Must-Read on the Fallacy of Casino-Based Economic Development

Sunday, May 6, 2012

Must-Read on the Fallacy of Casino-Based Economic Development

http://www.criticalmassachusetts.com/2012/05/must-read-on-fallacy-of-casino-based.html

Finally.

I have been waiting for two months for this must-read by National Review's inestimable Kevin Williamson to come out from behind the subscribers-only firewall so that I could share it with the rest of the casino-averse folk out there in our fair Commonwealth...

"Play to Extinction" is the title. That's also a term of art in the casino industry; "extinction" being the point at which a patron has played to the absolute end of his/her available resources and is reduced economically to an empty husk (and personally, more likely than not, to a desperate shell of a human being). It is also shorthand for the point to which the good folk who operate the gaming establishments that our wise and beneficent political overlords hope to salt soon across Massachusetts endeavor to bring each and every patron who darkens their gaming parlor doors.

Here are a few choice excerpts from a piece that you need to read and then pass on to everyone you know. The point, by the way, isn't that gambling is "wrong" per se. The point is that anyone who pretends (as our Governor and much of our Legislature did last year in passing the casino bill) that gaming is a form of economic development is completely and totally full of crap...

Funny thing about Atlantic City: Nobody feels really obviously lucky to live there. Its population is declining (it has lost 40 percent since its peak), and among the foot soldiers of the gambling industry — blackjack dealers, scantily clad cocktail waitresses, cab drivers — it is difficult to find anybody who actually lives in it. One lightly clothed entertainer working at a particularly gamey establishment along a row of empty commercial buildings, video stores, and the occasional storefront mosque, all within a couple minutes’ walk of the casino district, snorted derisively at the notion of living in the city. “Oh, hell no. Too dangerous.”...

...Nobody who looks seriously at the nexus between politics and gambling could possibly conclude that what is happening in Atlantic City, in Pennsylvania, on the Indian reservations, or in the lottery racket represents the operation of the free market. It is a cartel in most cases and a monopoly in many, all with the blessings of the state. The arrangement, in the words of one scholarly study of casinos in Montana, leaves government “a dependent partner in the business of gambling.” If gambling advocates were simply making a principled case that putative adults have the right to entertain themselves with their own money according to their own tastes (or, let’s be serious, lack thereof), then their argument would be persuasive. But what is in fact happening is that politicians smell money, and so government itself is getting into the game, taking gambling to be a fruitful model of economic development...

...Governments, always eager to out-Enron Enron in the accounting-shenanigans olympics, earmark gambling proceeds for popular programs, then reduce general-revenue support for those programs and use the extra money to increase spending elsewhere. It’s a lot like slot machines: The house exploits the occasional jackpot to distract the schmucks from the fact that losses are a statistical inevitability. And while the accounting gets pretty hairy, it’s not too hard to find entries on the losing side of the ledger: In one study of Atlantic City, 22 percent of the local homeless reported that gambling was the proximate cause of their condition...

Then comes the question - always ignored by casino boosters - or market saturation. Already since Massachusetts passed its casino bill, neighbors Rhode Island, New Hampshire, Connecticut and New York State have moved to liberalize their own gaming policies. All believe, apparently, that the market for casino gamblers is infinite. Or, more likely, all hope to grab a slice of the inevitably-diminishing pie before it is all consumed.

...There’s only so much play at the top of the market, but that’s not where all the action resides, and the question that is seldom asked is: If New Jersey is successful in increasing its casino revenues, and Pennsylvania is successful, and Indiana is successful, and Mississippi is successful, and the Indians are successful, and Connecticut is successful — where exactly does the money come from? The money will come from the Silver Horde. Casinos have long loved the high rollers, the whales who still rule in Vegas, but the low rollers are the new bread and butter for casinos in the rest of the country. If the politicians have their way, the Silver Horde will not have to hop on the Lucky Streak and go to Atlantic City: Atlantic City is coming to them...

The industry term of art that denotes success vis-à-vis any individual gambler is: Play To Extinction. The mandate is to keep gamblers tied to the machines until they have handed over all the money they have to hand over. There are a great many ways to do this, but one way to keep the grannies tethered to the “Sex and the City: Change of a Dress” video slot machine is to keep them literally tethered: Casinos have begun offering rewards cards that give gamblers points based on their volume of play. The cards are affixed to neck lanyards and have to be kept plugged in to the machine to accrue points, producing a strangely umbilical sight...

And here's the worst part about the fiction that gaming equals "economic development: it makes government - all of us, in other words - complicit in the con.

...[W]hile there is a great deal of debate about gambling addiction and its role in the casino industry’s business model, a government study found that “disordered gambling” rates are double for populations living within 50 miles of a casino. If cancer rates were double in the 50 miles surrounding a bubblegum factory, you can bet that the bubblegum factory would get the full Erin Brockovich treatment. And it’s not just the gambling rates: In the years after the first casinos were built, Atlantic City went from having the 50th-highest per capita crime rate in the United States to being No. 1 on the list. That’s a big price to pay, but many in government are willing to pay it — for a big enough cut of the action. “The nanny state is bad news,” Davies says. “But when you start looking into gambling and what the companies do, they’re not just running a business. The more problematic part is the government’s role. It’s a joint venture between the government and the casinos, and gaming pays a higher tax rate than do other businesses. In Pennsylvania, slot-machine revenue is taxed at 55 percent rate — 55 percent of the cut. Government is not a minority partner, but a majority partner.”

Here's the capper to Williamson's excellent piece: "Call gambling a vice, call it an addiction, call it a harmless diversion, call it anything you fancy — but don’t call it economic development."

That, of course, is just the point. Casino gaming was sold to Massachusetts last year not as a harmless diversion (much less an addiction or a vice), but as "economic development". It beggars belief to think that so ludicrous a proposition must be refuted, but such are the times in which we live. Pass Williamson's piece around. No casino has yet to break ground in Massachusetts. It isn't too late... quite yet.