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Casino Math Workbook for Beacon Hill
www.uss-mass.org
The Net Effect of Casinos on Revenues
• The Massachusetts Lottery funds Local Aid
• The Lottery is expected to lose a minimum 10% net revenue with the introduction of class III gambling, slots and casinos
(See Appendix 1, Appendix 2)
Graph Sources: Grinols, Earl L., Mustard, David B. and Dilley, Cynthia Hunt, Casinos, Crime and Community Costs. June 2000.
Fiscal Impacts of Foxwoods Casino on the Town of Ledyard, Connecticut. Mayor Wesley J. Johnson, December, 2001.
Cost of Gaming Commission Estimated between 20 and 80 Million Dollars
-110
-200
-150
-100
-50
0
50
100
150
MA Lottery Loss (10% ) Cost Of Gaming Commission Cost Of Increased Law Enforcement
Slot Machine Revenues (Recaptured from CT)
Total Change In Revenue
Amou
nt re
ceiv
ed/
Loss
in R
even
ue
(Mill
ion)
Data based on Spectrum Gaming Report
Effect of Casinos On State Revenue and Spending
2
When Casinos win, Communities lose
Casino revenue will not increase Massachusetts NET revenue
Funds to Local Aid based on average. 2009 Aid was 23%3
Government sponsored predatory gambling
is a permanent regressive Tax
Money Lost Over Time in Slot Machines
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
10 20 30 40 50 60 70 80
Time Spent on Machine (In Minutes)
Money L
ost
$1 per game bet
$5 per game Bet
$15 per game bet
4
“While excessive gambling affects members of all social classes, its
greatest social concern comes from its prevalence among poor
economic groups.”
5
Slots and Casinos are a “backdoor” Tax
•For every $1 generated by casinos, it costs tax payers $3 to address increased crime, bankruptcies and other adverse affects
•No state that has legalized slots and casinos has adequately mitigated the impacted host region
•$1 Billion dollar cost to California taxpayers for impacts of slots/casinos
•$4.5 Billion dollar cost to Australian taxpayers for impacts of slots “pokies”/casinos
Slots/casinos send money out of the local economy and out of
state
•When money is not spent on household items, groceries, dinner out with the family and is instead dropped into a slot machine, it leaves the economy
•Massachusetts has significant levels of legalized gambling, the major difference is that lottery revenues stay in state
•Slots/casinos benefit wealthy investors and developers while draining individuals, families and local economies
6
Racinos and Casinos are not reliable revenue
When compared to other forms of gambling and the sales tax, Casinos are by far the most volatile form of
revenue.
FY 2008 to FY 2009(National Average)
-9.00%
-8.00%
-7.00%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
Lottery Casino Racino MA Sales Tax(Forecast)
7
Racinos and Casinos will not create 30,000 construction jobs
“I don’t know how 30,000 was arrived at, but it didn’t come from me.” -Frank Callahan, President of Massachusetts Building Trades Council
Source: Gus Faucher. Director of Macroeconomics, Moody’s Economy.com
30,000
20,000
3,500
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Governor Patrick's Projection Massachusetts Building and Trade Union Projection
Independent Study Projection by Moody's Economy.com
Num
ber o
f Job
s
* J obs Created include short term independent contractor positions
Projected Construction J obs Created Over a 3 Year Period*
8
An independent cost-benefit analysis is needed
Casinos will not solve the unemployment crisis
•Because the areas could not support the low wage jobs the casino was looking to fill in Connecticut, it brought in workers that would work for minimum wageSource: “Mayor: Casino Costly”: Sun Journal. Lewiston ME 10.22.08. By Leslie Dixon
•Many of the “new” jobs simply replace jobs destroyed when existing businesses lose their customer base to casino malls.(See Appendix 4 )
9
•A study commissioned by the Governor of New York concluded that 1,208 more jobs would be lost rather than gained with gambling expansion due to a change in residents spending habits.Source:Jerry Zremski, :Doubts Raised on Casino Job Gains” The Buffalo News, 8/18/02
Casinos and racinos cannibalizesmall businesses
•83% of retailers went out of business within the first 7 years of legalized gambling in Cripple Creek Colorado
•70% of independent restaurants shut down in Atlantic City within the first year casinos opened
10
Primary gamblers live locally
Rhode Island residents have the highest per capita spending at studied gambling sites.
Connecticut residents have the second highest per capita spending at studied gambling sites.
Page Source: New England Public Policy Center. September 14, 2006
11
Casinos are more problematicthan other forms of legalized gambling.*
People become addicted to Slot Machines 5 times faster than other forms of legalized
gambling
80-90% of calls to help lines for gambling addiction now concern Slot Machines
*Source: Rapid Onset of Pathological Gambling in Machine Gamblers. By–Robert Breen. 2002
12
ANATOMY OF A SLOT MACHINE
• Computerized machines allow faster bets. On average a gambler make a bet every 5 seconds.
• Slots are programmed to display frequent near-win combinations to keep gamblers “playing to extinction.”
• Experts state that computerized slot machines create a faster and more addictive game experience than original slot machines. (Appendix 6)
“Every feature of a slot machine-its mathematical structure, visual graphics, sound dynamics, seating and screen ergonomics is calibrated to increase a gambler’s ‘time on device’ and to encourage play to extinction”.
-Dr. Natasha Dow Schull Assistant Professor, MIT
Slot machines and social gambling are not the same
13
Casinos rely on problem gamblers to make profits
Daily Visitors to Foxwoods Casino with Gambling Problems or at Risk For Developing Gambling
Problems
2,400
4,800
0
1,000
2,000
3,000
4,000
5,000
6,000
Problem Gamblers At Risk Gamblers
Nu
mb
er
of
visi
tors
to F
oxw
ood
s
Based on data of 40,000 daily visitors to Foxwoods Casino Resort (See Appendix 5)
14
Much like the tobacco industry, racinos and Casinos need to attract new addicted users to bring
in revenue.
The role of Government
Is to protect the People
15
Not to exploit them
United to Stop Slots in Massachusetts (USS Mass) and our citizens coalition calls upon our elected officials for an independent cost-benefit analysis
before legalizing expanded gambling, slots/casinos.
USS Mass is joined by Governor Patrick, Attorney General Martha Coakley, Governor Dukakis, Mrs. Kitty Dukakis, former Attorney General Scott
Harshbarger, Congressman Michael Capuano, Governor’s Councilor Tom Foley, John Merrigan, Register of Probate, Sheriff Guy Glodis, Alan Khazei,
Mass Chiefs of Police Association, Mass Council of Churches, League of Women Voters, National Association of Social Workers – MA Chapter,
Western MA Substance Abuse Providers Association, Western MA Casino Task Force, Mass Family Institute, dozens of legislators and hundreds of
Massachusetts taxpayers.
For more information visit: [email protected]
AppendicesAppendix: 1:Figures based on October 2009 public hearing at the State House. 700 Million is estimated out of State gambling.
90 Million is the estimated net recapture after gambling industry deducts it’s allowable expenses (ANGR).
Appendix: 2Cost of Gaming commission is estimated between 20 million and 80 Million dollars.
The 80 Million estimate is based on the creation of a gaming commission relative to 16% of Revenue, which would be the approximately equal to the gaming commission in New Jersey, and be the best regulation in the country.
Appendix: 3Statistics based on total monies gambled at a 26% tax rate:
Money gambled $100
Payout $93
Gross profit $7
Taxable 26% of $7 = $1.82
Appendix: 4
According to municipal officials in Ledyard, Preston, and North Stonington Connecticut, each town has suffered significant reductions in their business sectors due to the casinos building malls that contain restaurants, clothing stores and other businesses similar to local enterprises. Casinos use these non-gaming activities to stimulate demand while cannibalizing the local retail market.
Appendix: 5
Data is based on an average of 40,000 daily visitors to Foxwoods Casino, as compared to findings in the 1999 National Impact Gambling Study stating the percent of problem gamblers and at-risk gamblers that visit casinos daily.
Appendix: 6
Dr. Natasha Schull states in her book Machine Life: Control and Compulsion in Las Vegas. Slot machines are designed to for quicker game play allowing a gambler to make a bet every 5 seconds.
Information is based on an average Slot Machine payout of 93% and an average time per game of 5 seconds.