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: www.uss-mass.orgussmass@gmail.com

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.