Tuesday, May 22, 2012

Massachusetts Casinos: Another Reality Check

The first few paragraphs of an article in today's Globe are pregnant with implications for the Commonwealth's gaming future:
The worldwide casino company run by billionaire Boston native Sheldon Adelson will bypass the chance to build a casino in Massachusetts, saying the state’s plan to license up to three casinos and a slot parlor is going to dilute the market, according to a spokesman.
Adelson, who had spent nearly $500,000 lobbying lawmakers on the casino bill approved last November, is known for building lavish gambling resorts, some costing several billion dollars.
“With multiple facilities being proposed, it didn’t synch with our business model,’’ Ron Reese, a spokesman for Adelson’s company, Las Vegas Sands Corp., said Monday.
Let that sink in. This man spent half a million dollars lobbying for passage of a casino bill in Massachusetts, and now he has decided not to bother even trying to reap the fruits of those labors because the market is too crowded to make the effort worth his while. Golly. Who ever would have thunk it? (See here and here and here  for starters).

Plan your next vacation to... this place?
Mr. Adelson's calculus here is quite simple. Connecticut has a couple of mega-casinos ("destination resort casinos," as our Governor is wont to call them) that are both struggling to stay afloat, as are Rhode Island's less ambitious gaming establishments closer to our border. Un-vexed by that bit of unfortunate reality, we're about to throw up three of our own. New Hampshire is moving to grab a slice of the shrinking casino pie. As is New York State. The already-anemic market for "destination resort casinos," in other words, is already stretched so thin as to make one of the world's most successful (and aggressive) developers of "destination resort casinos" throw up his hands and seek opportunity elsewhere.

It's the same all over, which is why states that have gone down the casino road before us are populated not with glimmering "destination resort casinos," but with seedy strip-mall slots parlors and ramshackle mini-casinos looming over highway rest stops. Our own race to that particular bottom started the instant Governor Patrick touched pen to casino bill paper.

But never fear. The newly-minted Massachusetts Gaming Commission is aware of the problem. A bit further down in that same Globe article we find this:
Stephen Crosby, chairman of the Massachusetts Gaming Commission, said the panel is thinking carefully about how much casino gambling the Massachusetts market can handle. The commission will tackle the question at a forum it is hosting in June.
“One of the things we have to do is re-look at what the market could bear, and see what is the economic prognosis for the model in the legislation [three resorts and a slot parlor] in today’s environment,’’ said Crosby. “We’re going to reconvene all of the people who have done projections and we’re going to say, ‘What do you think of your projections now?’ I think the casino legislation gives us the room to think carefully about the competitive environment and the size of the market and to act accordingly.’’
Now flash back to September 14 of last year, as the casino bill worked its way through the House of Representatives, and find this headline in the State House News: "House Rejects Cost-Benefit Analysis, Speeds Through Casino Bill Amendments."

It isn't hard to understand why the casino caucus in the legislature refused to hit pause long enough to conduct the cost-benefit analysis that the chair of the gaming commission now deems necessary fewer than nine months later. Such an analysis last year would have shown precisely the same things that the analysis will show this year: the New England gaming market is already saturated.

This truth - obvious even without a new analysis - has a number of serious implications: Developers are not going to be willing to pay the licensing fees our legislature predicted we'd collect.  The establishments that eventually do go up will fall far short of the "destination resort" standard. And most importantly, both jobs and revenues will come in woefully short of the pie-in-the-sky promises made by Governor Patrick and his allies in the legislature.

None of this is news. Mr. Adelson's decision this week only underscores what plenty of people have known all along. "Economic development" based on casinos is a fool's game.

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