Play to extinction

May 9, 2012 1:01 pm

Here is a great read by The National Review that cuts through the clutter and details what is really behind the growth in casinos across the country. Casinos are not about jobs or economic development. They are about raising easy money for state governments.

The upshot is a joint partnership between the casino industry and state governments to lure citizens to “Play to Extinction,” a term used by the industry to keep gamblers spending money until they are broke. The piece also captures the scene inside many casinos as poor and elderly gamblers arrive via buses and trains “on crutches and canes, lapping obesely over the seats of mobility scooters, adjusting oxygen tubes, discreetly nursing Big Gulp cups full of tequila and Pepsi through bendy straws at three in the afternoon.”

Deputy managing editor Kevin D. Williamson adds that the gamblers “come rolling and thundering down the tracks bearing our Social Security checks, our welfare checks, and quite possibly our rent checks. We are the blue-rinsed, unhinged, diabetic American id on walkers, and we are scratching off lottery tickets the whole way there as we converge from all points on the crime capital of New Jersey — because we are feeling lucky.”

Some hyperbole perhaps. But not much.

The piece does a fine job of making the case that casinos have done little to help struggling cities like Atlantic City or poor states like Mississippi. But the legalization of gambling has certainly made a lot of casino owners wealthy. And the casinos have generated revenue for state coffers. But that has not translated into better government services or lower taxes. As The National Review concludes: “Call gambling a vice, call it an addiction, call it a harmless diversion, call it anything you fancy — but don’t call it economic development.”

Spain: The next Vegas?

March 27, 2012 11:58 am

Casino operators have used the recession to spread gambling opportunities across the United States. Now Sheldon Adelson, the billionaire casino operator who has donated millions to Newt Gingrich’s flagging presidential campaign, is using the financial crisis in Spain to tout a plan to build Vegas-style mega casinos.

Adelson wants to build Europe’s first Las Vegas-style resort in either Madrid or Barcelona. Casinos are legal in Spain, but they are small, low-key establishments that cater mainly to the wealthy. Adelson wants to build a huge casino resort that would eclipse either city’s skyline, allow smoking and cater to the masses

As in the U.S., Adelson is using the idea of jobs and tax revenue to sell the casino idea. Casino operators have pounced on the desperation of citizens and lawmakers to promote gambling as a means of economic development. No doubt casinos create jobs. But stripping more wealth from citizens via gambling is not economic development.

Just ask Nobel Prize winning economist Paul Samuelson: “[Gambling] involves simply sterile transfers of money or goods between individuals, creating no new money or goods. Although it creates output, gambling does nevertheless absorb time and resources. When pursued beyond the limits of recreation, where the main purpose after all is to “kill” time, gambling subtracts from the national income.”

Translation: individuals and governments can’t gamble their way to prosperity.

Casino capitalism writ large

March 13, 2012 9:23 am

Casinos have generated $98 billion in gross revenue since 2008, compared with $20 billion in 1998. That’s more than three times what Americans spent on movie tickets. And most of the growth has occurred outside of Las Vegas and Atlantic City. Those are just some of the nuggets found in a fine piece in Salon.

“The billions of new dollars spent at casinos represent a net transfer of wealth to big business and to pay workers whose labor is not as productive as, say, repairing the nation’s crumbling infrastructure,” writes Daniel Denvir, who is also staffer at the City Paper in Philadelphia. “Casino capitalism is an apt metaphor exactly because — whatever one might think about legalized gambling — it is not generally perceived as a sound operating principle for the entire economy. Yet the steady march of casino gambling now sketches an eerie facsimile of our political economy writ large. In fact, casinos thrive amid economic misery.”

Denvir explains how the gambling industry has made great strides in many states during the recession, preying on desperate and struggling workers who can least afford to gamble. ”The growth of the gambling industry feeds on America’s job insecurity; people, whether gambling or seeking employment, have fewer viable ways to make good money. As the country has deindustrialized since the 1980s, and unions have been marginalized, real wages stagnated and then declined. At the same time, a deregulated and ascendant financial sector offered easier-than-ever credit cards and home mortgages, leading Americans desperate to maintain their lifestyle deep into debt.”

More broadly, casinos fail to produce the economic benefits that many lawmakers tout, Denvir writes. “In states that legalize gambling, casinos no doubt create jobs but they don’t necessarily stimulate the larger economy. A 1999 report by the National Gambling Impact Study Commission found that “few businesses can be found more than a few blocks from the Atlantic City boardwalk. Many of the ‘local’ businesses remaining are pawnshops, cash-for-gold stores and discount outlets. One witness noted that, ‘in 1978 [the year the first casino opened], there were 311 taverns and restaurants in Atlantic City. Nineteen years later, only 66 remained, despite the promise that gaming would be good for the city’s own.’”

Good food for thought as gambling industry lobbyists and lawmakers push to legalize casinos in New York, Florida, Kentucky and other states lining up to make a bad bet.

Cuomo’s casino plan: Where’s the beef?

January 5, 2012 2:07 pm

It didn’t take long to dismantle Gov. Cuomo’s economic development plan as lots of sizzle with little steak. The Associated Press’s Mike Gormley says the $25 billion plan doesn’t include any new spending.

The AP’s Gormley writes: “On Wednesday, Cuomo announced $1 billion for Buffalo, $2 billion to redevelop a Manhattan convention center, plus funds to build a new convention center at Aqueduct race track and more to repair 2,000 miles in roads and bridges. Cuomo spokesman Josh Vlasto says much of it relies on existing tax breaks, capital aid, matching federal grants and other resources that will add little or nothing to state spending.”

So where’s the beef?

The reality is Cuomo knows that legalizing casinos is not a slam dunk. So instead he wrapped the casino legalization in an empty box and called it economic development. At the same time, he tried to sprinkle money around to different parts of the state to help buy support. The $1 billion for Buffalo, for example, will help build support from a part of the state where there is an energized opposition to casinos because residents there have seen the negative impact from an Indian casino there.

About those great casino jobs…

December 12, 2011 2:35 pm

Casino operators and their government enablers like to tout the jobs that come with gambling. No doubt the casinos create jobs. But for the most they are not quality jobs in which one could raise a family. Basically the casino jobs are akin to working at Wal-Mart, except they include graveyard shifts and secondhand smoke.

In Cleveland, the Horseshoe Casino is looking to fill 750 jobs. The jobs pay from $12 an hour for security guards to $39,000 a year for those who oversee slot machines. Even in Cleveland, $39,000 a year doesn’t go too far.

Granted, it is better than no job. But states that bank on casinos as a form of economic development are misguided. To be sure, the economic benefits from casinos are not all they are cracked up to be and the costs are often overlooked or ignored.