Editorial: Red flag on casino revenue
Wednesday, February 18, 2015
(Published in print: Thursday, February 19, 2015)
(Published in print: Thursday, February 19, 2015)
As Massachusetts waits patiently to learn who will be the winning applicant for the state’s third, and presumably final, resort casino, there was other news this week that residents and state lawmakers should not ignore.
A number of states new to the casino gambling game are finding that revenue is coming in below forecasts. Maryland, Ohio and Pennsylvania, all among the latest states to join the ranks of those allowing casinos, have found that the promised windfalls don’t match up to reality.
We’re thinking this should be a red flag here in Massachusetts, where the revenue forecasts from the expanded gaming options — three casinos and a slots parlor — are set at some $300 million annually.
The actual numbers of tax revenue weren’t just slightly off, either. In Ohio, according to the Associated Press, when the state was considering a constitutional amendment to allow casinos in 2009, the state Department of Taxation estimated that the four casinos proposed for the state would generate $470 million to $643 million in tax revenue a year. In 2014, Ohio received just $267.5 million in casino tax money.
With five operating casinos and a sixth on its way, Maryland seems to be attracting gamblers who once were going to neighboring states. And the casinos ARE bringing in revenue — but AP’s analysis indicates that revenue projections by the Maryland Department of Legislative Services were off by hundreds of millions of dollars.
Meanwhile, in Pennsylvania, now second in the nation in the gaming market behind Nevada, has hit a considerable bump in the road. Counting 11 of its 12 operating casinos, revenue dropped to $3 billion in 2014, which was a 2 percent decrease from about $3.1 billion in 2013. Pennsylvania turns out to be an interesting case. When its state task force was estimating revenue as it was first getting into gaming, it was projecting $2.54 billion coming from what was then slots-only businesses. For 2014, slot revenue came in at $2.32 billion with table games, legalized in 2010, giving the revenue a boost to a total of $3.07 billion.
Asked about the differences in the numbers, state gaming officials say that there might have been miscalculations in spending habits or that, perhaps, wishful thinking on everyone’s part may have led to some over-inflating of numbers.
“In retrospect, we were guessing,” said Mike Sobul, who was the Ohio tax department’s director of research at the time.
Then there’s the matter of increased competition.
If states that already have casinos are feeling the pinch from new operations, what does that mean for Massachusetts and New York as they venture into the gaming scene? And if New Hampshire legalizes casinos, what kind of impact will that have on Massachusetts?
State officials here say they’re being cautious with the figures. That’s good, especially if the state is banking on certain amount of casino revenue to help with its bottom line. But even a cautious estimate is still a guess and Massachusetts may find that all that was promised isn’t delivered.
The bottom line is that casinos are no substitute for economic growth in manufacturing, science and technology jobs ... and that should be a goal that outweighs pie in the sky solutions.
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