Gaming Commission Report:  Findings & Comments

Quoted text is verbatim from the final report, http://www.nh.gov/gsc/documents/20100520.pdf

Prepared by Granite State Coalition Against Expanded Gambling

The findings of the Commission’s report are compelling because they were adopted unanimously by 15 individuals with highly-diverse views about legalized slot casinos. The report’s chief conclusion (which requires reading all 175 pages) is that – even using favorable revenue and conservative economic impact assumptions – slot casinos would cause more quantified harm than they would yield in state and local tax revenues.

The report’s chief weakness is its clinically-removed treatment of the human misery that would result from legalization of even one large border casino: the 10,000 new problem gamblers and gambling addicts and the 1,200 additional yearly crime victims. To its great credit, the report finally lays to rest the gambling industry falsity that the thousands of resulting broken families, bankruptcies, attempted suicides, child abuses, muggings, rapes, and embezzlements have no substantial cost. Budget conferees ought to hold a mental image of one rape or suicide victim when considering the state revenues that would be the direct cause of their suffering.

Revenues

The report’s assumed 39% tax rate, as proposed by the gambling industry to attract legislative support, has already dropped from last year’s 49%. This rate and the resulting revenue projection must be considered high, as the rate will likely drop closer to the 25% in Connecticut and as proposed for Massachusetts.

MA casino revenue impact. The report projects that Massachusetts casinos would depress state revenues from a Salem casino by 31%. But the closest modeled MA casinos are at the Wonderland and Suffolk Downs tracks, rather than a far more competitive mega-casino in a superior location (from a traffic and access standpoint) and closer to the New Hampshire border in Lowell or Lawrence, MA. Such a casino would create devastating competition for a $500 million casino in Salem. Millennium Gaming testified to the commission that MA casinos would reduce tax revenues from a Salem casino by nearly half (Page 15). Former Governor Shaheen’s revenue commission report included a projection that MA casinos would reduce NH casino revenue by 52%.

No first mover advantage. The Commission report finds limited credence for the claimed “first mover” advantage in capturing casino revenue (Page 15).

Economic/Social Costs and Impacts

Economic/social costs. The report projects $33-$60 million in annual costs among NH residents and $110-$228 million in social costs among MA residents resulting from legalization of a large Salem casino. Bi-state costs total $143-$288 million per year (Pages 89 and 91). These figures increase if multiple casinos were legalized in NH.

Costs exceed revenues. The projected (MA legalizes scenario) revenues from a Salem casino are $150 million (Page 60). Some will argue that NH budget makers should ignore the costs of misery induced among humans who happen live one mile south of Salem. The report does not quantify this, but MA problem and pathological (P&P) gamblers would impact the NH economy in the following ways: reduced discretionary income otherwise spent at New Hampshire retail or tourism venues; crimes committed in NH.

No net benefit from a Lakes Region or Berlin casino, because few social and economic costs are exported to MA populations (Pages 96 and 97).

Addiction. The report’s midrange estimate for increased P&P gamblers from a single large Southern NH casino: 10,000 NH residents. Multiple NH casinos would bring this to the 13,000 range, because individual casino impact estimates are not additive (Page 79).

Crime. The report finds that serious crimes in the regions surrounding casinos, including rape, aggravated assault, and various types of property crimes, would increase by 9-30%.  A single Salem casino would increase these serious crimes by over 1,200 per year in NH. Multiple casinos would increase this number. (Page 83).

Abused dollars not included. Abused dollars are included in most gambling impact studies and consist of gambling money stolen from or taken under false pretenses from family and acquaintances, but not reported as a crime. Including abused dollars would increase the report’s cost numbers by about 40%.

Regional impacts. “Areas around some proposed gaming sites will face added fiscal pressures due to a range of community impacts, including housing, schools, and other infrastructure requirements, due to the possible influx of workers to staff the facilities. Such impacts will add to already severe pressures on state and local budgets, though additional revenues from gaming could help mitigate such pressures. While host communities to a gaming facility may see the greatest positive economic impact, communities surrounding the facility will receive less economic benefit while bearing additional law enforcement and other costs. Many localities and regions of the state currently lack sufficient planning capacity to anticipate and handle the potential costs of such development impacts. While the state requires affected communities to be notified about projects of regional impact, surrounding communities are not necessarily given a seat at the table to discuss impacts or a share of the revenues to help offset impacts.” (Page 19)

Provision for regional approval referenda suggested. “The views and requirements of local citizens must be considered, possibly by making approval of new gaming facilities subject to local – and possibly regional – referenda.” (Page 28)

Impact on existing business. “The tourist [in a destination/resort casino] however, does not generally spend much in the communities surrounding a resort style casino … Casinos that cater to a local market generally do not bring outside money into the economy through the spending of their patrons. In fact, such casinos may have no net ancillary economic impacts; residents patronizing such casinos may simply substitute gambling for other goods and services.” (Page 62)

Tourism impact. “To help determine the impact of gaming on tourism, the New Hampshire Division of Travel and Tourism Development conducted a survey among about 100 members of its Travel Advisory Council this past spring, asking how two different kinds gambling scenarios might affect their perception of New Hampshire as a vacation destination and affect the number of trips they make to New Hampshire. The survey generally found that expanded gaming would have a more negative than positive effect about their perception…” (Page 29).

Other Issues

Proliferation cannot be prevented. “Based on the experience of other states and even that of New Hampshire, which has regularly expanded its Lottery games and other gaming activity – the Commission finds that gaming proliferation is not only possible, it is likely … The Commission concluded that the only assured way to prevent proliferation would be through an amendment to the New Hampshire Constitution, a move seen as unlikely.” (Page 24-25)

Addictive machine design. “Dr. Kevin Harrigan, Research Associate Professor at the University of Waterloo and founder and lead researcher of the University of Waterloo‘s problem gambling research team, described to the Commission on November 17, 2009, how technology enables VLTs to be designed in ways that contribute to faulty cognitions and addictiveness. According to Harrigan, such design features include near miss technology, by which losers at VLTs think they almost won. In some cases, losses can be disguised as wins. Because of such technology and design issues, and in view of the especially addictive aspects of VLT/slot machines, this Commission finds that the state should consider regulating – through licensing standards and enforcement – methods and technologies that have been identified as exacerbating addictive behaviors in the use of VLT machines.” (Page 22)

Norway (in 2007) banned the type of highly addictive machines proposed here and used throughout the US. Banning or regulating current addictive machines would make them far less profitable, given that the Ontario Problem Gambling Research Centre found that P&P gamblers are the source of 60% of slot machine revenue.