Letter of the Day

September 28, 2012 2:01 pm

The Baltimore Sun printed  a compelling letter to the editor regarding the spread of casinos in Maryland. Similar questions could be asked in other states pushing casinos as economic development.

Sadly, though, the public has been largely unengaged and uninformed about the spread of casinos and the economic and social ills that come with more gambling. But this letter shows that some taxpayers are beginning to understand the folly of states enabling more and casino gambling. That has been the message of this blog. (See recent op-ed in the Sun.) It is worth re-printing the letter in full from Douglas B. Hermann:

“With all the screaming and scandal and nonsense over a possible casino at National Harbor, has no one asked how many casinos we need here in Maryland (“Baltimore casino names manager,” Sept. 26)?

“Once upon a time this nation produced products that could be sold for profit and the generation of tax dollars. Today, while politicians allow the steel industry in Maryland and across America to die, they fall all over themselves building casinos that generate no products and rely on income earned in other lines of work.

“Perhaps in the short run this looks good for the politicians and the superficial voter who likes instant statistical gain. In the long run, attending to more casinos while heavy industry gives up the ghost is a recipe for economic self-strangulation.”

- Douglas B. Hermann, Parkville

Lynyrd Skynyrd rolls craps

September 28, 2012 11:55 am

A Las Vegas casino restaurant named after the Southern rock band Lynyrd Skynyrd filed for bankruptcy less than a year after opening.

The move is a new twist on the band’s song, “Gimme three Steps.” Instead of three steps out the door, it is three steps to Chapter 11 of the U.S. Bankruptcy Court. Restaurants fail all the time. But the concept of trying to lure gamblers through the use of a Southern rock band shows the lengths casinos go to create customer affinity in the effort to separate folks from their money.

Lynyrd Skynyrd became famous in the 1970s with the hit songs “Free Bird” and “Sweet Home Alabama.” At the peak of the band’s success, three members died in an airplane crash in 1977. The band added other members and has continued to tour.

Lynyrd Skynyrd performed at the grand opening of the restaurant at the Excalibur Hotel and Casino in Las Vegas. But less than a year later, the Lynyrd Skynyrd BBQ & Beer in the Excalibur Hotel and Casino in Las Vegas filed for Chapter 11 bankruptcy with fewer than $50,000 in assets.

Casinos .vs Casinos

September 27, 2012 3:25 pm

It is amazing how casino operators can argue either side of the gambling debate and still maintain a straight face. When a casino wants to open in the state, it will tout the jobs and tax revenue. But when a casino doesn’t want any competition, it will argue that more gambling is a bad deal for taxpayers that it will not deliver the promised benefits.

That is what is taking place in Maryland, where voters will decide a referendum in November on whether to allow a sixth casino and table games at the existing casinos. MGM supports the measure is spending millions of dollars arguing the casino will mean more jobs. But the Penn National casino in West Virginia is spending millions to sway voters that Maryland doesn’t need more gambling. That’s because Penn National is afraid the Maryland casino will keep gamblers from traveling to West Virginia.

The bottom line is that casinos will say and do whatever it takes to get open. Then they will twist the facts again to stop any competition from encroaching on their turf. As a result, the public debate is often lacking in any independent and substantive information with which to make a decision. Likewise, lawmakers make little effort to determine the social and economic costs of gambling. As a result, the taxpayers get played just like the suckers who go to casinos.

Casinos: “at best a mixed bag”

September 26, 2012 11:15 am

Elected officials and casino operators often hype the benefits of gambling. But The Washington Post editorial board cuts through the rhetoric with a compelling argument as to why casinos often over promise and underdeliver.

At best, gambling is a “mixed bag,” The Post argues. More accurately, gambling is “sensitive to economic gyrations” and is a “flimsy foundation on which to build a state’s economic development program,” The Post said. Spot on.

The argument from supporters that gambling will generate millions of dollars in new revenue rests on ”seat-of-the-pants guesses and rosy assumptions.” Well said.

The paper is even less convinced that adding table games and a sixth casino in Maryland will yield much in the way of new revenue, especially in Prince George’s County. The paper called the move “a poor branding strategy,” especially for a county whose “image has been badly stained by corruption.” Prince George’s may just be getting warmed up. That’s because gambling has a long history of being corrupting influence on lawmakers.

To recap: here’s the Post’s take on more casinos in Maryland: Flimsy foundation for economic development; rosy assumptions and seat-of-the-pants guesses for the revenue impact tot he state; and a “poor branding strategy” for a county marred by corruption. Sounds like all the usual ingredients for a flawed partnership between government and the gambling industry.

Adelson’s defense: it’s political

September 25, 2012 1:27 pm

Billionaire casino mogul Sheldon Adelson claims his support for Mitt Romney is why his casino company is under criminal investigation on several fronts.

In an interview with Politico, Adelson, who has donated tens of millions of dollars in support of Romney and other Republicans, argued that he was being targeted by investigators for his political activity. Adelson told Politico the government has been trying to discredit him. He said the goal is to make “me toxic so that they can make the argument to the Republicans, ‘This guy is toxic. Don’t do business with him. Don’t take his money.’ ”

Puh-leeze.

To be sure, Adelson has been a longtime contributor to Republicans going back a number of years. But he did not ramp up his giving until after the investigations were launched. More to the point, it is believed the investigations were prompted by a civil lawsuit filed by a former executive at Adelson’s company, Las Vegas Sands, that contained allegations of bribery.

If anything, one could argue that Adelson became more involved in trying to defeat President Obama after the investigation began in hopes that a change in the White House (and in the Justice Department leadership) would help the probe go away.

In fact, the Securities and Exchange Commission has been investigating Adelson’s company since at least early 2011 when it subpoenaed documents in connection with the possible bribes. In turn, Adelson started spending big on the presidential race in January 2012, when he and his wife each wrote $5 million checks to Winning Our Future, a super PAC that supported Newt Gingrich’s failed presidential bid.

Federal and Nevada investigators are looking into tactics Adelson’s company used to build a huge casino complex in the Macau region of China. ProPublica reported that Adelson told a company executive to pay $700,000 in legal fees to a Macau public official whose firm served as an outside counsel to the Las Vegas Sands. Adelson denies any wrongdoing and hasn’t been charged.

The New York Times and The Wall Street Journal have also reported on the investigation. Read those stories here and here.

NJ residents: no more casinos

September 24, 2012 1:07 pm

Most New Jersey residents are opposed to allowing more casinos outside of Atlantic City, according to a new poll.

The poll found 56 percent of voters oppose casinos elsewhere in the state, while 35 percent said casinos should be located outside of Atlantic City. The poll was conducted by Fairleigh Dickinson University and comes as some lawmakers in North Jersey are pushing to allow casinos in the Meadowlands as a way to generate more tax revenue from gambling losses.

The push to add more casinos across the state is in response to the steep drop in gambling tax revenue coming out of Atlantic City, due in large part to increased competition from Pennsylvania and other area states. At the same time, New York lawmakers, led by Gov. Andrew Cuomo, want to legalize commerical casinos in the Empire State. Such a move could further cut into the number of gamblers traveling to Atlantic City – manily to lose money.

However, New Jersey Gov. Chris Christie and Democratic lawmakers in South Jersey oppose adding more casinos in other parts of the state. Instead, they want to focus efforts to lure gamblers back to Atlantic City. But so far those efforts – which include a new casino, a new marketing campaign and cuts in regulation – have yet to stop the bleeding in Atlantic City.

But at least most voters in New Jersey understand that the answer to the drop in gambling is not more gambling. Perhaps they know that 30-plus years of gambling Atlantic City has failed to revitalize that shore town. Not to mention that adding casinos in other cities is not a worthy policy when it comes to generating jobs or tax revenue.

Casinos bet big on New York

September 20, 2012 9:06 am

This report by Common Cause may help explain why Gov. Andrew Cuomo and other legislative leaders suddenly want to change the state Constitution in order to allow commercial casinos in New York.

Since 2005, gambling interests have spent nearly $50 million on lobbying and campaign contributions in New York, according to an analysis by Common Cause. Translation: money talks. (Recall that Cuomo never even mentioned legalizing casino when he was running for office. Now it is at the top of his agenda.)

As the casino issue has heated up in the last year, there has been a surge in spending. Gambling interests have spent nearly $4 million on lobbying and more than $700,000 on campaign contributions in the first half of 2012, according to The New York Times.

The spending playbook by the gambling industry is the same one used to legalize casinos in other states. No doubt $50 million is a lot of money to most folks. But consider this: the new slots barn at the Aqueduct racetrack in Queens is raking in more than $50 million in revenue a month. In other words, $50 million to buy up, er influence, some lawmakers is a great return on investment.

Look for the spending in Albany to continue as the gambling interests work hard to upend the Constitution and expand gambling across the state. Of course, opening the doors to more casinos, means lawmakers will enable a policy that strips money from the very residents they are sworn to protect. Indeed, that point gets lost in the river of money gushing into Albany from the casinos interests.

The Asian casino boom: “an act of madness.”

September 18, 2012 9:31 am

The explosion in casinos in Macau has set off a gambling boom in other Asian countries.

Las Vegas-style casinos are planned in Taiwan, the Philippines and South Korea, while Cambodia is expanding its casino. Two casinos that opened in Singapore raked in $6 billion last year. Even Russia is planning to build a casino in the Pacific port city of Vladivostok to cater to gamblers in China.

The gambling boom has many worried.

“If we get casinos in Japan, that will destroy the nation,” said Ken Wakamiya, an author and anti-gambling activist. “Introducing casinos is a plan to rip off our own people. It is an act of madness.”

A 2011 survey by the National council on Problem Gambling found more low-income people are betting bigger amounts, while calls to problem gambling hot lines have increased.

“The gambling industry is not a sector that creates value-added products or services and therefore will have little impact on the development of the future economy,” said Vincent Wijeysingha, treasurer of the opposition Singapore Democratic Party.

Just like the gambling boom in the U.S., the explosion of casinos in Asian countries comes with many of the same economic and social costs. Since the casinos produce little more than losers, the explosion in gambling is a bad bet for just about everyone.

Las Vegas Sands misled court

September 17, 2012 10:37 am

The Las Vegas Sands profits by stacking the odds against its casino customers. So it should come as no surprise that the casino also tried to play a version of three-card Monte in a Nevada courtroom.

The Sands, which is controlled by billionaire Sheldon Adelson was fined $25,000 for trying deceive the court in a wrongful termination case brought by a former executive of its Macau operations.

At issue are emails and other electronic data sought by Steve Jacobs, the former Sands executive fired in 2010. Sands officials told the court the data could not be removed from Macau due to a local data protection law. But the data had already been copied and removed from Macau in 2010 for review by Sands officials, District Court Judge Elizabeth Gonzalez ruled last week.

The Sands repeated inaccurate statements over several months, and intentionally tried to deceive the court in order to stall the discovery process, the judge wrote. Jacobs’ suit alleges Adelson directed him to investigate Chinese officials and gather information to use against them. Jacobs also alleges Adelson told him to hire a Macau government official, a potential violation of U.S. anti-bribery law and that Adelson approved a “prostitution strategy” to help boost business at the casino. The Sands and Adelson deny the allegations.

The case has caught the attention of the U.S. Department of Justice, Securities and Exchange Commission and Nevada casino regulators, which have all launched criminal investigations. Adelson, a leading donor to the Republican Party and Mitt Romney, has contributed tens of millions of dollars in an effort to defeat President Obama and influence policy in Israel.

Atlantic City: a cautionary tale

September 14, 2012 12:30 pm

As more and more states turn to casinos as a way to fund budget gaps, they may want to consider what is happening in Atlantic City.

Outside of Las Vegas, no city is more dependent on casinos than Atlantic City.  While 30-plus years of gambling has failed to revitalize Atlantic City, its bet on casinos is quickly turning into a bust, as Reuters columnist David Cay Johnston details here.

Increased competition from neighboring states has resulted in a steep drop in the number of gamblers traveling to Atlantic City. Gamblers lost $3.3 billion in Atlantic City last year, down 39 percent from the more than $5.4 billion in 1996, according to the Center for Gaming Research at the University of Nevada, Las Vegas.

That drop in spending by gamblers has had a ripple effect on Atlantic City’s government and its taxpayers. “The casino hotels have slashed their workforces, cut real wages and, citing falling property values, received huge property tax refunds – with more refunds likely,” writes Johnston, a Pulitzer Prize-winning reporter who worked at The New York Times and The Philadelphia Inquirer and wrote a book about the casino industry titled “Temples of Chance.”

In order to replace the lost revenue from the casino property tax refunds, the city has sold $103 million of bonds. The interest on the bonds will cost the average homeowner more than $2,100 over the next two decades, Michael Stinson, the city finance director, told Johnston.

“The city is about to sell another $35 million in bonds, while the Press of Atlantic City reports that $40 million more may have to be borrowed next year,” Johnston writes. “If all that happens the average homeowner eventually may be out more than $3,600 in added taxes.”

Officials hoped the opening this spring of the $2.4 billion Revel casino would lure gamblers back to Atlantic City. So far, the Revel has been a bust. Atlantic City is scrambling to add more gambling to lure customers, but the prospect of more competition in New York or North Jersey is expected to divert more gamblers away from the Jersey shore resort.

“Atlantic City is in trouble, and I don’t see any way out, even if they get sports betting and Internet” gambling, I. Nelson Rose, the Whittier College of Law gambling expert, told Johnston.