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“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

Board of DirectorsTodd I. Selig, Chair

David Alukonis

Michael Buckley

William H. Dunlap

Sheila T. Francoeur

Stephen Reno

Stuart V. Smith, Jr.

Donna Sytek

Brian F. Walsh

Kimon S. Zachos

Martin L. Gross, Chair Emeritus

John D. Crosier, Sr., Emeritus

Gambling in New Hampshire – September 2011 Update

Steve Norton, Executive DirectorNH Center for Public Policy Studies

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Fundamental Assumptions of models

• The placement of a casino in New Hampshire (or closer to New Hampshire) will increase the number of people that gamble.

• The farther individuals have to travel, the less likely they are to go to a casino in New Hampshire. And … the closer you are to a casino, the more likely you are to go to a casino.

• Gravity of a facility – attractiveness, size, amenities – and the competition in the market affects gambling behavior.

• For a small share of the population, exposure to gambling results in pathological behavior.– This creates a set of social issues which – if they can be

quantified -- are offsets to the potential benefits.

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Center’s Model of Expanded Gambling

• Take as Inputs– Location– Size– Type– Massachusetts Action

• Produce as Outputs– Economic (jobs, product)– Net Revenue – Crime– Social Costs to NH and local

communities

5 Sites

• North Woods• Southern NH• Ski Country• Southwestern NH• Lakes Region

Sites IDed by Commission to give a sense of the impact of location.Model can be used to simulate other sites.

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Drive time analysis used as the foundation of a gravity model which assumes the more amenities, the greater the attraction.

Adjusts for NH specifics: Tourist multiplier

Allows us to simulate Massachusetts impact

Tested models against existing markets

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Markets?

Standard Economic Development Models

Short Term(Construction)

Long Term (Operation of Facility)

# of Gamblers and Intensity

# of New Problem/Pathological Gamblers

Societal Costs (Govt and Non-

Govt)

New Gambling Tax Dollars

Meals and Rooms, Lottery

Impact

Standard Retail Gravity Model Adjusted to Reflect NH Experience

Costs of Problem/ Pathological

Gamblers

Net Impact

Direct/Indirect

Direct/Indirect

Net Impact

Displacement

Putting It All Together

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Testing Our Approach

• Market Development Tested and adjusted model against existing markets in Middle Atlantic.

• Economic Development Tested RIMS models against REMI model results.

• Social Costs Evaluate against multiple options.

• Peer review of our report.

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What Has Changed? Lots

• The Center’s prior estimates of net benefit to the state $89m with a $500 facility (including slots and table games) in Southern NH.

• Three factors have changed – Massachusetts will act– Gambling revenues have declined– Inflation has increased the costs of managing

the social costs.

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Map Source: Boston Globe

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Markets, Borders and Drive Time: Palmer, MA

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Markets, Borders and Drive Time: Suffolk Downs, MA

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NH Lottery Revenues – Actual through August 2011

Sweepstakes Net Income

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Jul-9

9

Jul-0

0

Jul-0

1

Jul-0

2

Jul-0

3

Jul-0

4

Jul-0

5

Jul-0

6

Jul-0

7

Jul-0

8

Jul-0

9

Jul-1

0

Jul-1

1

Mill

ion

s

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Connecticut Casinos Have Seen a 16% Decline in slot Revenue Since the Peak

Connecticut Casino Slot Machine Revenue(Foxwoods + Mohegan Sun)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Mill

ion

s o

f D

olla

rs

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Changes to Original Study

• Gaming revenue reduced by 15%, based on CT casino and NH Lottery experience.

• Same job creation (economic development)

• Social costs– Increased Regulatory 3% (general inflation)– Increased other social costs 10% (medical

services inflation rate)

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Estimating the Marginal Increase in Problem Gambling

Low and High Estimates of Gambling Disorders Among Induced Gamblers Associated with a $500 Million facility with VLTs and Table Games

6,988

1151

3445

1030227

14,253

2348

7025

2101

464

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Southern NH Southwestern NH Lakes Region Ski Country Great NorthWoods

Induced Gambling Disorders(Low Estimate)Induced Gamblers (HighEstimate)

Original Results

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Economic Benefit Is Local, but Social

Implications Are Not

Low HighSouthern NH

0-30 minutes 1,946 3,96930-60 minutes 4,532 9,24360-90 minutes 510 1,041

Southwestern NH0-30 minutes 142 290

30-60 minutes 700 1,42960-90 minutes 309 629

Lakes Region0-30 minutes 633 1,291

30-60 minutes 2,793 5,69660-90 minutes 19 38

Ski Country0-30 minutes 111 226

30-60 minutes 319 65160-90 minutes 600 1,224

Great North Woods0-30 minutes 78 160

30-60 minutes 37 7660-90 minutes 112 228

Market Area, Large Casino with Table

Games

Gambling Disorders among Induced

Gamblers

Original Results

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Net Benefit: Southern NH

Sept 2011 Update

Calculating Benefit to the State of Expanding Gambling, Large Facility ($500m Investment, 5,000 VLTs and Table Games) in Southern NH

Including Only Revenue and Social Costs

$184

$114

$24$48

$41

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Revenue to State Revenue to State(Assuming

MassachusettsExpands)

Social Costs Net State Benefit

In m

illio

ns $

Govt

Private

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Investment Amount/Size Matters: Economic Development

New Jobs: Operations, Direct and IndirectVLTs and Table Games

190

443 452316

190

949

2,215 2,262

1,582

949

0

500

1,000

1,500

2,000

2,500

The Great NorthWoods

Southwestern NH Southern NH Lakes Region Ski Country

Small Facility ($100mInvestment)

Large Facility ($500mInvestment)

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We Did Not Model Timing

The Costs and Benefits of expanded gambling do not all accrue at the same time and an economic analysis could use a net

present value approach

Economic DevelopmentConstruction (18 Months)Operations

RevenuesLicense FeesNet State (Gambling, M&R, Lottery)

Social CostsNet Benefit to Lowered UnemploymentPathological Gambling BehaviorImpact of Pathological Gambling

Hypothetical Description of Time's Role in Understanding Impact of Gambling

FY 2011: July 1, 2010 FY 2012: July 1, 2011 FY 2013: July 1, 2012 FY 2013 FY 2014

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NH: Overlapping Markets of Existing Proposals (30 Min.)

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Maps of Markets

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What’s Going on in Maine?

• Fall of 2010 Maine voters passed a referendum (by a narrow margin) that would allow a casino at Pigeon Hill, in Oxford County, Maine.

• Maine voters will be asked this November to approve two additional casinos, including one near the southern border, at Scarborough Downs in Biddeford and another at Calais.

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Casino in Oxford, ME will draw NH residents (and tourists!)

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Lowell, Massachusetts: How Would this Compete with

Connecticut?

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Gaming Facilities in the Northeast