As regular readers of this column are aware, I’ve long been fascinated — and repulsed by — the relationship between gambling and economic development and the social costs associated with such enterprises.
We all know how much Connecticut’s two Indian casinos contribute directly to the state’s coffers. Under a deal first negotiated in 1993 by former Governor Lowell Weicker with the Mashantucket Pequots and the Mohegans, the state receives 25 percent of gross slot machine revenues from the Foxwoods Resort Casino and Mohegan Sun.
As the state searches desperately for more revenues to make up for the underperforming income tax, the news on the slot front is hardly encouraging. Competition from other states threatens us, or so we are told.
According to the state Department of Consumer Protection, over the last fiscal year, Mohegan Sun paid out about $150.5 million to the state, with Foxwoods coming in a close second at $120 million. In both cases, those numbers have dropped considerably over the last 10 years. In 2007, Mohegan Sun brought in almost $230 million and Foxwoods more than $201 million. I’m no math major but that looks like a decline of roughly 40 percent apiece.
It is the result, no doubt, of increased competition from Massachusetts, which has approved casino gambling and already has a small casino in Plainville, not far from both eastern Connecticut and Boston, and two more major casino developments in the offing: MGM Resorts in Springfield and Wynn Resorts in Everett.
The MGM project has so alarmed Connecticut officials and the two Indian tribes that they have agreed to build a mini-casino in East Windsor in an attempt to divert Connecticut gamblers from making the trip north into the Bay State. As you might expect, East Windsorites are salivating at the expected $3 million per year in payments coming from the two tribes.
So it’s no secret that we have become dependent on the gambling industry as a revenue generator. But is casino gambling really economic development? Are states that embrace the casinos any better off because of it?
Ask the gambling industry (for obvious reasons, I refuse to call it “gaming”). A new study conducted by Nathan Associates for the American Gaming Association contains a state-by-state analysis of “tribal gaming,” which the consulting group defines as gambling enterprises “operated by Native American tribes as an exercise of their inherent sovereign rights as independent nations under federal law.”
The 20-page study, which does not contain the word “gambling” anywhere, details how casino “gaming” has benefitted the tribes themselves, which seems beyond dispute. Since the passage of Indian Gaming Regulatory Act in 1988, tribal gambling has grown by leaps and bounds. At that time, tribal gambling operations were confined to little more than small bingo halls and gaming facilities.
According to the report, the industry now supports 635,000 jobs in 28 states that generate more than $33 billion in wages annually. On nearly $97 billion in sales, more than $16 billion in taxes and fees are paid to various government entities. Tribal gambling facilities include “many resort destination casinos that are on par with the most successful commercial casinos in the country.”
Connecticut itself ranks fifth in the nation in terms of economic output by tribal gambling enterprises. The study measured a total of about $3.7 billion in economic output in 2014, the last year for which complete stats were available. That total includes: 25,197 jobs; more than $1.2 billion in wages; and almost $829 million in tax revenues and direct payments to government.
And we only have two facilities. Much larger states like California, which tops the list, has 72 tribal gaming facilities. Oklahoma, which has about the same population as Connecticut, still manages to support 126 facilities, including Winstar, which is larger than either Mohegan Sun or Foxwoods.
There is a compelling argument to be made that casino gambling in general is not really sustainable economic development. The argument is that gambling has essentially become a downscale business. For every high-roller, there are dozens of lower income people who are more likely to gamble than the wealthy, just as in other forms of wagering like the lottery. It seems gambling revenue is even more vulnerable to fluctuations in revenues than many other businesses as the economy sours. Revenues dropped in the great recession of 2008 and never really recovered.
You would expect a consulting firm hired by the gambling lobby to paint a rosy picture. But beyond a small group of executives, casino employees don’t make much money and the list of social ills spawned by expanded gambling is well known — to say nothing of the traffic and infrastructure demands visited upon casino towns.
But what are you going to do in a state like ours? We are losing population, as revenues underperform, and young people are fleeing the state for greener pastures. Manufacturing job growth is sluggish, though ironically stronger where the casinos are in eastern Connecticut, where Electric Boat is expected to add 5,000 jobs by 2030.
As I’ve said before, our reliance on gambling revenue is disgusting, seeing as it draws from the poor more than from the rich and since, in the case of the lottery, the state is actually running and marketing its games to the poor, urging them to risk their paychecks. It’s enough to drive me to drink — or play keno.
Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at ctdevilsadvocate.com and is managing editor of The Berkshire Edge in Great Barrington, Mass. Follow him on Twitter @terrycowgill.
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