Booze, pills and the economics of casinos

Caesar
Caesar

The chaos that has broken out over the split between Suffolk Downs and Caesars Entertainment is good news for casino opponents. At the very least, it increases the likelihood that East Boston residents will vote no on Nov. 5. At most, we may be able to look forward to delays and lawsuits for years to come.

I was particularly struck by the accusation — reported by Mark Arsenault in The Boston Globe — that Caesars separated one wealthy gambler from his money by keeping him liquored up and plying him with painkillers. I know nothing about the details of that accusation. But it actually fits well with the business model for casinos.

I’ve flagged this before, and it’s worth flagging again: according to Michael Jonas of CommonWealth Magazine, casinos could not survive if it weren’t for the problem gamblers who provide a disproportionate share of the revenues. Jonas explains it this way:

Just how much of the revenue casinos bring in is from the losses of those with gambling problems? One of the most thorough studies of this issue was done in 2004 in Ontario, where researchers had a sample of residents maintain diaries logging their gambling expenditures. The study, prepared for the government-supported Ontario Problem Gambling Research Centre, estimated that 35 percent of Ontario casino revenues were derived from moderate to severe problem gamblers. Such gamblers accounted for 30 percent of revenue from casino table games and a whopping 62 percent of revenue from slot machines.

I remain appalled that Gov. Deval Patrick and the Legislature legalized casinos and slots, which are associated with higher rates of crime, divorce and suicide. But I’m optimistic that these social parasites can be stopped one at a time.

Below is a statement from No Eastie Casino:

EAST BOSTON, Mass. — Oct. 19, 2013 — For more than a year, No Eastie Casino has pushed the City of Boston and Suffolk Downs to share more information about Suffolk Downs’ proposed Caesars Entertainment Resort. After ignoring repeated calls for greater transparency and concerns about Caesars’ solvency raised by East Boston residents, on Friday Suffolk Downs dropped the operations partner it chose in 2011 to run a casino in East Boston, Caesars Entertainment, only after state investigators informed them that Suffolk Downs likely would not pass the background check if Caesars stayed on. The Boston Globe reported that a number of concerns were brought to Suffolk Downs’ attention, including Caesars’ alleged business ties to organized crime.

But East Boston casino opponents say the stunning news late Friday demonstrates that residents cannot trust Suffolk Downs when it comes to whom they choose to bring into the neighborhood, said No Eastie Casino co-chair Celeste Myers.

“As recently as two months ago, Suffolk Downs owner Joe O’Donnell stated that Caesars was ‘as professional as they come,'” Myers said, pointing out Suffolk Downs’ frequent assertion that it shares Caesars’ values. “Clearly, they did not do due diligence in vetting Caesars — a company with which they have had a relationship since 2011 — and only ended the relationship when forced to do so.”

She added that Suffolk Downs has now picked two corporations, Caesars and Vornado Realty Trust, that have been unable or unwilling to pass background checks. In March, Vornado put its 19 percent stake in the casino plan into a blind trust after the majority of its executive team refused the state’s mandatory background checks. To our knowledge, Vornado has not divested completely from the casino partnership and voters remain in the dark about who will pick up its nearly one-fifth share in the project.

Caesars’ sudden departure also raises serious questions about the value of the City’s and Suffolk Downs’ host community agreement and shows that the promises in the mitigation agreement were made to be broken. Many key elements of the mitigation agreement-including key components of the jobs and small business plans-were tied to Caesars’ employee practices and Total Rewards programs. (Download our 16-page mitigation analysis here.)

No Eastie Casino leaders on Saturday formally called on Suffolk Downs to withdraw its casino application, in light of the information that emerged late Friday, and to share full details about their casino plans — including what they knew about Caesars and when they knew it — with the community at large.

“Now, more than ever, our neighbors and voters are seeing the glaring problems in the Suffolk Downs casino plans and the flaws in transparency that have plagued this fight from the start,” Myers said. “We hope Suffolk Downs and the City of Boston do the right thing and withdraw their support of this project. Until they do, our campaign will continue to reach out to and educate voters until we are victorious on Nov. 5.”

Neighbors reject Taunton casino plan by 2-1 margin

As you may have heard, Taunton voters overwhelmingly approved a tribal casino in a nonbinding referendum on Saturday. But that’s not even close to the whole story.

Residents who live closest to the proposed casino voted even more overwhelmingly against it. According to Cape Cod Times reporter George Brennan, the city voted  7,693 in favor and 4,571 opposed — but “in the two East Taunton precincts where the Mashpee Wampanoag casino is planned, voters rejected it by nearly a 2-1 margin.”

In the Taunton Gazette, reporter Christopher Nichols posts the numbers:

Ward 4 — which contains most of East Taunton — voted against the casino proposal with 755 in favor and 1,332 opposed. Voters closest to the proposed casino site in Ward 4 Precinct B voted against the proposal, 678-350.

Yet, with regard to Boston’s two daily newspapers, we’re already seeing a repeat of 2007. That’s when the big news was that Middleborough had voted in favor of a deal the selectmen had cut with the Mashpee Wampanoag tribe to build a casino in that town (big news!), and then turned around and took a decisive but nonbinding vote against the casino itself (shhhh … pay no attention).

The proposed Middleborough casino eventually fell apart, but town officials are still hoping there’s a pot of gold at the end of the rainbow. Alice Elwell of the Brockton Enterprise has the latest.

So what happened with the Taunton vote? On Sunday, the Globe’s Mark Arsenault reported on Taunton’s vote in favor of the casino — but made no mention of the results in East Taunton. The Herald did better, publishing Brennan’s Cape Cod Times story (Herald publisher Pat Purcell runs several of Rupert Murdoch’s regional papers, including the Times). But today, the Herald offers a follow-up by Chris Cassidy and Laurel Sweet that omits the vote of the opposition in East Taunton.

Arsenault, in his Globe story, closes by noting that Taunton is a long way from actually hosting a tribal casino. Because of a 2009 U.S. Supreme Court decision, Carcieri v. Salazar, the Mashpee won’t be able to build a tribal casino in Taunton without an act of Congress. Good luck with that.

The Taunton vote demonstrates, once again, that no one wants to live next to a casino. Nor should they have to.

A final casino note: Former Boston mayor Ray Flynn turned out on Saturday to lend his support to East Boston residents opposed to a casino that’s been proposed for Suffolk Downs.

Given that the East Boston plan is already being portrayed as a done deal, it will be pretty interesting to see how a battle between Boston’s former and current mayors (Tom Menino supports the proposal) will play out.

Photo (cc) by s_falkow and republished here under a Creative Commons license. Some rights reserved.

Yes, casinos hurt local businesses

The Boston Globe’s Jenifer McKim today reports that Robert Goodman, an expert on casino gambling, believes a proposed casino and slot-machine emporium at Suffolk Downs would harm local businesses.

“No serious economic impact analysis has been done in Massachusetts,” Goodman tells McKim. “More money is going to be sucked out of the local economy.”

But aren’t casinos supposed to be good for the economy?

In fact, the negative effect described by Goodman is so well-known that Glenn Marshall, the disgraced former chairman of the Mashpee Wampanoag tribe, reportedly promised business owners in Middleborough that he would give them money to offset the harm that would be done by the casino the tribe had proposed for that town. (The tribe recently dropped the long-dormant Middleborough scheme in favor of a site in Fall River.)

According to a story by Alice Elwell in the Enterprise of Brockton in September 2007, Marshall had promised local business leaders that he would “help” if the casino harmed restaurants in town. Selectman Wayne Perkins was quoted as saying this would have taken the form of “comp points” — scrip given to casino visitors that could be used at Middleborough businesses, which in turn could trade them in for cash. (The original link seems to be broken, but I wrote about it at the time.)

A casino is a self-contained economic machine that sucks money out of customers who might otherwise spread it around at local businesses, a fact Marshall backhandedly acknowledged in promising “comp points.” It then funnels the cash to high-rolling investors — and, of course, to the state, which is why Beacon Hill is now on the verge of approving this monstrosity.

The Globe’s corporate cousin, the New York Times, editorialized on Monday:

Casinos are a magnet for tainted money and promote addiction, crime and other ills….

The state’s politicians should also stop chasing gamblers. At a time when casino revenue is slumping across the country, it doesn’t even make economic sense. They need to make hard decisions on taxes and spending, and focus on developing stable industries, improving education and working their way to growth. If they keep holding out for a false jackpot, everyone will lose.

The Globe editorial page, by contrast, has been consistently if cautiously pro-casino. Too bad. As the region’s dominant media player, the Globe could exercise some real leadership on this issue.

Photo (cc) by Jamie Adams via Wikimedia Commons.