling will help. It is an empirical matter subject to a number of special factors as to how gambling affects a particular economy.” 

Finally, I haven’t yet touched on the impact that addictions can have on a family.  Not just in one generation, but in generations to come.  It is easy to find stories of addiction ruining relationships and costing families their security.  Is it worth taking this risk when, even if there is a financial profit, we are raising the chances for broken dreams and damaged families?

This is an issue I have struggled with for quite some time.  As a general rule I really like things that will create jobs and am, most of the time, opposed to the Government making our personal choices for us.  However, the crime and problems that so often follow casinos affect everyone in the community, gambler or no.  The government has a responsibility to look out for all citizens and, by making it harder to partake in a damaging activity, all citizens (both those who want to gamble and those who don’t) are being protected. 

Bottom line, the only thing we know about expanded gambling is that it will adversely affect the quality of our communities.  The economic measures are a gamble and, quite frankly, it is a gamble we can not afford.  One of things you always hear about responsible gambling is “only bet what you can afford to lose.”  We can’t afford to lose and, in many ways (i.e. the human toll gambling addiction takes on families) we can’t afford to win.  That is why, after many hours of decision-making, I have decided to oppose expanded casino gambling in the Commonwealth and hope you will as well. 

If you are so moved, call your Senator and have your voice heard.  You can figure out who your Senator is by visiting: http://www.mass.gov/legis/city_town.htm

*Note on costs: To this point there has been NO state study of the actual costs associated with passing this gambling bill.  Not a one.  The truth is we have no idea what the real cost would be and lawmakers have not taken the time to actually take a hard look at that very important issue.  It would be like picking taking a final exam without doing any studying.  Might you do well? Sure.  Are your chances MUCH better if you make some flash cards? You bet.

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Posted on June 24, 2010, in Uncategorized and tagged , . Bookmark the permalink. Leave a comment.

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