Ohio’s $1 billion casino shortfall

March 12, 2014 9:22 am

In 2009, Ohio residents were told the four proposed casinos would generate $1.9 billion in annual tax revenue for the state. The figure helped convince slightly more than half of the state’s residents to approve a referendum legalizing casinos.

But after the first full year of operation for all four casinos, the actual revenue was $839 million, according to this report. Turns out the state’s projection was off by $1 billion. To quote Texas Gov. Rick Perry: “Oops.”

Of course, the $839 million figure does not take into account any of the social and economic costs that also come with casinos. Nor, does the figure consider the drop in spending at area businesses. After all, not only are the revenue figures well below the projection, the Ohio casinos are not generating much new spending. That’s because casinos divert spending that would have gone to buy cars, clothes, food and other goods and services in the state.

But since the casinos are taxed at a higher rate, the state pockets more tax revenue. Usually casinos experience solid growth at first, but then revenue figures level off and begin to drop. Ohio’s weak start does not bode well since the numbers came in low and are likely to keep dropping in future years. Ohio’s revenue problem underscores a broader industry concern: so many other states have legalized casinos recently the market is getting saturated. (Shocked – just shocked – that gamblers are not flocking to the casino in a former department store in downtown Cleveland.)

The casino shortfall in Ohio should serve as a cautionary tale for other states, like Florida and New Hampshire, considering whether to legalize casinos. The casino hype rarely lives up to the reality.

A Dirty Secret: Suicides at casinos

February 8, 2014 4:07 pm

A 39-year-old man jumped to his death at Genting’s slots casino in Queens, N.Y., the New York Post reported.

Sadly, suicides related to a gambling problem are not unusual. But the Post story claims – emphasis on claims – that the gambler was on a winning streak. “He was not in the hole,” the source told the tabloid newspaper. “Actually, he was up.”

First of all, it defies logic that a person would go on a winning streak and then jump 30 feet to their death in the middle of the casino. But even if true, the fact that casino sources felt the need to make clear that the gambler was “up” underscores the reality that gambling addiction can cause people to kill themselves. The reporting in this incident also underscores how the casinos and police often conspire to soften or even cover up suicides at casinos. (Getting assigned to a casino is considered a cushy assignment for police, who get to know workers and gamblers.)

Despite those efforts, there is no denying the link between gambling and suicide. In fact, Las Vegas – the biggest casino outpost in the country – is considered the suicide capital of America. But as more states legalize casinos, more and more gamblers are committing suicide across the country.

Just consider: In Gulfport, Mississippi, suicides skyrocketed 213 percent in the first two years the casino there opened. In Biloxi, suicides increased 1,000 percent in the first four years, according to this report. Indeed, the National Council on Problem Gambling, citing various studies, reports that 20 percent of pathological gamblers attempt suicide — a rate higher than for any other addictive disorder. The New York Times reported way back in 1997 that the rise in gambling matched an increase in suicides.

Read this sad story from a mother whose son had a gambling problem and ultimately killed himself. Here is just a random sampling of other casino-related suicides:

* Earlier this week, a Louisiana police chief shot himself in the head at a casino in Biloxi, Miss.

* In October, a 19-year-old committed suicide by jumping from the parking garage at the Showboat Casino in Atlantic City. (Read more here.)

* In 2013, an Illinois mother of three killed herself after her gambling addiction was exposed.

* In 2013, a woman jumped from the parking garage of a casino in Detroit. The police did not release her name let alone details as to the cause.

* In 2012, a man shot a killed a woman and then killed himself at a Las Vegas casino.

* In 2012, a woman jumped from the parking garage at a casino in Indiana. Again, ploice did not release any details as to the cause.

* In 2011, a 21-year-old Pennsylvania man killed himself by driving his car off the top of the parking garage at the Sands Casino in Bethlehem. (Read more here.)

* In 2009, a man shot a casino worker in Atlantic City and planned to kill himself but was stopped by police. He had a suicide note on him.

* In 2005, a 23-year-old gambler shot himself in the mouth at a casino in Illinois after losing $900 in less than 15 minutes playing blackjack. (Read more here.)

* In 2000, an off-duty police officer who lost more than $15,000 at a casino in Detroit pulled out his service revolver and shot himself in the head. (Read more here.)

* In 1999, a string of three suicides in eight days at casinos in Atlantic City prompted The New York Times to detail how such killings are regular worry at casinos.

Beyond suicides, the stress of gambling losses leads people to smash slot machines in anger as The New York Times detailed here. The slot smashings took place at the same Genting casino in Queens where the gambler committed suicide.

New Hampshire cuts through casino “smooth talk”

February 7, 2014 8:56 am

New Hampshire not only has the best state motto, it also appears to have the most common sense when it comes to casinos.

Of all the states that have wrestled with legalizing casinos, New Hampshire’s elected officials and residents are the most engaged on the issue. They have looked at the costs and benefits of gambling. They have done independent studies that show casinos are a net negative. And they have discussed and debated the issue.

Each time, New Hampshire has rejected the empty promises of casinos. But the casino industry does not take no for an answer, as the Seacoast newspaper detailed here. They keep the lobbyists and campaign contributions coming until they win over enough elected officials.

Indeed, the casino industry has finally found a friend in New Hampshire, in Gov. Maggie Hassan. Gov. Hassan is leading the charge to legalize one casino in New Hampshire. But New Hampshire remains skeptical. Conservative and liberal newspapers across the Granite State have consistently dismantled the bogus claims made about casino benefits.

For example, The Union Leader understands that casinos are not economic development engines, but instead siphon money from the economy. The Concord Monitor cut through the rhetoric in an excellent editorial that warns residents and lawmakers not to fall for the “smooth talk” of casinos.

“New Hampshire shouldn’t finance its government by preying on people who lose their shirts at a casino,” The Monitor wrote. “Residents shouldn’t trust lawmakers to support gambling addiction services – New Hampshire’s track record on helping those addicted to drugs, alcohol and tobacco is abysmal; there’s no reason to believe this would be different. Existing businesses shouldn’t be victimized by the state’s grab for money.

“As parents all over New Hampshire tell their kids every day: Just because everyone else is doing it doesn’t make it right.”

The last line is a dig at the other states, especially neighboring Massachusetts, that are rushing over the casino cliff. New Hampshire is surrounded by states that are pushing more and more gambling on residents. If New Hampshire holds out, history will show it was the state that was able to keep its head while others were falling for casinos.

Mickey Mouse .vs Sheldon Adelson

February 6, 2014 11:19 am

Here is a heavyweight fight worth watching.

In the effort to legalize casinos in Florida, Las Vegas billionaire Sheldon Adelson and other casino operators have hired more than 100 lobbyists to influence lawmakers in Tallahassee. On the other side of the fight is the Walt Disney Co., which opposes casinos in the Sunshine State.

The Boston Globe reports the army of lobbyists and campaign contributions are pouring into Florida. The big spending is a sign of the high stakes in Florida. It also underscores how the gambling industry drives and influences public policy when it comes to casinos. It is not as if there is a grassroots push by residents begging their elected officials for more places to gamble.

Lobbyists for casino operators say an expansion will bring jobs and tourists and boost the economy, according to The Globe. Disney believes gambling would hurt the state and undermine the family-friendly theme it has tried to build over the years.

‘‘The massive expansion of gambling that would come from legalizing mega-casinos would be a bad bet for Florida’s taxpayers, tourism brand and existing businesses,’’ Andrea Finger, a Disney spokeswoman, told The Globe.

Here is my recent op-ed in The Tampa Bay Times on the casino issue in Florida.

Is Atlantic City the next Detroit?

January 2, 2014 11:01 am

Atlantic City’s faltering casino industry has resulted in a sharp drop in property tax revenues, which has forced the city to borrow hundreds of millions of dollars and is threatening its ability to pay its bills.

A big problem is that the drop in gambling revenue prompted a number of casinos to appeal their property tax assessments, resulting in lower tax bills. In order to pay property-tax refunds, Atlantic City has borrowed $270 million since 2007.

“In a few years, we will be broke under the way the city is doing business, and the [casino tax] appeals is just one part of it,” Mayor Don Guardian told The Inquirer in an interview before he was sworn in. “Detroit continued to bond until [it] couldn’t bond anymore. It increased taxes and lost population. Some of those same things are happening in Atlantic City, and we have to take steps to avert bankruptcy.”

In Detroit, a continued drop in casino revenues is hampering the city’s ability to restructure its debt. Meanwhile, there does not appear to be any end in sight to Atlantic City’s financial woes.

The Atlantic Club Casino (formerly Steve Wynn’s Golden Nugget) is closing its doors later this month, reducing the number of casinos in Atlantic City to 11.The Borgata will be in court this spring fighting to maintain a $48.8 million refund awarded by a state tax court in October. The city appealed the ruling. If the Borgata wins, many expect Atlantic City will have to raise taxes on residents and businesses.

Moody’s downgraded Atlantic City’s credit rating last month to Baa2, citing the shrinking tax base. In New Jersey, casino property valuations are based on the income generated. Casino revenues in Atlantic City have dropped from a high of $5.2 billion in 2006 to just over $3 billion in 2012. The final figures for 2013 are expected to be below $3 billion, which would be the lowest in 22 years. That is without adjusting for inflation.

Atlantic City’s financial woes offer a cautionary tale for other cities and states that try to use casinos to fund budget operations. Research by the Rockefeller Institute shows that gambling revenue is often unsustainable and unreliable.

The nearly two dozen states that get revenue from casinos struggled financially in recent years, according to an analysis by the Lexington Herald-Leader. “All of the states cut spending; half raised taxes. Some fired thousands of their public workers, including educators and police, and gutted their basic classroom funding,” the paper reported.

The casino crime blotter

December 31, 2013 9:34 am

It has been a while since this blog did a post on the crimes that take place at casinos. But that is not because there has been a sudden drop in crime. In fact, publishing a daily casino crime blotter could be a full-time job.

Just consider this random sampling of recent casino crimes:

* Cyber criminals hacked into the computer systems at casinos in Colorado, Missouri, Iowa and Nevada between March and October and stole thousands of gamblers’ credit card data.

* Two Santa Rosa men were arrested in connection with a Christmas Eve robbery outside the Graton Resort and Casino in Sonoma County.

* A Santa Rosa man who was wanted by federal authorities for a number of drug-related offenses was arrested at the same casino in Sonoma County.

* A worker at the Horseshoe Casino in Ohio and two others were indicted for theft in a scheme that enabled them to spends thousands of dollars gambling for free.

* A card dealer at the same Ohio casino sued her employer alleging she was sexually harassed by gamblers and her supervisors did nothing to stop it.

The crimes underscore studies that show crime rates increase where casinos open. In addition to crimes, the number of personal bankruptcies, suicides, and divorces also increase when casinos come to town. It is a reminder of the social and economic costs that come with casinos. Those costs undermine the increased tax revenue that governments get from casinos and raise the question of why lawmakers would enable public policies that harm citizens when they take an oath to protect them.

Casinos: The Not So Wonderful Life

December 23, 2013 11:23 am

Lawmakers continue to push to legalize casinos, but many towns are starting to turn against the gambling halls. Many view casinos like landfills and nuclear power plants: not something they want in their backyard.

Milford, Mass. – a town Time Magazine likened to the fictional version of Bedford Falls from “It’s a Wonderful Life” – recently voted down plans for a $1 billion casino. Many understand casinos are more Pottersville than viable economic development.

“It didn’t take long to be convinced that this was not good for a small town,” Steve Trettel, co-chair of the group Casino-Free Milford, told Time. “If you want to get right down to the root of it, that’s really it.”

Milford is not alone. New or expanded gambling halls have been voted down in Oregon, Rhode Island and Maine. Disney and other business interests are leading an effort to block casinos from coming to Florida.

Even Gov. Deval Patrick – who led the effort to legalize casinos in Massachusetts – said he would vote against a casino if it were ever proposed for the Berkshires town where he has a second home. If gambling is such a good policy than why doesn’t Patrick want a casino near his home? Gov. Patrick also filed suit to block a native-American tribe from opening a casino on upscale Martha’s Vineyard.

What a hypocrite.

Ohio casinos a harbinger for Florida

December 17, 2013 6:47 am

Gambling supporters who expect big bucks from casinos in Florida may want to take a look at Ohio.

The casinos in Ohio have failed to deliver on the more than $1 billion in projected annual tax revenue. Often gambling revenues drop off after several years of steady increases. But the Ohio casinos have disappointed from day one. (See this story in the Columbus Dispatch.)

One of the problems is the gambling market is getting saturated. Many states already have casinos, so there is little need for gamblers to travel elsewhere. Since Florida already has lots of gambling options, any increase in spending by residents is expected to be marginal. And that’s using the best-case figures from a study by Spectrum Gaming, a pro-casino group hired by the state. It is also worth noting that Spectrum did the study for Ohio that has proven to be way off. When it comes to gambling studies, supporters often over promise and under deliver.

Considering the added tax revenue is the main reason lawmakers argue for casinos, it is hard to make the case that more casinos in Florida is a good idea – as this blog post makes clear. If the state is just going to get more social and economic costs and marginal financial benefit than why bother? Other states have found that gambling is not a cure for budget woes.

Adelson takes on Internet gambling

November 18, 2013 9:24 am

For once, Sheldon Adelson is right.

The billionaire casino mogul opposes legalizing online gambling because of the danger to children, the poor, elderly and others who could be exploited by easy access to betting via the Internet. (Oh, and another unmentioned reason: Adelson wants his Las Vegas Sands casinos to remain one of the main places to exploit gamblers.)

But this time at least Adelson’s self interest is in line with smart public policy. (There’s a line I never thought I would write.) The Washington Post reports that Adelson is using his deep pockets and lobbying influence to get Congress to ban Internet gambling.

Three states are gearing up to allow Internet gambling and the federal government is considering getting in on the action. As a result, online betting is shaping up to be one of the heaviest lobbying battles in 2014. Most of the major casinos support Internet gambling, provided, of course, they operate the betting sites.

But Adelson is fighting the effort. He has begun hiring lobbyists and public relations experts in Washington and in state capitals to press his case, The Post said.

Adelson has begun hiring lobbyists and public relations experts in Washington and in state capitals nationwide to press his case in what is shaping up to be one of the most heavily lobbied debates of 2014. He plans to launch a advocacy group in January called the Coalition to Stop internet Gambling. (A possible subtitle: And to keep all the gambling money in casinos).

Adelson is correct that Internet gambling could be even more destructive than casinos. Customers will be able to gamble anywhere and anytime from their home or mobile phone. It will be especially difficult to prevent children and teens from gambling. The ease of access is expected to create even more gambling addicts.

So for now at least, welcome Mr. Adelson to the efforts to raise awareness about the dangers of more legalized gambling.

Casino measure approved: Cuomo wins; NY loses

November 6, 2013 5:58 am

New Yorkers voted to change the state constitution to legalize up to seven casinos across the state.

The controversial measure was approved by 57 percent of voters. The vote likely would have been closer if the Cuomo administration had not rigged the ballot to place rosy wording in the referendum that touted potential benefits of casinos without mentioning any of the costs. Polls showed voters were evenly divided over casinos, but support increased after voters were given the misleading language.

Gambling interests also raised $4 million to promote the measure largely through TV ads. Another $59 million has been spent by gambling interests since 2005 on lobbying and donations to lawmakers, including more than $1 million to Gov. Andrew Cuomo. (See The New York Times report here.)

As a candidate, Cuomo never discussed casinos. But eight months into his term, he suddenly championed casinos and later cut a series of deals with Indian casino operators and racetrack operators in order to reduce opposition from gambling interests. He said the casinos could generate “$1 billion in economic activity” for the state but failed to hold any public hearings or conduct a cost-benefit analysis into more gambling. Cuomo’s $1 billion figure came from an interview a gambling industry lobbyist gave to a Albany business publication.

Cuomo also said the first four casinos would be built in upstate New York. This also helped to mute opposition in and around New York City, where polls showed more residents were opposed to casinos. But now that the measure has passed it will only be a matter of time before casinos are built in and around the city.

Cuomo said casinos would generate jobs and economic development for the state. However, the jobs that come from casinos do not outweigh the many costs that will come from having more residents gambling more often. (At several casinos in and around Philadelphia, customers come an average of three to five times a week.) More broadly, casinos do not generate new spending but merely divert it.

Studies show that casinos generate anywhere from 30 percent to 55 percent of their revenues from repeat and problem gamblers. Studies also show that where casinos locate there is an increase in social costs, including more crime, bankruptcy, divorce and suicide. One study found that for every $1 in casino revenue creates $3 in costs.

So Cuomo may have won the casino vote, but New York lost.