The Three C’s of Casino Legalization: Cannibalization, Crime, and Corruption
You’ve no doubt heard casino backers’ extravagant promises about jobs and tax relief. Let’s look under the hood to see why these promises are too good to be true.
Cannibalization. We keep hearing how New Hampshire will get “destination-resort” casinos. But, with four bigger, flashier casinos closer to New England’s population centers soon to be built in Massachusetts, two mega-casinos in Connecticut, two casinos each in Maine and Rhode Island, the New England casino market is now so saturated that the remaining New Hampshire market will be limited to smaller “convenience” casinos that attract mostly local New Hampshire gamblers, not tourists.
A Federal Reserve Board survey of the literature on casino economic impacts concludes that local market, convenience casinos of the type we would get in New Hampshire do not generate economic gains, but only cannibalize money otherwise spent at existing local New Hampshire businesses. A dollar going into a New Hampshire casino is a dollar taken from New Hampshire retailers, restaurants, hotels, and entertainment venues. And casinos use monopoly slots profits to subsidize meals, rooms, and entertainment, putting local business at an additional unfair disadvantage.
Take it from casino magnate Steve Wynn who told Bridgeport, Connecticut business leaders hoping for local economic stimulus, “There is no reason on earth for any of you to expect for more than a second that just because there are people here, they’re going to run into your restaurants and stores just because we build this [casino] here.”
Casino backers promise us jobs. But because about half of New Hampshire casino revenue would be consumer spending diverted from existing local business, casino jobs displace jobs at existing local businesses. The New Hampshire Gaming Study Commission projects that a Salem or Hudson casino would produce 2,215 permanent direct and indirect new jobs and about $540 million in gross revenue. The U.S. Department of Commerce estimates that, for every $1 million diverted from household spending in New Hampshire, the state loses nine existing jobs. The displacement effect of even one New Hampshire casino means that nearly 2,500 existing jobs will be lost. Apart from temporary casino construction jobs, there are no net job gains.
Crime.The New Hampshire Gaming Study Commission conducted an exhaustive review of all research on the casino-crime link. The Commission, half of whose members were pro-casino, concluded unanimously that a single Salem casino would cause an additional 1,200 serious crimes per year. These crimes include theft, burglary, violent assault, robbery, and rape and would be perpetrated against innocent New Hampshire citizens.
The primary cause of these crimes is addiction to the video slot machines, which are entirely unlike the lottery, horse racing, and charity gambling we now have in New Hampshire. The Commission found – again unanimously — that a single Salem or Hudson casino would create 10,000 new and additional problem and pathological gambling addicts. Sixty percent of slot machine revenue comes from gambling addicts who are unable to stop themselves. Each addict impact an average of ten additional people via increases in divorce, family violence, bankruptcy, lost work days, sickness, and attempted suicide.
The costs of gambling addiction and the increased criminal justice and welfare costs resulting is greater than projected state and local tax revenue from casinos. Casino backers are asking us to ignore these costs and the human suffering that follows gambling addiction. For these reasons, the NH Association of Chiefs of Police and every New Hampshire Attorney General for the past 35 years have opposed legalized slot casinos.
Corruption.Unlike any other business, casinos are almost wholly dependent upon the actions of state government for their profits. The number of allowed slot machines, number and location of competitors, alcohol and smoking policy, location of ATM machines, tax rates, license fees, license renewal terms, and type of allowed table games are all controlled by legislators and regulators. The result is that the gambling industry becomes the most powerful political force in casino states, filling state houses with lobbyists, and funding campaigns and attack ads to fill legislatures with casino supporters. And bribery and corruption follows influence. In almost every state to have legalized casinos, legislators get led off in handcuffs.
Casino lobbyists here in Concord constantly chant that New Hampshire must imitate Connecticut and Massachusetts and legalize casinos to help state finances. Despite having two huge casinos, Connecticut is in dire fiscal shape, dead last nationally in job creation over the past two decades, last or close to last in unfunded state pension obligations and rainy day budget reserves, and near the top in per capita debt. Last year, the Connecticut legislature passed its largest package of tax increases in state history. Similar budget disasters are found in other big casino states: Illinois, California, New York, and New Jersey.
Bottom line, casinos are profitable for only one entity: the casino owners.
Jim Rubens chairs the Granite State Coalition Against Expanded Gambling and is a former GOP state senator from Etna.