By Mary Whitfill, News Staff
Catching the casino fever that has struck in many states across the country, Massachusetts legalized casino gambling and slot parlors last year. Betting that the controversial entertainment venues will pay off, state legislators doubled down on assertions that tax revenue from the venues will bolster the Commonwealth’s economy.
Governor Deval Patrick signed the bill, commonly known as the gaming act, in late November of last year, allowing up to three gaming casinos within the state, with one slot machine parlor. In January, 11 companies submitted proposals for the four available gambling licenses in Boston and locations in western and Southeastern Massachusetts.
Proponents of the bill point to the economic boost and job creation expected to come with the casinos, while adversaries worry about the negative social effects experienced by casino towns like Atlantic City, N.J.
“The reason why Massachusetts has been interested is that it sees it is losing this business to the states where there are casinos, such as Connecticut and Rhode Island,” Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern, said. “We didn’t build casinos, other states did, and people who enjoy casinos have been leaving the state to gamble and we are losing revenue to them. The idea was that whether you like gambling or not, people are going to do it, why not keep that revenue here in the state.”
Combating the social stigma
Opponents of casinos often associate large gambling facilities with high crime rates and increased cases of gaming addiction.
University of Nevada professor emeritus B. Grant Stitt, Ph. D., was one of three authors of a federally funded study investigating how gaming facilities affect crime rates. Two criminologists, including Stitt, along with one economist, accepted a research grant from the National Institute of Justice to look at the impact of casinos on crime and quality of life in different communities.
“We looked at what we called ‘new casino jurisdictions’ which were ones where they brought in casinos and we could get data about the community before and after the casinos were there,” Stitt told The News in an interview. “In terms of crime, the crime effects were, at best, negligible. In the biggest jurisdiction there was some increase in public order crimes, such as public intoxication and prostitution, but in terms of any significant increase in serious crime, there was none.”
Stitt said he is confident that casinos are not a particularly dangerous addition to communities, nor do they bring additional social curses to an area.
“One of the things that people need to remember is that casinos are businesses and they are concerned about their image,” he said. “They do everything they can to operate safely. They have really good security in their parking lots, the areas surrounding the casino and of course within the building. Anyone who commits a crime inside a casino is an idiot, because big brother is always watching; there are cameras in the sky.”
Gaming addictions in young adults
Even with the seemingly neutral effects on crime rates in surrounding areas, advocates for the gaming act recognize that casinos come with a human price.
The bill calls for one of the most aggressive addiction-combating programs in the country, allotting an estimated $25 million per year to support addiction prevention, treatment and research.
Phil Scherer is the director at the Illinois Institute for Addiction Recovery, one of the few addiction centers in the nation with a program sector dedicated to gaming addictions in teens and young adults.
“The percentage of people who are addicted to gambling is relatively small, but what happens in our country is that we tend to not focus on the consequences of the activities that we allow people to become involved in,” Scherer said. “We don’t really treat addiction in a real responsible manner; we tend to employ the criminal justice system to fix the problem with blame and shame and punishment as opposed to recognizing that there is an actual disease in play here.”
The arrival of large-scale gambling venues may affect college-aged people in different ways than older adults, Scherer said.
“Younger people become addicted more quickly because their brains are not fully developed,” he said. “A person’s brain doesn’t fully develop until they reach about 25 or 26, so a lot of the time what happens is that the combination of lower decision making skills and that young people are more impulsive than others, more negative consequences happen more quickly.”
Despite the increased likelihood of addiction in young adults, others familiar with the industry do not think that college students will be affected by casinos any differently than other Massachusetts residents.
“Casinos really are not interested in college kids because college kids do not have money,” Frank Fantini, publisher of the online daily Fantini Gaming and Lodging News, said. “Your ideal casino customer is someone at the peak of their earning potential with discretionary income. Casinos have not ruined Philadelphia or southern California; I don’t think any colleges have been negatively affected.”
A much-desired economic boost
Many of the companies who submitted proposals to the Massachusetts Gaming Commission pointed to the short and long term booms such large developments could bring to the state’s economy.
“These projects are going to employ many thousands of people per casino which will help on many levels – one of which being that the state then reaps the pay roll taxes,” Fantini said. “One of the things casino companies do is they provide good paying jobs with benefits and in many cases they are unionized jobs. We have this idea that it is very hard for people to work their way into the middle class, but a casino is an exception. If you start and work your way up in casinos you can earn a good amount even without a college degree.”
While casinos also maintain their own virtually self-contained economies – with lodging, food and entertainment all in one place – the implementation of casinos will likely benefit other businesses.
According to Fantini, over a period of seven years a casino will spend the same amount of money refurbishing a property that it did to construct the project originally.
“If they spend $1 billion dollars to build a property, in the next seven years they will spend $1 billion to maintain it and most of that will go to local services who provide furnishings, flooring, etc.,” he said.
In contrast to the economic boost given to these local service providers, other entertainment businesses could suffer, some researchers believe.
An article from the Kennedy School of Government at Harvard University reported a decline in per-capita spending and revenue to other sectors of the entertainment industry when casinos are built.
Bluestone said he does not believe the introduction of casinos into a well-established economy like Massachusetts’ will draw people away from alternative forms of entertainment in the surrounding communities.
“I’m sure there are some adverse consequences to some of the smaller [entertainment] businesses,” Bluestone said. “It’s the same thing as when a Walmart goes in to town – nearby shops often suffer, but I’m not sure that just because you have a big casino, that a coffee house with folk music is going to be harmed. People who don’t gamble now probably aren’t going to start just because casinos come to Massachusetts, there are very different audiences.”
In a tight race to gain permits last month, 11 developers filed an application and paid a $400,000 fee to contend for a gambling license in the Boston area, which is expected to be the most lucrative casino location in the state.
Among the top contenders were David Nunes, a well-connected site developer who is proposing a casino at a site in Milford; Suffolk Downs racing resort in Boston, in partnership with Caesars Entertainment; and Steven Wynn, a casino tycoon who proposed a resort on the Mystic River in Everett.
“I can’t say that one [development] would generate more or less revenue than the other,” Fantini said. “Casinos in general bring massive amounts of economic boost into an area and provide jobs with a lot of room for advancement. One of the things they do very well is hire and promote minorities.”
Suffolk Downs, a thoroughbred racetrack in East Boston, has proposed a $1 billion development in partnership with Caesars Entertainment, the largest owner, operator and developer of casinos in the world. Responsible for the widely known properties Caesars Palace Las Vegas and Flamingo Las Vegas, the entertainment giant promises a streamlined and effective product.
“Caesars is a company that practices consumer science. They will maximize the potential to get people to come in and spend money, maximizing revenue for the state,” Fantini said. “At a place where gambling is already taking place, it is really just an expansion of the activity that is already there so it won’t be disruptive to the community.”
The Suffolk Downs development would include a hotel with approximately 300 rooms, multiple gaming and nightclub venues, up to 10 restaurants and approximately 200,000 square feet of gaming space, including up to 5,000 slot machines and 200 table games.
“This is an opportunity to create a fiscal and economic boost for generations to come,” Richard Fields, principal owner of Suffolk Downs, said in a statement. “Recapturing Massachusetts discretionary spending that, for 20 years, has generated billions of dollars in tax revenues and thousands of jobs in Connecticut and Rhode Island. But with our proposal comes a commitment to create a venue that complements East Boston, Revere and surrounding communities.”
Steve Wynn is Chairman of the Board and CEO of Wynn Resorts, Ltd., a massively successful owner and operator of hotels and casinos.
The Wynn project would be developed at the site of the former Monsanto chemical plant on the Mystic River, a 37-acre piece of land in Everett that Wynn began leasing late last year. Similar to the Suffolk Downs project, the $1 billion development would include a hotel, restaurants, shops and a massive gaming entertainment center.
“What you get when Steve Wynn builds a resort is a super high quality product. He personally designs every product down to the Nth detail,” Fantini said. “Some of the finest casinos in the world are Wynn properties so there is a standard there.”
Wynn Resorts is responsible for some iconic Las Vegas casinos, including Bellagio, The Mirage and the Wynn and Encore resorts. The deep pockets of Wynn Resorts will attract the kind of investors and loans that the company would need to successfully develop, according to Fantini. The development is expected to create anywhere from $20 to $30 million in revenue annually.
“Wynn has a good, strong bounce sheet and they do not have a great amount of debt relative to their revenue,” Fantini said.
The final large contender is lesser-known Crossroads Massachusetts, Nunes’ development company, which controls 177 acres in Milfrod where he is planning a suburban casino. Nunes has offered budgets of over $750 million to create a rural casino experience similar to those available in Connecticut.
“Whichever project gets chosen will probably be project financed, which means that the parent company won’t finance it, most of the money will be borrowed,” Fantini said. “The problem with the [Crossroads Massachusetts] project is that it doesn’t have a deep pocketed parent company to turn to if it needs more cash beyond that.”
The proposed casino licenses are unlikely to be awarded before 2014 as the Massachusetts Gaming Commission has allocated almost a full year to reviewing the proposals and qualifications of proposed developers, according to its website. Additionally, the commission warns that it is unlikely residents will be able to take advantage of these developments until well into 2017.