The best case for a casino

July 9, 2013 10:57 am

Gov. Andrew Cuomo and other casino supporters like to hype the benefits from the gambling traps. Critics likewise highlight the social and economic problems that follow casinos, including increased crime, bankruptcy, suicide and divorce. Not to mention, casinos strip wealth from a community and create very little economic spin-off.

But this piece takes a clear-eyed look at whether casinos will transform struggling towns in the Catskills and other parts of New York into economic engines. Here’s the best case: casinos in rural areas lead to a spike in jobs, but few ancillary businesses. Meanwhile, casinos in big cities have no noticeable impact on overall employment. They just switch around the jobs that already exist.

Chad Cotti, an economist at the University of Connecticut, also found that placing casinos in remote areas seemed to increase the number of fatal car crashes. (That’s what has happened near the Indian casinos in Connecticut.) That’s the best Cuomo and other casino supporters can muster? A brief spike in jobs and more deaths from drunk driving. Some legacy. Cuomo and other casino supporters should be proud.

Casinos mostly just benefit casinos

January 4, 2013 9:51 am

Lawmakers who support more casinos often point to the benefits of increased tax revenue and new jobs. But a study by a nonpartisan government agency in Illinois found that a plan to add five casinos and slot machines at six horse tracks there would dramatically boost revenue for the casinos, but have little impact on state coffers.

In fact, the gross revenues for casinos would more than double, but the state’s total take would increase by only 19 percent, according to an analysis by the Commission on Government Forecasting and Accountability. That’s because the legislation enabling more gambling created a smorgasbord of tax cuts and and tax breaks for the casinos. The measure would also create an environment in which horse tracks and new casinos would cannibalize each others’ profits and those of 10 existing casinos, the commission found.

“Gamblers in the state will lose double the amount they were losing before, yet the state is only going to be gaining a relatively small (annual) revenue increase,” Eric Noggle, a senior analyst with the forecast commission, told the Chicago Tribune.

Of course, the analysis didn’t even factor in the social and economic costs of casinos. Fortunately, the governor of Illinois vetoed the measure. But the casinos and other lawmakers continue to press for more gambling. The study further demonstrates the need for lawmakers in Illinois and other states to consider whether enabling more casinos is a worthy public policy.

In short, are the benefits worth the costs? And who really benefits?

Maryland residents split over casinos

October 25, 2012 11:41 am

Give Maryland lawmakers this, at least taxpayers will get to decide if the state needs more casinos. And by accounts, the vote on Election Day will be close.

Maryland residents are sharply divided over the benefits and drawbacks of more gambling in the state. Sure, the casino will create jobs and more tax revenue. But the casino also diverts money that would have been spent at other businesses; strips wealth from the pockets of taxpayers; creates more repeat and problem gamblers; and leads to increase in crime, bankruptcy, divorce and suicide.

Anyone who takes the time to study the issue will understand the negative effects of casinos outweigh the benefits. Sadly, much of the public is not well informed about the issue. That’s due in part to thinly reported stories like this one in The Baltimore Sun that only scratch the surface of the issue and fail to dig into the deeper social and economic costs that come with casinos. At the same time, it is tough to overcome the misleading ad campaigns by casino supporters.

Despite the lack of information and misinformation, polls indicate voters may still defeat the referendum that would allow another casino and table games at the existing slots parlors. But if the public fully understood all the issues surrounding casinos, voters would overwhelmingly reject the measure.

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.

The false promise of casinos

January 25, 2012 1:40 pm

Lawmakers in state after state are seeking to legalize casinos as a way to create jobs and balance budgets. But there’s just one problem: casinos are not the answer to a state’s job or budget woes.

The Lexington (Ky.) Herald-Leader reporter John Cheves provided a very thoughtful analysis on the false promise of casinos. Kentucky Gov. Steve Beshear is the latest state leader to push for casinos. He joins lawmakers in Florida, New York and Illinois who are all looking to legalize casinos. 

The newspaper found that states that have casinos are struggling just like states without casinos. According to the analysis: The nearly two dozen states that get revenue from casinos have struggled financially during the past three years, just like everyone else. All of them cut spending; half raised taxes. Some fired thousands of their public workers, including educators and police, and gutted their basic classroom funding.

“Casinos will almost certainly increase your revenue to some extent. But there will be offsets and costs that you also need to consider,” said Alan Mallach, a visiting scholar at the Federal Reserve Bank in Philadelphia told the paper. “Casino gambling does not create a single new dollar. Every dollar dropped into a slot machine is a dollar not spent on something else. It’s not like you’ve got an auto plant and you’re building cars to be shipped and sold around the world.”

The Gray Lady is no fan of casinos

January 5, 2012 11:56 am

The New York Times clearly was not wowed by Gov. Cuomo’s call to legalize casinos. The Times’ editorial board signaled that casinos are a bad economic development policy.

“We are concerned about his plan to bolster state finances and create jobs with a lot more gambling,” the editorial said. “[Cuomo] said on Wednesday that he will pursue a constitutional amendment that would allow gambling throughout the state and not just in the five casinos run by American Indians and the locations with “electronic gaming machines.” There’s little evidence that casinos, which carry high social costs, will create good, high-wage jobs.”

Building casinos will generate construction jobs in the short term. The casinos hire workers but the wages for most of the jobs tend to be low wage. Granted a job is a job for many who are suffering. The bigger problem is that there is little to no economic spin-off from casinos, which do a great job of keeping gamblers on site by offering free buffets, free drinks and live entertainment. In fact, many other area retail and entertainment businesses suffer from a loss of customers, who spend their money gambling, eating and shopping in the casino.

About those great casino jobs (part II)

December 13, 2011 10:12 am

We did a post yesterday about the low pay for many of the casino jobs that elected officials like to tout as a reason to legalize gambling. But then along comes a report in The Press of Atlantic City today that says the new Revel casino wants to limit the number of years people can work jobs as card dealers and wait staff.

The casino – which received a huge taxpayer bailout from Gov. Christie – is telling workers they can only stay in the job for a few years. Essentially, Revel is placing term limits on the jobs. Of course, the unstated reason behind the move is to keep down costs and ensure a steady flow of new, young employees to fill the jobs. Younger bodies tend to look better in the skimpy costumes that many female cocktail waitresses and blackjack dealers are forced to wear.

Indeed, nine waitresses sued the Resorts casino in Atlantic City earlier this year for age discrimination, alleging they were fired because they couldn’t fit in the new flapper costumes.

At Revel, the unions are balking and arguing the provision is a form of age discrimination. It’s also another example of how the casino jobs are not all they are cracked up to be. Indeed, many of the casino salaries of around $30,000 are not enough to raise a family, so are hardly worth the economic or social problems that come with gambling.

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.