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Wednesday, November 11, 2015

Doubling down on a troubled industry

Doubling down on a troubled industry

Posted: Tuesday, November 10, 2015 11:00 am
The initial proposals are in and the race is on to see which of four towns — Hartford, East Hartford, Windsor Locks, or East Windsor — gets to host the “convenience” casino the Mashantucket Pequots and Mohegans want to open in northern Connecticut.
Advocates contend the proposed casino would help protect Connecticut casino revenue and jobs from MGM’s Springfield casino, generate municipal tax dollars, and spur local economic development. In short, they argue, the casino would be a windfall both for the state and the lucky town chosen to host it.  
But would it? Or would it, in fact, entail doubling down on a declining state industry that comes with a mountain of economic and social problems that would far outweigh any benefits?
The evidence suggests the latter.
Economically, the Northeast’s growing casino glut is taking its toll, sharply reducing the inflow of out-of-state money that fueled Connecticut’s casino boom. The combined revenue for Foxwoods and Mohegan Sun is down 38 percent from its peak. The two casinos have eliminated a third of their jobs and have been replacing full-time jobs with part-time jobs to reduce wage costs and eliminate medical benefits. Foxwoods has stopped profit-sharing payments to its tribal owners and is mired in debt.
The proposed convenience casino would slow the decline of Connecticut’s casino industry by helping to keep state gamblers in Connecticut, encouraging local gamblers to gamble more frequently, and expanding the market for casino gambling in greater Hartford.
But the casino’s customer base would be heavily skewed to state residents, which would mean most of its revenue and jobs would be funded by the gambling losses of Connecticut people, resulting in simply redistributing money within the state and doing little to create any net new economic value.
What the new casino would do, however, is increase a myriad of societal problems, including debt, bankruptcies, broken families, and crime. A 2009 state-sponsored study reported a steep increase in the number of Connecticut residents seeking treatment for gambling addiction following the arrival of Foxwoods and Mohegan Sun, while arrests for embezzlement soared by 400 percent, a rate of increase 10 times the national average. More recently, a Western Connecticut State University study revealed that violent crime increased in nearby towns after the casinos opened despite a sharp drop in violent crimes nationally and in Connecticut as a whole. According to the study’s author, interviews with local officials also indicated increases in prostitution and illicit drug use.
Looking at the evidence nationally, the Institute for American Values, a nonpartisan think tank, concluded that casinos constitute a regressive tax that hits low-wage earners, minorities, and the elderly the hardest. In sum, the Institute found, the new regional and local casinos drain wealth from communities, weaken nearby businesses, hurt property values, and reduce civic participation, family stability, and other forms of social capital that are at the heart of a successful community.
There is another reason to be concerned about the proposed casino.
The tribes and their legislative allies originally proposed opening three convenience casinos. They backed off that proposal out of fear three couldn’t make it through the legislature all at once, but they are almost certain to revive the idea if they get the first one. Combined with the state’s decision to roll out the casino game keno to bars, restaurants, and convenience stores, the Hartford-area casino could be the first step in a massive expansion of casino-type gambling in the state.
It is time to examine not only the economic and social impact of additional casinos, but the serious ethical questions involved in government promoting them.
Multiple independent studies document that casinos obtain 35 percent to 50 percent of their revenue from problem gamblers — individuals with some level of gambling addiction. In other words, the casino industry’s business model is dependent upon preying on addicted gamblers, and up to half the money government obtains from casinos comes from exploiting addicted individuals and those around them.
Does anyone really think that’s a formula for economic growth?
Robert Steele is a former U.S. representative from Connecticut’s 2nd Congressional District and the author of “The Curse: Big-Time Gambling’s Seduction of a Small New England Town.” Tony Hwang is assistant leader of the state Senate’s Republican minority.

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