May 27, 2008
ILCAAAP offers a warning to Illinois Legislators
that the gambling industry is not recession-proof
The Mashantucket Pequot Tribal Nation is cutting about 20 percent of its government work force due to plunging revenues at Foxwoods. About 170 employees of the tribal government workforce will lose their jobs May 30. The tribe owns and operates Foxwoods Resorts Casino. The tribal government's trimming of its work force is part of a larger effort to cut $40 million from its budget as casino revenues have slipped.
Foxwoods generates 99 percent of the tribe's government funding, but the casino has weathered months of reduced revenue because of increased competition in Rhode Island and New York and an uncertain economy. http://news.bostonherald.com/business/general/view/2008_05_25_Are_casinos_worth_the_gamble_:_Foxwoods_cuts_staff_due_to_revenue_drop/srvc=home&position=recent
In the past fortnight, the owner of the iconic Tropicana casino in Las Vegas has filed for bankruptcy and four of the US's largest gambling companies have reported earnings slumps. Most market observers said the falls illustrated that the industry was not as recession-proof as it liked to think.
Boyd Gaming, which mainly runs casinos catering to Las Vegas residents, said earnings at these casinos fell 11 per cent.
Aristocrat Leisure has already warned that a declining US economy has reduced gamblers' appetites, and sales to its biggest market this year will be more than 20 per cent below expectations. The company has started a cost-cutting and efficiency drive, a move mirrored by the US giant MGM Mirage, which operates the Bellagio, Mandalay Bay and Circus Circus resorts in Las Vegas, after it saw first-quarter profits fall 30 per cent. http://business.smh.com.au/us-slump-deals-bad-hand-to-gambling/20080511-2d0u.html
Atlantic City, after three decades of having casinos, was described by the Economist as a place where "multi-million dollar casinos are steps away from crime-ridden neighborhoods. A quarter of the 40,000 residents live below the poverty line."
Nevada's casinos racked up a record $12.8 billion in revenues in 2007. But the Toronto Star wrote in January, "Nevada also leads in other areas, such as gun deaths, suicide and now home foreclosures. It has one of the worst public school systems in the United States. Bankruptcies are high. It ranks below average for the number without health insurance."
According to the federal Corporation for National and Community Service, Las Vegas ranks 43d out of 50 major metropolitan areas in high school graduation rate, second to last for its college graduation rate, and dead last for its volunteer rate. http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/03/04/the_ills_casinos_bring/?p1=email_to_a_friend
Gomez, 70, watched casinos trade coin-operated slot machines for ticket-based devices. Now he sees them moving toward flat-screen machines linked by a back-room computer server, more similar to an office computer network than a classic ringing, clanging casino slot floor. Each upgrade comes with more choices for gamblers, more cash for casinos and fewer jobs for attendants like Gomez.
Our capacity to gamble is not unlimited. In fact, it appears we already may be close to it. That explains why lottery sales are stagnant and why, despite heavy advertising, gaming revenues at the five existing New England casinos grew less than 2 percent (after inflation) from 2005 to 2006. (Indeed, imagine the outcry if the governor said that his scheme depended on persuading people who never gamble to now pick up the habit!)
Casino advocates argue, there is a source of new money: Massachusetts residents who now gamble out of state. UMass-Dartmouth professor Clyde Barrow estimates that Bay Staters in 2006 spent about $1.1 billion gambling in Connecticut, Rhode Island, and Maine. Once we build our own casinos, runs the thinking, we'll no longer "lose" that money to other states.
Really? Does anyone seriously believe that Foxwoods and Mohegan Sun will sit idly by while a vast chunk of their business disappears? As the Massachusetts Taxpayers Foundation pointed out recently, like any good competitor, they'll fight back. They'll drop room rates, improve entertainment, and spruce up the buffet tables. Most important, they - and the states they're in - will be compelled to offer gamblers better odds.
My guess is that, over time, our casinos will start to look like most other businesses, generating some jobs and some economic growth, but nothing exceptional. But this notion of gambling magically paying for property tax relief and rebuilding our infrastructure? No way. It's as real as the jackpot dreams that crowd casino floors. http://www.boston.com/bostonglobe/magazine/articles/2007/11/11/bad_bet/
Delaware was one of the first states to legalize slots at racetracks. The slots have done nothing to attract more people to horse racing. The purses are higher, but there are fewer live races. Now they want to expand to another form of gambling at the racetracks-- sports gambling. This expansion will not attract gamblers to bet on the horses.
The racetracks in West Virginia lobbied to legalize slot machines. After a few years, they were back at the capital asking for table games. Legislation to legalize table games at the tracks passed last spring. Later that fall, the tracks introduced another form of gambling-poker. Track owners seemed surprised that this new type of gambling attracted college-age men who were only interested in gambling on poker.