Wednesday, August 24, 2011

MA Casinos? Eight arguments against (to start)

Here we go again.  "State leaders agree on casino bill," reads the headline.  "For months, [Governor Patrick] and his aides have worked closely and behind closed doors with DeLeo and Senate President Therese Murray to draft the latest proposal."  As if anything of importance is ever done any other way in this one-party state of ours.

"[L]egislative leaders defended their approach, saying they want to prevent another bitter public battle."  Of course they do!  Why wouldn't they?  Especially the "public" part.  What do we think this is, a democracy? 

"'We all want to see this done,' DeLeo said in an interview in his office yesterday."  And by "we," the Speaker means those good folk who have been "working closely and behind closed doors" with him lo these many long months since the last casino effort broke down in a morass of ego clashes and political Schwartz measuring.  It was nice of the Speaker to come out briefly for an interview, peevish though it was.

Here's a good laugh:
The bill attempts to combat the corruption that has historically cropped up around casinos by setting up a five-member commission to monitor the industry and a new State Police unit to enforce the law. The commission would ensure casino developers have “integrity, honesty, [and] good character’’ and could also ban gamblers with “notorious or unsavory reputations.’’
Oh yes.  The organized crime and corruption that "historically" (read: always) crops up around casinos won't have a chance against our mighty... five member commission.  And gamblers with "notorious or unsavory reputations" will doubtless steer clear of our casinos, or at least will be forced to abandon their beloved "Notorious and Unsavory" t-shirts and caps.

Notorious B.I.G. Were he still with us, he'd be unwelcome in MA casinos
Much as I hate to admit it, I think this thing might be inevitable this year.  Embarrassed each one by last year's debacle, Patrick, DeLeo and Senate President Murray wouldn't push a casino bill forward again without greased skids beneath.  Still, if there is one truth in government and politics it is that there is no such thing as a sure thing.  And every gambler knows that every once in a while the house loses (though in the gambling context the house only loses to keep the saps coming in the door).

Since I started blogging in December '08, I've written as much about Massachusetts casino proposals as any other topic.  Rather than re-create all of it from whole cloth this time, it occurred to me to go through my earlier screeds and re-publish only the contra arguments that still apply today with equal force as when they were first typed.  Which, it turns out, is most of 'em.  Hereafter, then, a condensed digest.

Why, Despite Everything You've Heard, Massachusetts Casinos Are A Bad Idea:

Reason #1: The market for gaming is neither infinite, nor recession-proof.

March 8, 2010:  I noticed an interesting headline on the Drudge Report this morning, linking to an AFP dispatch carried by Breitbart.com: Chips are down for US casinos as revenues slide.

The fact that casinos are suffering along with the rest of the economy is hardly breaking news.   Foxwoods and Mohegan Sun, our closest "destination resort casino" neighbors, have been hurting for a while now (ditto Twin Rivers in Rhode Island, the nearest prototype for Speaker DeLeo's favored "racino" option).  But today's article is a nice reminder of a pesky little thing those of us who do not work on Beacon Hill like to call "reality."  Here are the lowlights:
US casinos have run into a string of bad luck as the recession and other factors cut into gambling revenues, even as more states move to get a piece of the action. Gaming revenues in the 12 US states authorizing casinos fell 5.7 percent in 2009 to 30.7 billion dollars, according to a preliminary estimate by the American Gaming Association, a trade group.
This followed a 4.6 percent drop in 2008 gross gaming receipts, the figures showed...
[Research analyst Billy] Hulkower said the trend suggests little or no growth in casino attendance over the past decade, a period that included two recessions and an economic upturn. This means economics is not the only factor, he said...
Twelve states currently authorize casino gambling, but Mintel notes that at least 25 states have proposed or are considering expanding gambling operations including lotteries and sports betting to help balance their budgets.
"If a whole lot of states are suddenly starting to allow gambling and were counting on this revenue you're going to have a problem," Hulkower said...
"The expansion of gambling does not bring more customers into the market," said Lucy Dadayan a senior analyst at the Rockefeller Institute.
"There are only so many customers, so with every new casino there are only marginal increases."
November 18, 2009:  This little tid-bit from the State House News seems so far to have been missed by the major media. But it should be of interest to anyone pondering casinos as a means to budgetary salvation here in Massachusetts:
Foxwoods Resort Casino, the Connecticut facility eyed by Bay State policymakers as a cash vacuum from gambling residents here, defaulted on a debt payment Monday and saw its credit lowered to junk bond status, the Hartford Courant reported. The Pequot tribe that owns the casino reported paying $14.2 million of the $21.25 semi-annual interest on $500 million in debt, and does not plan to pay the remainder within 30 days, the paper said. That prompted Standard & Poor’s to downgrade the Foxwoods debt score.
Plenty of people here in the Bay State would have voters believe that a Foxwoods or two in our state, pumping a healthy portion of its revenues into state coffers, would solve all of our problems. Meanwhile, the real Foxwoods cannot even pay its bills.

February 24, 2009: The Globe has an interesting piece today on the state of the gaming industry and how it relates to the prospects for a new push for casinos here in Massachusetts. If ever you were inclined to believe the Governor's predictions of money raining from the skies if only we'd license some casinos, you ought to take the time to read this article.

The upshot is this: the gaming industry has been hit hard by the recession. Massachusetts can no longer expect (if it ever could) developers to spend hundreds of millions of dollars merely for a license to build a resort casino in Massachusetts. They may not have the money to build such facilities at all.

There is some significant cause for concern in the subtext of the article, however. If developers are not willing or able to build destination resort casinos, we could always let them throw some slots in at our tracks, open "gambling halls," etc. Here's a chilling paragraph:
Instead of resorts, Loveman said, the Massachusetts Legislature should pursue an incremental approach to expanded gambling by legalizing slot machines at the racetracks, including Suffolk Downs. One model, he said, would be similar to Detroit, where state officials allowed for temporary casinos until developers could secure more funding and build bigger tourist destinations.
Anyone been to Detroit lately? This guy would be well-advised to find another model. Quite possibly he does not have one.

Reason #2:  Gaming revenue estimates are wholly imaginary - and even proponents know it.

July 31, 2010: A couple of years back, the last time three casinos were on the table, it was assumed that license bidding per casino would start at $200 million and go up from there.  This was a big part of the political sell - casino licenses would, advocates said, result in an immediate infusion of at least $600 million, and possibly $1 billion or more, to the Commonwealth's coffers.

As anyone who has followed the abbreviated 'process' this year knows, our esteemed legislature declined to publicly update those revenue projections, preferring to hold their deliberations in an alternate universe, one apparently free of the effects of the recent and lingering recession.

But it looks like they updated their estimates in private.  The casino authorization bill that emerged from conference late yesterday would require developers to pay license fees of... $85 million.  That's a reduction in value of 55.5% right off the top.

[Note: This year's estimate sticks at $85 million, though the aspirational "at least" is tacked on for effect.  Not chump change, but the sharp downward trend is revealing.]


Reason # 3: There is no precedent for a state turning its economy around with gaming. It doesn't happen.

July 8, 2010: I do not like casinos for what they have come to represent in the Massachusetts non-debate over whether we ought to have them here: namely, a false panacea for the Commonwealth's fiscal difficulties.  There is simply no precedent - none whatsoever - for the assumption, which underlies much of the limited public debate on the issue, that "new revenues" from casinos will either outweigh their costs or solve any part of the state's budget problems.  On the other hand, there is plenty of precedent for the argument that states that lean on casino revenues tend to simply spend those revenues and land themselves back in the same fiscal suck-swamp from which they'd hoped to escape by legalizing casino gambling in the first place.  See, Exhibit A: Connecticut.  See, Exhibit B: California.  And so on.

September 18, 2009 [I was feeling feisty on Sept. 18, 2009]:  Foxwoods is billions in debt and restructuring its finances. Mohegan Sun recently laid off 500 employees.

To our immediate south, Rhode Island's Twin River 'racino' is also drowning in debt and sucking state funds eagerly into its starving maw.

Atlantic City, Detroit and many other urban areas across the country that bet on casinos to save their fiscal bacon are virtual urban wastelands, illuminated by the fitful blinking of gaudy signs that sit atop empty casinos.

Even Las Vegas, Mecca for casino enthusiasts and long held as a model of how gambling can drive a successful economy, is sputtering - with unemployment recently pegged at 13.4 percent.

So naturally this is the perfect time for Massachusetts to build a bunch of 'destination resort casinos.' Or so says Massachusetts House Speaker Bob DeLeo this morning.

We have a "vital need for revenue," you see - and casinos are just the way to get it. If you suspect that a variation of that line - "I need the cash... I'm due for some luck... this has to be my night!"- emanates from countless desperate mouths at countless late-night craps, poker, roulette and blackjack tables at every single existing casino in the country... well, you're probably right.

But never mind that. Let's bet big on casinos. The Legislature needs the cash. They're due for some luck. This has to be their night.

Of course there is an important difference between our grubbing pols and the lost souls who bring their pension checks to the casino - the Legislature won't be betting with their own money.

Reason #4: The notion that the legislature can legalize casinos but limit their number is fantasy.

March 5, 2010: Now add another crucial little wrinkle - the tribes. Like Governor Patrick before him, Speaker DeLeo proposes somehow to limit the number of casinos that can be built in the Commonwealth. In DeLeo's formulation, we'd have two. This is fantasy.

The Indian Gaming Regulatory Act (IGRA) gives a federally-recognized tribe (of which we have several) the absolute right to operate a "Class III" gaming facility (a casino) on its sovereign land in any state where such gaming is legal. Advocates for expanded gaming will rely on the public's (and the media's) relative ignorance of this complicated law to argue that a tribe may only establish a casino after entering into a "compact" with the state. This is accurate, but misleading. Under the IGRA, once a state legalizes Class III gaming and a tribe requests such a compact, the state "shall negotiate with the Indian tribe in good faith to enter into such a compact." It's compulsory. A tribe asks for a compact, the state must give it one. Further, if the state delays or refuses to enter into negotiations, or fails to negotiate in "good faith," the IGRA gives the tribe the right to petition the federal government, which is thereafter obligated to impose a compact of its design upon the state.

Bottom line: any of our tribes that have land and want to build a casino can build a casino once the state legalizes casino gaming.

This is precisely what Cedric Cromwell, chairman of the Mashpee Wampanoag tribe, had in mind yesterday when he released a statement saying, "Once gaming is expanded, we intend to move forward with our plans to build a full resort-style casino in Southeastern Massachusetts under the rights afforded to us as a sovereign Indian tribe." Simplified: once you open the door, we're walking through it.

Speaker DeLeo may wish to crack open Pandora's Box, pull out what he wants (two casinos, four slot parlors) and then slam it shut again. That isn't how Pandora's Box works. Once it is opened, it is opened. Everything comes out.


Reason #5: Some guy from Colorado wants to put up a casino in my backyard.

October 23, 2009 [Sure it's NIMBYism. But that's kind of the point. Every single mega casino is going to be a NIMBY issue for a lot of someones - especially because developers of these things tend to prefer vast tracts of previously undeveloped land of the sort that exist only in places that don't have a lot of development that would be consonant with a gambling mecca.  People who choose to make their homes in such places do not want them fundamentally and forever changed by a casino.  That's perfectly rational, and a powerful motivator.]

Reason #6: If everybody wants these things, then why do they ALWAYS try to jam it through without public debate?

July 28, 2010: I did, however, want to point out an illuminating observation embedded in last night's casino update from the State House News:
Most Senate Democrats have stayed clear of the conference committee, observing informal legislative tradition of not injecting outside voices into closed-door dealings.
Beacon Hill democracy, ladies and gentlemen!  Where even elected representatives in the majority party are deemed "outside voices" who dare not inject their thinking - or that of their constituents - into "closed-door dealings."  What a fine, if "informal" tradition!

Reason #7: The unions are driving this bus.

July 29, 2010: "Details don't matter, pass a bill."  Those are the words of AFL-CIO president Robert Haynes, the state's number one union poo-bah, and the guy who more than anyone else is providing the impetus for the aforementioned irrational rush.  He isn't shy about it either - no effort whatsoever to hide the strings he is pulling.  Here's how Haynes describes meetings he's had in the past week with Speaker Bob DeLeo and Senate President Murray (again to the State House News):
"They both say to me: 'Can you talk to the other one?' I say, 'Yes, I can. I don't care what the formula is, do an expanded gaming bill by July 31'," state AFL-CIO president Robert Haynes said late Wednesday.

"Here's what I want you to do," Haynes said he told Murray. "I want you to pass expanded gaming legislation. That's what I want you to do. I don't care whether it's your formula or his formula."

Haynes, who boasts of 400,000 members, said he favored neither the Senate's proposal of three casinos or the House plan for two casinos and four racetracks with slot machines. He said he had told legislative leaders he wanted some form of expanded gambling passed.

"I'm the guy that gets to put the political legislative strategy to work," he said in a telephone interview. "I'm not the guy that writes the bill. I'm the guy that asks them to do their job."
Subtle, isn't he? Humble too. If we return for a second to the sausage-making analogy, Haynes is the hulking, sweaty guy dressed in a head-to-toe white rubber apron, face and torso smeared in blood, fat and muck, arms shoulder deep in a vat of eyeballs, beaks, hooves, feathers and fingers.

Interesting phrasing, too.  "I'm the guy that gets to put the political legislative strategy to work."  Again, the aversion to facing such naked, ugly reality; I'm not sure I want to know what he means by that.

But at least Haynes has done us the favor of explaining, finally, this mad scramble to pass some form of casino legislation by midnight on Saturday.  "And if you don't do it, then I guess you suffer the consequences."  That's still Haynes.  Seriously.  No word on whether he was fingering a butcher's knife at the time.

Reason #8: Proponents are budgeting for destroyed lives.

I don't have a previous post for this one, but it just might be the best argument against legalization of casino gaming in Massachusetts.  Ironically, it is also one of the proponents' favorite arguments in favor.

Revenue estimates for casino gaming are all over the map.  Let's take $500 million, to use a round number within the range of common estimates.  The new bill would devote five percent of that to "programs to combat compulsive gambling."  That's 25 million dollars per year budgeted for the sole purpose of providing state assistance to people whose lives will be destroyed by the Commonwealth's new economic development initiative.  I have no idea what dollar figure state planners assign to each anticipated compulsive gambler they expect to come in need of those dollars, or even if they've thought about it to that level of granularity.  But however you slice it, that's a lot of deliberately created misery they are budgeting for.  A lot of families left broken and destitute.  A lot of college funds down the pisser, wedding rings turned in at the pawn shop, cleaned out savings accounts.  It's exactly as if Beacon Hill's big three were to propose a state cigarette store, with five percent of revenues dedicated to smoking cessation programs.

Ordinarily I am of the view that people are responsible for their own decisions, and that if s guy wants to go blow his wad at a casino it is his business and  his alone.  I'm still of that mind, in a way.  I just don't think government ought to build an economic development strategy around that guy or - worse - the expectation that many thousands of those guys will queue up for the privilege of losing it all to a state-sponsored vice.

Anyhow.  It will be interesting to see how this plays out this time around. 

5 comments:

  1. What kind of state do you want to live in?

    There's no valid reason the people of Massachusetts should not give this piece of legislation full vetting, and the legislature a full battery of hearings, just like every other major policy change.

    Neil Sagan

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  2. Well I agree with you Dan- we should not be building Casino's at all. There is just no valid reason or justification for it. If the unions want jobs let's build schools and/ or repair the crumbling infrastructure in this state. This is such a fantasy that Casino's bring money- they drain money from our already poor state. I also agree that this should not be discussed behind closed doors- what happened to Open meeting rules? If it's such a great idea then let them bring it out into the light of day!

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  3. Casinos bring in money to the state. CT makes 300+ million each year. MA owuld bring double that if not more. People want to gamble, its a form of entertainment. It would increase torism which adds more tax dollars. You can build a 100 million dollar school which brings in zero revenue. You can build a 100 million dollar casino and it brings in millions in tax revenue. Its a no brainer. Casinos will not cure the economy but it will help. Finally don't forget we already have legalized gambling, the lotttery and church bingos. SOw hats the big deal?

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  4. Thanks for the comments, all. Anonymous (the second): I'm sure you don't mean to equate schools with casinos. I don't even know where to start on that, but this will do: schools are a public expenditure; casinos aren't. It isn't an either/or proposition, obviously. As to your other points - yes, CT makes money off of casinos. And as I noted in the initial post, that state's budget mess was every bit as bad as ours through this recession and even before. Even if MA casinos bring in $300M - an optimistic number for sure - that will cover less than one percent of the annual budget. To my mind that just isn't worth the tradeoffs. Thanks for commenting.

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  5. Why do the current times feel like the 1920's prior too the great depression gambling & crime ran rough shot over that era also producing the biggest criminals of the century obviously our country didnt learn a big enough lesson & history is now repeating itself. I mean people broke, people are hungry adding casinos just doesnt seem like it would helping anything I yes it brings revenue but also brings the sleazy negative element this should be open too public debate & scrutinized heavily

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