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.

Florida casinos: Wait ’til next year?

January 27, 2014 9:47 am

It turns out, election-year politics may force Florida lawmakers to delay voting on any major gambling bills until 2015, according to the Tampa Bay Times.

Gov. Rick Scott is up for re-election and apparently does not want to get bogged down in a controversial debate about gambling. Lawmakers in Tallahassee are wrestling with a bunch of thorny issues surrounding gambling, including whether to legalize slot machines at racetracks; allow major commercial casino resorts; or renew a gambling pact with an Indian tribe.

Senate Gaming Committee Chairman Garrett Richter, R-Naples, told The Times a modest bill that tightens loopholes may be all that gets passed this year, while the bigger gambling issues wait another year. “If an election year has any influence, it could influence the magnitude of what’s undertaken,” Richter told the paper.

As is often the case, lawmakers prefer to work out gambling deals in the backroom so as not to cause much public attention or media scrutiny until it is too late. (See Pennsylvania, Massachusetts and New York for recent examples of where gambling was legalized with little public debate.) Not to mention, lawmakers often prefer to use the election year to raise more money from gambling interests and then return the favors later.

Gov. Scott knows gambling is a controversial topic that does not have wide public support. So rather than risk upsetting voters, it appears he will follow the advice of Scarlet O’Hara, who famously said at the end of “Gone With The Wind”: “Tomorrow is another day.”

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.

New York Post: No to Casinos

October 29, 2013 4:12 pm

It is rare the editorial boards at The New York Times and The New York Post agree on anything, let alone a major public policy issue. But within the past few days, both the Times and Post have come out against changing the state constitution to legalize casinos in New York.

The Post editorial board said the proposal to change the state constitution to allow casinos was a “bad bet for many reasons.” The Post pointed to the rigged language on the ballot that claims several dubious benefits without mentioning the costs. The Post rightly said casinos are a regressive tax on the poor and pointed to the lack of economic benefits from gambling.

“If the governor wants to revitalize New York, let’s not do it by taxing those who can least afford it. Let’s do it the old-fashioned way: by building an economy that encourages thrift, investment and enterprise,” The Post said. Read the full editorial here: http://nypost.com/2013/10/29/the-casino-cuomo/

Meanwhile, The Times also urged voters to reject the casino measure that is on the Nov. 5 ballot. The Times cited many of the same reasons as the Post. Read the full editorial here: http://www.nytimes.com/2013/10/25/opinion/no-to-more-casinos-in-new-york-state.html?_r=0&adxnnl=1&adxnnlx=1383098418-ux2qc7InbhAAjXsjrAeqMw

The fact that both papers – with such differing political views on many issues – agree that casinos are bad for New York speaks volumes about how misguided the effort is to change the constitution in order to enable more residents to gamble.

Bishops question casinos in New York

September 30, 2013 9:37 am

New York’s Roman Catholic bishops voiced deep concern over the increased social costs that will come with more gambling if Gov. Andrew Cuomo’s plan to legalize commercial casinos is approved.

In a statement released Sunday, the Bishops said the constitutional referendum facing voters on Nov. 5 is “an important matter affecting our communities.” The Bishops said in recent years the state has “dramatically increased access to legalized gambling in an effort to raise revenue,” including multi-state lotteries and creating several video lottery terminal facilities.

But those benefits come with social and economic costs. “Even if the state does realize economic benefits envisioned by our elected officials, we voters must also consider the potential for negative consequences,” the statement said.

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.

NY rams through casino bill

July 1, 2013 8:52 am

Gov. Andrew Cuomo and New York lawmakers used an emergency provision to pass the casino bill that enabled them to dodge the required three days to review such measures, the Associated Press reported.

Of course, there was no emergency. It was just another sleazy maneuver used to ram through the casino bill in order to avoid public debate or scrutiny. From the start, the casino bill was crafted in the dark. Changes were made along the way after numerous closed-door meetings with lawmakers and lobbyists. And of course, after gambling interests spent millions of dollars on campaign contributions.

Cuomo had promised not use to the much-criticized emergency tactic that enabled lawmakers to avoid the required three-day waiting period. The provision is there to give lawmakers time to analyze measures before they vote. Instead, Cuomo and lawmakers decided to use the “message of necessity orders” because the session was coming to an end and they did not want to stay in Albany. (Maybe everyone needed a shower.)

Cuomo said the last-minute changes to the bill were minor and technical and did not change the substance of the measure. Critics didn’t buy that excuse.

“Regardless of the level of significance of the individual changes, the bills as finally approved by the Legislature were not on their desks for three days prior to final approval and are therefore unconstitutional, null and void.” said Robert Schulz, a resident who has sued governments more than 100 times to enforce what he considers violations of the state and U.S. constitutions.

In other words, in voting to amend the state Constitution to legalize casinos, Cuomo and lawmakers violated the Constitution. Then again when it comes lawmakers and gambling, this is pretty much business as usual.

Albany sells out to casino interests

June 24, 2013 11:33 am

Turns out, it only costs about $2 million to get Albany lawmakers to vote to change the state Constitution. That’s how much gambling interests spent in the run-up to a vote last week to legalize commercial casinos.

As expected, lawmakers voted to change the state Constitution in order to allow as many as Las Vegas-style casino in New York. The convoluted plan calls for four casinos located upstate initially and three casinos to be added later in and around New York City. Voters must first approve the casino referendum at the ballot box in November before it becomes law.

Gov. Andrew Cuomo called the casino plan part of a larger effort to revitalize the economies of struggling upstate regions. He said the legislation was “about gaming, and gaming is about tourism, and tourism is about jobs.” Cuomo offered no numbers to support his economic claim. Instead, Cuomo staffers resorted to alleged threats to get some lawmakers to vote for the bill.

Nor did Cuomo present a cost-benefit analysis that would look at the true costs of adding casinos. Perhaps that is because casinos will do very little to boost tourism upstate. Nor will the casinos provide any ripple effect to the local economy. Yes, the casinos create some jobs and generate tax revenue for the state.

But studies show the casinos will also lead to increased personal bankruptcy, crime, divorce and suicide. The casinos do not generate new spending but instead strip wealth from the local economy. One study has found that casinos generate $3 in costs for every $1 they bring in. (No coincidence that measures to combat corruption and prohibit campaign contributions from gambling interests were rejected by Albany lawmakers.)

Lawmakers do not care about that. New York, like other states, was driven to enable the misguided gambling policy by the river of campaign money that has flowed into the coffers of lawmakers. Consider that Cuomo never even mentioned casinos when he was running for governor. But eight months later he made casinos a major initiative of his administration.

Meanwhile, gambling interests have given nearly $2 million to statewide campaign committees, candidates and parties, according to an analysis by the New York Public Interest Research Group. That may seem like a lot of money to some but it is peanuts to the casino interests. In fact, the average casino takes in $2 million in revenue every two days. Most of that money comes from the pockets of the elderly, minority and working-class residents of New York - the very citizens Cuomo and lawmakers are supposed to protect not harm.