ARE THE NEW ENGLAND STATES IN A GAMBLING ARMS RACE? · 1. Commercial Casinos land-based, dockside,...
Transcript of ARE THE NEW ENGLAND STATES IN A GAMBLING ARMS RACE? · 1. Commercial Casinos land-based, dockside,...
ARE THE NEW ENGLAND STATES IN A
GAMBLING ARMS RACE? Presentation to the New England Fiscal Leaders Meeting
Held at Federal Reserve Bank, Boston, MA
By
© 2013 Clyde W. Barrow, Ph.D., University of Massachusetts Dartmouth
February 22, 2013
The U.S. Casino Industry
North American Industrial Classification
System (NAICS)
The North American Industrial Classification System (NAICS)
is the statistical classification standard underlying all
establishment-based economic statistics in the U.S., Canada
& Mexico
NAICS classifies business establishments into
twenty different Sectors and assigns each
business establishment in North America a six-
digit classification code.
NAICS Major Sector Code 71
Sector 71. Arts, Entertainment & Recreation
Subsector 711. Performing Arts, Spectator Sports and
Related Industries
Subsector 712. Museums, Historical Sites & Similar
Institutions
Subsector 713. Amusement, Gambling & Recreation
Industries
• Definition: The Arts, Entertainment and Recreation Sector includes a wide range
of establishments that operate facilities or provide services to meet varied
cultural, entertainment and recreational interests of their patrons.
CASINOS AS ENTERTAINMENT
Casinos enjoy a high level of acceptance by the American public:
• 51% of the adult population view casino gambling as “perfectly acceptable for anyone” and another 30% viewing it as “acceptable for others,” but not for themselves.
• Only 16% of the American public views casino gaming as “not acceptable for anyone”
• 81% of the adult population agree that “casino gaming can be a fun night out”
Source: (AGA/Peter D. Hart 2012, 3).
The U.S. Casino
Industry
1. Commercial Casinos
land-based, dockside, riverboat, cruise ships
2. Racetrack casinos or “racinos”
3. Native American or “Indian” Casinos
“Fundamentally, gaming is a business.”
-- Mass. Gov. Deval Patrick, Sept. 17, 2007
“Across the world casino gambling is becoming
increasingly mundane…in every instance casinos have
been around, they’ve operated for a long time, and they
have become entirely noncontroversial in the context of
people’s lives and their communities.’’
-- Gary Loveman, CEO Caesars Entertainment, Feb. 14,
2012
Commercial Casinos & Racinos
In 2011, the U.S. commercial casino & racino sectors:
• Earned $35.6 billion in gross gaming revenue
• Employed 339,038 people
• Paid wages of $12.9 billion
• Contributed $7.93 billion in gaming taxes to states
$9.8 B GGR in
Northeast Gaming
Market
MD to WV to ME
Another $3.2B GGR
in Indian Gaming
59 Class 3 Casinos
(2013) with 5 more
authorized
STATE GAMBLING POLICY:
FROM REVENUES TO JOB CREATION
REVENUES
• 1990s – 2000s was
revenue driven reaction
to tax revolt
• Fast initial start up
• Low capital investment
• High tax rates
• Riverboats + Racinos
JOB CREATION
• Deindustrialization & the
intractable “blue-collar
recession”
• Great Recession High
Capital Investment
• Lower tax rates
• Casinos: Tables + Non-
Gaming Amenities
JOBS PER $1M GGR
State
No. of
Casinos
No. of Casino
Employees
Gross Gaming
Revenue
(billions)
Employees per
$1 million GGR
Nevada 256 175,024 $10.405 16.8
New Jersey 11 34,145 $3.565 9.6
Mississippi 30 24,707 $2.390 10.3
Colorado 37 9,589 $0.760 12.6
South Dakota 34 1,512 $0.106 14.2
Iowa 17 8,915 $1.368 6.5
Michigan 3 8,067 $1.378 5.9
Louisiana 18 16,873 $2.374 7.1
Kansas 1 303 $0.038 8.0
Missouri 12 11,071 $1.788 6.2
Indiana 13 14,144 $2.794 5.1
Illinois 9 6,892 $1.374 5.0
Delaware 3 3,245 $0.571 5.7
West Virginia 5 4,528 $0.878 5.2
Pennsylvania 10 12,664 $2.486 5.1
Total 459 331,679 $32.275 10.3
Non-Traditional 192 122,510 $18.305 6.7
State
No. of
Casinos
No. of Casino
Employees
Gross Gaming
Revenue
(billions)
Employees per
$1 million GGR
Oklahoma 2 770 $0.100 7.7
Louisiana 4 1,257 $0.369 3.4
Iowa 3 1,172 $0.455 2.6
New Mexico 5 1,423 $0.247 5.8
Florida 5 2,533 $0.329 7.7
Maine 1 385 $0.062 6.2
Maryland 1 309 $0.062 5.0
New York 8 3,465 $1.088 3.2
Rhode Island 2 1,100 $0.477 2.3
Total 31 12,414 $3.189 3.9
Source: Calculated from data in AGA, State of the
States, 2012
EFFECTIVE TAX RATES
State No. of Casinos
Gross Gaming
Revenue
(billions)
Gaming Tax
Revenue (billions)
Effective Gaming
Tax Rates
Nevada 256 $10.405 $0.84 8.0%
New Jersey 11 $3.565 $0.31 8.6%
Mississippi 30 $2.390 $0.29 11.9%
Colorado 37 $0.760 $0.11 14.1%
South Dakota 34 $0.106 $0.02 16.2%
Iowa 17 $1.368 $0.31 22.3%
Michigan 3 $1.378 $0.31 22.6%
Louisiana 18 $2.374 $0.57 24.1%
Kansas 1 $0.038 $0.01 25.1%
Missouri 12 $1.788 $0.49 27.2%
Indiana 13 $2.794 $0.87 31.3%
Illinois 9 $1.374 $0.47 33.9%
Delaware 3 $0.571 $0.24 42.5%
West Virginia 5 $0.878 $0.38 43.1%
Pennsylvania 10 $2.486 $1.33 53.4%
Total 459 $32.275 $6.53 20.2%
Non-Traditional 192 $18.305 $5.385 29.4%
Source: Calculated from data in AGA, State of the
States, 2012
State No. of Racinos
Gross Gaming
Revenue
(billions)
Gaming Tax
Revenue (billions)
Effective Gaming
Tax Rates
Oklahoma 2 $0.100 $0.02 16.6%
Louisiana 4 $0.369 $0.07 18.4%
Iowa 3 $0.455 $0.11 24.1%
New Mexico 5 $0.247 $0.06 26.0%
Florida 5 $0.329 $0.14 42.8%
Maine 1 $0.062 $0.03 48.9%
Maryland 1 $0.062 $0.03 48.9%
New York 8 $1.088 $0.50 46.3%
Rhode Island 2 $0.477 $0.30 62.1%
Total 31 $3.189 $1.26 39.5%
EXPORTS TO RECAPTURE
CFPA POLLS FIND THAT „RECAPTURING‟ TAX
REVENUE IS ONE OF THE TOP TWO
RATIONALES THAT GENERAE SUPPORT FOR
EXPANDING GAMING
RECAPTURE WAS A PROMINENT LEGISLATIVE
RATIONALE IN PENNSYLVANIA &
MASSACHUSETTS GAMING EXPANSION
PLAYING A MAJOR ROLE IN NEW YORK AND
NEW HAMPSHIRE DEBATES
RURAL TO URBAN
PHILADELPHIA (SUGAR HOUSE + 1)
PITTSBURGH
RESORTS WORLD (NY)
EMPIRE RACEWAY (NY)
BANGOR, ME
SPRINGFIELD AND BOSTON, MA
INCREASE PROPENSITY TO GAMBLE BY
MOVING FACILITIES CLOSER TO PEOPLE &
INCOME
GAIN COMPETITIVE ADVANTAGE WITH
CONVENIENCE
INTEGRATED RESORT TO
URBAN INTEGRATION USE OF EXISTING ENTERTAINMENT & CONFERENCE
VENUES
COMP FREQUENT PLAYERS WITH TICKETS TO LOCAL
ENTERTAINMENT EVENTS
SMALLER HOTELS & PARTNERSHIPS WITH NEARBY
EXISTING HOTELS
PLAYER REWARDS USED AT LOCAL RETAIL OUTLETS &
RESTAURANTS
CROSS-MARKETING TO PROMOTE TOURISM &
HOSPITALITY INDUSTRY GENERALLY
LOCAL VENDOR PREFERENCE & LABOR AGREEMENTS
IS THERE SATURATION?
DEF.: “The point of a product life
cycle where the market has been
completely filled so that no more
sales for goods and services can be
taken up.”
SOURCE: Shim & Siegel, Dictionary of Economics (1995), p. 306.
THE GREAT RECESSION WAS A BUSY TIME
FOR GAMING IN THE NORTHEAST (2007-2011)
• West Virginia authorized table games at its four racetrack casinos
• Delaware authorized table games at its three racetrack casinos
• Delaware reauthorized a sports lottery
• Pennsylvania opened nine slot parlors and then added table
games
• Rhode Island authorized 24-hour gaming at its two slot parlors
• Maryland opened a racetrack casino (now two)
• New York opened 3 additional racinos, including Empire City
==================================
• Resorts World (Aqueduct) (2011)
• Revel (2012)
• Valley Forge (2012)
• Horseshoe Cleveland (2012)
• Oxford Casino (2012)
==================================
• $3.4 B in capital investment
HOW MANY CASINOS IS TOO
MANY? State No. of Casinos
No. of Casino
Employees Gross Gaming Revenue
(billions) Employees per $1 million
GGR
South Dakota 35 1,647 $0.101 16.3
Nevada 256 174,381 $10.700 16.3
Colorado 40 9,263 $0.750 12.3
Mississippi 30 23,721 $2.240 10.6
New Jersey 11 32,823 $3.320 9.9
Louisiana 18 17,207 $2.370 7.3
Iowa 18 9,384 $1.368 6.9
Kansas 2 303 $0.048 6.3
Maine 1 364 $0.059 6.1
Missouri 12 10,435 $1.810 5.8
Illinois 10 7,911 $1.480 5.3
Indiana 13 14,079 $2.720 5.2
Michigan 3 7,303 $1.420 5.1
Delaware 3 2,730 $0.552 4.9
West Virginia 5 4,475 $0.959 4.7
Pennsylvania 10 13,050 $3.020 4.3
Total 467 329,076 $32.918 10.0
Non-Traditional 200 121,872 $18.898 6.4
Source: AGA, State of the States, 2012.
Sources: Meister, Indian Gaming Industry Report, 2012; AGA, 2012 Survey of Casino Entertainment (Innovation Group);
U.S. Census 2010.
Note: Includes 529 slots at Oxford Casino (ME) + 400 additional slots in Phase II Oxford expansion (Fall 2012).
893
537
388
309
256 227 227
225 224 202
171 119 107
57
-
100
200
300
400
500
600
700
800
900
1,000
Adults (aged 21+) Per Slot Machine By Select States/Markets: Pre-Expansion Massachusetts
HOW MANY SLOT MACHINES ARE ENOUGH?
Sources: Meister, Indian Gaming Industry Report, 2012; AGA, 2012 Survey of Casino Entertainment (Innovation Group); U.S. Census
2010; Center for Policy Analysis.
Note: Estimate assumes 2,850 slot reduction in CT & RI due to recapture + 5,000 slots in Region A, 2,500 slots in Region B, 2,500 slots in
Region C, and 1,250 slots at slot parlor + 1,929 slots in Maine.
893
377
483
388
309 256
227 227 225 224
202 171
119 107
57
-
100
200
300
400
500
600
700
800
900
1,000
Adults (aged 21+) Per Slot Machine By Select States/Markets: Post-Expansion Massachusetts
MASSACHUSETTS
IS WHERE THE
PEOPLE ARE!
MASSACHUSETTS
IS WHERE THE
MONEY IS!
State DPI (2011) % New England
PDI NE Wager Wager/PDI
(2011)
RI $
41,478,215,000 6.5% $
397,677,799 0.96%
CT $
171,847,111,000 26.8% $
871,069,321 0.51%
MA $ 304,577,893,000 47.5%
755,919,190 0.25%
ME $
45,591,683,000 7.1% $
84,337,395 0.18%
NH $
54,669,172,000 8.5% $
54,600,074 0.10%
VT $
23,709,048,000 3.7% $
10,315,661 0.04%
*U.S. $ 11,700,000,000,000 $ 62,200,000,000 0.53%
New England $
641,873,122,000 100.0% $
2,495,262,980 0.39%
Sources: Bureau of Economic Analysis; CFPA, New England Casino Gaming Update, 2012.
PERSONAL DISPOSABLE INCOME &
PROPENSITY TO GAMBLE
DEMAND FOR CASINO GAMING IN NEW ENGLAND U.S. Wager 0.00532
NE Market (GGR) $
3,412,351,127 Potential Avg.
Wager
Maine $
110,000,000 Includes Oxford
Connecticut $
1,663,656,201 Minus NY
Rhode Island $
513,000,000
Unmet Demand $
1,125,694,926
MA Recapture (.60) $ 454,000,000
N. NE States ReC (.750) $ 112,000,000
CT/RI/NY Capture $ 153,000,000 Distance + Non-Smoking
Mass Demand $ 1,844,694,926
Tourism Factor (.10) $ 184,469,493 250,000
Visitations
Total Mass Demand $ 2,029,164,419
GGR NGR TR
Return to Avg.
Propensity $ 2,680,083,609 $
616,419,230 $
3,296,502,839
Center for Policy Analysis
University of Massachusetts Dartmouth
285 Old Westport Road
North Dartmouth, MA. 02747-2300
http://www.umassd.edu/seppce/centers/cfpa/